Liberated Syndication 10Q/A 2018 Q3 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 000-55779

LIBERATED SYNDICATION INC.

(Exact name of registrant as specified in its charter)

NEVADA		47-5224851
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5001 Baum Boulevard, Suite 770

Pittsburgh, Pennsylvania 15213

(Address of Principal Executive Offices)

Registrant's Telephone Number: (412) 621-0902

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of ‘‘large accelerated filer”, “accelerated filer,’’ “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 12, 2018, there were 29,776,974 shares of common stock, par value $0.001, of the registrant issued and outstanding.

Explanatory Note

This Quarterly Report on Form 10-Q/A (Amendment No. 1) amends the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”) by Liberated Syndication Corp. (the “Company”) on November 14, 2018 (the “Original 10-Q”) to restate our unaudited consolidated financial statements for the quarterly period ended September 30, 2018 and to amend related disclosures.

Background of the Restatement

On April 28, 2020, the Audit Committee of the Board of Directors of Liberated Syndication Inc, a Nevada corporation (the “Company”) determined that (a) the Consolidated Balance Sheet as of December 31, 2018, (b) the Consolidated Statement of Operations for the year ended December 31, 2018, (c) the Statement of Stockholders’ Equity for the year ended December 31, 2018, and (d) the Consolidated Statement of Cash Flows for the year December 31, 2018, all as presented in the Company’s Annual Report on Form 10-K for the Period Ended December 31, 2018, as previously filed with the U.S. Securities and Exchange Commission on March 14, 2019, should not be relied upon. Subsequent to such determination, the Company reviewed the related interim financial statements and interim financial statements for the first three quarters of 2019 and 2018, and as a result of such review, on May 20, 2020, the Audit Committee determined that such interim financial statement should likewise no longer be relied upon.

Specifically, the amounts reported in the Consolidated Balance Sheet as of September 30, 2018 for total assets, current liabilities, and consequently total liabilities and total stockholders’ equity, were determined to be materially different. Additionally, the income tax (benefit) expense in the Consolidated Statement of Operations for the three and nine months ended September 30, 2018 was changed. As a result, the net income and the basic and diluted income per common share were determined to be materially different. The Consolidated Statement of Cash Flows for the nine months ended September 30, 2018 also changed as a result of the deferred income taxes and income tax payable for 2018.

During the 2019 audit process, it was discovered through an ongoing IRS examination that the Company owed Federal tax for 2018.

The IRS examination uncovered an error in calculating the Net Operating Loss Carryforward (NOL) resulting from the spin-off of Libsyn in 2016. At December 31, 2017, the Company had recorded an NOL of approximately $14 million. The NOL was part of deferred tax asset which was valued at $0 on the balance sheet, as it had a full valuation allowance. Consequently, the Company was not recognizing tax expenses or the associated tax payable during 2018. However, as the IRS examination continued, it has become clear that the $14 million NOL was overestimated by approximately $12.5 million, and by March 31, 2018, that the NOL has been completely utilized. The result is that the Company ought to have begun recording income tax (benefit) expense in 2018.

This Federal Tax Balance will be paid with an amended return in 2020.

The Company has temporary tax differences which result in a deferred tax asset (DTA). Under the provisions of ASC Topic 740, a DTA is to be recognized for the potential future tax benefit from a loss carryforward. Full realization of the benefit, however, depends on the Company having income in future years.

Because the NOL has been completely utilized and the Company is now consistently recording profits, a DTA with the associated payable should have been recorded in 2018. DTAs represent future income tax benefits. But the tax (benefits) will be realized only if there is sufficient taxable income from which the deductible amount can be deducted.

Impact of the Restatement

As a result of the restatement, reported net income from continuing operations was decreased by $270,527, or $0.01 per basic and diluted share for the three months ended September 30, 2018.

As a result of the restatement, reported net income from continuing operations was increased by $827,323, or $0.03 per basic and diluted share for the nine months ended September 30, 2018. Total assets increased by $1,416,762 at September 30, 2018. Current and total liabilities increased by $589,438 at September 30, 2018. Accumulated deficit decreased by $827,323 at September 30, 2018.

Items Amended in this Filing

For the convenience of the reader, this Form 10-Q/A sets forth the Original Filing, in its entirety, as amended to reflect the restatement. No attempt has been made in this Form 10-Q/A to update other disclosures presented in the Original Filing, except as required to reflect the effects of the restatement. The following items have been amended as a result of the restatement:

Item 1. Financial Statements

Item 2. Management Discussion & Analysis

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

The Unaudited Condensed Consolidated Financial Statements of Liberated Syndication Inc., a Nevada corporation (the “Company,” “Libsyn,” “Pair”, “we,” “our,” “us” and words of similar import), required to be filed with this 10-Q Quarterly Report were prepared by management and commence on the following page, together with related notes. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements fairly present the financial condition of the Company.

LIBERATED SYNDICATION INC.

FINANCIAL STATEMENTS

CONTENTS

		PAGE
Unaudited Condensed Consolidated Balance Sheets		4

Unaudited Condensed Consolidated Statements of Operations		5

Unaudited Condensed Consolidated Statements of Cash Flows		6

Notes to Unaudited Condensed Consolidated Financial Statements		7

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2018 (Unaudited) (As Restated)	December 31, 2017
CURRENT ASSETS:
Cash	$9,364,218	$5,211,845
Accounts receivable, net	515,852(1)	660,139(1)
Prepaid expenses	243,534	186,425
Prepaid domains, net	216,760	-
Total current assets	10,340,364	6,058,409

Property and equipment, net	2,381,456	3,007,025
Goodwill	16,388,171	16,352,069
Definite life - intangible assets, net	8,251,014	9,644,000
Prepaid domains, net of current portion	149,257	-
Other	3,582	7,076
Deferred tax assets	1,416,762	-
Total assets	$38,930,606	$35,068,579

CURRENT LIABILITIES:
Accounts payable	$452,418	$440,565
Income tax payable	589,438	-
Accrued expenses	307,332	769,485
Deferred revenue, net	2,293,245	1,247,686
Current portion of capital lease obligation	72,032	69,243
Current portion of loans payable, net of $29,371 and $33,366 discount, respectively	2,637,296	1,566,634
Total current liabilities	6,351,761	4,093,613

LONG TERM LIABILITIES:
Loans payable, net of $58,151 and $79,634 discount, respectively, less current portion	6,075,182	8,320,366
Capital lease obligation, net of current portion	19,439	73,817
Deferred revenue, net	280,774	133,617
Total long-term liabilities	6,375,395	8,527,800
Total liabilities	12,727,156	12,621,413

COMMITMENTS & CONTINGENCIES	-	-

STOCKHOLDERS' EQUITY
Common stock	29,778	29,596
Additional paid-in capital	35,092,997	34,804,457
Accumulated deficit	(8,919,325)	(12,386,887)
Total stockholders' equity	26,203,450	22,447,166
Total liabilities and stockholders' equity	$38,930,606	$35,068,579

Liberated Syndication Inc. and Subsidiaries Balance Sheet (Parenthetical)
Statement of Financial Position	September 30, 2018 (As Restated)	December 31, 2017
Allowance for doubtful accounts [1]	14,000	14,000
Common stock authorized	200,000,000	200,000,000
Common stock par value	0.001	0.001
Common stock issued and outstanding	29,776,974	29,595,473

The accompanying notes are an integral part to the unaudited condensed consolidated financial statements.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	Three Months Ended September 30,		Nine Months Ended September 30,
	2018 (As Restated)	2017	2018 (As Restated)	2017


Revenue	$5,726,425	$2,730,237	$16,091,492	$7,723,250

Costs and operating expenses

Cost of revenue (excluding depreciation and amortization)	962,817	636,090	2,374,702	1,833,868
General and administrative	1,348,731	642,262	4,252,630	1,916,787
Non-cash compensation	-	-	318,000	1,752,000
Technology	426,339	157,328	1,292,238	463,386
Selling	220,460	75,649	647,833	235,583
Customer support	680,094	53,099	2,055,389	138,721
Depreciation and amortization	736,818	4,329	2,273,083	12,648
Total costs and operating expenses	4,375,259	1,568,757	13,213,875	6,352,993
Operating income	1,351,166	1,161,480	2,877,617	1,370,257


Interest expense	(92,002)	-	(291,205)	-
Interest income	21,904	-	44,970	-
Other income	3,690	-	8,857	-
Income from operations before income taxes	1,284,758	1,161,480	2,640,239	1,370,257

Income tax expense (benefit)	270,527	-	(827,323)	-
Net Income	$1,014,231	$1,161,480	$3,467,562	$1,370,257


BASIC AND DILUTED INCOME PER COMMON SHARE	$0.03	$0.05	$0.12	$0.06
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	29,776,974	24,415,860	29,733,256	24,195,567

The accompanying notes are an integral part to the unaudited condensed consolidated financial statements.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	September 30, 2018 (As Restated)	September 30, 2017

Cash Flows from Operating Activities
Net income	$3,467,562	$1,370,257
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	2,273,083	14,098
Issuance of common stock for services	318,000	1,752,000
Deferred income taxes	1,416,762	-
Discount on loan fees	25,478	-
Change in assets and liabilities:
Accounts receivable	78,906	(206,236)
Prepaid expenses	(419,633)	(3,599)
Accounts payable	11,853	(106,918)
Income taxes payable	589,438	-
Accrued expense	(462,152)	(239,285)
Deferred revenue	1,192,715	(9,142)
Net Cash Provided by Operating Activities	5,658,489	2,571,175

Cash Flows from Investing Activities:

Purchase of property and equipment	(254,527)	(69,064)
Net Cash Used in Investing Activities	(254,527)	(69,064)


Cash Flows from Financing Activities:
Repayment on term loan	(1,200,000)	-
Repayment on capital lease	(51,589)	-
Re-purchase of common stock	-	(8,000)
Net Cash Used in Financing Activities	(1,251,589)	(8,000)

Net Increase in Cash	4,152,373	2,494,111
Cash at Beginning of Period	5,211,845	4,875,458
Cash at End of Period	$9,364,218	$7,369,569

Supplemental Disclosures of Cash Flow Information
Cash paid during the periods for:
Interest	$263,981	$-
Income taxes	-	-

Supplemental Non-Cash Investing and Financing Activities
Returned Common Stock	$29,278	$-

The accompanying notes are an integral part to the unaudited condensed consolidated financial statements

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization – Liberated Syndication Inc., (“Company”, “parent”), a Nevada Corporation, was organized on September 30, 2015. Webmayhem, Inc. (“Libsyn”), a Pennsylvania corporation, currently a wholly owned subsidiary of the Company, was originally 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. 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 660837 N.B., Inc. (“NB”), in a transaction accounted for as a purchase. Pair provides web hosting services and domain name registrations.

Basis of Presentation – 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. All material intercompany accounts and transactions have been eliminated.

Our interim financial statements are unaudited, and in our opinion, include all adjustments of a normal recurring nature necessary for the fair presentation of the periods presented. The results for the interim periods are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2018.

These financial statements should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the 2017 Form 10-K).

Prior Period Reclassifications - Reclassifications of certain immaterial prior period amounts have been made to conform to the current period presentation.

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. Management made assumptions and estimates for determining reserve for accounts receivable, depreciation of fixed assets and in determining the impairment of definite life intangible assets and goodwill. Actual results could differ from those estimated by management.

Our more significant estimates include:

●

the determination of the best estimate of selling price of the deliverables included in multiple-deliverable revenue arrangements;

●

the fair value of assets acquired, and liabilities assumed in business acquisitions;

●

the assessment of recoverability of long-lived assets, including property and equipment, goodwill and intangible assets;

●

the estimated reserve for refunds;

●

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 September 30, 2018, the Company had $8,858,914 cash balances in excess of federally insured limits.

Depreciation – Depreciation of property and equipment is provided on the straight-line method over the estimated useful lives.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued

Accounts Receivable – Accounts receivable consist of trade receivables arising in the normal course of business. At September 30, 2018 and December 31, 2017, 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 nine months ended September 30, 2018 and 2017, the Company adjusted the allowance for bad debt by $0.

Long-lived 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 - 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. To date, costs incurred between the completion of a working model and the point at which the product is ready for general release have been insignificant. Accordingly, the Company has expensed all such costs to technology during the nine months ended September 30, 2018 and 2017. Software development costs totaled $1,292,238 and $463,386 for the nine months ended September 30, 2018 and 2017, respectively.

Goodwill – Goodwill is evaluated for impairment annually in the fourth quarter of the Company’s fiscal year, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. 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. Management noted no triggering events during the period ended September 30, 2018.

Advertising Costs – Advertising costs are expensed as incurred and amounted to $95,075 and $25,344 for the nine months ending September 30, 2018 and 2017, 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, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued

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 - Domains revenue primarily consists of domain registrations and renewals, domain privacy, domain application fees, domain back-orders, aftermarket domain sales and fee surcharges paid to ICANN. Domain registrations provide a customer with the exclusive use of a domain during the applicable contract term. After the contract term expires, unless renewed, the customer can no longer access the domain. Consideration is recorded as deferred revenue when received, which is typically at the time of sale, and revenue, other than for aftermarket domain sales, is recognized over the period in which the performance obligations are satisfied, which is generally over the contract term. Aftermarket domain revenue is recognized when ownership of the domain is transferred to the buyer.

Hosting Services - Hosting services revenue primarily consists of website hosting products, website building products and services, website security products, an online shopping cart and online visibility products and email accounts. Consideration is recorded as deferred revenue when received, which is typically at the time of sale, and revenue is recognized over the period in which the performance obligations are satisfied, which is generally over the contract term.

Podcast Hosting - Podcast hosting publishing services are billed on a month to month basis, with first month’s bill prorated to the end of the month so all performance obligations are satisfied at each month-end. Consideration is recorded as revenue as the services, the underlying performance obligation, are provided and or satisfied and collection is probable which is generally when received.

Media Subscription Services - The Company facilitates the sale of producers’ premium content through the sale of subscriptions. The amount earned per transaction is fixed with the producers determine the price for the sale of each subscription, and the Company earns a percentage of what the customer pays. The performance obligation is providing the subscription hosting medium and billing services. Accordingly, the Company reports premium subscription revenue on a net basis over the subscription service period in which the performance obligation is satisfied.

Advertising – The Company recognizes revenue from the insertion of advertisements in digital media. The performance obligation is the download of the digital media with the advertisement inserted. The performance obligation to recognize advertising revenue is satisfied upon delivery of the media download and collection is probable.

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 840. Leases that meet one or more of the capital lease criteria of standard are recorded as a capital lease, all other leases are operating leases.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued

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).

Income Taxes – The Company accounts for income taxes in accordance with FASB ASC Topic 740 Accounting for Income Taxes. This topic requires an asset and liability approach for accounting for income taxes (See Note 7).

Recently Enacted Accounting Standards - In February 2016, the FASB issued changes to the accounting for leases that primarily affect presentation and disclosure requirements. The new standard will require the recognition of a right to use asset and underlying lease liability for operating leases with an initial life in excess of one year. This standard is effective for us beginning in the first quarter of 2019. We have not yet determined the impact of the new standard on our consolidated financial statements.

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.

NOTE 2 - PROPERTY & EQUIPMENT

The following is a summary of property and equipment at:

	Life	September 30, 2018	December 31, 2017

Furniture, fixtures, and equipment	3-10 yrs	$8,103,172	$8,032,178
Leasehold improvements	3 - 5 yrs	2,646,400	2,646,400
Software	3 yrs	190,038	6,503
		10,939,609	10,685,081
Less: Accumulated depreciation		(8,558,154)	(7,678,056)
Property & equipment, net		$2,381,456	$3,007,025

Depreciation expense for the nine months ended September 30, 2018 and 2017 was $880,097 and $14,098, respectively.

NOTE 3 - GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS

Goodwill - The following is a summary of goodwill:

	September 30,	December 31,
	2018	2017

Goodwill at beginning of period	$16,352,069	$11,484,251
Acquisition of Pair	36,102	4,867,818
Impairment	-	-
Goodwill at end of period	$16,388,171	$16,352,069

During the first quarter of 2018, the Company completed its net-working capital closing adjustment for the acquisition of Pair, resulting in an additional allocation of $36,102 of goodwill.

Other definite-life intangible assets - Other intangible assets consist of customer relationships, intellectual property, trade name and non-compete, which were generated through the acquisition of Pair. Management considers these intangible assets to have finite-lives except trade name. These assets are being amortized on a straight-line basis over their estimated useful lives.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS - Continued

As of September 30, 2018, 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	$422,893	$3,524,107
Intellectual Property	3,709,000	7	397,393	3,311,607
Trade name	576,000	10	43,200	532,800
Non-compete	1,412,000	2	529,500	882,500
Total	$9,644,000		$1,392,986	$8,251,014

Amortization expense for the nine months ended September 30, 2018 and 2017 was $1,392,986 and $0, respectively

The estimated future amortization expenses related to other intangible assets as of September 30, 2018 are as follows:

For twelve months ending September 30,
2019	$1,857,314
2020	1,327,814
2021	1,151,315
2022	1,151,314
2023	1,151,314
Thereafter	1,611,943
Total	$8,251,014

NOTE 4 - 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 September 30, 2018, $2,000,000 was drawn down on the revolving line with $0 available.

The loan currently accrues interest at LIBOR plus 150 base points or prime plus 75 basis points at the election of the Company. As of September 30, 2018, the Company has elected LIBOR plus 150 basis points or 3.886%.

The Term Loan is repayable in quarterly installments of $400,000 commencing on March 30, 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 a year and no more than $3,200,000 over the life of the term loan. As of September 30, 2018, the balance on the term loan was $6,800,000.

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.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 – LOANS - Continued

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 payable to the Seller 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 September 30, 2018, the discount was $87,522.

Future maturities of the loans at September 30, 2018 are as follows:

For the year ending September 30,
2019	$2,666,667
2020	1,600,000
2021	1,600,000
2022	1,600,000
2023	1,333,333
Thereafter	-
Total	$8,800,000

NOTE 5 - CAPITAL STOCK

Common Stock - The Company has authorized 200,000,000 shares of common stock, $0.001 par value. As of September 30, 2018, 29,776,974 shares were issued and outstanding.

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.

During the first quarter of 2017, the Company issued 3,650,000 shares of common stock valued at $1,752,000 to officers and directors.

During the second quarter of 2017, the Company repurchased 40,000 shares of common stock for $8,000, and the stock was retired.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 – DEFERRED REVENUE

Deferred revenue consists of the following:

	September 30, 2018	December 31, 2017
Current:
Hosting services	$1,698,164	$1,032,000
Domains	486,102	104,172
Media subscription	108,979	111,514
	$2,293,245	$1,247,686
Noncurrent:
Hosting services	-	50,351
Domains	280,774	83,266
	$2,574,019	$1,381,303

Deferred revenue as of September 30, 2018 is expected to be recognized as revenue as follows:

	Remainder of 2018	2019	2020	2021	2022	Thereafter	Total

Domains	$169,901	$350,520	$99,312	$67,619	$54,236	$25,289	$766,877
Hosting	821,308	791,839	85,016	-	-	-	1,698,163
Media Subscription	55,633	53,346	-	-	-	-	108,979
	$1,046,842	$1,195,705	$184,328	$67,619	$54,236	$25,289	$2,574,019

Disaggregated revenue consists of following:

	Three Months Ended September 30		Nine months ended September 30
	2018	2017	2018	2017
Hosting services	$2,246,071	$-	$6,439,706	$-
Podcast hosting	2,794,994	2,191,311	7,945,625	6,159,613
Advertising	449,467	443,107	1,020,881	1,285,075
Domains	159,128	-	347,423	-
Other	76,765	95,819	337,857	278,562
	$5,726,425	$2,730,237	$16,091,492	$7,723,250

NOTE 7 - 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 September 30, 2018 and December 31, 2017, the total of all deferred tax assets was $1,416,762 and $3,458,667, respectively, and the total of the deferred tax assets related to goodwill was $0 and $1,848,717, respectively. The 2017 deferred tax asst was fully allowed for in the year. 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. Management has analyzed the health of the Company and it is now more likely than not that the company will likely have strong income from operations moving forward. Therefore, the valuation allowance has been relieved. The change in the valuation allowance for the nine months ended September 30, 2018 and 2017 was $1,416,762 and $557,580, respectively.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - INCOME TAXES – continued

The components of income tax expense (benefit) from continuing operations for the nine months ended September 30, 2018 and 2017 consist of the following:

	For the Nine months ended
	September 30,
	2018	2017
Current tax expense:
Federal	$589,438	$-
State	-	-
Current tax expense	589,438	-

Deferred tax (benefit) expense:
Deferred revenue	(21,045)	-
Depreciation and amortization	(67,966)	-
Intangible Assets	-	383,331
Non-cash compensation	(1,327,751)
Valuation Allowance	-	(557,580)
Net operating loss carryforward		174,249
Subtotal deferred tax (benefit) expense	(1,416,762)	-
Income tax (benefit) expense	$(827,327)	$-

A reconciliation of income tax expense as the federal statutory rate to income tax expense at the Company’s effective rate is as follows:

	For the Nine months ended September 30,
	2018	2017

Computed tax at the expected statutory rate	$589,438	$465,893
State and local income taxes, net of federal	-	90,565
Other non-deductible expenses	-	1,122
Valuation Allowance	(1,416,762)	(557,580)
Income tax (benefit) expense	$(827,327)	$-

The temporary differences, tax credits and carryforwards gave rise to the following deferred tax asset at September 30, 2018 and December 31, 2017:

	September 30,	December 31,
	2018	2017
Current deferred tax assets (liabilities):
Allowance for doubtful accounts	$-	$-
Vacation accrual	-	-
Total current deferred tax assets (liabilities)	-	-

Long-term deferred tax assets (liabilities):

Long-term deferred tax assets (liabilities):

Depreciation and amortization	67,966	-
Deferred revenue	21,045	-
Non-cash compensation	1,327,751	-
Goodwill - impaired	-	2,066,632
Intangible assets – tax amortization	-	(3,915,349)
Net operating loss carryforward	-	5,307,384
Valuation allowance	-	(3,458,667)
Net term deferred tax assets (liabilities)	$1,416,762	$-

At December 31, 2018, the company has loss carryforwards of $0.

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.

NOTE 8 - LEASES

Operating Lease - The Company leases two office spaces in Pittsburgh, Pennsylvania. The corporate headquarters’ lease is for $4,841 a month through April 2022. The office space for Pair is $34,014 a month through September 2021.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – LEASES - Continued

The future minimum lease payments for non-cancelable operating leases having remaining terms in excess of one year as of September 30, 2018 are as follows:

Year ending September 30:	Lease Payments
2019	466,260
2020	466,260
2021	466,260
2022	33,887
Total Minimum Lease Payment	$1,432,667

Lease expense charged to operations was $458,805 and $153,252 for the nine months ended September 30, 2018 and 2017, respectively.

NOTE 9 –EARNINGS PER SHARE

Basic income (loss) per share is computed by dividing net income (loss) attributable to Liberated Syndication Inc. by the weighted-average number of shares of common stock outstanding during the period. As of September 30, 2018, 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:

	For the Three Months		For the Nine Months
	September 30		September 30
	2018	2017	2018	2017

Income from operations available to common stockholders (numerator)$	$1,014,231	$1,161,480	$3,467,562	1,370,257
Income available to common stockholders (numerator)	1,014,231	1,161,480	3,467,562	1,370,257
Restated Weighted average number of common shares outstanding during the period used in earnings per share (denominator)	29,776,974	24,415,860	29,733,256	24,195,567

NOTE 10 – COMMITMENTS AND CONTINGENCIES

After the Spin-Off, FAB Universal Corp. (“FAB”), the former parent company of the Company, may have obligations that at the present time are unknown or unforeseen. As the nature of such obligations are unknown, we are unable to provide an estimate of the potential obligation. However, should FAB incur such obligations, the Company may be financially obligated to pay any losses incurred.

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 $100,000 profit sharing contribution to the plan in 2018.

NOTE 11 - 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.

LIBERATED SYNDICATION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - SEGMENT REPORTING - Continued

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 September 30, 2018 which are podcast hosting services (Libsyn) and internet hosting services (Pair).

The following table presents summary information by segment for the nine months ended September 30, 2018 and 2017, respectively:

	2018			2017
(in thousands)	Libsyn	Pair	Total	Libsyn	Pair	Total

Revenue	$9,260	$6,831	$16,091	$7,723	$-	$7,723
Cost of revenue	1,818	557	2,375	1,834	-	1,834

Total assets	$21,092	$17,839	$38,931	$19,583	$-	$19,583
Depreciation and amortization	$30	$2,243	$2,273	$14	$-	$14

The following table presents summary information by segment for the three months ended September 30, 2018 and 2017, respectively:

	2018			2017
(in thousands)	Libsyn	Pair	Total	Libsyn	Pair	Total

Revenue	$3,352	$2,374	$5,726	$2,730	$-	$2,730
Cost of revenue	745	218	963	636	-	636

Depreciation and amortization	$12	$725	$737	$6	$-	$6

NOTE 12 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date of the filing of this report.

13 – RESTATEMENT OF PREVIOUSLY REPORTED UNAUDITED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS

Background of the Restatement

During the 2019 audit process, it was discovered through an ongoing IRS examination it was discovered that the Company owed Federal tax for 2018.

This Federal Tax Balance will be paid with an amended return in 2020.

Because the NOL has been completely utilized and the Company is now consistently recording profits, a DTA with the associated payable should have been recorded in 2018. DTAs represent future income tax benefits. But the tax benefits will be realized only if there is sufficient taxable income from which the deductible amount can be deducted.

Impact of the Restatement

As a result of the restatement, reported net income from continuing operations was decreased by $270,527, or $0.01 per basic and diluted share for the three months ended September 30, 2018.

The financial statements included in this Form 10-Q/A have been restated to reflect the adjustments described. The table below summarizes the effects of the restatement on Libsyn’s Unaudited Consolidated Statements of Operation for the nine months ended September 30, 2018 and, Unaudited Consolidated Balance Sheet at September 30, 2018.

In addition to the restatement of the financial statements, certain information within Note 7 – Income Taxes to the financial statements has been restated to reflect the corrections of misstatements discussed above as well as to add disclosure language as appropriate.

Unaudited Consolidated Balance Sheet
	September 30, 2018 As Reported	Corrections	September 30, 2018 As Restated
Deferred Tax Assets	-	1,416,762	1,416,762
Total Assets	37,513,844	1,416,762	38,930,606
Income Taxes Payable	-	589,438	589,438
Total Current Liabilities	5,762,323	589,438	6,351,761
Total Liabilities	12,137,718	589,438	12,727,156
Accumulated Deficit	(9,746,648)	827,323	(8,919,325)
Stockholder’s Equity	25,376,127	827,323	26,203,450

Unaudited Consolidated Statement of Operations
	Nine months ended September 30, 2018 As Reported	Corrections	Nine months ended September 30, 2018 As Restated
Income Tax (Benefit) Expense	-	(827,323)	(827,323)
Net Income	2,640,239	827,323	3,467,562
Basic and Diluted Income Per Common Share	0.09	0.03	0.12

Unaudited Consolidated Statement of Operations
	Three months ended September 30, 2018 As Reported	Corrections	Three months ended September 30, 2018 As Restated
Income Tax (Benefit) Expense	-	270,527	270,527
Net Income	1,284,758	270,527	1,014,231
Basic and Diluted Income Per Common Share	0.04	(0.01)	0.03

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Safe Harbor Statement.

Statements made in this Form 10-Q which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of the Company, including, without limitation, (i) our ability to gain a larger share of the home healthcare industry, our ability to continue to develop services acceptable to our industry, our ability to retain our business relationships, and our ability to raise capital and the growth of the home healthcare industry, and (ii) statements preceded by, followed by or that include the words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets", "tend" or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond the Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, in addition to those contained in the Company's reports on file with the Securities and Exchange Commission: general economic or industry conditions, nationally and/or in the communities in which the Company conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, changes in the home healthcare industry, the development of services that may be superior to the services offered by the Company, competition, changes in the quality or composition of the Company's services, our ability to develop new services, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting the Company’s operations, services and prices.

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. The Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Company Overview

Founded in 2015, Liberated Syndication Inc (“the “Company,”, “parent”, “we,” or “us” and words of similar import), a Nevada corporation, provides podcast hosting services through its wholly-owned subsidiary Webmayhem Inc., a Pennsylvania corporation (“Libsyn”), and webhosting services through its wholly-owned subsidiary Pair Networks, Inc., a Pennsylvania corporation (“Pair” or “PNI”). Libsyn’s focus is on our podcasting business, while Pair’s focus is on webhosting and domains.

Podcast Hosting and Distribution

Libsyn is a Podcast Service Provider offering hosting and distribution tools which include storage, bandwidth, RSS creation, destination distribution and audience statistics and analytics. Podcast producers can choose from a variety of hosting plan levels based on the requirements for their podcast. Plans are designed to provide full-featured podcast tools with generous storage and bandwidth transfer.

Podcast producers can choose from a variety of hosting plan levels based on the requirements for their podcast. Podcast producers’ sign-up online at www.libsyn.com, using their credit card to subscribe to a monthly plan. Libsyn’s standard plans range for $5 to $75 per month. LibsynPro service is an enterprise solution for professional media producers and corporate customers that require media network features and dedicated support. LibsynPro revenue consists primarily of monthly hosting fees and bandwidth usage charges. Other professional level add-ons, such as set-up fees and custom features, represent a small portion of LibsynPro revenue.

During the first nine months of 2018, Libsyn generated 70% of its revenue from Podcast hosting fees paid by Libsyn4 Producers. LibsynPro revenue is 17% of overall revenues, and Advertising revenue makes up 10% revenues. App subscriptions make up 3% of total Libsyn revenues. During the first nine months of 2017, Libsyn generated 64% of its revenue from Podcast hosting fees paid by Libsyn4 Producers. LibsynPro revenue is 17% of overall revenues, and Advertising revenue makes up 16% of revenues. App subscriptions make up 3% of total Libsyn revenues.

Trends in the number of podcast shows on the Libsyn network and podcast consumption affect our revenue and financial results as they are directly related to cash flow and cost of revenue. Management believes that over the next 3 months, growth in the podcasting industry and Libsyn’s market leadership will continue to fuel expansion of the Libsyn network and revenue. The Company expects to see year-over-year bandwidth usage continue to grow in 2018.

Pair Networks, Inc. (“Pair”)

Pair offers a variety of hosting plan levels, value add Internet services and domain registration. Through the Pair Account Control Center (ACC), customers can manage their hosting accounts and domains from one place.

Customers can choose from a variety of web hosting plan levels based on their requirements and applications. Pair Hosting offers shared servers, virtual private servers, dedicated servers and Pair cloud technology as managed services. With over twenty years of experience in Internet hosting, Pair has the expertise to build and manage reliable and powerful hosting solutions. The managed service and 24x7 support allow customers to focus on their core business without having to worry about hardware, operating systems, network connectivity or uptime.

Share web hosting is a great option for startup or smaller businesses as the website sits on the same server with other websites and shares resources such as memory and Central Processing Unit (CPU). Basic website applications such as email and file sharing are ideal for shared server offerings.

Results of Operations

Nine months ended September 30, 2018 and 2017.

During the nine months ended September 30, 2018, the Company recorded revenues of $16,091,492, a 108% increase over revenues of $7,723,250 for the same period in 2017. The increase for 2018 reflects an increase in Libsyn4 hosting revenue as well as LibsynPro and Premium Subscription, offset by decreases in Advertising revenue. Pair contributed $6,830,964 of revenue during the first nine months of 2018, and $0 during 2017 due to the acquisition in December 2017. Libsyn4 hosting revenue increased 31% due to the growth in the number of podcasts on the network when comparing the first nine months of 2018 versus 2017. LibsynPro revenue increased as a result of additional LibsynPro networks using our platform in 2018 with increased bandwidth usage fees for delivery of podcasts contributing to the majority of the revenue gain. Advertising revenue decreased 24% in the first nine months of 2018 versus 2017. The decrease resulted from decrease in the dollars being spent on ad campaigns during the first nine months of 2018 with existing advertisers. Premium subscription revenue increased $18,714.

The Company recorded total costs and operating expenses of $13,213,875 during the nine months ended September 30, 2018, an 108% increase as compared to operating expenses of $6,352,993 in the same period of 2017. Pair contributed $7,954,209 to total costs and operating expenses during the first nine months of 2018, and $0 during 2017 due to the acquisition in December 2017.

During the nine months ended September 30, 2018, cost of revenue totaled $2,374,702, a 29% increase as compared to $1,833,868 for the same period in 2017. Pair contributed $556,560 to cost of revenue during the first nine months of 2018. There was also an increase in bandwidth costs, credit card processing fees, and colocation fees, offset by a decrease in ad sharing that is being paid to producers in 2018 versus 2017, driven by a decrease in ad revenue.

The increase in general and administrative was primarily driven by the addition of the Pair business consisting primarily of wages, rent, utilities, and health insurance costs. General and administrative expenses, including non-cash compensation, totaled $4,570,630 in 2018 versus $3,668,787 in 2017, an increase of 25%, driven by an increase in wages from the addition of Pair during 2018. Technology expenses represented $1,292,238 in 2018 versus $463,386 in 2017, driven by an increase in wages from the addition of Pair during 2018. Selling expenses in 2018 were $647,833 versus $235,583 in 2017 with the addition of the selling team for Pair. Customer support expenses in 2018 were $2,055,389 versus $138,721 in 2017 driven by the 24/7 support provided by Pair.

Interest expense for the first nine months of 2018 was $291,205, which represents interest on the loan facility obtained in connection with the acquisition of Pair.

Income tax benefit for the nine months ended September 30, 2018 was $827,323, which represents the deferred tax asset from the 2018 tax provision and the expected federal balance due for 2018. The income tax payable will be payable with the amended return in 2020.

The Company’s net income was $3,467,562 for the nine months ended September 30, 2018. This represents a $2,097,305 increase from $1,370,257 for the nine months ended September 30, 2017.

Three Months Ended September 30, 2018 and 2017.

During the three months ended September 30, 2018, the Company recorded revenues of $5,726,425, a 110% increase over revenues of $2,730,237 for the same period in 2017. The increase for 2018 reflects an increase in Libsyn 4 hosting revenue as well as LibsynPro, Premium Subscription and advertising. Pair contributed $2,373,822 of revenue during the third quarter of 2018, and $0 during 2017 due to the acquisition in December 2017. Libsyn4 hosting revenue increased due to the growth in the number of podcasts on the network when comparing the third quarter of 2018 versus 2017. LibsynPro revenue increased as a result of additional LibsynPro networks using our platform in 2018 with increased bandwidth usage fees for delivery of podcasts contributing to the majority of the revenue gain. Advertising revenue increased due to an increase in spending on campaigns during the third quarter of 2018. Premium subscription revenue increased due an increase in the number producers offering subscription.

Libsyn recorded total costs and operating expenses of $4,375,259 during the three months ended September 30, 2018, a 179% increase as compared to operating expenses of $1,568,757 in the same period of 2017. Pair contributed $2,613,605 to total costs and operating expenses during the third quarter of 2018, and $0 during 2017 due to the acquisition in December 2017.

During the three months ended September 30, 2018, cost of revenue totaled $962,817, a 51% increase as compared to $636,090 for the same period in 2017. Pair contributed $218,285 to cost of revenue during the third quarter of 2018. There was also an increase in bandwidth costs, credit card processing fees, and colocation fees, offset by a decrease in ad sharing that is being paid to producers in 2018 versus 2017.

Income tax expense for the three months ended September 30, 2018 was $270,527, which represents the deferred tax asset from the 2018 tax provision and the expected federal balance due for 2018. The income tax payable will be payable with the amended return in 2020.

The Company’s net income was $1,014,231 for the three months ended September 30, 2018. This represents a $147,249 decrease from our net income of $1,161,480 for the three months ended September 30, 2017.

Liquidity and Capital Resources.

Cash on hand was $9,364,218 at September 30, 2018, an increase of $4,152,373 over the $5,211,845 on hand at December 31, 2017. Cash provided by operations for the nine months ended September 30, 2018, was $5,658,489, an increase of $3,087,314 over the $2,571,175 cash provided by operations for the nine months ended September 30, 2017. The contribution from Pair of this cash generation totaled $1,494,893, and Libsyn added $2,657,480. This increase is driven from our operating results of both segments of our business.

Cash used in investing activities of $254,527 during the third quarter of 2018 was for the purchase of equipment and capitalization of software development costs.

Cash used in financing activities was $1,251,589 for the nine months ended September 30, 2018 and $8,000 in 2017. During the first nine months of 2018, we made our payments on the loan used to acquire Pair, a total of $1,200,000, as well as $51,589 of payments on our capital lease.

The increase in cash of $4,152,373 during the first nine months of 2018 is a reflection of the strength of the overall business through the first nine months of 2018.

Off-balance sheet arrangements

We have operating leases for certain facilities, but otherwise do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, or capital resources.

The future minimum lease payments for non-cancelable operating leases having remaining terms in excess of one year as of September 30, 2018 are as follows:

Year ending September 30:	Lease Payments
2019	466,260
2020	466,260
2021	466,260
2022	33,887
Total Minimum Lease Payment	$1,432,667

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")), which we refer to as disclosure controls, are controls and procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any control system. A control system, no matter how well conceived and operated, can provide only reasonable assurance that its objectives are met. No evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

As of September 30, 2018, an evaluation was carried out under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of such date, the design and operation of these disclosure controls were not effective to accomplish their objectives at the reasonable assurance level due to the identification of errors which led to certain of our financial statements being restated. On an on-going basis we will evaluate the adequacy of our controls and procedures.

(b) Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), occurred during the fiscal quarter ended September 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Liberated Syndication Inc. is involved in routine legal and administrative proceedings and claims of various types. We have no material pending legal or administrative proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any property is the subject.

Item 1A. Risk Factors.

Not required for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None; not applicable.

Item 3. Defaults Upon Senior Securities.

None; not applicable.

Item 4. Mine Safety Disclosures.

None; not applicable.

Item 5. Other Information.

None; not applicable.

(a)

During the quarterly period ended September 30, 2018, there were no changes to the procedures by which shareholders may recommend nominees to the Company’s board of directors.

Item 6. Exhibits.

(ii)

Exhibit No.		Description

31.1		302 Certification of Christopher J. Spencer

31.2		302 Certification of Gabriel J. Mosey

32		906 Certification.

101.1		The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:	7/10/2020	By:	/s/ Christopher J. Spencer
			Christopher J. Spencer
			Chief Executive Officer and President

Date:	7/10/2020	/s/ Gabriel J. Mosey
		Gabriel J. Mosey
		Interim Chief Financial Officer

Liberated Syndication (LSYN) 10-Q/A2018 Q3 Quarterly report (amended)