Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 27, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | SRAX, Inc. | |
Entity Central Index Key | 0001538217 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,034,152 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 110,000 | $ 32,000 |
Accounts receivable | 515,000 | 805,000 |
Prepaid expenses | 715,000 | 715,000 |
Other current assets | 301,000 | 306,000 |
Current assets | 1,641,000 | 1,858,000 |
Property and equipment | 172,000 | 191,000 |
Goodwill | 15,645,000 | 15,645,000 |
Intangible assets | 1,954,000 | 1,966,000 |
Right of use assets | 435,000 | 456,000 |
Other assets | 53,000 | 118,000 |
Total Assets | 19,900,000 | 20,234,000 |
Liabilities and stockholders' equity | ||
Accounts payable and accrued liabilities | 2,996,000 | 2,442,000 |
Derivative liabilities | 3,095,000 | 4,397,000 |
Other current liabilities | 516,000 | 537,000 |
Accounts receivable loan | 510,000 | |
Short-term promissory notes | 450,000 | |
Term loan note - current portion | 438,000 | |
Current liabilities | 8,005,000 | 7,376,000 |
Right to use liability - long term | 352,000 | 352,000 |
Term loan note, less current portion | 1,626,000 | |
Total liabilities | 9,983,000 | 7,728,000 |
Preferred stock | ||
Additional paid-in capital | 48,543,000 | 48,129,000 |
Accumulated deficit | (38,640,000) | (35,637,000) |
Total stockholders' equity | 9,917,000 | 12,506,000 |
Total liabilities and stockholders' equity | 19,900,000 | 20,234,000 |
Class A Common Stock [Member] | ||
Liabilities and stockholders' equity | ||
Common stock, value | 14,000 | 14,000 |
Class B Common Stock [Member] | ||
Liabilities and stockholders' equity | ||
Common stock, value |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 351,000 | $ 592,000 |
Cost of revenues | 112,000 | 342,000 |
Gross profit | 239,000 | 250,000 |
Employee related costs | 2,026,000 | 2,198,000 |
Marketing and selling expenses | 320,000 | 455,000 |
Platform Costs | 403,000 | 339,000 |
Depreciation and amortization | 308,000 | 253,000 |
General and administrative | 1,056,000 | 1,247,000 |
Total operating expense | 4,113,000 | 4,492,000 |
Loss from operations | (3,874,000) | (4,242,000) |
Other income (expense) | ||
Financing Costs | (360,000) | (68,000) |
Gain (loss) on sale of assets | 472,000 | |
Exchange gain (loss) | (71,000) | 14,000 |
Change in fair value of derivative liabilities | 1,302,000 | (1,962,000) |
Total other income (loss) | 871,000 | (1,544,000) |
Loss before provision for income taxes | (3,003,000) | (5,786,000) |
Provision for income taxes | ||
Net income (loss) | $ (3,003,000) | $ (5,786,000) |
Net loss per share, basic and diluted | $ (0.21) | $ (0.57) |
Weighted average shares outstanding - basic and diluted | 14,000,275 | 10,109,530 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 10,000 | $ 32,870,000 | $ (18,778,000) | $ 14,102,000 |
Balance, shares at Dec. 31, 2018 | 10,109,530 | |||
Share based compensation, related employees | 121,000 | 121,000 | ||
Net Income (loss) | (5,786,000) | (5,786,000) | ||
Balance at Mar. 31, 2019 | $ 10,000 | 32,991,000 | (24,564,000) | 8,437,000 |
Balance, shares at Mar. 31, 2019 | 10,109,530 | |||
Balance at Dec. 31, 2019 | $ 14,000 | 48,129,000 | (35,637,000) | 12,506,000 |
Balance, shares at Dec. 31, 2019 | 13,997,452 | |||
Share based compensation, related employees | 260,000 | 260,000 | ||
Relative fair value of warrants issued with notes payable | 83,000 | 83,000 | ||
Shares issued for extension agreement | 71,000 | 71,000 | ||
Shares issued for extension agreement, shares | 36,700 | |||
Net Income (loss) | (3,003,000) | (3,003,000) | ||
Balance at Mar. 31, 2020 | $ 14,000 | $ 48,543,000 | $ (38,640,000) | $ 9,917,000 |
Balance, shares at Mar. 31, 2020 | 14,034,152 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flows From Operating Activities | ||
Net loss | $ (3,003,000) | $ (5,786,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Gain on sale of SRAXmd | (472,000) | |
Stock based compensation | 260,000 | 121,000 |
Amortization of debt issue costs | 17,000 | |
Change in fair value of derivative liabilities | (1,302,000) | 1,962,000 |
Provision for bad debts | 15,000 | |
Depreciation expense | 19,000 | 16,000 |
Amortization of intangibles | 290,000 | 237,000 |
Changes in operating assets and liabilities | ||
Accounts receivable | 275,000 | 1,278,000 |
Prepaid expenses | 71,000 | (25,000) |
Other current assets | 5,000 | 30,000 |
Accounts payable and accrued expenses | 553,000 | (299,000) |
Net Cash Used in Operating Activities | (2,799,000) | (2,939,000) |
Cash Flows From Investing Activities | ||
Proceeds from sale of SRAXmd, net | 473,000 | |
Purchase of property and equipment | (20,000) | |
Development of software | (278,000) | (280,000) |
Other assets | 65,000 | |
Net Cash Used by Investing Activities | (213,000) | 172,000 |
Cash Flows From Financing Activities | ||
Proceeds from issuance of notes payable less issuance costs | 3,090,000 | |
Net Cash Provided by Financing Activities | 3,090,000 | |
Net increase (decrease) in Cash | 78,000 | (2,767,000) |
Cash, Beginning of Period | 32,000 | 2,785,000 |
Cash, End of Period | 110,000 | 18,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 52,000 | 56,000 |
Cash paid for income taxes | ||
Noncash investing and financing activities: | ||
Vesting of prepaid common stock award | 94,000 | |
Relative fair value of warrants issued with term loan | 83,000 | |
Shares of common stock issued for extension agreement | $ 71,000 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | NOTE 1 – Organization and Basis Of Presentation Organization SRAX, Inc. (“SRAX”, “we”, “us”, “our” or the “Company”) is a Delaware corporation formed on August 2, 2011. Effective January 1, 2012 we acquired 100% of the member interests and operations of Social Reality, LLC, a California limited liability company formed on August 14, 2009 which began business in May of 2010, in exchange for 2,465,753 shares of our Class A common stock. The former members of Social Reality, LLC owned 100% of our Class A common stock after the acquisition. We are a data technology company offering tools and services to identify and reach consumers for the purpose of marketing and advertising communication. Our technologies assist our clients in: (i) identifying their core consumers and such consumers’ characteristics across various channels in order to discover new and measurable opportunities maximize profits associated with advertising campaigns and (ii) gaining insight into the activities of their customers. We derive our revenues from the: ● Sale and licensing of our proprietary SaaS platform; ● Sales of proprietary consumer data; and ● Sales of digital advertising campaigns. We are headquartered in Los Angeles, California. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and notes thereto are unaudited. The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in the Company’s annual financial statements have been condensed or omitted. The December 31, 2019 condensed balance sheet data was derived from financial statements but does not include all disclosures required by GAAP. These interim unaudited condensed financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim three-month periods ended March 31, 2020 and 2019. The results for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 or for any future period. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended December 31, 2019, included in the Company’s annual report on Form 10-K filed with the SEC on May 1, 2020. Liquidity and Going Concern The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its goods and services to achieved profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In addition, the Company’s operations and specifically, the development of BIGToken will require significant additional financing. These factors create substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flow and cash usage forecasts for the period ending March 31, 2020, and our current capital structure including outstanding warrants and other equity-based instruments and our obligations and debts. We expect that our existing cash and cash equivalents as of March 31, 2020, along with the proceeds from our recent capital raising transactions will be sufficient to enable us to fund our anticipated level of operations based on our current operating plans, through the second quarter of 2020. Accordingly, we will require additional capital to fund our operations and the development of BIGToken. We anticipate raising additional capital through the private and public sales of our equity or debt securities, or a combination thereof. Although management believes that such capital sources will be available, there can be no assurance that financing will be available to us when needed in order to allow us to continue our operations, or if available, on terms acceptable to us. At March 31, 2020, the Company had $110,000 in cash and cash equivalents. If we do not raise sufficient capital in a timely manner, among other things, we may be forced scale back our operations or cease operations all together. During the first quarter of 2020, the Company was able to raise gross proceeds of $3,460,000 in debt investments. The Company’s capital-raising efforts are ongoing and the Company has undertaken the following to raise capital and reduce its burn rate: (i) applied to the Small Business Administration for funding under the Payroll Protection Program, which has been approved as of April 17, 2020 in the amount of $1,074,488, (ii) previously entered into a loan and security agreement whereby we will be able to draw down an additional $2,500,000 in debt, contingent on certain factors, including the filing of a registration statement for the sale of common stock pursuant to an “At-the-Market” sales agreement, and (ii) an ongoing review and reduction of monthly operating expenses. If sufficient capital cannot be raised during 2020, the Company will continue its plans of curtailing operations by reducing discretionary spending and staffing levels and attempting to operate by only pursuing activities for which it has external financial support. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but may have a material impact on our business, financial condition and results of operations. The significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time. In light of the COVID-19 pandemic, the Company has taken proactive steps to manage its costs and discretionary spending. Net Loss per Share The Company calculates basic and diluted income (loss) per weighted average share. The Company the weighted-average number of shares of common stock outstanding during the period for the computation of basic earnings per share. Diluted earnings per share include the dilutive effect of all potentially dilutive common stock, including awards granted under its equity incentive compensation plans in the weighted-average number of shares of common stock outstanding. Due the Company incurring a net loss for the three months ended March 31, 2020 and 2019, all potentially dilutive securities were considered anti-dilutive. Recent Accounting Pronouncements The Company reviewed all recently issued pronouncement in 2020, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s financial condition or the results of its operations. |
Sale of Accounts Receivable
Sale of Accounts Receivable | 3 Months Ended |
Mar. 31, 2020 | |
Credit Loss [Abstract] | |
Sale of Accounts Receivable | NOTE 2 – Sale of Accounts Receivable On January 22, 2020 and January 30, 2020, the Company entered into financing agreements, with a single unrelated purchaser to sell, with full recourse, certain accounts receivable with a face value of $454,000 and $75,000, respectively, for a purchase price of $454,000 and $56,000, respectively. Transactions under these agreements were accounted for as financing of accounts receivable and the related accounts receivable was not removed from our consolidated balance sheet at the time of the sales transactions, a liability was recorded for the proceeds received. The terms of the agreements are as follows: Pursuant to the initial purchase agreement, commencing on March 24, 2020, the purchaser may, at its sole discretion, exercise a put option, to cause the Company to purchase from purchaser, any of the outstanding January 22, 2020 receivables which were not collected by the purchaser. Effective April 9, 2020, the put option was extended until June 23, 2020 (See Note 7 below). The purchase price payable by Company to the Purchaser for the receivables upon exercise of the Put Option shall be equal to one hundred and thirty six percent (136%) of the then remaining outstanding balance of the applicable receivables. Upon the occurrence of a payment made on the applicable receivables, the Company is required to pay a true up amount as follows: a. ten percent (10%) of the portion of the receivables which are paid on or before the 30th day following the effective date of the agreement; b. twenty percent (20%) of the portion of the receivables which are paid after the 30 th th c. thirty six percent (36%) of the portion of the receivables which are paid after the 60 th In order to secure performance by the Company, the purchaser was granted a security interest in: (i) 239,029 shares of the Company’s Class A common stock in connection with the sale of the $454,000 receivable and (ii) 29,519 shares of the Company’s Class A common stock in connection with the sale of the $75,000 receivable. The shares have been issued and are being held by the Company’s transfer agent. Since the shares are not outstanding, the Company has treated them as shares reserved for collateral. Since the purchaser of the receivables has recourse, the Company accounted for the purchase price as a liability. Upon the purchaser’s election of the put option or the true up, as applicable the Company will treat the put option price or the true up amounts as interest. At March 31, 2020, the Company has a payable for $510,000 and accrued interest of $184,000. |
Short Term Promissory Notes
Short Term Promissory Notes | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Short Term Promissory Notes | NOTE 3 – Short Term Promissory Notes In February 2020, the Company entered into three separate short-term promissory notes with an aggregate principal value of $450,000, of which $100,000 was borrowed from the Company’s Chief Financial Officer. The notes are due and payable on May 12, 2020. The notes will accrue interest as follows: (i) on the origination date, ten percent (10%) of the principal amount was added to each note, (ii) on March 12, 2020, an additional ten percent (10%) of the principal amount was added to each note, and (iii) on April 12, 2020, an additional sixteen percent (16%) of the principal amount was added to each note. The note holders were granted security interests (in amounts equal to the face value of their investments on a dollar for share basis) in an aggregate of 450,000 shares of the Company’s Class A common stock. The shares have been issued and are being held by the Company’s transfer agent. Since the shares are not outstanding, the Company has treated them as shares reserved for collateral. The interest imputed on the origination date was treated as an original issue discount with the $45,000 amortized over the term of the Notes. On each of the interest date, the Company accrued and expensed the related interest. |
Term Loan Note
Term Loan Note | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Term Loan Note | NOTE 4 – Term Loan Note On February 28, 2020, the Company entered into a term loan and security agreement with a BRF Finance Co. LLC as lender. Pursuant to the loan agreement, the Company can borrow up to $5,000,000, subject to the conditions described below. Under the loan: (i) the Company received an initial draw of $2,500,000 on February 28, 2020 and (ii) the Company is eligible to receive an additional $2,500,000 loan within (30) days of the Company entering into an at the market sales agreement with the lender and the filing of an at the market offering on Form S-3 with the SEC registering the shares to be sold pursuant to the at the market sales agreement. The Company agreed to file the ATM by May 1, 2020. Additionally, the Company will be required to increase the dollar amount authorized under the at the market sales agreement each time additional capacity of at least $1,000,000 is available under our shelf registration statement. The loan is secured by substantially by all of the assets of the Company pursuant to the loan agreement and the intellectual property security agreement entered into in connection with the transaction. The loan bears interest at ten percent (10%) per annum and has a maturity date of March 1, 2022. Beginning on August 1, 2020, and continuing on the first day of each month thereafter until the maturity date, the Company will make monthly payments of principal and interest on an eighteen (18) month straight line amortization schedule, based on the principal outstanding on July 31, 2020. Additionally, the Company will have the option of a one (1) time payment-in-kind payment for a monthly required payment of principal and interest, which will defer such payments and result in a recalculation of the amortization schedule. In the event that the Company is late on any payments under the Loan, a late charge of three percent (3%) of the amount of the payment due will be assessed. At origination the Company paid lender: (i) an origination fee of $300,000, (ii) $35,000 in attorneys’ fees reimbursement, and (iii) certain other costs and expenses associated with the completion of the loan, including but not limited to escrow fees and recording fees. Accordingly, the Company received net proceeds of approximately $2,164,000 as of May 1, 2020. The Loan may be prepaid in whole or in part at any time at the discretion of the Company. The loan also provides for mandatory prepayments of all of the net cash received upon (i) a sale of the company’ assets, (ii) raising additional capital through the issuance of equity or debt securities, or (iii) sales under the at the market sales agreement described above. As part of the loan the Company agreed to issue to Lender: (i) 500,000 Common Stock purchase warrants on the date of the origination date and (ii) 500,000 Common Stock purchase warrants on the date of the second drawdown. The warrants have an exercise price equal to a 25% premium of the closing price of the Common Stock on their respective date of issue (provided that the exercise price of the warrants cannot be less than $2.50 per share, subject to adjustment contained therein). The initial warrant has an exercise price of $3.60. The warrants will expire on October 31, 2022. The warrants allow for cashless exercise in the event that they are not subject to a registration statement on the six (6) month anniversary of their respective issuances. The warrants do not contain any price protection or non-standard anti-dilution provisions. In accordance with ASC 470 - Debt The Company evaluated the loan and warrant agreements in accordance with ASC 88-15 Derivatives and Hedging. As of March 31, 2020, the Term Note Loan balance was as follows: Current Long-Term Total Principal $ 583,000 $ 1,917,000 $ 2,500,000 Discount (145,000 ) (291,000 ) (436,000 ) Balance $ 438,000 $ 1,626,000 $ 2,064,000 |
Right to Use Asset
Right to Use Asset | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Right to Use Asset | NOTE 5 – Right To Use Asset We adopted ASU No. 2016-02, Leases Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, our incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term. We had no financing leases as of March 31, 2020. We have operating leases for office space. Our leases have remaining lease terms of 3.25 years. We consider a renewal options in determining the lease term used to establish our right-of-use assets and lease liabilities when it is determined that it is reasonably certain that the renewal option will be exercised. As of March 31, 2020, there were no material variable lease costs or sublease income. Cash paid for operating leases was $65,000 and $77,000 in the three months ended March 31, 2020 and 2019, respectively, which is classified in operating activities. The following table summarizes the lease expense for the three months ended March 31: 2020 2019 Operating lease expense $ 41,000 $ 41,000 Short-term lease expense 24,000 36,000 Total lease expense $ 65,000 $ 77,000 The below table summarizes these lease asset and liability accounts presented on our accompanying Consolidated Balance Sheets: Operating Leases* Consolidated Balance Sheet Caption Balance as of March 31, Operating lease right-of-use assets - non-current Right of Use Asset $ 435,000 Operating lease liabilities - current Accrued liabilities $ 70,000 Operating lease liabilities - non-current Lease Obligation – Long-Term $ 352,000 Total operating lease liabilities $ 422,000 Components of Lease Expense We recognize lease expense on a straight-line basis over the term of our operating leases, as reported within “selling, general and administrative” expense on the accompanying condensed consolidated statement of operations. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 6 – Stockholders’ Equity Authorized Shares Preferred Stock We are authorized to issue 50,000,000 of preferred stock, par value $0.001, of which 200,000 shares were designated as Series 1 Preferred Stock. Our board of directors, without further stockholder approval, may issue preferred stock in one or more series from time to time and fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares of each series. The rights, preferences, limitations and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and other matters. Our board of directors may authorize the issuance of preferred stock, which ranks senior to our common stock for the payment of dividends and the distribution of assets on liquidation. In addition, our board of directors can fix limitations and restrictions, if any, upon the payment of dividends on both classes of our common stock to be effective while any shares of preferred stock are outstanding. Common Stock We are authorized to issue an aggregate of 259,000,000 shares of common stock. Our certificate of incorporation provides that we will have two classes of common stock: Class A common stock (authorized 250,000,000 shares, par value $0.001), which has one vote per share, and Class B common stock (authorized 9,000,000 shares, par value $0.001), which has ten votes per share. Any holder of Class B common stock may convert his or her shares at any time into shares of Class A common stock on a share-for-share basis. Otherwise the rights of the two classes of common stock are identical. As of March 31, 2020, the Company had 14,752,700 shares issued and 14,034,152 Shares outstanding. As of December 31, 2019, the Company had 13,997,452 shares issued and outstanding. Common Stock Warrants In conjunction with a Term Loan Note, the Company granted the borrower warrants to purchase up to 500,000 shares of Common Stock at an exercise price of $3.60 per warrant share. There were no warrants exercised from warrant during the three months ended March 31, 2020. Stock Based Compensation During the Quarter ended March 31, 2020, the Company did not issue any new stock-based awards. Stock based compensation expense for the three months ended March 31, 2020 was $260,000. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 7 – Subsequent Events On April 9, 2020 the Company entered into an agreement to amend the January 22 and 30 accounts receivable agreements. The purchaser agreed to amend the put option date as described in Note 2 above to June 23, 2020 and June 30, 2020 for the sale of receivables originating on January 22, 2020 and January 30, 2020, respectively. As consideration for the extension the Company agreed to issue the purchaser 32,668 and 4,032 shares of Class A common stock for the receivable sale originating on January 22 , On April 17, 2020, we entered into a promissory note evidencing an unsecured $1,074,488 loan under the Paycheck Protection Program (PPP). The loan is being made through Cross River Bank. The term of the loan is two years with an interest rate of 0.98%, which shall be deferred for the first six months of the term of the loan. The promissory note evidencing the loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment against the Company. |
Term Loan Note (Tables)
Term Loan Note (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Term Loan Note | As of March 31, 2020, the Term Note Loan balance was as follows: Current Long-Term Total Principal $ 583,000 $ 1,917,000 $ 2,500,000 Discount (145,000 ) (291,000 ) (436,000 ) Balance $ 438,000 $ 1,626,000 $ 2,064,000 |
Right to Use Asset (Tables)
Right to Use Asset (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Schedule of Component of Lease Expense | The following table summarizes the lease expense for the three months ended March 31: 2020 2019 Operating lease expense $ 41,000 $ 41,000 Short-term lease expense 24,000 36,000 Total lease expense $ 65,000 $ 77,000 |
Schedule of Operating Lease Assets and Liabilities | The below table summarizes these lease asset and liability accounts presented on our accompanying Consolidated Balance Sheets: Operating Leases* Consolidated Balance Sheet Caption Balance as of March 31, Operating lease right-of-use assets - non-current Right of Use Asset $ 435,000 Operating lease liabilities - current Accrued liabilities $ 70,000 Operating lease liabilities - non-current Lease Obligation – Long-Term $ 352,000 Total operating lease liabilities $ 422,000 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details Narrative) - USD ($) | Apr. 17, 2020 | Jan. 01, 2012 | Mar. 31, 2020 | Dec. 31, 2019 |
Cash and cash equivalents | $ 110,000 | $ 32,000 | ||
Proceeds from debt | 3,460,000 | |||
Additional Agreements for Debt Financing [Member] | ||||
Proceeds from debt | $ 2,500,000 | |||
Subsequent Event [Member] | ||||
Proceeds from debt | $ 1,074,488 | |||
Social Reality, LLC [Member] | Class A Common Stock [Member] | ||||
Ownership percentage | 100.00% | |||
Shares issued in business acquisition | 2,465,753 | |||
Social Reality, LLC [Member] | Class A Common Stock [Member] | Former Members [Member] | ||||
Ownership percentage | 100.00% |
Sale of Accounts Receivable (De
Sale of Accounts Receivable (Details Narrative) - USD ($) | Mar. 24, 2020 | Jan. 30, 2020 | Jan. 22, 2020 | Mar. 31, 2020 |
Accounts receivable | $ 75,000 | $ 454,000 | ||
Accounts receivable, purchase | $ 56,000 | $ 454,000 | ||
Description of sale of accounts receivable | Upon the occurrence of a payment made on the applicable receivables, the Company is required to pay a true up amount as follows: a) ten percent (10%) of the portion of the receivables which are paid on or before the 30th day following the effective date of the agreement; b) twenty percent (20%) of the portion of the receivables which are paid after the 30th day but on or before the 60th day following the effective date of the agreement; and d) thirty six percent (36%) of the portion of the receivables which are paid after the 60th day following the effective date of the agreement. | |||
Accounts payable | $ 510,000 | |||
Accrued interest | $ 184,000 | |||
Class A Common Stock [Member] | ||||
Sale of stock, number of shares issued in transaction | 29,519 | 239,029 | ||
Agreements to Sell Accounts Receivable [Member] | ||||
Percentage of receivables upon exercise of put option | 136.00% |
Short Term Promissory Notes (De
Short Term Promissory Notes (Details Narrative) - Short-Term Promissory Notes [Member] - USD ($) | Feb. 28, 2020 | Mar. 31, 2020 |
Debt instrument, face amount | $ 450,000 | |
Debt instrument, maturity date | Apr. 12, 2020 | |
Debt instrument, description | The notes are due and payable on May 12, 2020. The notes will accrue interest as follows: (i) on the origination date, ten percent (10%) of the principal amount was added to each note, (ii) on March 12, 2020, an additional ten percent (10%) of the principal amount was added to each note, and (iii) on April 12, 2020, an additional sixteen percent (16%) of the principal amount was added to each note. | |
Debt conversion, converted instrument, shares issued | 450,000 | |
Debt instrument, original issue discount | $ 45,000 | |
Chief Financial Officer [Member] | ||
Debt instrument, face amount | $ 100,000 |
Term Loan Note (Details Narrati
Term Loan Note (Details Narrative) - USD ($) | May 01, 2020 | Feb. 28, 2020 | Mar. 31, 2020 |
Exercise price of warrant | $ 3.60 | ||
Warrants [Member] | |||
Class of warrant issued | 500,000 | ||
Exercise price of warrant | $ 3.60 | ||
Warrant expire date | Oct. 31, 2022 | ||
Proceeds from issuance of warrant | $ 83,000 | ||
Warrants [Member] | Maximum [Member] | |||
Exercise price of warrant | $ 2.50 | ||
Warrants [Member] | Second Drawdown [Member] | |||
Class of warrant issued | 500,000 | ||
Term loan [Member] | |||
Term loan, maximum borrowing capacity | $ 5,000,000 | ||
Proceeds from notes payable | 2,500,000 | ||
Debt instrument, unused borrowing capacity, amount | 2,500,000 | ||
Debt instrument, additional borrowing capacity | $ 1,000,000 | ||
Debt instrument, interest rate | 10.00% | ||
Debt instrument, maturity date | Mar. 1, 2022 | ||
Debt instrument, payment term description | The Company will make monthly payments of principal and interest on an eighteen (18) month straight line amortization schedule, based on the principal outstanding on July 31, 2020. Additionally, the Company will have the option of a one (1) time payment-in-kind payment for a monthly required payment of principal and interest, which will defer such payments and result in a recalculation of the amortization schedule. In the event that the Company is late on any payments under the Loan, a late charge of three percent (3%) of the amount of the payment due will be assessed. | ||
Debt instrument origination fee | $ 300,000 | ||
Attorneys fees | $ 35,000 | ||
Term loan [Member] | Subsequent Event [Member] | |||
Proceeds from notes payable | $ 2,164,000 |
Term Loan Note - Summary of Ter
Term Loan Note - Summary of Term Loan Note (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Term loan, balance current | $ 438,000 | |
Term loan, balance long-term | 1,626,000 | |
Term loan [Member] | ||
Term loan, principal current | 583,000 | |
Term loan, discount current | (145,000) | |
Term loan, balance current | 438,000 | |
Term loan, principal long-term | 1,917,000 | |
Term loan, discount long-term | (291,000) | |
Term loan, balance long-term | 1,626,000 | |
Term loan, principal | 2,500,000 | |
Term loan, discount | (436,000) | |
Term loan, balance | $ 2,064,000 |
Right to Use Asset (Details Nar
Right to Use Asset (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Remaining lease term | 3 years 2 months 30 days | |
Cash paid for operating lease | $ 65,000 | $ 77,000 |
Right to Use Asset - Schedule o
Right to Use Asset - Schedule of Component of Lease Expense (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Operating lease expense | $ 41,000 | $ 41,000 |
Short-term lease expense | 24,000 | 36,000 |
Total lease expense | $ 65,000 | $ 77,000 |
Right to Use Asset - Schedule_2
Right to Use Asset - Schedule of Operating Lease Assets and Liabilities (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Operating lease right-of-use assets - non-current | $ 435,000 | $ 456,000 |
Operating lease liabilities - current | 70,000 | |
Operating lease liabilities - non-current | 352,000 | $ 352,000 |
Total operating lease liabilities | $ 422,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Preferred stock shares authorized | 50,000,000 | ||
Preferred stock par value | $ 0.001 | ||
Common stock shares authorized | 259,000,000 | ||
Common stock shares issued | 14,752,700 | 13,997,452 | |
Common stock shares outstanding | 14,034,152 | 13,997,452 | |
Warrants to purchase common stock shares | 500,000 | ||
Warrants exercise price per share | $ 3.60 | ||
Stock based compensation expenses | $ 260,000 | $ 121,000 | |
Series 1 Preferred Stock [Member] | |||
Preferred stock shares authorized | 200,000 | ||
Class A Common Stock [Member] | |||
Common stock shares authorized | 250,000,000 | ||
Common stock par value | $ 0.001 | ||
Class B Common Stock [Member] | |||
Common stock shares authorized | 9,000,000 | ||
Common stock par value | $ 0.001 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Apr. 17, 2020 | Apr. 09, 2020 | Jan. 30, 2020 | Jan. 22, 2020 | Mar. 31, 2020 |
Description of sale of accounts receivable | Upon the occurrence of a payment made on the applicable receivables, the Company is required to pay a true up amount as follows: a) ten percent (10%) of the portion of the receivables which are paid on or before the 30th day following the effective date of the agreement; b) twenty percent (20%) of the portion of the receivables which are paid after the 30th day but on or before the 60th day following the effective date of the agreement; and d) thirty six percent (36%) of the portion of the receivables which are paid after the 60th day following the effective date of the agreement. | ||||
Class A Common Stock [Member] | |||||
Sale of stock, number of shares issued in transaction | 29,519 | 239,029 | |||
Agreements to Sell Accounts Receivable Ammended [Member] | Class A Common Stock [Member] | |||||
Sale of stock, number of shares issued in transaction | 4,032 | 32,668 | |||
Subsequent Event [Member] | Paycheck Protection Program [Member] | |||||
Unsecured loan | $ 1,074,488 | ||||
Term loan | 2 years | ||||
Interest rate | 0.98% | ||||
Subsequent Event [Member] | Agreements to Sell Accounts Receivable Ammended [Member] | |||||
Description of sale of accounts receivable | On April 9, 2020 the Company entered into an agreement to amend the January 22 and 30 accounts receivable agreements. The purchaser agreed to amend the put option date as described in Note 2 above to June 23, 2020 and June 30, 2020 for the sale of receivables originating on January 22, 2020 and January 30, 2020, respectively. As consideration for the extension the Company agreed to issue the purchaser 32,668 and 4,032 shares of Class A common stock for the receivable sale originating on January 22, 2020 and January 30, 2020, respectively |