Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | May 14, 2020 | Jun. 30, 2019 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Liberated Syndication Inc. | ||
Entity Central Index Key | 0001667489 | ||
Amendment Flag | false | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation, State or Country Code | NV | ||
Entity File Number | 000-55779 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | true | ||
EntityExTransitionPeriod | true | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Common Stock, Shares Outstanding | 29,346,974 | ||
Entity Public Float | $ 60,914,352 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash | $ 16,621,272 | $ 11,079,941 |
Accounts receivable, net | 549,044 | 481,921 |
Prepaid expenses | 614,417 | 449,223 |
Total current assets | 17,784,733 | 12,011,085 |
Property and equipment, net | 1,536,930 | 2,229,294 |
Definite life - intangible | 5,929,371 | 7,786,686 |
Prepaid expense | 363,091 | 191,609 |
Operating lease right-of-use assets | 751,731 | 0 |
Deferred Tax Asset | 1,847,979 | 1,454,077 |
Goodwill | 16,388,171 | 16,388,171 |
Total assets | 44,602,006 | 40,060,922 |
CURRENT LIABILITIES: | ||
Accounts payable | 760,163 | 745,889 |
Income taxes payable | 2,047,917 | 868,529 |
Accrued expenses | 1,087,271 | 377,572 |
Deferred revenue | 2,511,682 | 2,276,079 |
Current portion of finance lease obligation | 831 | 72,986 |
Current portion of loans payable, net | 2,643,824 | 2,638,599 |
Current portion of operating lease liabilities | 408,828 | 0 |
Total current liabilities | 9,460,516 | 6,979,654 |
Loans payable, net | 2,104,611 | 3,681,767 |
Finance lease obligation, net of current portion | 0 | 831 |
Deferred revenue, net of current portion | 601,234 | 371,938 |
Operating lease liabilities, net of current portion | 342,903 | 0 |
Line of credit | 2,000,000 | 2,000,000 |
Total long-term liabilities | 5,048,748 | 6,054,536 |
Total liabilities | 14,509,264 | 13,034,190 |
COMMITMENTS & CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Common stock | 29,272 | 29,722 |
Additional paid-in capital | 35,243,171 | 35,010,552 |
Accumulated deficit | (5,179,701) | (8,013,542) |
Total stockholders' equity | 30,092,472 | 27,026,732 |
Total liabilities and stockholders' equity | $ 44,602,006 | $ 40,060,922 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 14,000 | $ 14,000 |
Common stock authorized | 200,000,000 | 200,000,000 |
Common stock par value | $ .001 | $ 0.001 |
Common stock outstanding | 29,721,974 | 29,721,974 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 24,201,629 | $ 22,010,132 |
Costs and operating expenses | ||
Cost of revenue (excluding depreciation and amortization) | 3,491,545 | 3,331,876 |
General and administrative | 8,487,462 | 6,065,661 |
Technology | 1,971,338 | 1,842,020 |
Selling | 981,940 | 846,434 |
Customer support | 2,678,252 | 2,830,789 |
Depreciation and amortization | 2,910,219 | 3,013,732 |
Total costs and operating expenses | 20,520,756 | 17,930,512 |
Operating income | 3,680,873 | 4,079,620 |
Interest expense | (308,732) | (387,064) |
Interest income | 251,510 | 84,992 |
Other income (expense) | 0 | 10,249 |
Total other income (expense) | 57,222 | (291,823) |
Income from operations before income taxes | 3,263,651 | 3,787,797 |
Income tax benefit (expense) | (789,810) | 585,548 |
Net Income | $ 2,833,841 | $ 4,373,345 |
BASIC AND DILUTED EARNINGS PER COMMON SHARE | $ 0.10 | $ 0.15 |
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 29,398,960 | 29,740,207 |
STATEMENT OF STOCKHOLDERS' EQUI
STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance, shares at Dec. 31, 2017 | 29,595,473 | |||
Balance, amount at Dec. 31, 2017 | $ 29,596 | $ 34,804,458 | $ (12,386,887) | $ 22,447,167 |
Issuance of Common Stock for services, amount | $ 200 | 317,800 | 318,000 | |
Issuance of Common Stock for services, shares | 200,000 | |||
Repurchase of Common Stock, amount | $ (55) | (82,445) | (82,500) | |
Repurchase of Common Stock, shares | (55,000) | |||
Return of Common Stock for final settlement of Pair Acquisition, amount | $ (19) | (29,260) | (29,280) | |
Return of Common Stock for final settlement of Pair Acquisition, shares | (18,499) | |||
Net income | 4,373,345 | 4,373,345 | ||
Balance, shares at Dec. 31, 2018 | 29,721,974 | |||
Balance, amount at Dec. 31, 2018 | $ 29,722 | 35,010,552 | (8,013,542) | 27,026,732 |
Recapture of prior period non-cash compensation charges in the current period | (830,500) | (830,500) | ||
Non-cash compensation awards | 1,062,669 | 1,062,669 | ||
Stock forfeiture, shares | (450,000) | |||
Stock forfeiture, amount | $ (450) | 450 | 0 | |
Net income | 3,590,487 | 2,833,841 | ||
Balance, shares at Dec. 31, 2019 | 29,271,974 | |||
Balance, amount at Dec. 31, 2019 | $ 29,272 | $ 35,243,171 | $ (5,179,701) | $ 30,092,472 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows from Operating Activities | ||
Net income | $ 2,833,841 | $ 4,373,345 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 2,910,219 | 3,013,732 |
Issuance of common stock for services | 0 | 318,000 |
Non-cash compensation expense, net of recapture | 232,169 | 0 |
Deferred income taxes | (393,902) | (1,454,077) |
Amortization of right-of-use asset | 646,090 | 0 |
Discount on loan fees | 28,068 | 33,366 |
Change in assets and liabilities: | ||
Accounts receivable | (67,123) | 112,838 |
Prepaid expenses | (336,675) | (447,332) |
Accounts payable | 14,274 | 305,324 |
Income taxes payable | 1,179,389 | 868,529 |
Accrued expense | 709,698 | (391,913) |
Operating lease liabilities | (646,090) | 0 |
Deferred revenue | 464,899 | 1,266,714 |
Net Cash Provided by Operating Activities | 7,574,857 | 7,998,526 |
Cash Flows from Investing Activities: | ||
Purchase of property & equipment and software development costs | (360,540) | (378,687) |
Net Cash Used in Investing Activities | (360,540) | (378,687) |
Cash Flows from Financing Activities: | ||
Re-purchase of common stock | 0 | (82,500) |
Repayment on term loan | (1,600,000) | (1,600,000) |
Repayment on capital lease | (72,986) | (69,243) |
Net Cash Used in Financing Activities | (1,672,986) | (1,751,743) |
Net Increase in Cash | 5,541,331 | 5,868,096 |
Cash and Cash Equivalents at Beginning of Period | 11,079,941 | 5,211,845 |
Cash and Cash Equivalents at End of Period | 16,621,272 | 11,079,941 |
Right-of-use operating lease assets obtained in exchange for operating lease liabilities | 1,397,821 | 0 |
Supplemental Disclosures of Cash Flow Information | ||
Cash paid during the periods for: Interest | (335,294) | 350,761 |
Cash paid during the periods for: Income taxes | 4,323 | 0 |
Supplemental Disclosures of Cash Flow Investing and Financing Activities | ||
Right-of-use operating lease assets obtained in exchange for operating lease liabilities | $ 1,397,821 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Organization On December 27, 2017, the Company purchased all the issued and outstanding shares of Pair Networks Inc., (“Pair”), a Pennsylvania corporation, and subsidiaries Ryousha Kokusai, LLC (Ryousha) and 660837NB, Inc. (NB), in a transaction accounted for as a purchase. Pair Networks Inc. provides web hosting services and domain name registrations. Services include shared web hosting, e-commerce, fully managed virtual private and dedicated servers, customer self-managed dedicated servers, domain-name registration, co-location and content-delivery networks. Pair began operations in August 1995. It incorporated in the state of Pennsylvania in August 1998. Pair’s principal operations are conducted on-site in Pittsburgh, PA. Pair also has an operating site in Denver, Colorado, and a remote site back-up location in Pittsburgh, PA. Ryousha Kokusai, LLC (dba Pair International), a wholly owned single-member limited liability company subsidiary of Pair, was formed on January 1, 2015. The Value Added Tax (VAT) for sales to European Union countries subject to the VAT in Europe are paid through Ryousha Kokusai LLC. There are no operating activities conducted by Ryousha. NB, a Canadian Company was organized on December 2, 2011. NB is used solely for holding the Canadian tradenames and domain names of Pair. There are no operating activities conducted by NB. Principles of Consolidation Accounting Estimates Our more significant estimates include: ● the assessment of recoverability of long-lived assets, including property and equipment, goodwill and intangible assets; ● the estimated useful lives of intangible and depreciable assets; ● the grant date fair value of equity-based awards; ● the recognition, measurement, and valuation of current and deferred income taxes; We periodically evaluate these estimates and adjust prospectively, if necessary. We believe our estimates and assumptions are reasonable; however, actual results may differ from our estimates. Cash and Cash Equivalents Concentration of Credit Risk Accounts Receivable Registry Deposits - Prepaid Domain Name Registry Fees - Property and Equipment Definite-Life Intangible Assets Software Development Costs Debt Issuance Costs - Goodwill Advertising Costs Fair Value of Financial Instruments ● Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities; ● Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and ● Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, and accounts payable, deferred revenue and accrued expenses approximates their recorded values due to their short-term maturities. Revenue Recognition The adoption of the new standard did not have a material impact to our financial statements. Revenue is recognized when control of the promised services is transferred to our customers, in an amount reflecting the consideration we expect to be entitled to in exchange for those services. Certain products are generally sold with a right of return within our policy, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Refunds are estimated at contract inception using the expected value method based on historical refund experience and updated each reporting period as additional information becomes available and only to the extent it is probable a significant reversal of any incremental revenue will not occur. Refunds reduce deferred revenue at the time they are granted and resulted in a reduced amount of revenue recognized over the contract term of the applicable service compared to the amount originally expected. Our revenue is categorized and disaggregated as follows: Domains Hosting Services Podcast Hosting Media Subscription Services Advertising Equity-Based Compensation - Leases Other Definite-life Intangible Assets - Business Combinations Contingent consideration is adjusted to fair value in subsequent periods as an increase or decrease in general and administrative expenses. Acquisition-related costs are expensed as incurred. See Note 3 to our consolidated financial statements for additional information regarding business combinations. Income Taxes Earnings Per Share Income Taxes Recently Enacted Accounting Standards - In January 2017, the FASB issued ASU 2017-04, Intangibles, Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The standard eliminates the previous requirement to calculate a goodwill impairment charge by comparing the implied fair value of goodwill with its carrying amount. The new standard becomes effective for us on January 1, 2020. We early adopted the proposed guidance under ASU 2017-04 for the year end December 31, 2018 on a prospective basis. The implementation of ASU 2017-04 did not have a material impact on our consolidated financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements. Reclassifications to Prior Period Financial Statements and Adjustments Certain reclassifications have been made in the Company’s financial statements of the prior year to conform to the current year presentation. $2,000,000 for the line of credit as of December 31, 2018, was reclassified from loans payable, net |
PROPERTY & EQUIPMENT
PROPERTY & EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | The following is a summary of property and equipment at: Life December 31, 2019 December 31, 2018 Furniture, fixtures, and equipment 3-10 yrs $8,262,929 $8,155,322 Leasehold improvements 3 - 5 yrs 2,646,399 2,646,400 Software 3 yrs 514,981 262,046 11,424,309 11,063,768 Less: Accumulated depreciation $(9,887,379) (8,834,474) Property & equipment, net $1,536,930 $2,229,294 Depreciation expense for the periods ended December 31, 2019 and 2018 was $1,052,905 and $1,156,418, respectively. |
GOODWILL AND OTHER DEFINITE-LIF
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS | Goodwill The Company followed the guidance in ASC 350-20-35-3 and performed the annual impairment test of goodwill. Using qualitative factors to determine whether it is necessary to perform the goodwill impairment test discussed in paragraphs ASC 350-20-35-4 through 35-13, management concluded that it is more likely than not that the fair value of the Liberated Syndication and Pair reporting units is more than its carrying amount. Therefore, no further testing is performed. Goodwill consists of: December 31, December 31, 2019 2018 Pair $4,903,920 $4,903,920 Libsyn 11,484,251 11,484,251 Total Goodwill $16,388,171 $16,388,171 The following is a summary of goodwill for the Year Ended: December 31, December 31, 2019 2018 Goodwill at beginning of period $16,388,171 $16,352,069 Acquisition of Pair - 36,102 Impairment - - Goodwill at end of period $16,388,171 $16,388,171 As of December 31, 2019, identifiable intangible assets consist of following: Preliminary Fair Value Weighted Average Useful Life (in Years) Accumulated Amortization Net Carrying Amount Customer Relationships $3,947,000 7 $1,127,714 $2,819,286 Intellectual Property 3,709,000 7 1,059,714 2,649,285 Trade name 576,000 10 115,200 460,800 Non-compete 1,412,000 2 1,412,000 - Total $9,644,000 $3,714,628 $5,929,371 The estimated future amortization expenses related to other intangible assets as of December 31, 2018 are as follows: For twelve months ending December 31, 2020 $1,151,314 2021 1,151,314 2022 1,151,314 2023 1,151,314 2024 1,151,315 Thereafter 172,800 Total $5,929,371 |
LOANS
LOANS | 12 Months Ended |
Dec. 31, 2019 | |
Loans Payable [Abstract] | |
LOANS | On December 27, 2017, the Company entered into a loan agreement (the “Loan Agreement”) among the Company, Libsyn, and Pair, together, and First Commonwealth Bank, a Pennsylvania bank and trust company (the “Bank”). The Loan Agreement provides for: (i) a revolving credit facility pursuant to which the Company may borrow an aggregate principal amount not to exceed $2,000,000 (the “Revolving Credit Facility”); and (ii) a term loan in a principal amount equal to $8,000,000 (the “Term Loan” and, together with the Revolving Credit Facility, the “Facility”). A portion of the Revolving Credit Facility, up to $500,000, may be used for standby letters of credit for the account of the Company. As of December 31, 2019, $2,000,000 was drawn down on the revolving line with $0 available. The due date for the revolving line of credit is December 27, 2022. The loan currently accrues interest at LIBOR plus 125 base points or prime plus 75 basis points at the election of the Company. As of December 31, 2019, the Company has elected LIBOR plus 125 basis points or 3.055%. The Term Loan is repayable in quarterly installments of $400,000 commencing on March 31, 2018 and on the last day of each June, September, December and March thereafter, through and including September 30, 2022. Accrued interest is payable in arrears not less frequently than quarterly. The remaining unpaid principal balance of the Term Loan, together with accrued interest thereon, is due and payable in full on December 27, 2022. The Term Loan also calls for additional payment equal to the following: 1)100% of the proceeds from the sale of any common shares 2) 100% of the proceeds from the sale of assets not immediately replaced 3) excess liquidity in any given year up to $1,066,667 and no more than $3,200,000 over the life of the term loan. Excess liquidity is obtained when the audited financial statements reflect a cash balance greater than $4,600,000. Based upon the 2019 financial statements, the company demonstrates excess liquidity per the Term Loan agreement. As such, the company has included the expected $1,066,667 payment to the bank as a current liability. As of December 31, 2019, the balance on the term loan was $4,800,000. The Company, Libsyn and Pair have granted the bank a blanket security interest in their respective assets, and the Company has pledged the stock of Webmayhem Inc. and Pair Networks Inc. to the bank, as security for all obligations under the Loan Agreement. Borrowings under the Facility are at variable rates which are, at the Company’s option, tied to LIBOR (London Interbank Offered Rate) plus an applicable rate or a prime rate. Interest rates are subject to change based on the Company’s combined cash balances. The Facility contains covenants that may have the effect of limiting the ability of the Company to, among other things, merge with or acquire other entities, enter into a transaction resulting in a change in control, create certain new liens, incur certain additional indebtedness, engage in certain transactions with affiliates, engage in new lines of business or sell a substantial part of its assets. The Facility also requires the Company to maintain certain consolidated fixed charge coverage ratios and minimum liquidity balances. The Facility also contains customary events of default, including (but not limited to) default in the payment of principal or, following an applicable grace period, interest, breaches of the Company’s covenants or warranties under the Facility, payment default or acceleration of certain indebtedness of the Company or any subsidiary, certain events of bankruptcy, insolvency or liquidation involving the Company or its subsidiaries, certain judgments or uninsured losses, changes in control and certain liabilities related to ERISA based plans. On December 27, 2017, the Company drew $10,000,000 under the Facility to finance a portion of the cash consideration pursuant to the Share Purchase Agreement. Debt issuance costs of $113,000 for the Facility were recorded as a discount and will be amortized over the life of the Facility. As of December 31, 2019, the discount was $51,566. Future Maturities of the loans at December 31, 2019 are as follows: For the year ending December 31, 2020 $ 2,666,667 2021 1,600,000 2022 533,333 Total $ 4,800,000 |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
CAPITAL STOCK | Common Stock In prior periods, the Company issued stock-based awards to employees that contained a vesting performance condition related to the occurrence of an uplisting of the Company’s common stock to the NASDAQ stock exchange. Such awards were initially expensed in the period issued as the Company deemed it probable the performance condition would be met. During the first quarter of 2019, approximately $830,500 of previously recognized expense related to these awards was recaptured in accordance with ASC 718, Compensation – Stock Compensation (“ASC 718”) as a credit to general and administrative expense as it became less than probable that such performance conditions would occur within the time specified in the stock award agreements. Per the October 4, 2019 settlement agreement with Camac Fund, LP, and its affiliates Camac Partners, LLC, Camac Capital, LLC, and Eric Shahinian, (collectively, “Camac”), 300,000 of these shares were to be returned to the Company. As of December 31, 2019, this has not yet been completed. The Company is taking the necessary steps to irrevocably cancel these equity awards previously granted to the Company’s Chief Executive Officer and Chief Financial Officer. On March 15, 2019 (“Modification Date”), the Company modified certain stock awards previously issued which contained a market condition. The prior agreement required the Company’s adjusted market capitalization to exceed $75 million on five consecutive days by April 23, 2019, whereas the modified award increases the adjusted market capitalization threshold to $80 million on five consecutive days within 18 months of the Modification Date. In accordance with ASC 718, the Company recorded the incremental fair value of the newly modified award over the fair value of the original award, as compensation expense totaling $677,088. On April 13, 2019, 450,000 shares of common stock were forfeited as certain milestones were not achieved. On December 27, 2019 (“Modification Date”), the Company modified certain stock awards previously issued which contained a market condition. The prior agreement required the Company to obtain an average closing price of $5.00 per share (adjusted for stock splits) for any 10 consecutive trading days, in which case certain employees would retain 25% of the stock. The modification requires the Company to obtain an average closing price of $5.50 per share (adjusted for stock splits for any 10 consecutive trading days, in which case the Employees will retain 100% of their stock. In accordance with ASC 718, the Company recorded the incremental fair value of the newly modified award over the fair value of the original award, as compensation expense totaling $385,582. During the first quarter of 2018, the Company issued 200,000 shares of common stock valued at $318,000 to a consultant for services rendered. During the first quarter of 2018, the seller of Pair Networks Inc., returned 18,499 shares valued at $29,278 to the company as per the terms of the acquisition agreement dated December 27, 2017 in connection with the closing adjustment for the net-working capital provision. Information regarding vested stock awards for the year ended December 31, 2019 is summarized in the table below: Shares Weighted Average Grant Date Fair Value Average Remaining Life Issued and outstanding unvested shares subject to forfeiture at beginning of period 5,175,000 $1.00 0.70 Stock Awards Issued - $- - Awards no-longer subject to forfeiture 397,500 $0.66 N/A Cancelled / Forfeited Awards 450,000 - - Issued and outstanding unvested shares subject to forfeiture at end of period 3,787,500 $1.66 0.70 Per the settlement agreement in the proxy contest with Camac, 300,000 of these shares will be returned to the Company. On February 28, 2020, the Board of Directors approved the termination of John Busshaus. The Company anticipates that the 1,212,500 shares of unvested shares held by Mr. Busshaus will be forfeited and cancelled. |
DEFERRED REVENUE
DEFERRED REVENUE | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
DEFERRED REVENUE | Deferred revenue consists of the following: December 31, 2019 December 31, 2018 Current: Hosting services $1,664,811 $1,601,335 Domains 688,717 104,172 Media subscription 158,154 111,514 $2,511,682 $2,276,079 Noncurrent: Hosting services 29,309 39,071 Domains 571,925 83,266 $3,112,916 $2,648,017 Deferred revenue as of December 31, 2019 is expected to be recognized as revenue as follows: 2020 2021 2022 2023 2024 Thereafter Total Domains $688,717 $232,133 $162,659 $116,480 $49,782 $10,870 $1,260,641 Hosting 1,664,811 27,246 2,064 - - - 1,694,121 Media Subscription 158,154 - - - - - 158,154 $2,511,682 $259,379 $164,723 $116,480 $49,782 $10,891 $3,112,916 Disaggregated revenue consists of following: Twelve months ended December 31 2019 2018 Hosting services $8,813,547 $8,896,966 Podcast hosting 13,511,188 10,915,771 Advertising 594,289 1,323,776 Domains 1,018,419 547,770 Other 264,186 325,849 $24,201,629 $22,010,132 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company accounts for income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes which requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carryforwards. At December 31, 2019 and 2018, the total of all deferred tax assets was $1,847,979 and $1,454,077, respectively. The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which cannot be determined. The change in the valuation allowance for the years ended December 31, 2019 and 2018 was $0 and $1,454,077, respectively. The components of income tax expense (benefit) from continuing operations for the Years ended December 31, 2019 and 2018 consist of the following: For the Years Ended December 31, Current tax expense: 2019 2018 Federal $ 1,162,480 $ 868,529 State 25,555 - Current tax expense $ 1,183,712 868,529 Deferred tax (benefit) expense: Depreciation and amortization (611,146) (164,862) Tax Depreciation and Amortization 30,467 - Bonus Accrual (63,000) - Intangible Assets – Tax Amortization 229,071 - Non-cash compensation 70,753 (1,261,155) Deferred Revenue (50,047) (28,060) Total deferred tax benefit (393,902) (1,454,077) Total income tax (benefit) expense $ 789,810 $ (585,548) A reconciliation of income tax expense at the federal statutory rate to income tax expense at the company’s effective rate is as follows: For the Years Ended December 31, 2019 2018 Computed tax at the expected statutory rate $ 1,162,480 $ 868,529 State and local income taxes, net of federal 21,232 - Valuation Allowance (393,902) (1,454,077) Total income tax (benefit) expense $ 789,810 $ (585,548) The temporary differences, tax credits and carryforwards gave rise to the following deferred tax asset at December 31, 2019 and 2018: December 31, December 31, 2019 2018 Current deferred tax assets (liabilities): Bonus accrual $ 63,000 $ - Total current deferred tax assets 63,000 - Long-term deferred tax assets (liabilities): Intangible assets – tax amortization (229,071) - Depreciation and amortization 745,541 164,862 Non-cash compensation 1,190,402 1,261,155 Deferred Revenue 78,107 28,060 Total long-term deferred tax assets $ 1,784,979 $ 1,454,077 Net term deferred tax assets $ 1,847,979 $ 1,454,077 At December 31, 2019, the company has loss carryforwards of $0. The Internal Revenue Service (the “IRS”) is performing its field audit of the Company’s federal income tax returns and is currently examining the years 2016 through 2018. Management believes that adequate provisions have been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. We file U.S. federal, and U.S. states returns, and we are generally no longer subject to tax examinations for years prior to 2015 for U.S. federal and U.S. states tax returns. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
LEASES | We lease two office spaces, a Denver data center, and three Xerox machines. These leases are all classified as operating leases. There is one finance lease for Emerson batteries which is immaterial to our consolidated financial statements. Operating lease assets and obligations are reflected within Operating lease right-of-use assets, Current portion of operating lease liabilities, and Operating lease liabilities, respectively, on the Consolidated Balance Sheet. Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred. We have options to renew lease terms for the office spaces and other assets. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for our operating leases as of December 31, 2019 was 1.84 years. The discount rate implicit within our leases is generally not determinable and therefore the Company determines the discount rate based on its incremental borrowing rate for purposes of classifying the lease and measuring the right-of-use asset and lease liability. The incremental borrowing rate for our leases is determined based on lease term in a similar economic environment, adjusted for impacts of collateral. The weighted average discount rate used to measure our operating lease liabilities as of December 31, 2019 was 4.42%. As of, December 31, 2019, cash paid for amounts in the measurement of lease liabilities was $557,190. Total operating lease costs during the same period were $558,849. Maturity of lease liabilities: Twelve months ending December 31, Operating Leases 2020 $ 433,426 2021 320,936 2022 29,816 Total lease payments 784,178 Less amount of lease payment representing interest (32,448) Total present value of lease payments $ 751,730 As previously disclosed in our 2018 Form 10-K under the prior guidance of ASC 840, minimum payments under operating lease agreements as of December 31, 2018 were as follows: Twelve months ending December 31, Operating Leases 2019 $ 544,284 2020 493,164 2021 365,582 2022 19,812 Total lease payments $ 1,422,822 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | Basic income per share is computed by dividing net income attributable to Liberated Syndication Inc. by the weighted-average number of shares of common stock outstanding during the period. As of December 31, 2019, there were no common stock equivalents outstanding. The following data shows the amounts used in computing earnings per share and the weighted average number of shares of common stock outstanding for the periods presented for the periods ended: December 31, 2019 December 31, 2018 Income from operations available to common stockholders (numerator)$ $2,833,841 4,373,345 Income available to common stockholders (numerator) 2,833,841 4,373,345 Weighted average number of common shares outstanding during the period used in earnings per share (denominator) 29,398,960 29,740,207 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | The Company has a 401(k) plan and profit-sharing plan for the benefit of the employees of the Company. Employees are eligible to participate in the plan the first of the month following their hire date and attaining the age of 21. Profit sharing contributions are made at the discretion of the Board of Directors and vest 100% after the second year of service. The Company made a $111,431 profit sharing contribution to the plan during 2019. The Company entered into employment agreements with its executive officers and management that provide for bonus payments at the end of the agreement, and bonus upon termination without cause, or following a change of control by the Company or by the executive for good reason. As of December 31, 2019, the bonus accrual totals $940,000. On September 30, 2019, the Securities and Exchange Commission (“SEC”) filed a complaint in the Southern District of New York regarding certain actions by Christopher Spencer and John Busshaus involving the Company’s previous parent company, FAB Universal Corp. (“FAB”). According to the SEC’s complaint, between 2012 and 2013, Mr. Spencer and Mr. Busshaus the former Chief Executive Officer and former Chief Financial Officer of FAB, respectively, negligently used a series of misrepresentations about the capabilities and growth prospects of a central component of FAB’s business in China, namely FAB’s multi-media kiosk business. Mr. Spencer and Mr. Busshaus have accepted the SEC’s offer of settlement without admitting or denying the allegations or findings contained in the complaint. The SEC's complaint charged Spencer and Busshaus with violations of the antifraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933. Without admitting or denying the allegations, Spencer and Busshaus have agreed to bifurcated settlements where they will be permanently enjoined from violating these provisions. The settlements, which received court approval, reserve the issues of disgorgement, prejudgment interest, and civil penalties for further determination by the court upon motion of the SEC. On October 2, 2019, the Company formally accepted the resignation John Busshaus, the former Chief Financial Officer of the Company (“Busshaus”). The Company received a letter from Mr. Busshaus, providing notice of his intent to resign for “Good Reason” as defined in Section 8(c) of the Employment Agreement pursuant to which he claimed to be entitled to the “Effect of Termination” under the Employment Agreement in Section 9(c). The Company has taken the position that it does not believe that there was “Good Reason” for his resignation and therefore is not entitled to the “Effect of Termination” under the Employment Agreement in Section 9(c). On April 24, 2020 Busshaus filed a complaint against the Company with the American Arbitration Association (AAA) asserting claims arising from his employment relationship with Libsyn, including, inter alia, claims for wages, compensation and benefits, and claims prohibiting unlawful discharge and wrongful termination. Busshaus claims that he resigned for “Good Reason” as defined in Section 8(c) of his Employment Agreement pursuant to which he claims to be entitled to the “Effect of Termination” under the Employment Agreement in Section 9(c). The Company denies Busshaus’ claims in their entirety. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company's business segments. The Company is engaged in providing hosting services. The Company's chief operating decision maker (“CODM”) has been identified as the CEO who reviews the financial information of separate operating segments when making decisions about allocating resources and assessing performance of the group. Based on management's assessment, the Company has determined that it has two operating segments as of December 31, 2019 which are podcast hosting services (Libsyn) and internet hosting services (Pair). The following table presents summary information by segment for the twelve months ended December 31, 2019 and 2018, respectively: 2019 2018 (in thousands) Libsyn Pair Total Libsyn Pair Total Revenue $ 14,486 $ 9,716 $ 24,202 $ 12,630 $ 9,380 $ 22,010 Cost of revenue 2,368 1,123 3,491 2,516 816 3,332 Total assets $ 26,934 $ 17,668 $ 44,602 $ 22,329 $ 17,732 $ 40,061 Depreciation and amortization $ 82 $ 2,828 $ 2,910 $ 46 $ 2,968 $ 3,014 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On February 18, 2020 the Company modified and extended the Stock Agreements dated December 28, 2017 (Original Agreement) for four key employees. The Company modified and extended certain milestones which include the up-listing of the common stock to the Nasdaq or NYSE and increasing the average closing price per share for any 10 consecutive trading days to $5.50 per share. A total of 500,000 restricted shares of common stock are eligible for vesting based on the amended agreement. On February 18, 2020, the Company amended stock agreements entered into with two Board members, each with respect to 200,000 shares of common stock. The Company modified the stock agreements for the stock to vest immediately in the event of certain changes in control of the Company. A total of 400,000 restricted shares of common stock were covered by the amended agreement. On February 18, 2020, the Company awarded 25,000 shares of restricted common stock to three members of the Board of Directors, which shares shall vest in four equal quarterly tranches at the end of each quarter of 2020 and all such shares shall vest immediately in the event of certain changes in control of the Company. On February 28, 2020, the Board of Directors approved the termination of John Busshaus. As of December 31, 2019, the Company has reversed the $560,000 bonus which was accruing during 2019. On April 24, 2020 Busshaus filed a complaint against the Company with the American Arbitration Association (AAA) asserting claims arising from his employment relationship with Libsyn, including, inter alia |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Organization | Liberated Syndication Inc., (“Company”, “parent”), a Nevada Corporation, was organized on September 30, 2015. Webmayhem, Inc. (“Libsyn”), a Pennsylvania corporation, a wholly owned subsidiary of the Company, was organized on January 1, 2001. Libsyn provides podcast hosting services for producers of content. Libsyn also offers ad insertion on certain of the producers’ content. Libsyn offers hosting and distribution tools, including storage, bandwidth, syndication creation, distribution, and statistics tracking. Libsyn offers an enterprise solution for professional media producers and corporate customers and a premium subscription service that provides producers a custom App and a podcast Website where listeners can access their show, login to purchase a subscription, and get access to premium content. On December 27, 2017, the Company purchased all the issued and outstanding shares of Pair Networks Inc., (“Pair”), a Pennsylvania corporation, and subsidiaries Ryousha Kokusai, LLC (Ryousha) and 660837NB, Inc. (NB), in a transaction accounted for as a purchase. Pair Networks Inc. provides web hosting services and domain name registrations. Services include shared web hosting, e-commerce, fully managed virtual private and dedicated servers, customer self-managed dedicated servers, domain-name registration, co-location and content-delivery networks. Pair began operations in August 1995. It incorporated in the state of Pennsylvania in August 1998. Pair’s principal operations are conducted on-site in Pittsburgh, PA. Pair also has an operating site in Denver, Colorado, and a remote site back-up location in Pittsburgh, PA. Ryousha Kokusai, LLC (dba Pair International), a wholly owned single-member limited liability company subsidiary of Pair, was formed on January 1, 2015. The Value Added Tax (VAT) for sales to European Union countries subject to the VAT in Europe are paid through Ryousha Kokusai LLC. There are no operating activities conducted by Ryousha. NB, a Canadian Company was organized on December 2, 2011. NB is used solely for holding the Canadian tradenames and domain names of Pair. There are no operating activities conducted by NB. |
Principles of consolidation | Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and include our accounts and the accounts of our subsidiaries. The financial statements presented reflect the accounts of parent, Libsyn, Ryousha, NB and Pair. All material intercompany accounts and transactions have been eliminated. |
Accounting estimates | The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Our more significant estimates include: ● the assessment of recoverability of long-lived assets, including property and equipment, goodwill and intangible assets; ● the estimated useful lives of intangible and depreciable assets; ● the grant date fair value of equity-based awards; ● the recognition, measurement, and valuation of current and deferred income taxes; We periodically evaluate these estimates and adjust prospectively, if necessary. We believe our estimates and assumptions are reasonable; however, actual results may differ from our estimates. |
Cash and cash equivalents | The Company considers all highly liquid investments with an original maturity date of three months or less when purchased to be cash equivalents. At December 31, 2019, the Company had $16,621,272 in cash which included $16,145,362 cash balances in excess of federally insured limits. |
Concentration of credit risk | Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents and account receivable. Management’s assessment of the Company’s credit risk for cash and cash equivalents is low as cash and cash equivalents are held in financial institutions believed to be credit worthy. No single customer represented over 10% of our total revenue for any period presented. As of December 31, 2019, two customers individually accounted for 13% and 5%, respectively, of our total accounts receivable. In 2018, the same two customers individually accounted for 18% and 12%, respectively. |
Accounts receivable | Accounts receivable consist of trade receivables arising in the normal course of business. At December 31, 2019 and 2018, the Company has an allowance for doubtful accounts of $14,000 and $14,000, respectively, which reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. During the years ended December 31, 2019 and 2018, the Company adjusted the allowance for bad debt by $0. |
Registry deposits | Registry deposits represent amounts on deposit with, or receivable from, various domain name registries to be used by us to make payments for future domain registrations or renewals. |
Prepaid domain name registry fees | Prepaid domain name registry fees represent amounts charged by a registry at the time a domain is registered or renewed. These amounts are amortized to cost of revenue over the same period revenue is recognized for the related domain registration contracts. |
Property and Equipment | Property and equipment is stated at cost. Depreciation is recorded over the shorter of the estimated useful life or the lease term of the applicable asset using the straight-line method beginning on the date an asset is placed in service. Maintenance and repairs are charged to expense as incurred. |
Definite-Life Intangible Assets | The Company evaluates its long-lived assets for impairment whenever events or change in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the asset. |
Software development costs | We account for software development costs, including costs to develop software products or the software component of products to be marketed to external users, as well as software programs to be used solely to meet our internal needs in accordance with ASC Topic 985 Software. Software development costs associated with software to be sold, leased, or for internal use are expensed as incurred until technological feasibility, defined as a working model or prototype, has been established. At that time, such costs are capitalized until the product is available for general release and amortized over its useful life. |
Debt issuance costs | We defer and amortize issuance costs, underwriting fees and related expenses incurred in connection with the issuance of debt instruments using the effective interest method over the terms of the respective instruments. Debt issuance costs, other than those associated with our revolving credit loan, are reflected as a direct reduction (discount) of the carrying amount of the related debt liability. |
Goodwill | Goodwill is evaluated for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company performed the annual impairment test of goodwill as of December 31, 2019. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows. The company recorded no impairment charge for goodwill during the years ended December 31, 2019 and 2018. |
Advertising costs | Advertising costs are expensed as incurred and amounted to $83,209 and $122,424 for the periods ending December 31, 2019 and 2018, respectively. |
Fair value of financial instruments | The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic 820. The authoritative guidance, which, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: ● Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities; ● Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and ● Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, and accounts payable, deferred revenue and accrued expenses approximates their recorded values due to their short-term maturities. |
Revenue recognition | On January 1, 2018, we adopted the Financial Accounting Standards Board's (FASB) new revenue recognition standard using the modified retrospective method applied to those contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new standard. The adoption of the new standard did not have a material impact to our financial statements. Revenue is recognized when control of the promised services is transferred to our customers, in an amount reflecting the consideration we expect to be entitled to in exchange for those services. Certain products are generally sold with a right of return within our policy, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Refunds are estimated at contract inception using the expected value method based on historical refund experience and updated each reporting period as additional information becomes available and only to the extent it is probable a significant reversal of any incremental revenue will not occur. Refunds reduce deferred revenue at the time they are granted and resulted in a reduced amount of revenue recognized over the contract term of the applicable service compared to the amount originally expected. Our revenue is categorized and disaggregated as follows: Domains Hosting Services Podcast Hosting Media Subscription Services Advertising |
Equity-based compensation | Our equity-based awards are comprised of stock and are accounted for using the fair value method. Stock is measured based on the fair market value of the underlying common stock on the date of grant. Awards vest and compensation is recognized over the requisite service period. The measurement date for performance vesting awards is the date on which the applicable performance criteria are approved by our board of directors. |
Leases | The Company accounts for leases in accordance with Accounting Standards Codification (“ASC”) Topic 842. Leases that meet one or more of the finance lease criteria of standard are recorded as a finance lease, all other leases are operating leases. |
Other definite-life intangible assets | Other intangible assets consist of customer relationships, intellectual property, trade name and non-compete agreement, which were generated through the acquisition of Pair. Management considers these intangible assets to have finite-lives. These assets are being amortized on a straight-line basis over their estimated useful lives. |
Business combinations | We include the results of operations of acquired businesses in our consolidated financial statements as of the respective dates of acquisition. 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. The purchase price of acquisitions, including estimates of the fair value of contingent consideration when applicable, is allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values on the respective acquisition dates, with the excess recorded as goodwill. 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. The estimates are inherently uncertain and subject to refinement. We continue to collect information and reevaluate these estimates and assumptions quarterly and record any adjustments to the preliminary estimates to goodwill provided we are within the measurement period. Contingent consideration is adjusted to fair value in subsequent periods as an increase or decrease in general and administrative expenses. Acquisition-related costs are expensed as incurred. See Note 3 to our consolidated financial statements for additional information regarding business combinations. |
Income taxes | The Company accounts for income taxes using the liability method, which requires the determination of deferred tax assets and liabilities based on the differences between the financial and tax basis of assets and liabilities, using enacted tax rates in effect for the year in which differences are expected to reverse. Deferred tax assets are adjusted by a valuation allowance, if based on the weight of available evidence it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company anticipates earnings in the near future and the realization of the benefit of the deferred tax assets. |
Earnings per share | The Company computes earnings per share in accordance with FASB ASC Topic 260 Earnings Per Share, which requires the Company to present basic earnings per share and diluted earnings per share when the effect is dilutive (see Note 9). |
Recently enacted accounting standards | On January 1, 2019, the Company adopted Accounting Standards Codification (ASC) 842, Leases (ASC 842). ASC 842 was issued to increase transparency and comparability among entities by recognizing right-of-use assets and lease liabilities on the balance sheet and disclosing key information about lease arrangements. We elected to transition to ASC 842 using the option to apply the standard on its effective date, January 1, 2019. The comparative periods presented reflect the former lease accounting guidance and the required comparative disclosures are included in Note 4 – Leases. There was not a material cumulative-effect adjustment to our beginning retained earnings as a result of adopting ASC 842. In January 2017, the FASB issued ASU 2017-04, Intangibles, Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The standard eliminates the previous requirement to calculate a goodwill impairment charge by comparing the implied fair value of goodwill with its carrying amount. The new standard becomes effective for us on January 1, 2020. We early adopted the proposed guidance under ASU 2017-04 for the year end December 31, 2018 on a prospective basis. The implementation of ASU 2017-04 did not have a material impact on our consolidated financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
Reclassifications to Prior Period Financial Statements and Adjustments | Certain reclassifications have been made in the Company’s financial statements of the prior year to conform to the current year presentation. $2,000,000 for the line of credit as of December 31, 2018, was reclassified from loans payable, net |
PROPERTY & EQUIPMENT (Tables)
PROPERTY & EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Life December 31, 2019 December 31, 2018 Furniture, fixtures, and equipment 3-10 yrs $8,262,929 $8,155,322 Leasehold improvements 3 - 5 yrs 2,646,399 2,646,400 Software 3 yrs 514,981 262,046 11,424,309 11,063,768 Less: Accumulated depreciation $(9,887,379) (8,834,474) Property & equipment, net $1,536,930 $2,229,294 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of goodwill | Goodwill consists of: December 31, December 31, 2019 2018 Pair $4,903,920 $4,903,920 Libsyn 11,484,251 11,484,251 Total Goodwill $16,388,171 $16,388,171 The following is a summary of goodwill for the Year Ended: December 31, December 31, 2019 2018 Goodwill at beginning of period $16,388,171 $16,352,069 Acquisition of Pair - 36,102 Impairment - - Goodwill at end of period $16,388,171 $16,388,171 |
Summary of other intangible assets | Preliminary Fair Value Weighted Average Useful Life (in Years) Accumulated Amortization Net Carrying Amount Customer Relationships $3,947,000 7 $1,127,714 $2,819,286 Intellectual Property 3,709,000 7 1,059,714 2,649,285 Trade name 576,000 10 115,200 460,800 Non-compete 1,412,000 2 1,412,000 - Total $9,644,000 $3,714,628 $5,929,371 |
Schedule of estimated future amortization expenses related to other intangible assets | For twelve months ending December 31, 2020 $1,151,314 2021 1,151,314 2022 1,151,314 2023 1,151,314 2024 1,151,315 Thereafter 172,800 Total $5,929,371 |
LOANS (Tables)
LOANS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Loans Payable [Abstract] | |
Future maturities of the loans | For the year ending December 31, 2020 $ 2,666,667 2021 1,600,000 2022 533,333 Total $ 4,800,000 |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Vested stock awards | Shares Weighted Average Grant Date Fair Value Average Remaining Life Issued and outstanding unvested shares subject to forfeiture at beginning of period 5,175,000 $1.00 0.70 Stock Awards Issued - $- - Awards no-longer subject to forfeiture 397,500 $0.66 N/A Cancelled / Forfeited Awards 450,000 - - Issued and outstanding unvested shares subject to forfeiture at end of period 3,787,500 $1.66 0.70 |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Summary of Deferred revenue | December 31, 2019 December 31, 2018 Current: Hosting services $1,664,811 $1,601,335 Domains 688,717 104,172 Media subscription 158,154 111,514 $2,511,682 $2,276,079 Noncurrent: Hosting services 29,309 39,071 Domains 571,925 83,266 $3,112,916 $2,648,017 |
Deferred revenue expected to be recognized as revenue | 2020 2021 2022 2023 2024 Thereafter Total Domains $688,717 $232,133 $162,659 $116,480 $49,782 $10,870 $1,260,641 Hosting 1,664,811 27,246 2,064 - - - 1,694,121 Media Subscription 158,154 - - - - - 158,154 $2,511,682 $259,379 $164,723 $116,480 $49,782 $10,891 $3,112,916 |
Summary of Disaggregated revenue | Twelve months ended December 31 2019 2018 Hosting services $8,813,547 $8,896,966 Podcast hosting 13,511,188 10,915,771 Advertising 594,289 1,323,776 Domains 1,018,419 547,770 Other 264,186 325,849 $24,201,629 $22,010,132 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense (benefit) | For the Years Ended December 31, Current tax expense: 2019 2018 Federal $ 1,162,480 $ 868,529 State 25,555 - Current tax expense $ 1,183,712 868,529 Deferred tax (benefit) expense: Depreciation and amortization (611,146) (164,862) Tax Depreciation and Amortization 30,467 - Bonus Accrual (63,000) - Intangible Assets – Tax Amortization 229,071 - Non-cash compensation 70,753 (1,261,155) Deferred Revenue (50,047) (28,060) Total deferred tax benefit (393,902) (1,454,077) Total income tax (benefit) expense $ 789,810 $ (585,548) |
Schedule of effective income tax rate reconciliation | For the Years Ended December 31, 2019 2018 Computed tax at the expected statutory rate $ 1,162,480 $ 868,529 State and local income taxes, net of federal 21,232 - Valuation Allowance (393,902) (1,454,077) Total income tax (benefit) expense $ 789,810 $ (585,548) |
Schedule of deferred tax assets and liabilities | December 31, December 31, 2019 2018 Current deferred tax assets (liabilities): Bonus accrual $ 63,000 $ - Total current deferred tax assets 63,000 - Long-term deferred tax assets (liabilities): Intangible assets – tax amortization (229,071) - Depreciation and amortization 745,541 164,862 Non-cash compensation 1,190,402 1,261,155 Deferred Revenue 78,107 28,060 Total long-term deferred tax assets $ 1,784,979 $ 1,454,077 Net term deferred tax assets $ 1,847,979 $ 1,454,077 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Maturity of lease liabilities | Twelve months ending December 31, Operating Leases 2020 $ 433,426 2021 320,936 2022 29,816 Total lease payments 784,178 Less amount of lease payment representing interest (32,448) Total present value of lease payments $ 751,730 |
Schedule of future minimum lease payments | Twelve months ending December 31, Operating Leases 2019 $ 544,284 2020 493,164 2021 365,582 2022 19,812 Total lease payments $ 1,422,822 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | December 31, 2019 December 31, 2018 Income from operations available to common stockholders (numerator)$ $2,833,841 4,373,345 Income available to common stockholders (numerator) 2,833,841 4,373,345 Weighted average number of common shares outstanding during the period used in earnings per share (denominator) 29,398,960 29,740,207 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Summary of Segment Reporting | 2019 2018 (in thousands) Libsyn Pair Total Libsyn Pair Total Revenue $ 14,486 $ 9,716 $ 24,202 $ 12,630 $ 9,380 $ 22,010 Cost of revenue 2,368 1,123 3,491 2,516 816 3,332 Total assets $ 26,934 $ 17,668 $ 44,602 $ 22,329 $ 17,732 $ 40,061 Depreciation and amortization $ 82 $ 2,828 $ 2,910 $ 46 $ 2,968 $ 3,014 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Cash balances in excess of federally insured limits | $ 16,145,362 | $ 10,641,198 |
Allowance for doubtful accounts | 14,000 | 14,000 |
Adjustments to allowance for bad debt | 0 | 0 |
Advertising costs | $ 83,209 | 122,424 |
Research and development costs | $ 1,842,020 |
PROPERY & EQUIPMENT (Details)
PROPERY & EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property and equipment | $ 11,424,309 | $ 11,063,768 |
Less: Accumulated depreciation | (9,887,379) | (8,834,474) |
Property and equipment, net | 1,536,930 | 2,229,294 |
Furniture, fixtures and equipment [Member] | ||
Property and equipment | $ 8,262,929 | $ 8,155,322 |
Furniture, fixtures and equipment [Member] | Minimum [Member] | ||
Estimated useful life | 3 years | 3 years |
Furniture, fixtures and equipment [Member] | Maximum [Member] | ||
Estimated useful life | 10 years | 10 years |
Leasehold improvements [Member] | ||
Property and equipment | $ 2,646,399 | $ 2,646,400 |
Leasehold improvements [Member] | Minimum [Member] | ||
Estimated useful life | 3 years | 3 years |
Leasehold improvements [Member] | Maximum [Member] | ||
Estimated useful life | 5 years | 5 years |
Software [Member] | ||
Estimated useful life | 3 years | 3 years |
Property and equipment | $ 514,981 | $ 262,046 |
PROPERY & EQUIPMENT (Details Na
PROPERY & EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 1,052,905 | $ 1,156,418 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill | $ 16,388,171 | $ 16,388,171 | $ 16,352,069 |
Pair | |||
Goodwill | 4,903,920 | 4,903,920 | |
Libsyn | |||
Goodwill | $ 11,484,251 | $ 11,484,251 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill at beginning of period | $ 16,388,171 | $ 16,352,069 |
Acquisition of pair | 0 | 36,102 |
Impairment | 0 | 0 |
Goodwill at end of period | $ 16,388,171 | $ 16,388,171 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 2) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Preliminary fair value | $ 9,644,000 |
Accumulated amortization | 3,714,628 |
Net carrying amount | 5,929,371 |
Customer relationships | |
Preliminary fair value | $ 3,947,000 |
Weighted average useful life | 7 years |
Accumulated amortization | $ 1,127,714 |
Net carrying amount | 2,819,286 |
Intellectual property | |
Preliminary fair value | $ 3,709,000 |
Weighted average useful life | 7 years |
Accumulated amortization | $ 1,059,714 |
Net carrying amount | 2,649,285 |
Trade name | |
Preliminary fair value | $ 576,000 |
Weighted average useful life | 10 years |
Accumulated amortization | $ 115,200 |
Net carrying amount | 460,800 |
Non-compete | |
Preliminary fair value | $ 1,412,000 |
Weighted average useful life | 2 years |
Accumulated amortization | $ 1,412,000 |
Net carrying amount | $ 0 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 3) | Dec. 31, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2020 | $ 1,151,314 |
2021 | 1,151,314 |
2022 | 1,151,314 |
2023 | 1,151,314 |
2024 | 1,151,315 |
Thereafter | 172,800 |
Total | $ 5,929,371 |
LOANS (Details)
LOANS (Details) | Dec. 31, 2019USD ($) |
Loans Payable [Abstract] | |
2020 | $ 2,666,667 |
2021 | 1,600,000 |
2022 | 533,333 |
Total | $ 4,800,000 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Stockholders' Equity Note [Abstract] | |
Stock awards outstanding, beginning | shares | 5,175,000 |
Stock awards, issued | shares | 0 |
Stock awards, no-longer subject to forfeiture | shares | 937,500 |
Stock awards, cancelled/forfeited | shares | 450,000 |
Stock awards outstanding, ending | shares | 3,787,500 |
Weighted average grant date fair value outstanding, beginning | $ / shares | $ 1 |
Weighted average grant date fair value, issued | $ / shares | 0 |
Weighted average grant date fair value, no-longer subject to forfeiture | $ / shares | 0.66 |
Weighted average grant date fair value, cancelled/forfeited | $ / shares | 0 |
Weighted average grant date fair value outstanding, ending | $ / shares | $ 1.66 |
Average remaining life, issued | 8 months 12 days |
Average remaining life outstanding, ending | 8 months 12 days |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Stockholders' Equity Note [Abstract] | ||
Common stock authorized | 200,000,000 | 200,000,000 |
Common stock par value | $ .001 | $ 0.001 |
Common stock issued | 29,721,974 | |
Common stock outstanding | 29,721,974 | 29,721,974 |
DEFERRED REVENUE (Details)
DEFERRED REVENUE (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current revenue | $ 2,511,682 | $ 2,276,079 |
Noncurrent revenue | 601,234 | 371,938 |
Deferred revenue | 3,112,916 | 2,648,017 |
Hosting Services | ||
Current revenue | 1,664,811 | 1,601,335 |
Noncurrent revenue | 29,309 | 39,071 |
Deferred revenue | 1,694,120 | 1,640,406 |
Domains | ||
Current revenue | 688,717 | 535,273 |
Noncurrent revenue | 571,925 | 332,867 |
Deferred revenue | 1,260,641 | 868,140 |
Media Subscription | ||
Current revenue | 158,154 | 139,471 |
Deferred revenue | $ 158,154 | $ 139,471 |
DEFERRED REVENUE (Details 1) (U
DEFERRED REVENUE (Details 1) (USD $) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
2020 | $ 2,511,682 | |
2021 | 259,379 | |
2022 | 164,723 | |
2023 | 116,480 | |
2024 | 49,782 | |
Thereafter | 10,891 | |
Total | 3,112,916 | $ 2,648,017 |
Domains | ||
2020 | 688,717 | |
2021 | 232,133 | |
2022 | 162,659 | |
2023 | 116,480 | |
2024 | 49,782 | |
Thereafter | 10,870 | |
Total | 1,260,641 | 868,140 |
Hosting Services | ||
2020 | 1,664,811 | |
2021 | 27,246 | |
2022 | 2,064 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Total | 1,694,120 | 1,640,406 |
Media Subscription | ||
2020 | 158,154 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Total | $ 158,154 | $ 139,471 |
DEFERRED REVENUE (Details 2)
DEFERRED REVENUE (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | $ 24,201,629 | $ 22,010,132 |
Hosting Services | ||
Revenue | 8,813,547 | 8,896,966 |
Podcast Hosting | ||
Revenue | 13,511,188 | 10,915,771 |
Advertising | ||
Revenue | 594,289 | 1,323,776 |
Domains | ||
Revenue | 1,018,419 | 547,770 |
Other | ||
Revenue | $ 264,186 | $ 325,849 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current tax expense: | ||
Federal | $ 1,162,480 | $ 868,529 |
State | 25,555 | 0 |
Current tax expense | 1,183,712 | 868,529 |
Deferred tax (benefit) expense: | ||
Depreciation and amortization | (611,146) | (164,862) |
Tax Depreciation and Amortization | 30,467 | 0 |
Bonus Accrual | (63,000) | 0 |
Intangible Assets - Tax Amortization | 229,071 | 0 |
Non-cash compensation | 70,753 | (1,261,155) |
Deferred Revenue | (50,047) | (28,060) |
Total deferred tax benefit | (393,902) | (1,454,077) |
Total income tax (benefit) expense | $ (789,810) | $ 585,548 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Computed tax at the expected statutory rate | $ 1,162,480 | $ 868,529 |
State and local income taxes, net of federal | 21,232 | 0 |
Change in valuation allowance | (393,902) | (1,454,077) |
Total income tax (benefit) expense | $ 789,810 | $ (585,548) |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current deferred tax assets (liabilities): | ||
Bonus Accrual | $ 63,000 | $ 0 |
Total current deferred tax assets | 63,000 | 0 |
Long-term deferred tax assets (liabilities): | ||
Intangible assets - Tax amortization | (229,071) | 0 |
Depreciation and amortization | 745,541 | 164,862 |
Non-cash compensation | 1,190,402 | 1,261,155 |
Deferred Revenue | 78,107 | 28,060 |
Total long-term deferred tax assets | 1,784,979 | 1,454,077 |
Net term deferred tax assets | $ 1,847,979 | $ 1,454,077 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Total deferred tax assets | $ 1,784,979 | $ 1,454,077 |
Deferred tax assets attributable to goodwill | 0 | 0 |
Valuation allowance | 0 | 1,454,077 |
Change in the valuation allowance | $ 0 | $ 909,738 |
LEASES (Details)
LEASES (Details) | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 433,426 |
2021 | 320,936 |
2022 | 29,816 |
Total payments | 784,178 |
Less amount of lease payment representing interest | (32,448) |
Total operating lease liability | $ 751,730 |
LEASES (Details 1)
LEASES (Details 1) | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 544,284 |
2021 | 493,164 |
2022 | 365,582 |
2023 | 19,812 |
Total Minimum Lease Payment | $ 1,422,822 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||
Lease expense charged to operations | $ 558,849 | $ 611,538 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Income from operations available to common stockholders (numerator) | $ 2,833,841 | $ 4,373,345 |
Income available to common stockholders (numerator) | $ 2,833,841 | $ 4,373,345 |
Weighted average number of common shares outstanding during the period used in earnings per share (denominator) | 29,398,960 | 29,740,207 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Profit sharing contribution | $ 111,431 |
SEGMENT REPORTING (Details) (US
SEGMENT REPORTING (Details) (USD $) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | $ 24,202 | $ 22,010 |
Cost of revenue | 3,491 | 3,332 |
Total assets | 45,304 | 40,061 |
Depreciation and amortization | 2,910 | 3,014 |
Libsyn | ||
Revenue | 14,486 | 12,630 |
Cost of revenue | 2,368 | 2,516 |
Total assets | 27,637 | 22,329 |
Depreciation and amortization | 82 | 46 |
Pair | ||
Revenue | 9,716 | 9,380 |
Cost of revenue | 1,123 | 816 |
Total assets | 17,667 | 17,732 |
Depreciation and amortization | $ 2,828 | $ 2,968 |