SharpSpring (SHSP) 10-K 16 Mar 20 2019 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Mar. 13, 2020	Jun. 30, 2019
Document And Entity Information
Entity Registrant Name	SharpSpring, Inc.
Entity Central Index Key	0001506439
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Entity File Number	001-36280
Entity Public Float			$ 133,259,188
Entity Common Stock, Shares Outstanding		11,520,718
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2019

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 11,881,949	$ 9,320,866
Accounts receivable, net of allowance for doubtful accounts of $12,455 and $127,516 at December 31, 2019 and December 31, 2018, respectively	340,344	80,521
Unbilled receivables	998,048	740,425
Income taxes receivable	15,010	22,913
Other current assets	1,363,366	1,184,217
Total current assets	14,598,717	11,348,942
Property and equipment, net	1,996,722	1,260,798
Goodwill	10,922,814	8,866,413
Intangibles, net	4,658,000	1,866,000
Right-of-use assets	5,281,530	0
Other long-term assets	549,022	665,123
Total assets	38,006,805	24,007,276
Liabilities and Shareholders' Equity
Accounts payable	2,052,538	1,613,477
Accrued expenses and other current liabilities	919,089	774,944
Deferred revenue	860,820	250,656
Income taxes payable	13,944	23,705
Lease liability, current portion	370,340	0
Total current liabilities	4,216,731	2,662,782
Convertible notes, including accrued interest	0	8,342,426
Convertible notes embedded derivative	0	214,350
Lease liability, net of current portion	4,976,727	0
Total liabilities	9,193,458	11,219,558
Commitments and Contingencies (Note 13)
Shareholders' equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding at December 31, 2019 and December 31, 2018	0	0
Common stock, $0.001 par value, Authorized shares-50,000,000; issued shares- 11,537,163 at December 31, 2019 and 8,639,139 at December 31, 2018; outstanding shares- 11,517,163 at December 31, 2019 and 8,619,139 at December 31, 2018	11,537	8,639
Additional paid in capital	58,851,285	30,446,838
Accumulated other comprehensive loss	(224,793)	(231,053)
Accumulated deficit	(29,740,682)	(17,352,706)
Treasury stock	(84,000)	(84,000)
Total shareholders' equity	28,813,347	12,787,718
Total liabilities and shareholders' equity	$ 38,006,805	$ 24,007,276

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 12,455	$ 127,516
Preferred Stock, par value per share	$ 0.001	$ 0.001
Preferred Stock, shares authorized	5,000,000	5,000,000
Preferred Stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common shares, par value per share	$ 0.001	$ 0.001
Common shares, shares authorized	50,000,000	50,000,000
Common shares, shares issued	11,537,163	8,639,139
Common shares, shares outstanding	11,517,163	8,619,139

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Loss - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Statement [Abstract]
Revenue, net	$ 22,699,386	$ 18,651,525
Cost of services	7,142,416	5,798,269
Gross profit	15,556,970	12,853,256
Operating expenses:
Sales and marketing	11,785,227	10,092,691
Research and development	5,036,613	4,298,031
General and administrative	8,617,073	6,358,087
Non-employee stock issuance expense	0	508,561
Intangible asset amortization	381,000	460,000
Total operating expenses	25,819,913	21,717,370
Operating loss	(10,262,943)	(8,864,114)
Other expenses, net	(147,338)	(545,482)
Loss on induced conversion	(2,162,696)	0
Gain (loss) on embedded derivative	214,350	(400,220)
Loss before income taxes	(12,358,627)	(9,809,816)
Provision (benefit) for income taxes	29,349	(330,994)
Net loss	$ (12,387,976)	$ (9,478,822)
Basic net loss per share	$ (1.20)	$ (1.11)
Diluted net loss per share	$ (1.20)	$ (1.11)
Shares used in computing basic net loss per share	10,323,889	8,512,297
Shares used in computing diluted net loss per share	10,323,889	8,512,297
Other comprehensive income (loss):
Foreign currency translation adjustment, net	$ 6,260	$ 249,709
Comprehensive loss	$ (12,381,716)	$ (9,229,113)

Consolidated Statment of Change

Consolidated Statment of Changes in Shareholders' Equity - USD ($)	Common Stock	Additional Paid in Capital	Accumulated Other Comprehensive Loss	Treasury Stock	Accumulated Deficit	Total
Balance, shares at Dec. 31, 2017	8,456,061			20,000
Balance at Dec. 31, 2017	$ 8,456	$ 28,362,397	$ (480,762)	$ (84,000)	$ (7,873,883)	$ 19,932,208
Stock based compensation - stock options		801,655				801,655
Issuance of common stock for cash, shares	113,090
Issuance of common stock for cash	$ 113	596,274				596,387
Issuance of common stock for director services, shares	23,302
Issuance of common stock for director services	$ 24	177,998				178,022
Issuance of common stock for other non-employee services, shares	36,274
Issuance of common stock for other non-employee services	$ 36	508,525				508,561
Issuance of common stock for warrant conversions, shares	10,412
Issuance of common stock for warrant conversions	$ 10	(10)				0
Foreign currency translation adjustment, net			249,709			249,709
Net loss					(9,478,822)	(9,478,822)
Balance, shares at Dec. 31, 2018	8,639,139			20,000
Balance at Dec. 31, 2018	$ 8,639	30,446,838	(231,053)	$ (84,000)	(17,352,706)	12,787,718
Stock based compensation - stock options		1,076,324				1,076,324
Issuance of common stock for cash, shares	1,631,331
Issuance of common stock for cash	$ 1,631	16,578,784				16,580,415
Issuance of common stock for director services, shares	10,286
Issuance of common stock for director services	$ 10	127,878				127,888
Issuance of common stock for warrant conversions, shares	14,772
Issuance of common stock for warrant conversions	$ 15	(15)				0
Issuance of common stock for settlement of notes, shares	1,241,635
Issuance of common stock for settlement of notes	$ 1,242	10,621,474				10,622,716
Foreign currency translation adjustment, net			6,260			6,260
Net loss					(12,387,976)	(12,387,976)
Balance, shares at Dec. 31, 2019	11,537,163			20,000
Balance at Dec. 31, 2019	$ 11,537	$ 58,851,285	$ (224,793)	$ (84,000)	$ (29,740,682)	$ 28,813,347

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net loss	$ (12,387,976)	$ (9,478,822)
Adjustments to reconcile loss from operations:
Depreciation and amortization	1,010,123	892,233
Amortization of costs to acquire contracts	804,780	758,014
Non-cash stock compensation	1,204,213	964,676
Non-employee stock issuance expense	0	508,561
Deferred income taxes	0	(168,119)
Gain on disposal of property and equipment	(617)	(4,700)
Non-cash interest	139,372	304,301
Amortization of debt issuance costs and embedded derivative	2,903	(6,088)
(Gain)/loss on embedded derivative	(214,350)	400,220
Loss on induced conversion	2,162,696	0
Unrealized foreign currency loss	25,425	289,339
Changes in assets and liabilities:
Accounts receivable	(204,217)	3,896
Unbilled receivables	(254,987)	(187,246)
Right-of-use assets	433,980	0
Other assets	(837,082)	(1,097,683)
Income taxes, net	(2,094)	1,966,648
Accounts payable	439,028	1,094,281
Lease liabilities	(377,264)	0
Other liabilities	(392,480)	162,984
Deferred revenue	421,405	(27,283)
Net cash used in operating activities	(8,027,142)	(3,624,788)
Cash flows from investing activities:
Acquisition of business	(4,566,402)	0
Purchases of property and equipment	(1,365,048)	(893,886)
Proceeds from the sale of property and equipment	617	4,700
Net cash used in investing activities	(5,930,833)	(889,186)
Cash flows from financing activities:
Proceeds from issuance of convertible note	0	8,000,000
Debt issuance costs	0	(141,657)
Proceeds from exercise of stock options	968,986	596,387
Proceeds (cost) from issuance of common stock, net	15,587,990	0
Net cash provided by financing activities	16,556,976	8,454,730
Effect of exchange rate on cash	(37,918)	(19,637)
Change in cash and cash equivalents	2,561,083	3,921,119
Cash and cash equivalents, beginning of period	9,320,866	5,399,747
Cash and cash equivalents, end of period	11,881,949	9,320,866
Supplemental information on consolidated statements of cash flows:
Cash paid during the period for income taxes, net	11,013	(2,099,762)
Right-of-use asset obtained for lease liability	5,715,510	0
Convertible notes liability relieved upon conversion	8,484,701	0
Embedded derivative liability relieved upon conversion	$ 189,776	$ 0

Organization

Organization	12 Months Ended
	Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	SharpSpring, Inc. (the “Company”) provides a cloud-based marketing automation solution and a display retargeting platform through our SharpSpring and Perfect Audience products respectively. SharpSpring is designed to increase the rates at which businesses generate leads and convert leads to sales opportunities by improving the way businesses communicate with customers and prospects. Our products are marketed directly by us and through a small group of reseller partners to customers around the world.

Summary of Significant Accounti

Summary of Significant Accounting Policies	12 Months Ended
	Dec. 31, 2019
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Basis of Presentation and Consolidation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Company’s consolidated financial statements include the accounts of SharpSpring, Inc. and our subsidiaries (the “Company”). The Company’s consolidated financial statements reflect the elimination of all significant inter-company accounts and transactions. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating Segments The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s chief executive officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the Company’s financial information and resources and assess the performance of these resources on a consolidated basis. The Company does not present geographical information about revenues because it is impractical to do so. Foreign Currencies The functional currency of the Company’s foreign subsidiaries is the local currency. Assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rates in effect at the balance sheet dates, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at the average exchange rates during the period. Foreign currency translation gains and losses are recorded in other comprehensive income (loss). Cash and Cash Equivalents Cash equivalents are short-term, liquid investments with remaining maturities of three months or less when acquired. Cash and cash equivalents are deposited or managed by major financial institutions and at most times are in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits. Fair Value of Financial Instruments U.S. GAAP establishes a fair value hierarchy which has three levels based on the reliability of the inputs to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, deposits, embedded derivatives (associated with our convertible notes) and accounts payable. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the short-term nature of these items. The fair value of the embedded derivatives associated with our convertible notes are calculated using Level 3 unobservable inputs, utilizing a probability-weighted expected value model to determine the liability. The fair value of the embedded derivatives at December 31, 2019 and December 31, 2018 was a liability balance of zero and $0.21 million, respectively. The change in fair value for the year ended December 31, 2019 and 2018 was a gain of $0.21 million and loss of $0.4 million. Accounts Receivable Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. Management reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. The Company reserves for receivables that are determined to be uncollectible, if any, in its allowance for doubtful accounts. After the Company has exhausted all collection efforts, the outstanding receivable is written off against the allowance. In cases where our customers pay for services in arrears, we accrue for revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating a contract asset. A portion of our accounts receivable balance is therefore unbilled at each balance sheet date and is reflected as such on the consolidated balance sheet. Business Combinations Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed and pre-acquisition contingencies. We use our best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets. Examples of critical estimates in valuing certain of the intangible assets and goodwill we have acquired include but are not limited to: ● future expected cash flows from customer contracts and acquired developed technologies and patents; ● the acquired company’s trade name, vendor relationships, and customer relationships, as well as assumptions about the period of time the acquired trade name will continue to be used in our offerings; and ● discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. Intangibles Finite-lived intangible assets include trade names, developed technologies and customer relationships and are amortized based on the estimated economic benefit over their estimated useful lives, with original periods ranging from 5 to 11 years. We continually evaluate the reasonableness of the useful lives of these assets. Finite-lived intangibles are tested for recoverability whenever events or changes in circumstances indicate the carrying amounts may not be recoverable. Impairment losses are measured as the amount by which the carrying value of an asset group exceeds its fair value and are recognized in operating results. Judgment is used when applying these impairment rules to determine the timing of the impairment test, the undiscounted cash flows used to assess impairments and the fair value of an asset group. The dynamic economic environment in which the Company operates, and the resulting assumptions used to estimate future cash flows impact the outcome of these impairment tests. Goodwill and Indefinite-Lived Intangible Assets As of December 31, 2019 and 2018, we had recorded goodwill of $10.9 million and $8.9 million, respectively. Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets acquired in the SharpSpring, GraphicMail, and Perfect Audience acquisitions. In 2019, Goodwill increased due to the Perfect Audience acquisition (See Note 3). Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, “Intangibles - Goodwill and Other” The Company also has indefinite-lived intangible assets. As of December 31, 2019, and 2018, we had recorded indefinite-lived intangible assets of $0.38 million and zero, respectively (see Note 4). These assets are not amortized but are subject to annual impairment tests, and tests between annual tests in certain circumstances, based on estimated fair value in accordance with FASB ASC 350-30, and written down when impaired. Debt Issuance Costs Third-party costs associated with the issuance of debt are included as a direct reduction to the carrying value of the debt and are amortized as effective interest expense ratably over the life of the debt. There was no debt issuance costs during the year ended December 31, 2019. For the year ended December 31, 2018 we incurred debt issuance costs of approximately $141,000. These costs were included as a direct reduction tot the carrying value of the debt as part of the Notes on our consolidated balance sheets and are amortized to interest expense ratably over the five-year term of the Notes. Upon conversion of the Notes in 2019, the remaining balance of the debt issuance costs was expensed along with the remaining balance of the Notes. Income Taxes Provision for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are included in the consolidated financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB ASC 740, Accounting for Income The Company applies the authoritative guidance in accounting for uncertainty in income taxes recognized in the consolidated financial statements. This guidance prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. There are no material uncertain tax positions taken by the Company on its tax returns. Tax years subsequent to 2017 remain open to examination by U.S. federal and state tax jurisdictions. In determining the provision for income taxes, the Company uses statutory tax rates and tax planning opportunities available to the Company in the jurisdictions in which it operates. This includes recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns to the extent pervasive evidence exists that they will be realized in future periods. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which are expected to be in effect in the years in which the temporary differences are expected to reverse. In accordance with the Company’s income tax policy, significant or unusual items are separately recognized in the period in which they occur. The Company is subject to routine examination by domestic and foreign tax authorities and frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature and amount of deductions and the allocation of income among various tax jurisdictions. As of December 31, 2019, the Company was being examined by the U.S. tax authorities related to the 2016 and 2017 tax years. The Company does not expect any material adjustments as a result of the audit. The Company received notification February 14, 2020 that the examination had been closed with no changes. The Company received notification January 14, 2020 that it’s Swiss subsidiary, InterInbox SA is under examination from the Switzerland Federal Tax Administration for the years 2015 through 2018. The Company does not expect any material adjustments as a result of the audit. Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the assets. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to operations. Repairs and maintenance costs are expensed as incurred. Depreciation expense related to property and equipment was $0.63 million and $0.43 million for the years ended December 31, 2019 and 2018, respectively. Property and equipment as of December 31 is as follows: December 31, December 31, 2019 2018 Property and equipment, gross: Leasehold improvements $ 290,977 $ 197,268 Furniture and fixtures 678,774 611,171 Computer equipment and software 2,350,758 1,135,012 Total 3,320,509 1,943,451 Less: Accumulated depreciation and amortization (1,323,787 ) (682,653 ) $ 1,996,722 $ 1,260,798 Useful lives are as follows: Leasehold improvements 5 years Furniture and fixtures 3-5 years Computing equipment 3 years Software 3-5 years Revenue Recognition The Company generates revenue from contracts with multiple performance obligations, which typically include subscriptions to its cloud-based marketing automation software and professional services which include on-boarding and training services. The Company’s customers do not have the right to take possession of the software. Substantially all of SharpSpring’s revenue is from contracts with customers. The Company recognizes revenue from contracts with customers using a five-step model, which is described below: ● Identify the customer contract; ● Identify performance obligations that are distinct; ● Determine the transaction price; ● Allocate the transaction price to the distinct performance obligations; and ● Recognize revenue as the performance obligations are satisfied. Identify the customer contract A customer contract is generally identified when the Company and a customer have executed arrangement that calls for the Company to provide access to its software and provide professional services in exchange for consideration from the customer. Identify performance obligations that are distinct A performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and a company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. The Company has determined that subscriptions for its software is distinct because, once a customer has access to the software it purchased, the software is fully functional and does not require any additional development, modification, or customization. Professional services sold are distinct because the customer benefits from the on-boarding and training to make better use of the online software products it purchased. Determine the transaction price The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding sales taxes that are collected on behalf of government agencies. The Company estimates any variable consideration to which it will be entitled at contract inception, when determining the transaction price. The Company does not include variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will occur when any uncertainty associated with the variable consideration is resolved. Allocate the transaction price to the distinct performance obligations The transaction price is allocated to each performance obligation based on the relative standalone selling prices of the goods or services being provided to the customer. Recognize revenue as the performance obligations are satisfied Revenues are recognized when or as control of the promised goods or services is transferred to customers. Revenue from the SharpSpring marketing automation and Mail+ software is recognized ratably over the subscription period, which is typically one month. Revenue related to our professional services is recognized as the services are provided. The Perfect Audience software is utilized on an as needed basis, and the related revenue recognized as the service is provided. SharpSpring’s subscription contracts range from one to twelve months. The Company recognizes revenue from on-boarding and training services as the services are provided, which is generally 60 days. Cash payments received in advance of providing subscription or services are recorded to deferred revenue until the performance obligation is satisfied. Our products are typically billed in arrears or upfront, depending on the product, which creates contract assets (unbilled receivables) and contract liabilities (deferred revenue). Unbilled receivables occur due to unbilled charges for which the Company has satisfied performance obligations. Deferred revenues occur due to billing up front for charges that the Company has not yet fully satisfied all performance obligations. Both contract assets and liabilities are recognized as it is used. From time to time, the Company offers refunds to customers and experiences credit card chargebacks relating to cardholder disputes that are commonly experienced by businesses that accept credit cards. The Company makes estimates for refunds and credit card chargebacks based on historical experience. Deferred Revenue Deferred revenue consists of payments received in advance of the Company providing services. Deferred revenue is earned over the service period identified in each contract. The majority of our deferred revenue balances (contract liabilities) arise from upfront implementation and training fees for its SharpSpring marketing automation solution that are paid in advance. These services are typically performed over a 60-day period, and the revenue is recognized over that period. Additionally, some of the Company’s customers pay for services in advance on a periodic basis (such as monthly, quarterly, annually or bi-annually). In situations where a customer pays in advance for a one-year service period, the deferred revenue is recognized over that service period. Deferred revenue balances were $0.25 million and $0.28 million as of December 31, 2018 and 2017, respectively. Deferred revenue during the year ended December 31, 2019 increased by $0.61 million and decreased by $0.03 million during the year ended December 31, 2018. The Company had deferred revenue contract liability balances of $0.86 million and $0.25 million as of December 31, 2019 and 2018, respectively. The Company expects to recognize a majority of the revenue on these remaining performance obligations within 12 months. Approximately 4% of the deferred revenue balance is related to prepaid credits. These credits are recognized as they are used. The Company expects to recognize approximately half of the remaining credits within 12 months. As part of the acquisition of Perfect Audience, the Company acquired approximately $0.19 million of deferred revenue. Unbilled Receivable In cases where our customers pay for services in arrears, we accrue for revenue in advance of billings as long as the criteria for revenue recognition is met, thus creating a contract asset. The accrued revenue contract asset balances were $0.74 million and $0.55 million as of December 31, 2018 and 2017, respectively. Revenue billed that was included in accrued revenue at the beginning of the year ended December 31, 2019 and 2018 was $0.74 million and $0.55 million, respectively. The accrued revenue not billed and ending balance in years ended December 31, 2019 and 2018 was $1.0 million and $0.74 million respectively. Concentration of Credit Risk and Significant Customers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents. At December 31, 2019 and 2018, the Company had cash balances at financial institutions that exceed federally insured limits. The Company maintains its cash balances with accredited financial institutions. The Company does not believe it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. For the years ended December 31, 2019, and 2018, there were no customers that accounted for more than 10% of total revenue. For the year ended December 31, 2019 two customers had open accounts receivable balances which were above 10% of net accounts receivable, accounting for approximately 43% of net accounts receivable. As of February 29, 2020, these customers had no accounts receivable balance older than 30 days. For the year ended December 31, 2018 there were no customers that accounted for more than 10% of the net accounts receivable. Cost of Services Cost of services consists primarily of direct labor costs associated with support and customer onboarding and technology hosting costs and license costs associated with the cloud-based platform. Credit Card Processing Fees Credit card processing fees are included as a component of general and administrative expenses and are expensed as incurred. Advertising Costs The Company expenses advertising costs as incurred. Advertising and marketing expenses, excluding marketing team costs, were $5.8 million and $5.7 million for the years ended December 31, 2019 and 2018, respectively, and are included as a component of sales and marketing expense. Capitalized Cost of Obtaining a Contract The Company capitalizes sales commission costs which are incremental to obtaining a contract. We expense costs that are related to obtaining a contract but are not incremental such as other sales and marketing costs and other costs that would be incurred regardless of if the contract was obtained. Capitalized costs are amortized using straight-line amortization over the estimated weighted average life of the customer, which we have estimated to be 3 years. At December 31, 2019, the net carrying value of the capitalized cost of obtaining a contract was $1.2 million, of which $0.68 million is included in other current assets and $0.52 million is included in other long-term assets. At December 31, 2018, the net carrying value of the capitalized cost of obtaining a contract was $1.31 million, of which $0.7 million is included in other current assets and $0.61 million is included in other long-term assets. The Company amortized costs directly attributable to obtaining contracts of $0.8 million and $0.76 million during the years ended December 31, 2019 and 2018, respectively. Stock Compensation We account for stock-based compensation in accordance with FASB ASC 718 Compensation — Stock Compensation, Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents for the period. For purposes of this calculation, options to purchase common stock, warrants, and the conversion option of the Convertible Notes (Note 6) are considered to be potential common shares outstanding. Since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. The Company’s potential common shares outstanding were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. Comprehensive Income or Loss Comprehensive income or loss includes all changes in equity during a period from non-owner sources, such as net income or loss and foreign currency translation adjustments. Recently Issued Accounting Standards Recent accounting standards not included below are not expected to have a material impact on our consolidated financial position and results of operations. In May 2014, the FASB issued updated guidance and disclosure requirements for recognizing revenue from contracts with customers. This new revenue recognition standard became effective for the Company on January 1, 2018. In addition to providing guidance on when and how revenue is recognized, the new standard also provides guidance on accounting for costs of obtaining contracts primarily related to aligning the expense with the period in which the value is recognized. As a result of this new standard, the Company was required to capitalize certain costs related to obtaining contracts associated with commissions expense paid to salespeople. The Company is using the retrospective transition method to adjust each prior reporting period presented for this new method of accounting for costs associated with obtaining contracts. The application of the retrospective transition was applied to all contracts at the date of initial application. The following tables present our results under our historical method and as adjusted to reflect these accounting changes. Historical Accounting Method Effect of Adoption of New ASU As Adjusted Year Ended December 31, 2018 Sales and Marketing Expense 10,183,186 (90,495) 10,092,691 Total operating expense 21,807,865 (90,495) 21,717,370 Operating loss (8,954,609) 90,495 (8,864,114) Loss before income taxes (9,900,311) 90,495 (9,809,816) Net loss (9,569,317) 90,495 (9,478,822) Basic net loss per share (1.12) 0.01 (1.11) Diluted net loss per share (1.12) 0.01 (1.11) Balance as of December 31, 2018 Other current assets 485,058 699,159 1,184,217 Other long-term assets 54,954 610,169 665,123 Total assets 22,697,947 1,309,329 24,007,276 Accumulated deficit (18,662,035) 1,309,329 (17,352,706) In January 2017, the FASB issued guidance simplifying the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test. Under current guidance, Step 2 of the goodwill impairment test requires entities to calculate the implied fair value of goodwill in the same manner as the amount of goodwill recognized in a business combination by assigning the fair value of a reporting unit to all of the assets and liabilities of the reporting unit. The carrying value in excess of the implied fair value is recognized as goodwill impairment. Under the new standard, goodwill impairment is recognized based on Step 1 of the current guidance, which calculates the carrying value in excess of the reporting unit’s fair value. The new standard is effective beginning in January 2020, with early adoption permitted. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued guidance that requires lessees to recognize most leases on their balance sheets but record expenses on their income statements in a manner similar to current accounting. The guidance became effective for the Company on January 1, 2019. The Company is using the modified retrospective transition method which allows the Company to recognize and measure leases as of the adoption date, January 1, 2019, with the cumulative impact being reflected in the opening balance of retained earnings. The application of the modified retrospective transition was applied to all active leases at the date of initial application. There was no impact to the Company’s retained earnings for the implementation of this accounting standard. The following tables present the cumulative impact on our financial statements upon adoption. Impact upon adoption of new ASU As of January 1, 2019 Right-of-use assets 5,715,510 Total Assets $ 5,715,510 Accrued expenses and other current liabilities $ (8,821) Lease liability (current) 344,883 Lease liability (non-current) 5,379,448 Total Liabilities $ 5,715,510 In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This new accounting guidance removes the following: ● the exception to the incremental approach for intra-period tax allocations when there is a loss from continuing operations and income or gain from other items such as discontinued operation or other comprehensive income, ● the exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, ● the exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and ● the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The new accounting guidance also simplifies the accounting for income taxes by: ● requiring an entity to recognize franchise tax that is partially based on income as an income based tax and account for any incremental amount incurred as a non-income-based tax, ● requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, ● specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements, ● requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, and ● making minor Codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method. This standard is effective for fiscal and interim periods beginning after December 15, 2020. The Company anticipates that the adoption of this standard will not have a material impact on its financial statements.

Acquisitions

Acquisitions	12 Months Ended
	Dec. 31, 2019
Business Combinations [Abstract]
Acquisitions	On November 21, 2019, the Company acquired substantially all the assets and assumed certain liabilities of the Perfect Audience business unit from Marin Software Incorporated, a Delaware corporation for cash consideration of $4.6 million. The acquired assets and liabilities were assigned to SharpSpring’s wholly owned subsidiary SharpSpring Reach, Inc. Perfect Audience is a cloud-based platform that provides display retargeting software products and services. The transaction was structured as an asset purchase, whereby the SharpSpring acquired all of Perfect Audience’s assets used in connection with the business (excluding certain pre-acquisition receivables, cash, and cash equivalents) and only liabilities pertaining to the business such as deferred revenue, accrued publisher costs, accrued bonuses for to the acquired workforce, and any liabilities accruing on or after November 21, 2020. The allocation of the purchase price is based on management estimates and assumptions, and other information compiled by management, which utilized established valuation techniques appropriate for the industry. The valuation included a combination of the income approach and cost approach, depending upon which was the most appropriate based on the nature and reliability of the data available. The income approach is predicated upon the value of the future cash flows that an asset is expected to generate over its economic life. The cost approach takes into account the cost to replace (or reproduce) the asset and the effects on the assets value of physical, functional and/or economic obsolescence that has occurred with respect to the asset. The following represents the initial allocation of the purchase price to the acquired net tangible and intangible assets acquired and liabilities assumed by SharpSpring: Cash Consideration $ 4,566,402 Add: Net tangible assets acquired Deferred Revenue $ 186,500 Accrued expenses and other current liabilities $ 545,473 Total liabilities $ 731,973 Less: Net tangible assets acquired Accounts receivable $ (55,236 ) Other current assets $ (20,719 ) Total tangible assets $ (75,955 ) Intangible assets acquired: Trade names $ (381,000 ) Technology $ (979,000 ) Vendor relationships $ (1,813,000 ) Total intangible assets $ (3,173,000 ) Goodwill $ 2,049,420 Acquired intangible assets include developed technology and vendor relationships which are amortized over ten years. The acquired trade name assets have an indefinite life and will be tested for impairment at least annually. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill of $2.05 million. Goodwill will not be amortized but instead tested for impairment at least annually (more frequently if certain indicators are present). Goodwill arose primarily as a result of the expected future growth of the Perfect Audience product and the assembled workforce. The transaction costs associated with the acquisition were approximately $0.18 million and were recorded in general and administrative expense. The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. Pro Forma Results of Operations (Unaudited) The following table summarizes selected unaudited pro forma consolidated statements of operations data for the year ended December 31, 2019 and 2018 as if the acquisition of Perfect Audience had been completed at the beginning of the year. Year ended December 31, 2019 2018 Net revenues $ 2,980,148 $ 4,423,069 Gross profit $ 1,649,482 $ 3,120,694 Net income $ 257,154 $ 1,140,637 Net income per share: Basic $ 0.02 $ 0.13 Diluted $ 0.02 $ 0.13 This selected unaudited pro forma consolidated financial data is included only for the purpose of illustration and does not necessarily indicate what the operating results would have been if the acquisitions had been completed on that date. Moreover, this information does not indicate what the Company's future operating results will be. The information for 2019 and 2018 prior to the acquisitions is included based on prior accounting records maintained by the acquired companies. For 2019, this information includes actual data recorded in our consolidated financial statements for the period subsequent to the date of the acquisition. The Company’s consolidated statement of operations for the year ended December 31, 2019 include net revenue and net loss of $0.27 million and $0.1 million, respectively, attributable to the acquisitions.

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets	12 Months Ended
	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Other Intangible Assets	Goodwill and acquired intangible assets are initially recorded at fair value and measured periodically for impairment. In performing the Company’s annual impairment analysis during the fourth quarters of 2019 and 2018, the Company determined that the carrying amount of the Company’s goodwill was recoverable and no additional tests were required. Because portions of the goodwill are denominated in foreign currencies, relatively minor changes to the goodwill balance occur over time due to changes in foreign exchange rates. Goodwill increased from $8.87 million as of December 31, 2018 to $10.92 million as of December 31, 2019, $2.05 million of this increase is attributable to the acquisition of Perfect Audience in 2019. During the year ended December 31, 2019 and 2018, changes in foreign exchange rates caused goodwill to be increased by approximately $7,000 and decreased by approximately $6,000, respectively. In addition to our annual goodwill impairment review, the Company also performs periodic reviews of the carrying value and amortization periods of other acquired intangible assets. If indicators of impairment are present, an estimate of the undiscounted cash flows that the specific asset is expected to generate must be made to ensure that the carrying value of the asset can be recovered. These estimates involve significant subjectivity. During the years ended December 31, 2019 and 2018, the Company determined that no indicators of impairment were present for Goodwill and acquired intangible assets. The following tables set forth the information for intangible assets subject to amortization and for intangible assets not subject to amortization. As of December 31, 2019 Gross Net Carrying Accumulated Carrying Amount Amortization Value Amortized intangible assets: Trade names $ 501,000 (120,000 ) $ 381,000 Technology 3,109,000 (1,192,000 ) 1,917,000 Customer relationships 1,320,000 (773,000 ) 547,000 Vendor relationships 1,813,000 - 1,813,000 Unamortized intangible assets: 6,743,000 (2,085,000 ) 4,658,000 Goodwill 10,922,814 Total goodwill and intangible assets $ 15,580,814 As of December 31, 2018 Gross Net Carrying Accumulated Carrying Amount Amortization Value Amortized intangible assets: Trade names $ 120,000 (120,000 ) $ - Technology 2,130,000 (954,000 ) 1,176,000 Customer relationships 4,100,014 (3,410,014 ) 690,000 Unamortized intangible assets: 6,350,014 (4,484,014 ) 1,866,000 Goodwill 8,866,413 Total goodwill and intangible assets $ 10,732,413 Estimated amortization expense for 2019 and subsequent years is as follows: 2020 611,200 2021 559,200 2022 507,200 2023 459,200 2024 420,200 Thereafter 1,720,000 Total Amortizable Intangible Assets $ 4,277,000 Indefinite Lived 381,000 Total intangible assets 4,658,000 Amortization expense for the years ended December 31, 2019 and 2018, was $0.38 million and $0.46 million, respectively.

Credit Facility

Credit Facility	12 Months Ended
	Dec. 31, 2019
Debt Disclosure [Abstract]
Credit Facility	In March 2016, the Company entered into a $2.5 million revolving loan agreement (the “Credit Facility”) with Western Alliance Bank. The facility originally matured on March 21, 2018 and was amended to mature on March 31, 2020. There are no mandatory amortization provisions and the Credit Facility is payable in full at maturity. As of December 31, 2019, the credit facility carried an interest rate of 6.5%. The Credit Facility is collateralized by a lien on substantially all of the existing and future assets of the Company and secured by a pledge of 100% of the capital stock of SharpSpring Technologies, Inc. and a 65% pledge of the Company’s foreign subsidiaries’ stock. The Credit Facility subjects the Company to a number of restrictive covenants, including financial and non-financial covenants customarily found in loan agreements for similar transactions. The Credit Facility also restricts our ability to pay cash dividends on our common stock. There are no amounts outstanding under the Credit Facility and no events of default have occurred.

Convertible Notes

Convertible Notes	12 Months Ended
	Dec. 31, 2019
Debt Disclosure [Abstract]
Convertible Notes	In March 2018, we issued $8.0 million five year convertible notes (the “Notes”) with an interest rate of 5%. The interest was “payable in kind” annually in the form of the issuance of additional notes (“PIK Notes”). The Company had the right to extend the maturity date for up to nine months on up to three separate occasions, with interest accruing at a rate of 10% during any such extension periods. The Notes were convertible into shares of the Company’s common stock at any time by the holder at a fixed conversion price of $7.50 per share, subject to customary adjustments for specified corporate events. Additionally, if the Notes and PIK Notes were not converted into common stock by the holder, at the maturity date, the Company may elect to convert all outstanding Notes and PIK Notes into shares of the Company’s common stock at a conversion price equal to 80% of the volume weighted average closing price of the Company’s common stock for the 30 trading days prior to an including the maturity date. We received net proceeds from the offering of approximately $7.9 million after adjusting for debt issue costs, including financial advisory and legal fees. The Notes were unsecured obligations and were subordinate in right of payment to the Credit Facility (Note 5). So long as the Notes were outstanding the Company’s flexibility was restricted in regard to entering into other debt agreements. Prior to the issuance of the Notes, the Company had no outstanding indebtedness for borrowed money. The holder of the Notes was required to notify the Company at least 120 days prior to the maturity of the Notes of its election to convert the Notes. The Notes were recorded upon issuance at amortized cost in accordance with applicable accounting guidance. As there was no difference in the amount recorded at inception and the face value of the Notes, interest expense was accreted at the stated interest rate under the terms of the Notes. Total interest expense related to the Notes was impacted by the amortization of the debt issuance cost using the effective interest method. The Company was required to accelerate and issue the PIK Notes through the maturity of the Notes if the Company elected to convert the Notes prior to maturity or if there was a change in control. Pursuant to accounting guidance, for each of these situations, the Company determined that the economic characteristics of these “make whole” features were not considered clearly and closely related to the Company’s stock. Accordingly, these features were determined to be “embedded derivatives” and were bifurcated from the Notes and separately accounted for on a combined basis at fair value as a single derivative. The fair value of the derivatives as of December 31, 2018 was a liability of $0.21 million which was included within the non-current liabilities on the consolidated balance sheet. The derivative was accounted for at fair value, with subsequent changes in the fair value reported as part of Other income (expense), net in the Consolidated Statement of Operations. Additionally, the investor’s conversion option was analyzed for embedded derivative treatment, but the conversion option qualifies for a scope exception as it was considered to be clearly and closely related to the Company’s stock. On May 9, 2019, the Company entered into and made effective a Note Conversion Agreement (the “Conversion Agreement”) with SHSP Holdings, LLC (“SHSP Holdings”) and Evercel Holdings, LLC (“Evercel,” and together with SHSP Holdings, the “Investor”), pursuant to which the parties agreed to the conversion (the “Conversion”) of the Notes. The Company’s entry into the Conversion Agreement was unanimously approved by the disinterested members of the Company’s Board of Directors. Under the Conversion Agreement, the Notes were deemed to have been converted into the Conversion Shares, and any interest in any amount ceased to accrue or be payable with respect to the Notes, and SHSP Holdings ceases to be a holder of any Notes, and the Notes cease to be outstanding, for purposes of the Investors’ Rights Agreement dated as of March 28, 2018. Effective as of the issuance and delivery of the Conversion Shares to SHSP Holdings, the Notes were canceled and terminated in their entirety and of no further force and effect, and any and all indebtedness and other obligations of the Company under the Notes was fully performed and discharged, and any and all claims or rights of SHSP Holdings or its affiliates thereunder were fully and finally extinguished and released. Additionally, under the terms of the Conversion Agreement, the Company agreed to pay in shares 49% of the remaining future interest totaling 115,037 shares. As a result of accelerating the 49% of future interest along with the extinguishment of the convertible notes, the Company incurred a loss on conversion of debt of $2.2 million. The loss was measured as the excess fair value of the shares issued under the modified conversion, compared to the fair value of the shares that would have been issued under an unmodified conversion as of the measurement date. Level 1 inputs were used to determine the fair value of the shares paid to the Investor. The loss on conversion was partially offset by a gain of approximately $0.19 million from the write-off of the embedded derivative liability. The net carrying amount of the Notes at the years ended December 31, 2019 and 2018 were as follows: December 31, December 31, 2019 2018 Principal amount $ - $ 8,000,000 Accrued interest paid-in-kind - 304,301 Unamortized debt issuance costs - (122,153 ) Unamortized embedded derivative - 160,278 Net carrying value $ - $ 8,342,426 We incurred certain third-party costs in connection with our issuance of the Notes, principally related to financial advisory and legal fees, which were being amortized to interest expense ratably over the five-year term of the Notes. The following table sets forth total interest expense related to the Notes for the periods ended December 31, 2019 and 2018: Year ended December 31, 2019 2018 Contractual interest paid-in-kind expense (non-cash) $ 139,372 $ 304,301 Amortization of debt issuance costs (non-cash) (9,302 ) (6,088 ) Amortization of embedded derivative (non-cash) 12,205 - Total interest expense $ 142,275 $ 298,213 Effective interest rate 4.9 % 4.9 %

Net Loss Per Share

Net Loss Per Share	12 Months Ended
	Dec. 31, 2019
Earnings Per Share [Abstract]
Net Loss Per Share	Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by giving effect to all potential dilutive common stock equivalents for the period. For purposes of this calculation, options to purchase common stock, warrants and the conversion option of the convertible Notes (Note 6) are considered to be potential common shares outstanding. Computation of net income per share is as follows: Year ended December 31, 2019 2018 Net loss $ (12,387,976 ) $ (9,478,822 ) Basic weighted average common shares outstanding 10,323,889 8,512,297 Add incremental shares for: Warrants - - Stock options - - Convertible notes - - Diluted weighted average common shares outstanding 10,323,889 8,512,297 Net loss per share: Basic $ (1.20 ) $ (1.11 ) Diluted $ (1.20 ) $ (1.11 ) Additionally, since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. The Company’s outstanding warrants, stock options, and convertible notes were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. The following table contains all potentially dilutive common stock equivalents: Year Ended December 31, 2019 2018 Warrants - 30,000 Stock options 1,470,406 1,654,522 Restricted Stock Units 50,494 - Convertible notes - 1,107,240 Total 1,520,900 2,791,762

Income Taxes

Income Taxes	12 Months Ended
	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Income Taxes	Income taxes for years ended December 31, is summarized as follows: Year Ended December 31, 2019 2018 Current Provision Federal $ - $ (154,872 ) State 25,236 32,028 Foreign 4,113 (40,018 ) Current Income Tax Provision $ 29,349 $ (162,862 ) Deferred Provision Federal $ - $ (143,988 ) State - (24,144 ) Foreign - - Deferred Income Tax Provision - (168,132 ) Total Income Tax Provision $ 29,349 $ (330,994 ) A reconciliation of income tax for continuing operations computed at the U.S. statutory rate to the effective income tax rate is as follows: Year Ended Year Ended December 31, December 31, 2019 2018 Amount Percent Amount Percent Federal statutory rates $ (2,594,415 ) 21 % $ (2,058,172 ) 21 % State income taxes, net of federal benefit (68,162 ) 1 % (194,244 ) 2 % Permanent differences (46,592 ) 0 % 66,068 -1 % Perm Differences - Debt Conversion 454,166 -4 % 0 0 % Other (85,997 ) 1 % (69,968 ) 1 % Credits (227,213 ) 2 % (147,727 ) 2 % Foreign (22,820 ) 0 % (80,534 ) 1 % Valuation Allowance 2,620,382 -21 % 2,153,583 -22 % Effective rate $ 29,349 0 % $ (330,994 ) 3 % The following is a summary of the components of the Company’s deferred tax assets: As of December 31, 2019 2018 Deferred tax assets: Accrual to cash $ - $ - Stock-based compensation 274,364 226,476 Intangibles 590,427 662,042 NOL 5,893,260 3,630,772 Accruals & Reserves 267,980 75,685 Valuation allowance (6,962,051 ) (4,342,180 ) Deferred tax assets, net of valuation allowance 63,980 252,795 Deferred tax liabilities: Asset dispositions - - Depreciation (63,980 ) (252,795 ) Other - - Deferred tax liabilities (63,980 ) (252,795 ) Net deferred tax assets (liabilities) $ - $ - The Company has federal operating loss carryforwards of $18.39 million and $9.28 million as of December 31, 2019 and 2018, respectively. The Company has foreign operating loss carryforwards of $3.44 million and $3.2 million as of December 31, 2019 and 2018, respectively. The Company has state operating loss carryforwards of $19.25 million and $15.0 million as of December 31, 2019 and 2018, respectively. Depending on the jurisdiction, some of these operating loss carryovers will begin to expire within 3 years, while other net operating losses can be carried forward indefinitely as long as the company is operating. Valuation Allowance We record a deferred tax asset if we believe that it is more likely than not that we will realize a future tax benefit. Ultimate realization of any deferred tax asset is dependent on our ability to generate sufficient future taxable income in the appropriate tax jurisdiction before the expiration of carryforward periods, if any. Our assessment of deferred tax asset recoverability considers many different factors including historical and projected operating results, the reversal of existing deferred tax liabilities that provide a source of future taxable income, the impact of current tax planning strategies and the availability of future tax planning strategies. We establish a valuation allowance against any deferred tax asset for which we are unable to conclude that recoverability is more likely than not. This is inherently judgmental, since we are required to assess many different factors and evaluate as much objective evidence as we can in reaching an overall conclusion. The particularly sensitive component of our evaluation is our projection of future operating results since this relies heavily on our estimates of future revenue and expense levels by tax jurisdiction. We have established valuation allowances of $7.0 million and $4.3 million as of December 31, 2019 and December 31, 2018, respectively, against certain deferred tax assets given the uncertainty of recoverability of these amounts. In making our assessment of deferred tax asset recoverability, we considered our historical financial results, our projected future financial results, the planned reversal of existing deferred tax liabilities and the impact of any tax planning actions. Based on our analysis we noted both positive and negative factors relative to our ability to support realization of certain deferred tax assets. However, based on the weighting of all the evidence, including the near-term effect on our income projections of investments we are making in our team, product and systems infrastructure, we concluded that it was more likely than not that the majority of our deferred tax assets related to temporary differences and net operating losses may not be recovered. The establishment of a valuation allowance has no effect on our ability to use the underlying deferred tax assets prior to expiration to reduce cash tax payments in the future to the extent that we generate taxable income.

Defined Contribution Retirement

Defined Contribution Retirement Plan	12 Months Ended
	Dec. 31, 2019
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]
Defined Contribution Retirement Plan	Starting in 2016, we offered our U.S. employees the ability to participate in a 401(k) plan. Eligible U.S. employees may contribute up to 100% of their eligible compensation, subject to limitations established by the Internal Revenue Code. The Company contributes a matching contribution equal to 100% of each such participant’s contribution up to the first 3% of their annual eligible compensation. We charged approximately $0.3 million and $0.25 million, to expense in the years ended December 31, 2019 and 2018, respectively, associated with our matching contribution.

Related Party Transactions

Related Party Transactions	12 Months Ended
	Dec. 31, 2019
Related Party Transactions [Abstract]
Related Party Transactions	Intercompany transactions have been eliminated in our consolidated financial statements. The convertible notes issued in March 2018 are held directly by SHSP Holdings, LLC (“SHSP Holdings”). Daniel C. Allen, now a fomer director of SharpSpring Inc., is the founder and manager of Corona Park Investment Partners, LLC (“CPIP”). CPIP is a member of Evercel Holdings, LLC and is a member and sole manager of SHSP Holdings. Evercel, Inc. is a member and the manager of Evercel Holdings, LLC and is a member of SHSP Holdings. In May 2019, the Company and SHSP Holdings entered into and made effective a Note Conversion Agreement as outlined in Note 6 above. There were no other material related party transactions for the years ended December 31, 2019 or 2018.

Stock-Based Compensation

Stock-Based Compensation	12 Months Ended
	Dec. 31, 2019
Share-based Payment Arrangement [Abstract]
Stock-Based Compensation	From time to time, the Company grants stock option awards to officers and employees and grants stock awards to directors as compensation for their service to the Company. In November 2010, the Company adopted the 2010 Stock Incentive Plan (the “2010 Plan”) which was amended in April 2011, August 2013, April 2014, February 2016, March 2017, and June 2018. The plan was restated in its entirety in August 2018. As amended, up to 2,600,000 shares of common stock are available for issuance under the Plan. The Plan provides for the issuance of stock options and other stock-based awards. In April 2019, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”). No more than 697,039 shares of common stock, plus the number of shares of common stock underlying any award granted under the 2010 Plan that expires, terminates, is canceled, or is forfeited shall be available for grant under the 2019 Plan. The Plan provides for the issuance of stock options and other stock-based awards. During the terms of the Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Awards. Stock Options Stock option awards under the 2010 Plan and 2019 Plan (the “Plans”) have a 10-year maximum contractual term and must be issued at an exercise price of not less than 100% of the fair market value of the common stock at the date of grant. The Plans are administered by the Board of Directors, which has the authority to determine to whom options may be granted, the period of exercise, and what other restrictions, if any, should apply. Vesting for awards granted to date under the Plans is principally over four years from the date of the grant, with 25% of the award vesting after one year and monthly vesting thereafter. Option awards are valued based on the grant date fair value of the instruments, net of estimated forfeitures, using a Black-Scholes option pricing model with the following assumptions: Year Ended December 31, 2019 2018 Volatility 49% - 52% 48% - 49% Risk-free interest rate 1.45%- 2.59% 2.34% - 3.11% Expected term 6.25 years 6.25 years The weighted average grant date fair value of stock options granted during the year ended December 31, 2019 was $6.24. For grants prior to January 1, 2015, the volatility assumption was based on historical volatility of similar sized companies due to lack of historical data of the Company’s stock price. For all grants subsequent to January 1, 2015, the volatility assumption reflects the Company’s historic stock volatility for the period of February 1, 2014 forward, which is the date the Company’s stock started actively trading. The risk free interest rate was determined based on treasury securities with maturities equal to the expected term of the underlying award. The expected term was determined based on the simplified method outlined in Staff Accounting Bulletin No. 110. Stock option awards are expensed on a straight-line basis over the requisite service period. During the year ended December 31, 2019 and 2018, the Company recognized expense of approximately $1.08 million and $0.8 million, respectively, associated with stock option awards. At December 31, 2019, future stock compensation expense associated with stock options (net of estimated forfeitures) not yet recognized was approximately $2.35 million and will be recognized over a weighted average remaining vesting period of 2.93 years. The following summarizes stock option activity for the year ended December 31, 2019: Weighted Weighted Aggregate Number of Average Average Remaining Intrinsic Options Exercise Price Contractual Life Value Outstanding at December 31, 2018 1,654,522 $ 6.07 8.2 $ 10,866,658 Granted 226,294 12.37 Exercised (191,150 ) 5.11 Expired (1,198 ) 5.18 Forfeited (218,062 ) 5.19 Outstanding at December 31, 2019 1,470,406 $ 7.30 7.5 $ 6,604,461 Exercisable at December 31, 2019 815,978 $ 5.62 6.6 $ 4,847,227 The total intrinsic value of stock options exercised during the year ended December 31, 2019 and 2018 was $1.9 million and $0.6 million respectively. Restricted Stock Units During the year ended December 31, 2019 and 2018, the Company issued 50,494 and zero Restricted Stock Units (RSUs), respectively. RSUs having a value equal to the fair market value of an identical number of shares of Common Stock, which may, but need not, provide that such restricted award may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose for a period determined by the Board of Directors. The Plans are administered by the Board of Directors, which has the authority to determine to whom RSUs may be granted, the period of exercise, and what other restrictions, if any, should apply. Vesting for awards granted to date under the Plans is generally over four years from the date of the grant, with 25% of the award vesting after one year and monthly vesting thereafter. RSUs are expensed on a straight-line basis over the requisite vesting period. During the years ended December 31, 2019 and 2018, the Company recognized expense of approximately $9,000 and zero, respectively, associated with RSUs. At December 31, 2019, future stock compensation expense associated with stock options (net of estimated forfeitures) not yet recognized was approximately $2.35 million and will be recognized over a weighted average remaining vesting period of 3.92 years. The following summarizes RSU activity for the year ended December 31, 2019: Weighted Average Grant Date Number of Fair Value Units Per Share Unvested at December 31, 2018 - $ - Granted 50,494 11.82 Vested - - Cancelled - - Unvested at December 31, 2019 50,494 $ 11.82 Stock Awards During the year ended December 31, 2019 and 2018, the Company issued 10,286 and 23,302 shares, respectively, to non-employee directors as compensation for their service on the board. Such stock awards are immediately vested. Stock awards are valued based on the closing price of our common stock on the date of grant, and compensation cost is recorded immediately if there is no vesting period or on a straight-line basis over the vesting period. The total fair value of stock awards granted, vested and expensed during the years ended December 31, 2019 and 2018 was $0.13 million and $0.18 million, respectively. As of December 31, 2019 and 2018, there were no unrecognized compensation cost related to stock awards. Additionally, during the year ended December 31, 2018, the Company issued 36,274 shares to a service provider to satisfy a performance-based contractual arrangement. The Company recorded an expense of approximately $0.51 million associated with this issuance in the third quarter of 2018. These shares were not issued from the 2010 Stock Incentive Plan.

Warrants

Warrants	12 Months Ended
	Dec. 31, 2019
Warrants and Rights Note Disclosure [Abstract]
Warrants	On January 30, 2014, in connection with an $11.5 million financing transaction, the Company issued 80,000 warrants to purchase common stock at an exercise price of $7.81 per share with a term of 5 years. The fair value of the warrants was determined using the Black-Scholes option valuation model. These warrants became exercisable on January 30, 2015. The remaining 30,000 of the outstanding warrants were exercised in May and August 2019. No other warrants have been issued since January 30, 2014. The following table summarizes information about the Company’s warrants at December 31, 2019: Weighted Weighted Number of Average Average Remaining Intrinsic Units Exercise Price Contractual Term Value Outstanding at December 31, 2018 30,000 $ 7.81 1.1 $ 144,525 Granted - - Exercised (30,000 ) 7.81 Cancelled - - Outstanding at December 31, 2019 - $ - - $ - Exercisable at December 31, 2019 - $ - - $ -

Commitments and Contingencies

Commitments and Contingencies	12 Months Ended
	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Litigation From time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company is not currently a party to any litigation of a material nature. Commitments The Company is not party to any non-cancellable contracts that create a material future commitment other than its lease as described in Note 14. Sales and Franchise Taxes State, local and foreign jurisdictions have differing rules and regulations governing sales, franchise, use, value added and other taxes, and these rules and regulations are subject to varying interpretations that may change over time. In particular, the applicability of such taxes to SaaS products in various jurisdictions is unclear. Further, these jurisdictions’ rules regarding tax nexus vary significantly and are complex. As such, we could face possible tax assessments and audits. A successful assertion, by any of these taxing authorities, that we should be collecting additional sales, use, value added or other taxes in jurisdictions where we have not historically done so and do not accrue for such taxes could result in tax liabilities and related penalties for past sales, discourage customers from purchasing our products or otherwise harm our business and operating results. We are currently evaluating the impact of various tax types which may require future sales, franchise, or other tax payments. Employment Agreements The Company has employment agreements with several members of its leadership team and executive officers.

Leases

Leases	12 Months Ended
	Dec. 31, 2019
Leases [Abstract]
Leases	The Company currently rents its primary office facility under a ten-year lease which started in November 2018 (the “2018 Lease”). The term of the lease may be extended for an additional 5 years in incremental one-year periods, subject to certain conditions described in the 2018 Lease. In June 2019, the Company entered into an addendum agreement to the 2018 Lease (the “2019 Addendum”) to lease an additional approximately 18,000 square feet of office space located on the same premises as the 2018 Lease. As of December 31, 2019, we have not taken possession of the additional space from the 2019 Addendum. The term of the addendum extends through the same period as the 2018 Lease. We do not assume renewals in our determination of lease term unless the renewals are deemed to be reasonably assured at lease commencement. At the commencement of the 2018 lease, renewal was not reasonably assured. Determination of whether a contract contains a lease is determined at execution of the contract based on the facts of each contract. The Company elected the package of practical expedients permitted under ASC 842 which allows us to carryforward historical lease classification, assessment on whether a contract was or contains a lease, and initial direct costs for any leases that existed prior to adoption of the standard. The Company has lease agreements with lease and non-lease components, which it has elected to combine for all leases. In addition, the Company does not recognize right-of-use assets or lease liabilities for leases with a term of 12 months or less (“Short-term” leases). Short-term lease payments are recognized in the consolidated statements of comprehensive loss on a straight-line basis over the lease term. The Company is not party to any financing lease. The weighted average remaining lease term as of December 31, 2019, is 8.9 years. The weighted average discount rate for our operating leases as of December 31, 2019 is 6.5%. The discount rate of each lease is determined by the company’s incremental borrowing rate at the time of a lease contract. The lease cost associated with short-term leases for the years ended December 31, 2019, and 2018, were zero and $0.76 million respectively. Total operating lease costs for the years ended December 31, 2019 and 2018 was $0.8 million and $0.51 million, respectively. Future minimum lease payments are as follows as of December 31, 2019: Operating Leases 2020 742,956 2021 766,546 2022 771,278 2023 794,937 2024 799,669 Thereafter 3,221,086 Total undiscounted cash flows $ 7,096,472 Less imputed interest (1,749,405 ) Present value of lease liability $ 5,347,067

Disaggregation of Revenue

Disaggregation of Revenue	12 Months Ended
	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Disaggregation of Revenue	The Company operates as one reporting segment. Operating segments are defined as components of an enterprise for which separate financial information in regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s chief executive officer, in deciding how to allocate resources and assess performance. The Company does not present geographical information about revenues because it is impractical to do so. Disaggregated revenue for the year ended December 31, 2019 and 2018 are as follows: Year ended December 31, 2019 2018 Revenue by Product: Marketing Automation Revenue $ 22,204,479 $ 18,260,719 Retargeting Revenue $ 271,008 $ - Mail + Product Revenue 223,899 390,806 Total Revenue $ 22,699,386 $ 18,651,525 Revenue by Type: Recurring Revenue $ 20,911,854 $ 17,049,945 Upfront Fees $ 1,516,524 $ 1,601,580 Retargeting Revenue 271,008 - Total Revenue $ 22,699,386 $ 18,651,525

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2019
Accounting Policies [Abstract]
Basis of Presentation and Consolidation	The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Company’s consolidated financial statements include the accounts of SharpSpring, Inc. and our subsidiaries (the “Company”). The Company’s consolidated financial statements reflect the elimination of all significant inter-company accounts and transactions.
Use of Estimates	The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Operating Segments	The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s chief executive officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the Company’s financial information and resources and assess the performance of these resources on a consolidated basis. The Company does not present geographical information about revenues because it is impractical to do so.
Foreign Currencies	The functional currency of the Company’s foreign subsidiaries is the local currency. Assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rates in effect at the balance sheet dates, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at the average exchange rates during the period. Foreign currency translation gains and losses are recorded in other comprehensive income (loss).
Cash and Cash Equivalents	Cash equivalents are short-term, liquid investments with remaining maturities of three months or less when acquired. Cash and cash equivalents are deposited or managed by major financial institutions and at most times are in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits.
Fair Value of Financial Instruments	U.S. GAAP establishes a fair value hierarchy which has three levels based on the reliability of the inputs to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, deposits, embedded derivatives (associated with our convertible notes) and accounts payable. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the short-term nature of these items. The fair value of the embedded derivatives associated with our convertible notes are calculated using Level 3 unobservable inputs, utilizing a probability-weighted expected value model to determine the liability. The fair value of the embedded derivatives at December 31, 2019 and December 31, 2018 was a liability balance of zero and $0.21 million, respectively. The change in fair value for the year ended December 31, 2019 and 2018 was a gain of $0.21 million and loss of $0.4 million.
Accounts Receivable	Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. Management reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. The Company reserves for receivables that are determined to be uncollectible, if any, in its allowance for doubtful accounts. After the Company has exhausted all collection efforts, the outstanding receivable is written off against the allowance. In cases where our customers pay for services in arrears, we accrue for revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating a contract asset. A portion of our accounts receivable balance is therefore unbilled at each balance sheet date and is reflected as such on the consolidated balance sheet.
Business Combinations	Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed and pre-acquisition contingencies. We use our best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets. Examples of critical estimates in valuing certain of the intangible assets and goodwill we have acquired include but are not limited to: ● future expected cash flows from customer contracts and acquired developed technologies and patents; ● the acquired company’s trade name, vendor relationships, and customer relationships, as well as assumptions about the period of time the acquired trade name will continue to be used in our offerings; and ● discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.
Intangibles	Finite-lived intangible assets include trade names, developed technologies and customer relationships and are amortized based on the estimated economic benefit over their estimated useful lives, with original periods ranging from 5 to 11 years. We continually evaluate the reasonableness of the useful lives of these assets. Finite-lived intangibles are tested for recoverability whenever events or changes in circumstances indicate the carrying amounts may not be recoverable. Impairment losses are measured as the amount by which the carrying value of an asset group exceeds its fair value and are recognized in operating results. Judgment is used when applying these impairment rules to determine the timing of the impairment test, the undiscounted cash flows used to assess impairments and the fair value of an asset group. The dynamic economic environment in which the Company operates, and the resulting assumptions used to estimate future cash flows impact the outcome of these impairment tests.
Goodwill and Indefinite-Lived Intangible Assets	As of December 31, 2019 and 2018, we had recorded goodwill of $10.9 million and $8.9 million, respectively. Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets acquired in the SharpSpring, GraphicMail, and Perfect Audience acquisitions. In 2019, Goodwill increased due to the Perfect Audience acquisition (See Note 3). Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, “Intangibles - Goodwill and Other” The Company also has indefinite-lived intangible assets. As of December 31, 2019, and 2018, we had recorded indefinite-lived intangible assets of $0.38 million and zero, respectively (see Note 4). These assets are not amortized but are subject to annual impairment tests, and tests between annual tests in certain circumstances, based on estimated fair value in accordance with FASB ASC 350-30, and written down when impaired.
Debt Issuance Costs	Third-party costs associated with the issuance of debt are included as a direct reduction to the carrying value of the debt and are amortized as effective interest expense ratably over the life of the debt. There was no debt issuance costs during the year ended December 31, 2019. For the year ended December 31, 2018 we incurred debt issuance costs of approximately $141,000. These costs were included as a direct reduction tot the carrying value of the debt as part of the Notes on our consolidated balance sheets and are amortized to interest expense ratably over the five-year term of the Notes. Upon conversion of the Notes in 2019, the remaining balance of the debt issuance costs was expensed along with the remaining balance of the Notes.
Income Taxes	Provision for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are included in the consolidated financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB ASC 740, Accounting for Income The Company applies the authoritative guidance in accounting for uncertainty in income taxes recognized in the consolidated financial statements. This guidance prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. There are no material uncertain tax positions taken by the Company on its tax returns. Tax years subsequent to 2017 remain open to examination by U.S. federal and state tax jurisdictions. In determining the provision for income taxes, the Company uses statutory tax rates and tax planning opportunities available to the Company in the jurisdictions in which it operates. This includes recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns to the extent pervasive evidence exists that they will be realized in future periods. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which are expected to be in effect in the years in which the temporary differences are expected to reverse. In accordance with the Company’s income tax policy, significant or unusual items are separately recognized in the period in which they occur. The Company is subject to routine examination by domestic and foreign tax authorities and frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature and amount of deductions and the allocation of income among various tax jurisdictions. As of December 31, 2019, the Company was being examined by the U.S. tax authorities related to the 2016 and 2017 tax years. The Company does not expect any material adjustments as a result of the audit. The Company received notification February 14, 2020 that the examination had been closed with no changes. The Company received notification January 14, 2020 that it’s Swiss subsidiary, InterInbox SA is under examination from the Switzerland Federal Tax Administration for the years 2015 through 2018. The Company does not expect any material adjustments as a result of the audit.
Property and Equipment	Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the assets. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to operations. Repairs and maintenance costs are expensed as incurred. Depreciation expense related to property and equipment was $0.63 million and $0.43 million for the years ended December 31, 2019 and 2018, respectively. Property and equipment as of December 31 is as follows: December 31, December 31, 2019 2018 Property and equipment, gross: Leasehold improvements $ 290,977 $ 197,268 Furniture and fixtures 678,774 611,171 Computer equipment and software 2,350,758 1,135,012 Total 3,320,509 1,943,451 Less: Accumulated depreciation and amortization (1,323,787 ) (682,653 ) $ 1,996,722 $ 1,260,798 Useful lives are as follows: Leasehold improvements 5 years Furniture and fixtures 3-5 years Computing equipment 3 years Software 3-5 years
Revenue Recognition	The Company generates revenue from contracts with multiple performance obligations, which typically include subscriptions to its cloud-based marketing automation software and professional services which include on-boarding and training services. The Company’s customers do not have the right to take possession of the software. Substantially all of SharpSpring’s revenue is from contracts with customers. The Company recognizes revenue from contracts with customers using a five-step model, which is described below: ● Identify the customer contract; ● Identify performance obligations that are distinct; ● Determine the transaction price; ● Allocate the transaction price to the distinct performance obligations; and ● Recognize revenue as the performance obligations are satisfied. Identify the customer contract A customer contract is generally identified when the Company and a customer have executed arrangement that calls for the Company to provide access to its software and provide professional services in exchange for consideration from the customer. Identify performance obligations that are distinct A performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and a company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. The Company has determined that subscriptions for its software is distinct because, once a customer has access to the software it purchased, the software is fully functional and does not require any additional development, modification, or customization. Professional services sold are distinct because the customer benefits from the on-boarding and training to make better use of the online software products it purchased. Determine the transaction price The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding sales taxes that are collected on behalf of government agencies. The Company estimates any variable consideration to which it will be entitled at contract inception, when determining the transaction price. The Company does not include variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will occur when any uncertainty associated with the variable consideration is resolved. Allocate the transaction price to the distinct performance obligations The transaction price is allocated to each performance obligation based on the relative standalone selling prices of the goods or services being provided to the customer. Recognize revenue as the performance obligations are satisfied Revenues are recognized when or as control of the promised goods or services is transferred to customers. Revenue from the SharpSpring marketing automation and Mail+ software is recognized ratably over the subscription period, which is typically one month. Revenue related to our professional services is recognized as the services are provided. The Perfect Audience software is utilized on an as needed basis, and the related revenue recognized as the service is provided. SharpSpring’s subscription contracts range from one to twelve months. The Company recognizes revenue from on-boarding and training services as the services are provided, which is generally 60 days. Cash payments received in advance of providing subscription or services are recorded to deferred revenue until the performance obligation is satisfied. Our products are typically billed in arrears or upfront, depending on the product, which creates contract assets (unbilled receivables) and contract liabilities (deferred revenue). Unbilled receivables occur due to unbilled charges for which the Company has satisfied performance obligations. Deferred revenues occur due to billing up front for charges that the Company has not yet fully satisfied all performance obligations. Both contract assets and liabilities are recognized as it is used. From time to time, the Company offers refunds to customers and experiences credit card chargebacks relating to cardholder disputes that are commonly experienced by businesses that accept credit cards. The Company makes estimates for refunds and credit card chargebacks based on historical experience.
Deferred Revenue	Deferred revenue consists of payments received in advance of the Company providing services. Deferred revenue is earned over the service period identified in each contract. The majority of our deferred revenue balances (contract liabilities) arise from upfront implementation and training fees for its SharpSpring marketing automation solution that are paid in advance. These services are typically performed over a 60-day period, and the revenue is recognized over that period. Additionally, some of the Company’s customers pay for services in advance on a periodic basis (such as monthly, quarterly, annually or bi-annually). In situations where a customer pays in advance for a one-year service period, the deferred revenue is recognized over that service period. Deferred revenue balances were $0.25 million and $0.28 million as of December 31, 2018 and 2017, respectively. Deferred revenue during the year ended December 31, 2019 increased by $0.61 million and decreased by $0.03 million during the year ended December 31, 2018. The Company had deferred revenue contract liability balances of $0.86 million and $0.25 million as of December 31, 2019 and 2018, respectively. The Company expects to recognize a majority of the revenue on these remaining performance obligations within 12 months. Approximately 4% of the deferred revenue balance is related to prepaid credits. These credits are recognized as they are used. The Company expects to recognize approximately half of the remaining credits within 12 months. As part of the acquisition of Perfect Audience, the Company acquired approximately $0.19 million of deferred revenue.
Unbilled Receivable	In cases where our customers pay for services in arrears, we accrue for revenue in advance of billings as long as the criteria for revenue recognition is met, thus creating a contract asset. The accrued revenue contract asset balances were $0.74 million and $0.55 million as of December 31, 2018 and 2017, respectively. Revenue billed that was included in accrued revenue at the beginning of the year ended December 31, 2019 and 2018 was $0.74 million and $0.55 million, respectively. The accrued revenue not billed and ending balance in years ended December 31, 2019 and 2018 was $1.0 million and $0.74 million respectively.
Concentration of Credit Risks and Significant Customers	Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents. At December 31, 2019 and 2018, the Company had cash balances at financial institutions that exceed federally insured limits. The Company maintains its cash balances with accredited financial institutions. The Company does not believe it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. For the years ended December 31, 2019, and 2018, there were no customers that accounted for more than 10% of total revenue. For the year ended December 31, 2019 two customers had open accounts receivable balances which were above 10% of net accounts receivable, accounting for approximately 43% of net accounts receivable. As of February 29, 2020, these customers had no accounts receivable balance older than 30 days. For the year ended December 31, 2018 there were no customers that accounted for more than 10% of the net accounts receivable.
Cost of Services	Cost of services consists primarily of direct labor costs associated with support and customer onboarding and technology hosting costs and license costs associated with the cloud-based platform.
Credit Card Processing Fees	Credit card processing fees are included as a component of general and administrative expenses and are expensed as incurred.
Advertising Costs	The Company expenses advertising costs as incurred. Advertising and marketing expenses, excluding marketing team costs, were $5.8 million and $5.7 million for the years ended December 31, 2019 and 2018, respectively, and are included as a component of sales and marketing expense.
Capitalized Cost of Obtaining a Contract	The Company capitalizes sales commission costs which are incremental to obtaining a contract. We expense costs that are related to obtaining a contract but are not incremental such as other sales and marketing costs and other costs that would be incurred regardless of if the contract was obtained. Capitalized costs are amortized using straight-line amortization over the estimated weighted average life of the customer, which we have estimated to be 3 years. At December 31, 2019, the net carrying value of the capitalized cost of obtaining a contract was $1.2 million, of which $0.68 million is included in other current assets and $0.52 million is included in other long-term assets. At December 31, 2018, the net carrying value of the capitalized cost of obtaining a contract was $1.31 million, of which $0.7 million is included in other current assets and $0.61 million is included in other long-term assets. The Company amortized costs directly attributable to obtaining contracts of $0.8 million and $0.76 million during the years ended December 31, 2019 and 2018, respectively.
Stock Compensation	We account for stock-based compensation in accordance with FASB ASC 718 Compensation — Stock Compensation,
Net Loss Per Share	Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents for the period. For purposes of this calculation, options to purchase common stock, warrants, and the conversion option of the Convertible Notes (Note 6) are considered to be potential common shares outstanding. Since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. The Company’s potential common shares outstanding were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive.
Comprehensive Income or Loss	Comprehensive income or loss includes all changes in equity during a period from non-owner sources, such as net income or loss and foreign currency translation adjustments.
Recently Issued Accounting Standards	Recent accounting standards not included below are not expected to have a material impact on our consolidated financial position and results of operations. In May 2014, the FASB issued updated guidance and disclosure requirements for recognizing revenue from contracts with customers. This new revenue recognition standard became effective for the Company on January 1, 2018. In addition to providing guidance on when and how revenue is recognized, the new standard also provides guidance on accounting for costs of obtaining contracts primarily related to aligning the expense with the period in which the value is recognized. As a result of this new standard, the Company was required to capitalize certain costs related to obtaining contracts associated with commissions expense paid to salespeople. The Company is using the retrospective transition method to adjust each prior reporting period presented for this new method of accounting for costs associated with obtaining contracts. The application of the retrospective transition was applied to all contracts at the date of initial application. The following tables present our results under our historical method and as adjusted to reflect these accounting changes. Historical Accounting Method Effect of Adoption of New ASU As Adjusted Year Ended December 31, 2018 Sales and Marketing Expense 10,183,186 (90,495) 10,092,691 Total operating expense 21,807,865 (90,495) 21,717,370 Operating loss (8,954,609) 90,495 (8,864,114) Loss before income taxes (9,900,311) 90,495 (9,809,816) Net loss (9,569,317) 90,495 (9,478,822) Basic net loss per share (1.12) 0.01 (1.11) Diluted net loss per share (1.12) 0.01 (1.11) Balance as of December 31, 2018 Other current assets 485,058 699,159 1,184,217 Other long-term assets 54,954 610,169 665,123 Total assets 22,697,947 1,309,329 24,007,276 Accumulated deficit (18,662,035) 1,309,329 (17,352,706) In January 2017, the FASB issued guidance simplifying the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test. Under current guidance, Step 2 of the goodwill impairment test requires entities to calculate the implied fair value of goodwill in the same manner as the amount of goodwill recognized in a business combination by assigning the fair value of a reporting unit to all of the assets and liabilities of the reporting unit. The carrying value in excess of the implied fair value is recognized as goodwill impairment. Under the new standard, goodwill impairment is recognized based on Step 1 of the current guidance, which calculates the carrying value in excess of the reporting unit’s fair value. The new standard is effective beginning in January 2020, with early adoption permitted. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued guidance that requires lessees to recognize most leases on their balance sheets but record expenses on their income statements in a manner similar to current accounting. The guidance became effective for the Company on January 1, 2019. The Company is using the modified retrospective transition method which allows the Company to recognize and measure leases as of the adoption date, January 1, 2019, with the cumulative impact being reflected in the opening balance of retained earnings. The application of the modified retrospective transition was applied to all active leases at the date of initial application. There was no impact to the Company’s retained earnings for the implementation of this accounting standard. The following tables present the cumulative impact on our financial statements upon adoption. Impact upon adoption of new ASU As of January 1, 2019 Right-of-use assets 5,715,510 Total Assets $ 5,715,510 Accrued expenses and other current liabilities $ (8,821) Lease liability (current) 344,883 Lease liability (non-current) 5,379,448 Total Liabilities $ 5,715,510 In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This new accounting guidance removes the following: ● the exception to the incremental approach for intra-period tax allocations when there is a loss from continuing operations and income or gain from other items such as discontinued operation or other comprehensive income, ● the exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, ● the exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and ● the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The new accounting guidance also simplifies the accounting for income taxes by: ● requiring an entity to recognize franchise tax that is partially based on income as an income based tax and account for any incremental amount incurred as a non-income-based tax, ● requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, ● specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements, ● requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, and ● making minor Codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method. This standard is effective for fiscal and interim periods beginning after December 15, 2020. The Company anticipates that the adoption of this standard will not have a material impact on its financial statements.

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	12 Months Ended
	Dec. 31, 2019
Accounting Policies [Abstract]
Schedule of property and equipment	December 31, December 31, 2019 2018 Property and equipment, gross: Leasehold improvements $ 290,977 $ 197,268 Furniture and fixtures 678,774 611,171 Computer equipment and software 2,350,758 1,135,012 Total 3,320,509 1,943,451 Less: Accumulated depreciation and amortization (1,323,787 ) (682,653 ) $ 1,996,722 $ 1,260,798
Schedule of property and equipment useful lives	Leasehold improvements 5 years Furniture and fixtures 3-5 years Computing equipment 3 years Software 3-5 years
Accounting Change Adjustments	Historical Accounting Method Effect of Adoption of New ASU As Adjusted Year Ended December 31, 2018 Sales and Marketing Expense 10,183,186 (90,495) 10,092,691 Total operating expense 21,807,865 (90,495) 21,717,370 Operating loss (8,954,609) 90,495 (8,864,114) Loss before income taxes (9,900,311) 90,495 (9,809,816) Net loss (9,569,317) 90,495 (9,478,822) Basic net loss per share (1.12) 0.01 (1.11) Diluted net loss per share (1.12) 0.01 (1.11) Balance as of December 31, 2018 Other current assets 485,058 699,159 1,184,217 Other long-term assets 54,954 610,169 665,123 Total assets 22,697,947 1,309,329 24,007,276 Accumulated deficit (18,662,035) 1,309,329 (17,352,706) Impact upon adoption of new ASU As of January 1, 2019 Right-of-use assets 5,715,510 Total Assets $ 5,715,510 Accrued expenses and other current liabilities $ (8,821) Lease liability (current) 344,883 Lease liability (non-current) 5,379,448 Total Liabilities $ 5,715,510

Acquisitions (Tables)

Acquisitions (Tables)	12 Months Ended
	Dec. 31, 2019
Business Combinations [Abstract]
Purchase price allocation	Cash Consideration $ 4,566,402 Add: Net tangible assets acquired Deferred Revenue $ 186,500 Accrued expenses and other current liabilities $ 545,473 Total liabilities $ 731,973 Less: Net tangible assets acquired Accounts receivable $ (55,236 ) Other current assets $ (20,719 ) Total tangible assets $ (75,955 ) Intangible assets acquired: Trade names $ (381,000 ) Technology $ (979,000 ) Vendor relationships $ (1,813,000 ) Total intangible assets $ (3,173,000 ) Goodwill $ 2,049,420
Proforma results of operations	Year ended December 31, 2019 2018 Net revenues $ 2,980,148 $ 4,423,069 Gross profit $ 1,649,482 $ 3,120,694 Net income $ 257,154 $ 1,140,637 Net income per share: Basic $ 0.02 $ 0.13 Diluted $ 0.02 $ 0.13

Goodwill and Other Intangible_2

Goodwill and Other Intangible Assets (Tables)	12 Months Ended
	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of intangible assets	As of December 31, 2019 Gross Net Carrying Accumulated Carrying Amount Amortization Value Amortized intangible assets: Trade names $ 501,000 (120,000 ) $ 381,000 Technology 3,109,000 (1,192,000 ) 1,917,000 Customer relationships 1,320,000 (773,000 ) 547,000 Vendor relationships 1,813,000 - 1,813,000 Unamortized intangible assets: 6,743,000 (2,085,000 ) 4,658,000 Goodwill 10,922,814 Total goodwill and intangible assets $ 15,580,814 As of December 31, 2018 Gross Net Carrying Accumulated Carrying Amount Amortization Value Amortized intangible assets: Trade names $ 120,000 (120,000 ) $ - Technology 2,130,000 (954,000 ) 1,176,000 Customer relationships 4,100,014 (3,410,014 ) 690,000 Unamortized intangible assets: 6,350,014 (4,484,014 ) 1,866,000 Goodwill 8,866,413 Total goodwill and intangible assets $ 10,732,413
Schedule of estimated amortization expense	2020 611,200 2021 559,200 2022 507,200 2023 459,200 2024 420,200 Thereafter 1,720,000 Total Amortizable Intangible Assets $ 4,277,000 Indefinite Lived 381,000 Total intangible assets 4,658,000

Convertible Notes (Tables)

Convertible Notes (Tables)	12 Months Ended
	Dec. 31, 2019
Debt Disclosure [Abstract]
Net carrying amount - notes	December 31, December 31, 2019 2018 Principal amount $ - $ 8,000,000 Accrued interest paid-in-kind - 304,301 Unamortized debt issuance costs - (122,153 ) Unamortized embedded derivative - 160,278 Net carrying value $ - $ 8,342,426
Schedule of interest expense	Year ended December 31, 2019 2018 Contractual interest paid-in-kind expense (non-cash) $ 139,372 $ 304,301 Amortization of debt issuance costs (non-cash) (9,302 ) (6,088 ) Amortization of embedded derivative (non-cash) 12,205 - Total interest expense $ 142,275 $ 298,213 Effective interest rate 4.9 % 4.9 %

Net Loss Per Share (Tables)

Net Loss Per Share (Tables)	12 Months Ended
	Dec. 31, 2019
Earnings Per Share [Abstract]
Schedule of computation of net loss per share	Year ended December 31, 2019 2018 Net loss $ (12,387,976 ) $ (9,478,822 ) Basic weighted average common shares outstanding 10,323,889 8,512,297 Add incremental shares for: Warrants - - Stock options - - Convertible notes - - Diluted weighted average common shares outstanding 10,323,889 8,512,297 Net loss per share: Basic $ (1.20 ) $ (1.11 ) Diluted $ (1.20 ) $ (1.11 )
Schedule of potentially dilutive common stock equivalents	Year Ended December 31, 2019 2018 Warrants - 30,000 Stock options 1,470,406 1,654,522 Restricted Stock Units 50,494 - Convertible notes - 1,107,240 Total 1,520,900 2,791,762

Income Taxes (Tables)

Income Taxes (Tables)	12 Months Ended
	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Schedule of components of income tax expense	Year Ended December 31, 2019 2018 Current Provision Federal $ - $ (154,872 ) State 25,236 32,028 Foreign 4,113 (40,018 ) Current Income Tax Provision $ 29,349 $ (162,862 ) Deferred Provision Federal $ - $ (143,988 ) State - (24,144 ) Foreign - - Deferred Income Tax Provision - (168,132 ) Total Income Tax Provision $ 29,349 $ (330,994 )
Schedule of income tax rate reconciliation	Year Ended Year Ended December 31, December 31, 2019 2018 Amount Percent Amount Percent Federal statutory rates $ (2,594,415 ) 21 % $ (2,058,172 ) 21 % State income taxes, net of federal benefit (68,162 ) 1 % (194,244 ) 2 % Permanent differences (46,592 ) 0 % 66,068 -1 % Perm Differences - Debt Conversion 454,166 -4 % 0 0 % Other (85,997 ) 1 % (69,968 ) 1 % Credits (227,213 ) 2 % (147,727 ) 2 % Foreign (22,820 ) 0 % (80,534 ) 1 % Valuation Allowance 2,620,382 -21 % 2,153,583 -22 % Effective rate $ 29,349 0 % $ (330,994 ) 3 %
Schedule of deferred tax assets and liabilities	As of December 31, 2019 2018 Deferred tax assets: Accrual to cash $ - $ - Stock-based compensation 274,364 226,476 Intangibles 590,427 662,042 NOL 5,893,260 3,630,772 Accruals & Reserves 267,980 75,685 Valuation allowance (6,962,051 ) (4,342,180 ) Deferred tax assets, net of valuation allowance 63,980 252,795 Deferred tax liabilities: Asset dispositions - - Depreciation (63,980 ) (252,795 ) Other - - Deferred tax liabilities (63,980 ) (252,795 ) Net deferred tax assets (liabilities) $ - $ -

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	12 Months Ended
	Dec. 31, 2019
Share-based Payment Arrangement [Abstract]
Schedule of fair value assumptions used in valuing stock options	Year Ended December 31, 2019 2018 Volatility 49% - 52% 48% - 49% Risk-free interest rate 1.45%- 2.59% 2.34% - 3.11% Expected term 6.25 years 6.25 years
Schedule of stock option activity	Weighted Weighted Aggregate Number of Average Average Remaining Intrinsic Options Exercise Price Contractual Life Value Outstanding at December 31, 2018 1,654,522 $ 6.07 8.2 $ 10,866,658 Granted 226,294 12.37 Exercised (191,150 ) 5.11 Expired (1,198 ) 5.18 Forfeited (218,062 ) 5.19 Outstanding at December 31, 2019 1,470,406 $ 7.30 7.5 $ 6,604,461 Exercisable at December 31, 2019 815,978 $ 5.62 6.6 $ 4,847,227
Schedule of restricted stock unit activity	Weighted Average Grant Date Number of Fair Value Units Per Share Unvested at December 31, 2018 - $ - Granted 50,494 11.82 Vested - - Cancelled - - Unvested at December 31, 2019 50,494 $ 11.82

Warrants (Tables)

Warrants (Tables)	12 Months Ended
	Dec. 31, 2019
Warrants and Rights Note Disclosure [Abstract]
Summary of warrants activity	Weighted Weighted Number of Average Average Remaining Intrinsic Units Exercise Price Contractual Term Value Outstanding at December 31, 2018 30,000 $ 7.81 1.1 $ 144,525 Granted - - Exercised (30,000 ) 7.81 Cancelled - - Outstanding at December 31, 2019 - $ - - $ - Exercisable at December 31, 2019 - $ - - $ -

Leases (Tables)

Leases (Tables)	12 Months Ended
	Dec. 31, 2019
Leases [Abstract]
Future minimum lease payments	Operating Leases 2020 742,956 2021 766,546 2022 771,278 2023 794,937 2024 799,669 Thereafter 3,221,086 Total undiscounted cash flows $ 7,096,472 Less imputed interest (1,749,405 ) Present value of lease liability $ 5,347,067

Disaggregation of Revenue (Tabl

Disaggregation of Revenue (Tables)	12 Months Ended
	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Disaggregation of revenue	Year ended December 31, 2019 2018 Revenue by Product: Marketing Automation Revenue $ 22,204,479 $ 18,260,719 Retargeting Revenue $ 271,008 $ - Mail + Product Revenue 223,899 390,806 Total Revenue $ 22,699,386 $ 18,651,525 Revenue by Type: Recurring Revenue $ 20,911,854 $ 17,049,945 Upfront Fees $ 1,516,524 $ 1,601,580 Retargeting Revenue 271,008 - Total Revenue $ 22,699,386 $ 18,651,525

Summary of Significant Accoun_4

Summary of Significant Accounting Policies (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Property and equipment, gross	$ 3,320,509	$ 1,943,451
Less: accumulated depreciation and amortization	(1,323,787)	(682,653)
Property and equipment, net	1,996,722	1,260,798
Leasehold Improvements
Property and equipment, gross	290,977	197,268
Furniture and Fixtures
Property and equipment, gross	678,774	611,171
Computer Equipment and Software
Property and equipment, gross	$ 2,350,758	$ 1,135,012

Summary of Significant Accoun_5

Summary of Significant Accounting Policies (Details 1)	12 Months Ended
	Dec. 31, 2019
Leasehold Improvements
Useful lives	5 years
Furniture and Fixtures | Minimum
Useful lives	3 years
Furniture and Fixtures | Maximum
Useful lives	5 years
Computing Equipment
Useful lives	3 years
Software | Minimum
Useful lives	3 years
Software | Maximum
Useful lives	5 years

Summary of Significant Accoun_6

Summary of Significant Accounting Policies (Details 2) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Sales and marketing expense	$ 11,785,227	$ 10,092,691
Total operating expenses	25,819,913	21,717,370
Operating loss	(10,262,943)	(8,864,114)
Loss before income taxes	(12,358,627)	(9,809,816)
Net loss	$ (12,387,976)	$ (9,478,822)
Basic net loss per share	$ (1.20)	$ (1.11)
Diluted net loss per share	$ (1.20)	$ (1.11)
Other current assets	$ 1,363,366	$ 1,184,217
Other long-term assets	549,022	665,123
Total assets	38,006,805	24,007,276
Accumulated deficit	$ (29,740,682)	(17,352,706)
Historical Accounting Method
Sales and marketing expense		10,183,186
Total operating expenses		21,807,865
Operating loss		(8,954,609)
Loss before income taxes		(9,900,311)
Net loss		$ (9,569,317)
Basic net loss per share		$ (1.12)
Diluted net loss per share		$ (1.12)
Other current assets		$ 485,058
Other long-term assets		54,954
Total assets		22,697,947
Accumulated deficit		(18,662,035)
Effect of Adoption of New ASU
Sales and marketing expense		(90,495)
Total operating expenses		(90,495)
Operating loss		90,495
Loss before income taxes		90,495
Net loss		$ 90,495
Basic net loss per share		$ 0.01
Diluted net loss per share		$ 0.01
Other current assets		$ 699,159
Other long-term assets		610,169
Total assets		1,309,329
Accumulated deficit		$ 1,309,329

Summary of Significant Accoun_7

Summary of Significant Accounting Policies (Details 3) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Right-of-use assets	$ 5,281,530	$ 0
Total Assets	38,006,805	24,007,276
Lease liability (current)	370,340	0
Lease liability (non-current)	4,976,727	0
Total Liabilities	$ 9,193,458	11,219,558
Change In Accounting Principle [Member]
Right-of-use assets		5,715,510
Total Assets		5,715,510
Accrued expenses and other current liabilities		(8,821)
Lease liability (current)		344,883
Lease liability (non-current)		5,379,448
Total Liabilities		$ 5,715,510

Acquisitions (Details)

Acquisitions (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Goodwill	$ 10,922,814	$ 8,866,413
Perfect Audience
Cash consideration	4,566,402
Deferred revenue	186,500
Accrued expenses and other current liabilities	545,473
Total liabilities	731,973
Accounts receivable	(55,236)
Other current assets	(20,719)
Total tangible assets	(75,955)
Total intangible assets	(3,173,000)
Goodwill	2,049,420
Perfect Audience | Trade Names
Total intangible assets	(381,000)
Perfect Audience | Technology
Total intangible assets	(979,000)
Perfect Audience | Vendor Relationships
Total intangible assets	$ (1,813,000)

Acquisitions (Details 1)

Acquisitions (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Business Combinations [Abstract]
Net revenues	$ 2,980,148	$ 4,423,069
Gross profit	1,649,482	3,120,694
Net income	$ 257,154	$ 1,140,637
Net income per share: basic	$ 0.02	$ 0.13
Net income per share: diluted	$ 0.02	$ 0.13

Acquisitions (Details Narrative

Acquisitions (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Goodwill	$ 10,922,814	$ 8,866,413
Net income	257,154	$ 1,140,637
Perfect Audience
Cash consideration	4,566,402
Goodwill	2,049,420
Transaction costs	$ 180,000

Goodwill and Other Intangible_3

Goodwill and Other Intangible Assets (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Gross carrying amount	$ 6,743,000	$ 6,350,014
Accumulated amortization	(2,085,000)	(4,484,014)
Net carrying value	4,658,000	1,866,000
Goodwill	10,922,814	8,866,413
Total intangible assets	15,580,814	10,732,413
Trade Names
Gross carrying amount	501,000	120,000
Accumulated amortization	(120,000)	(120,000)
Net carrying value	381,000	0
Technology
Gross carrying amount	3,109,000	2,130,000
Accumulated amortization	(1,192,000)	(954,000)
Net carrying value	1,917,000	1,176,000
Customer Relationships
Gross carrying amount	1,320,000	4,100,014
Accumulated amortization	(773,000)	(3,410,014)
Net carrying value	547,000	$ 690,000
Vendor Relationships
Gross carrying amount	1,813,000
Accumulated amortization	0
Net carrying value	$ 1,813,000

Goodwill and Other Intangible_4

Goodwill and Other Intangible Assets (Details 1) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
2020	$ 611,200
2021	559,200
2022	507,200
2023	459,200
2024	420,200
Thereafter	1,720,000
Total amortizable intangible assets	4,277,000
Indefinite lived	381,000
Total	$ 4,658,000	$ 1,866,000

Goodwill and Other Intangible_5

Goodwill and Other Intangible Assets (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 10,922,814	$ 8,866,413
Changes in foreign exchange rate increase/reduction to goodwill	7,000	6,000
Impairment loss	0	0
Amortization expense	$ 381,000	$ 460,000

Credit Facility (Details Narrat

Credit Facility (Details Narrative) - Revolving Loan Agreement [Member]	12 Months Ended
	Dec. 31, 2019USD ($)
Line of credit	$ 2,500,000
Line of credit facility, expiration date	Mar. 31, 2020
Loan interest rate	6.50%
Percentage of secured pledge of capital stock	100.00%
Percentage of pledge of foreign subsidiaries stock	65.00%

Convertible Notes (Details)

Convertible Notes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
Principal amount	$ 0	$ 8,000,000
Accrued interest paid-in-kind	0	304,301
Unamortized debt issuance costs	0	(122,153)
Original embedded derivative conversion feature	0	160,278
Net carrying value	$ 0	$ 8,342,426

Convertible Notes (Details 1)

Convertible Notes (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
Contractual interest paid-in-kind expense (non-cash)	$ 139,372	$ 304,301
Amortization of debt issuance costs (non-cash)	(9,302)	(6,088)
Amortization of embedded derivative (non-cash)	12,205	0
Total interest expense	$ 142,275	$ 298,213
Effective interest rate	4.90%	4.90%

Net Loss Per Share (Details)

Net Loss Per Share (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Earnings Per Share [Abstract]
Net loss	$ (12,387,976)	$ (9,478,822)
Basic weighted average common shares outstanding	10,323,889	8,512,297
Add incremental shares for warrants	0	0
Add incremental shares for stock options	0	0
Add incremental shares for convertible notes	0	0
Diluted weighted average common shares outstanding	10,323,889	8,512,297
Basic net loss per share	$ (1.20)	$ (1.11)
Diluted net loss per share	$ (1.20)	$ (1.11)

Net Loss Per Share (Details 1)

Net Loss Per Share (Details 1) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Antidilutive securities	1,520,900	2,791,762
Warrants
Antidilutive securities	0	30,000
Stock Option
Antidilutive securities	1,470,406	1,654,522
Restricted Stock Units
Antidilutive securities	50,494	0
Convertible Notes
Antidilutive securities	0	1,107,240

Income Taxes (Details)

Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Current Provision
Federal	$ 0	$ (154,872)
State	25,236	32,028
Foreign	4,113	(40,018)
Current Income Tax Provision	29,349	(162,862)
Deferred Provision
Federal	0	(143,988)
State	0	(24,144)
Foreign	0	0
Deferred Income Tax Provision	0	(168,132)
Total Income Tax Provision	$ 29,349	$ (330,994)

Income Taxes (Details 1)

Income Taxes (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Federal statutory rates	$ (2,594,415)	$ (2,058,172)
State income taxes, net of federal benefit	(68,162)	(194,244)
Permanent differences	(46,592)	66,068
Perm differences - debt conversion	454,166	0
Other	(85,997)	(69,968)
Credits	(227,213)	(147,727)
Foreign	(22,820)	(80,534)
Valuation Allowance	2,620,382	2,153,583
Effective rate from continuing operations	$ 29,349	$ (330,994)
Federal statutory rates on continuing operations	21.00%	21.00%
State income taxes, net of federal benefit	1.00%	2.00%
Permanent differences	0.00%	(1.00%)
Perm differences - debt conversion	(4.00%)	0.00%
Other	1.00%	1.00%
Credits	2.00%	2.00%
Foreign	0.00%	1.00%
Valuation Allowance	(21.00%)	(22.00%)
Effective rate from continuing operations	0.00%	3.00%

Income Taxes (Details 2)

Income Taxes (Details 2) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Deferred Tax Assets:
Accrual to cash	$ 0	$ 0
Stock-based compensation	274,364	226,476
Intangibles	590,427	662,042
NOL	5,893,260	3,630,772
Accruals & reserves	267,980	75,685
Valuation allowance	(6,962,051)	(4,342,180)
Deferred tax assets, net of valuation allowance	63,980	252,795
Deferred Tax Liabilities:
Asset dispositions	(63,980)	(252,795)
Depreciation	(63,980)	(252,795)
Other	0	0
Deferred tax liabilities	(63,980)	(252,795)
Total net deferred tax liabilities	$ 0	$ 0

Income Taxes (Details Narrative

Income Taxes (Details Narrative) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Net operating loss carryforwards	$ 18,390,000	$ 9,280,000
Deferred tax valuation allowance	7,000,000	4,300,000
Foreign
Net operating loss carryforwards	3,440,000	3,200,000
State
Net operating loss carryforwards	$ 19,250,000	$ 15,000,000

Defined Contribution Retireme_2

Defined Contribution Retirement Plan (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]
Defined contribution plan, maximum annual contributions employee, percent	100.00%
Defined contribution plan, employer matching contribution, percent of match	100.00%
Defined contribution plan, employer matching contribution, percent of employees' gross pay	3.00%
Defined contribution retirement plan, expenses	$ 300,000	$ 250,000

Stock-Based Compensation (Detai

Stock-Based Compensation (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Payment Arrangement [Abstract]
Volatility, minimum	49.00%	48.00%
Volatility, maximum	52.00%	49.00%
Risk-free interest rate, minimum	1.45%	2.34%
Risk-free interest rate, maximum	2.59%	3.11%
Expected term	6 years 3 months	6 years 3 months

Stock-Based Compensation (Det_2

Stock-Based Compensation (Details 1)	12 Months Ended
	Dec. 31, 2019USD ($)$ / sharesshares
Share-based Payment Arrangement [Abstract]
Number of shares outstanding, beginning | shares	1,654,522
Number of shares granted | shares	226,294
Number of shares exercised | shares	(191,150)
Number of shares expired | shares	(1,198)
Number of shares forfeited | shares	(218,062)
Number of shares outstanding, ending | shares	1,470,406
Number of shares exercisable | shares	815,978
Weighted average exercise price outstanding, beginning | $ / shares	$ 6.07
Weighted average exercise price granted | $ / shares	12.37
Weighted average exercise price exercised | $ / shares	5.11
Weighted average exercise price expired | $ / shares	5.18
Weighted average exercise price forfeited | $ / shares	5.19
Weighted average exercise price outstanding, ending | $ / shares	7.30
Weighted average exercise price exercisable | $ / shares	$ 5.62
Weighted average remaining contractual life outstanding, beginning	8 years 2 months 12 days
Weighted average remaining contractual life outstanding, ending	7 years 6 months
Weighted average remaining contractual life exercisable	6 years 7 months 6 days
Aggregate intrinsic value, beginning | $	$ 10,866,658
Aggregate intrinsic value, ending | $	6,604,461
Aggregate intrinsic value, exercisable | $	$ 4,847,227

Stock-Based Compensation (Det_3

Stock-Based Compensation (Details 2)	12 Months Ended
	Dec. 31, 2019$ / sharesshares
Share-based Payment Arrangement [Abstract]
Number of unvested units, beginning | shares	0
Number of unvested units granted | shares	50,494
Number of unvested units vested | shares	0
Number of unvested units cancelled | shares	0
Number of unvested units, ending | shares	50,494
Weighted average grant date fair value, beginning | $ / shares	$ .00
Weighted average grant date fair value granted | $ / shares	11.82
Weighted average grant date fair value vested | $ / shares	.00
Weighted average grant date fair value cancelled | $ / shares	.00
Weighted average grant date fair value, ending | $ / shares	$ 11.82

Stock-Based Compensation (Det_4

Stock-Based Compensation (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Payment Arrangement [Abstract]
Weighted average grant date fair value of stock options granted	$ 6.24
Stock option expense	$ 1,080,000	$ 800,000
Unrecognized compensation cost	$ 2,350,000
Weighted average remaining vesting period	2 years 11 months 5 days
Aggregate intrinsic value	$ 1,900,000	600,000
Restricted stock units granted	50,494
Restricted stock unit expense	$ 9,000	$ 0
Unrecognized restricted stock unit compensation cost	$ 2,350,000
Weighted average remaining vesting period	3 years 11 months 1 day
Number of shares issued to non-employee directors	10,286	23,302
Fair value of stock awards granted, vested and expensed	$ 130,000	$ 180,000
Issuance of common stock for other non-employee services		$ 508,561

Warrants (Details)

Warrants (Details)	12 Months Ended
	Dec. 31, 2019USD ($)$ / sharesshares
Warrants and Rights Note Disclosure [Abstract]
Number of units outstanding, beginning | shares	30,000
Number of units granted | shares	0
Number of units exercised | shares	(30,000)
Number of units cancelled | shares	0
Number of units outstanding, ending | shares	0
Number of units, exercisable | shares	0
Weighted average exercise price outstanding, beginning | $ / shares	$ 7.81
Weighted average exercise price granted | $ / shares	0
Weighted average exercise price exercised | $ / shares	7.81
Weighted average exercise price cancelled | $ / shares	0
Weighted average exercise price outstanding, ending | $ / shares	0
Weighted average exercise price, exercisable | $ / shares	$ 0
Weighted average remaining contractual term outstanding, beginning	1 year 1 month 6 days
Weighted average remaining contractual term outstanding, ending	0 years
Weighted average remaining contractual term, exercisable	0 years
Intrinsic value, outstanding, beginning | $	$ 144,525
Intrinsic value, outstanding, ending | $	0
Intrinsic value, exercisable | $	$ 0

Warrants (Details Narrative)

Warrants (Details Narrative)	12 Months Ended
	Dec. 31, 2019USD ($)$ / sharesshares
Warrants and Rights Note Disclosure [Abstract]
Connection with financing transaction value | $	$ 11,500,000
Number of warrants issued to purchase of common stock | shares	80,000
Exercise price of warrants | $ / shares	$ 7.81
Warrant term	5 years

Leases (Details)

Leases (Details)	Dec. 31, 2019USD ($)
Leases [Abstract]
Remainder of 2019	$ 742,956
2020	766,546
2021	771,278
2022	794,937
2023	799,669
Thereafter	3,221,086
Total undiscounted cash flows	7,096,472
Less imputed interest	(1,749,405)
Present value of lease liability	$ 5,347,067

Disaggregation of Revenue (Deta

Disaggregation of Revenue (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Total revenue	$ 22,699,386	$ 18,651,525
Upfront fees
Total revenue	1,516,524	1,601,580
Marketing Automation Revenue
Total revenue	22,204,479	18,260,719
Retargeting Revenue
Total revenue	271,008	0
Mail + Product Revenue
Total revenue	223,899	390,806
Recurring Revenue
Total revenue	$ 20,911,854	$ 17,049,945