Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 09, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Liberated Syndication Inc. | |
Entity Central Index Key | 0001667489 | |
Amendment Flag | true | |
Amendment Description | 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 August 14, 2019 (the “Original 10-Q”) to restate our unaudited consolidated financial statements for the quarterly period ended June 30, 2019 and to amend related disclosures. | |
Document Type | 10-Q/A | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 29,271,974 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | NV | |
Entity File Number | 000-55779 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash | $ 14,205,455 | $ 11,079,941 |
Accounts receivable, net | 479,095 | 481,921 |
Prepaid expenses | 595,675 | 449,223 |
Total current assets | 15,280,225 | 12,011,085 |
Property and equipment, net | 1,975,359 | 2,229,294 |
Goodwill | 16,388,171 | 16,388,171 |
Definite life - intangible assets | 6,858,028 | 7,786,686 |
Prepaid expense | 304,187 | 191,609 |
Operating lease right-of-use assets | 1,142,581 | 0 |
Deferred tax assets | 1,657,765 | 1,454,077 |
Total assets | 43,606,316 | 40,060,922 |
CURRENT LIABILITIES: | ||
Accounts payable | 724,298 | 745,889 |
Accrued expenses | 956,975 | 377,572 |
Income tax payable | 1,583,159 | 868,529 |
Deferred revenue | 2,374,948 | 2,276,079 |
Current portion of capital lease obligation | 37,804 | 72,986 |
Current portion of loans payable, net | 2,641,130 | 2,638,599 |
Current portion of operating lease liabilities | 511,380 | 0 |
Total current liabilities | 8,829,694 | 6,979,654 |
LONG TERM LIABILITIES: | ||
Loans payable, net | 4,893,803 | 5,681,767 |
Capital lease obligation, net of current portion | 0 | 831 |
Deferred revenue, net of current portion | 513,628 | 371,938 |
Operating lease liabilities | 631,201 | 0 |
Total long-term liabilities | 6,038,632 | 6,054,536 |
Total liabilities | 14,868,326 | 13,034,190 |
COMMITMENTS & CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Common stock | 29,272 | 29,722 |
Additional paid-in capital | 34,857,590 | 35,010,552 |
Accumulated deficit | (6,148,872) | (8,013,542) |
Total stockholders' equity | 28,737,990 | 27,026,732 |
Total liabilities and stockholders' equity | $ 43,606,316 | $ 40,060,922 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 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 | $ 0.001 | $ 0.001 |
Common stock issued | 29,271,974 | 29,721,974 |
Common stock outstanding | 29,271,974 | 29,721,974 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenue | $ 5,700,635 | $ 5,305,762 | $ 11,983,614 | $ 10,365,067 |
Costs and operating expenses | ||||
Cost of revenue (excluding depreciation and amortization) | 860,848 | 704,515 | 1,700,488 | 1,411,885 |
General and administrative | 1,905,567 | 1,516,587 | 3,734,106 | 3,221,899 |
Technology | 457,151 | 492,573 | 911,789 | 865,899 |
Selling | 214,542 | 210,371 | 409,336 | 427,373 |
Customer support | 648,565 | 707,065 | 1,308,433 | 1,375,295 |
Depreciation and amortization | 745,093 | 769,365 | 1,487,190 | 1,536,265 |
Total costs and operating expenses | 4,831,766 | 4,400,476 | 9,551,342 | 8,838,616 |
Operating income | 868,869 | 905,286 | 2,432,272 | 1,526,451 |
Interest expense | (82,880) | (98,607) | (169,722) | (199,203) |
Interest income | 59,738 | 13,401 | 111,689 | 23,066 |
Other income (expense) | 2,252 | 2,486 | 1,373 | 5,167 |
Income from operations before income taxes | 847,979 | 822,566 | 2,375,612 | 1,355,481 |
Income tax (benefit) | (183,932) | (173,209) | (510,942) | (1,097,850) |
Net Income | $ 664,047 | $ 649,357 | $ 1,864,670 | $ 2,453,331 |
BASIC AND DILUTED INCOME PER COMMON SHARE | $ 0.02 | $ 0.02 | $ 0.06 | $ 0.08 |
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 29,336,260 | 29,776,974 | 29,528,051 | 29,711,034 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance, shares at Dec. 31, 2017 | 29,595,473 | |||
Balance, amount at Dec. 31, 2017 | $ 29,596 | $ 34,804,457 | $ (12,386,887) | $ 22,447,166 |
Issuance of common stock for services, shares | 200,000 | |||
Issuance of common stock for services, amount | $ 200 | 317,800 | 318,000 | |
Return of common stock for final settlement of Pair Acquisition, shares | (18,499) | |||
Return of common stock for final settlement of Pair Acquisition, amount | $ (18) | (29,260) | (29,278) | |
Net income | 1,803,974 | 1,803,974 | ||
Balance, shares at Mar. 31, 2018 | 29,776,974 | |||
Balance, amount at Mar. 31, 2018 | $ 29,778 | 35,029,977 | (10,582,913) | 24,539,862 |
Balance, shares at Dec. 31, 2017 | 29,595,473 | |||
Balance, amount at Dec. 31, 2017 | $ 29,596 | 34,804,457 | (12,386,887) | 22,447,166 |
Net income | 2,453,331 | |||
Balance, shares at Jun. 30, 2018 | 29,776,974 | |||
Balance, amount at Jun. 30, 2018 | $ 29,778 | 35,029,977 | (9,933,556) | 25,189,219 |
Balance, shares at Mar. 31, 2018 | 29,776,974 | |||
Balance, amount at Mar. 31, 2018 | $ 29,778 | 35,029,977 | (10,582,913) | 24,539,862 |
Net income | 649,357 | 649,357 | ||
Balance, shares at Jun. 30, 2018 | 29,776,974 | |||
Balance, amount at Jun. 30, 2018 | $ 29,778 | 35,029,977 | (9,933,556) | 25,189,219 |
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 | 677,088 | 677,088 | ||
Net income | 1,200,623 | 1,200,623 | ||
Balance, shares at Mar. 31, 2019 | 29,721,974 | |||
Balance, amount at Mar. 31, 2019 | $ 29,722 | 34,857,140 | (6,812,919) | 28,073,943 |
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 |
Net income | 1,864,670 | |||
Balance, shares at Jun. 30, 2019 | 29,271,974 | |||
Balance, amount at Jun. 30, 2019 | $ 29,272 | 34,857,590 | (6,148,872) | 28,737,990 |
Balance, shares at Mar. 31, 2019 | 29,721,974 | |||
Balance, amount at Mar. 31, 2019 | $ 29,722 | 34,857,140 | (6,812,919) | 28,073,943 |
Stock forfeiture, shares | (450,000) | |||
Stock forfeiture, amount | $ (450) | 450 | 0 | |
Net income | 664,047 | 664,047 | ||
Balance, shares at Jun. 30, 2019 | 29,271,974 | |||
Balance, amount at Jun. 30, 2019 | $ 29,272 | $ 34,857,590 | $ (6,148,872) | $ 28,737,990 |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash Flows from Operating Activities | ||
Net income | $ 1,864,670 | $ 2,453,331 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 1,487,190 | 1,536,265 |
Issuance of common stock | 0 | 318,000 |
Deferred taxes | (203,688) | (1,380,251) |
Non-cash compensation expense, net of recapture | (153,413) | 0 |
Amortization of right-of-use asset | 255,240 | 0 |
Discount on loan fees | 14,567 | 17,361 |
Change in assets and liabilities: | ||
Accounts receivable | 2,825 | 157,115 |
Prepaid expenses | (259,029) | (278,042) |
Accounts payable | (21,590) | 111,024 |
Income taxes payable | 714,630 | 282,401 |
Accrued expense | 579,403 | (335,730) |
Operating lease liabilities | (255,240) | 0 |
Deferred revenue | 240,558 | 1,063,210 |
Net Cash Provided by Operating Activities | 4,266,123 | 3,944,684 |
Cash Flows from Investing Activities: | ||
Purchase of property and equipment | (304,597) | (152,729) |
Net Cash Used in Investing Activities | (304,597) | (152,729) |
Cash Flows from Financing Activities: | ||
Repayment on term loan | (800,000) | (800,000) |
Repayment on capital lease | (36,012) | (34,166) |
Net Cash Used in Financing Activities | (836,012) | (834,166) |
Net Increase in Cash | 3,125,514 | 2,957,789 |
Cash at Beginning of Period | 11,079,941 | 5,211,845 |
Cash at End of Period | 14,205,455 | 8,169,634 |
Supplemental Disclosures of Cash Flow Information | ||
Cash paid during the periods for: Interest | 153,612 | 146,194 |
Cash paid during the periods for: Income taxes | 0 | 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 |
Returned Common Stock | $ 0 | $ 29,278 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 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. Basis of Presentation 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, 2019. 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, 2018 (the 2018 Form 10-K). Prior Period Reclassifications - 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 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 Depreciation Accounts Receivable Definite-life intangible assets Technology 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. The fair value of the Company’s equity-based awards recorded in the Company’s financial statements during the first quarter of 2019 was determined using a Monte Carlo simulation valuation methodology based upon a Geometric Brownian Motion stock path, a Level 3 measurement. Volatility was based on historical volatility of the Company’s common stock over commensurate periods. The expected life was based on the contractual term of the award, and the risk-free interest rate was based on the implied yield available on U.S. Treasury Securities with a maturity similar to the awards’ expected life. 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 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 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 8 – Leases. There was not a material cumulative-effect adjustment to our beginning retained earnings as a result of adopting ASC 842. We have recognized additional operating lease assets and obligations of $1.4 million and $1.1 million as of January 1, 2019 and June 30, 2019, respectively. For additional disclosure and detail, see Note 8 – Leases. Earnings Per Share Income Taxes Recently Enacted Accounting Standards - |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | The following is a summary of property and equipment at: Life June 30, 2019 December 31, 2019 Furniture, fixtures, and equipment 3-10 yrs $ 8,262,927 $ 8,155,322 Leasehold improvements 3 - 5 yrs 2,646,400 2,646,400 Software 3 yrs 459,038 262,046 11,368,365 11,063,768 Less: Accumulated depreciation (9,393,006 ) (8,834,474 ) Property & equipment, net $ 1,975,359 $ 2,229,294 Depreciation expense for the six months ended June 30, 2019 and 2018 was $558,533 and $607,608, respectively. |
GOODWILL AND OTHER DEFINITE-LIF
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS | Goodwill June 30, December 31, 2019 2018 Pair $ 4,903,920 $ 4,903,920 Libsyn 11,484,251 11,484,251 Goodwill at end of period $ 16,388,171 $ 16,388,171 Other definite-life intangible assets As of June 30, 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 $ 845,786 $ 3,101,214 Intellectual Property 3,709,000 7 794,786 2,914,214 Trade Name 576,000 10 86,400 489,600 Non-compete 1,412,000 2 1,059,000 353,000 Total $ 9,644,000 $ 2,785,972 $ 6,858,028 Amortization expense for the six months ended June 30, 2019 and 2018 was $928,657 and $928,657, respectively. The estimated future amortization expenses related to other intangible assets as of June 30, 2019 are as follows: For twelve months ending June 30, 2020 $ 1,504,314 2021 1,151,315 2022 1,151,315 2023 1,151,314 2024 1,151,314 Thereafter 748,456 Total $ 6,858,028 |
LOANS
LOANS | 6 Months Ended |
Jun. 30, 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 June 30, 2019, $2,000,000 was drawn down on the revolving line with $0 available. 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 June 30, 2019, the Company has elected LIBOR plus 125 basis points or 3.6524%. 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. Excess liquidity is obtained when the audited financial statements reflect a cash balance greater than $4,600,000. Based upon the 2018 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 June 30, 2019, the balance on the term loan was $5,600,000. 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 for the Purchase of Pair Networks, Inc. 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 June 30, 2019, the discount was $65,067. Future maturities of the loans at June 30, 2019 are as follows: Twelve months ending June 30, 2020 $ 2,666,667 2021 1,600,000 2022 1,600,000 2023 1,733,333 Thereafter - Total $ 7,600,000 |
CAPITAL STOCK
CAPITAL STOCK | 6 Months Ended |
Jun. 30, 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. 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 approximately $677,087. On April 13, 2019, 450,000 shares of common stock were forfeited as certain milestones were not achieved. No additional stock was issued during the second quarter of 2019. 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. |
DEFERRED REVENUE
DEFERRED REVENUE | 6 Months Ended |
Jun. 30, 2019 | |
Deferred Revenue [Abstract] | |
DEFERRED REVENUE | Deferred revenue consists of the following: June 30, 2019 December 31, 2018 Current: Hosting services $ 1,528,445 $ 1,601,335 Domains 647,175 535,273 Media subscription 199,328 139,471 $ 2,374,948 $ 2,276,079 Noncurrent: Hosting services 23,085 39,071 Domains 490,543 332,867 $ 2,888,576 $ 2,648,017 Deferred revenue as of June 30, 2019 is expected to be recognized as revenue as follows: Remainder of 2019 2020 2021 2022 2023 Thereafter Total Domains $ 414,430 $ 344,799 $ 154,464 $ 118,925 $ 79,941 $ 25,159 $ 1,137,718 Hosting 1,226,610 319,072 5,848 - - - 1,551,530 Media Subscription 173,191 26,137 - - - - 199,328 $ 1,814,231 $ 690,008 $ 160,312 $ 118,925 $ 79,941 $ 25,159 $ 2,888,576 Disaggregated revenue consists of following: Three Months Ended June 30 Six Months Ended June 30 2019 2018 2019 2018 Hosting services $ 1,890,719 $ 2,132,140 $ 4,618,635 $ 4,193,635 Podcast hosting 3,326,710 2,649,525 6,464,527 5,150,632 Advertising 158,244 250,750 331,884 571,414 Domains 244,306 116,499 485,838 188,295 Other 80,656 156,848 82,730 261,091 $ 5,700,635 $ 5,305,762 $ 11,983,614 $ 10,365,067 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Our provision for income taxes for the six-month periods ended June 30, 2019 and 2018 was a tax expense of approximately $510,942 and a tax benefit of approximately $1,097,850, respectively, which resulted in an effective tax rate of 22% and (81)%, respectively. Our provision for income taxes for the three-month periods ended June 30, 2019 and 2018 was a tax expense of approximately $183,932 and $173,209, respectively, which resulted in an effective tax rate of 22% and 21%, respectively. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 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 capital lease for Emerson batteries which is immaterial to our condensed 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 Condensed 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 June 30, 2019 was 2.28 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 June 30, 2019 was 4.42%. For the first six months ended, June 30, 2019, cash paid for amounts in the measurement of lease liabilities was $278,595. Total operating lease costs during the same period were $279,425. Maturity of lease liabilities: Twelve months ending June 30, Operating Leases 2020 551,484 2021 482,581 2022 167,264 2023 2,150 2024 - Thereafter - Total lease payments 1,203,479 Less amount of lease payment representing interest (60,898 ) Total present value of lease payments 1,142,581 As previously disclosed in our 2018 Form 10-K under the prior guidance of ASC 840, minimum payments under operating lease agreements as of December 31, 2018 were as follows: Twelve months ending December 31, Operating Leases 2019 544,284 2020 493,164 2021 365,562 2022 19,812 2023 - Thereafter - Total lease payments 1,422,822 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | Basic earnings per share is computed by dividing net income attributable to Liberated Syndication Inc. by the weighted-average number of shares of common stock outstanding during the period. As of June 30, 2019, there were no common stock equivalents outstanding. The following data shows the amounts used in computing earnings per share and the weighted average number of shares of common stock outstanding for the periods presented for the periods ended: For the Three Months For the Six Months June 30 June 30 2019 2018 2019 2018 Income from operations available to common stockholders (numerator)$ 664,047 $ 649,357 $ 1,864,670 $ 2,453,331 Income available to common stockholders (numerator) 664,047 $ 649,357 $ 1,864,670 $ 2,453,31 Weighted average number of common shares outstanding during the period used in earnings per share (denominator) 29,336,260 29,776,974 29,528,051 29,711,034 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Although the Company does not expect to be liable for any obligations not expressly assumed by the Company from the Spin-Off, it is possible that the Company could be required to assume responsibility for certain obligations retained by FAB Universal Corp. (“FAB”), the former parent company of the Company, should FAB fail to pay or perform its retained obligations. FAB 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 $111,431 profit sharing contribution to the plan in the first six months of 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. On April 24, 2019, a stockholder made a demand to inspect the Company’s books and records, purportedly in connection with such stockholder’s efforts to compel the Company to call a special meeting of its stockholders. On May 8, 2019, the Company provided the materials required by relevant Nevada law. On July 15, 2019, the purported stockholder filed a verified complaint and alternative petition for a writ of mandamus/prohibition in Nevada District Court together with a motion for preliminary injunction, seeking to compel the Company to provide certain additional documents relating to the identity of beneficial owners of its common stock. The Company filed a response brief to the motion for preliminary injunction and a hearing was held on such motion on August 1. The Court’s decision denied the issuance of an injunction obligating the Company to generate or obtain those additional documents, but requires the Company to turn over any such documents should the Company use those documents in the future to engage in solicitation activity in connection with any special meeting of stockholders that may be held involving such stockholder. |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 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 June 30, 2019 which are podcast hosting services (Libsyn) and internet hosting services (Pair). The following table presents summary information by segment for the six months ended June 30, 2019 and 2018, respectively: 2019 2018 (in thousands) Libsyn Pair Total Libsyn Pair Total Revenue $ 6,925 $ 5,059 $ 11,984 $ 5,908 $ 4,457 $ 10,365 Cost of revenue 1,153 547 1,700 1,074 338 1,412 Total assets $ 25,064 $ 18,542 $ 43,606 $ 21,946 $ 18,115 $ 40,061 Depreciation and amortization $ 38 $ 1,449 $ 1,487 $ 18 $ 1,518 $ 1,536 The following table presents summary information by segment for the three months ended June 30, 2019 and 2018, respectively: 2019 2018 (in thousands) Libsyn Pair Total Libsyn Pair Total Revenue $ 3,590 $ 2,110 $ 5,700 $ 3,025 $ 2,281 $ 5,306 Cost of revenue 586 275 861 539 166 705 Depreciation and amortization $ 20 $ 725 $ 745 $ 10 $ 759 $ 769 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Management has evaluated subsequent events through the date of the filing of this report. No events have occurred that would require adjustments to or disclosure in the financial statements. |
RESTATEMENT OF PREVIOUSLY REPOR
RESTATEMENT OF PREVIOUSLY REPORTED UNAUDITED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
RESTATEMENT OF PREVIOUSLY REPORTED UNAUDITED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS | 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 June 30, 2019 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 six months ended June 30, 2019 was changed. As a result, the net income and the basic and diluted income per common share were determined to be materially different. The Statement of Stockholders’ Equity for the period ended June 30, 2019 with its net income and accumulated deficit are consequently affected. The Consolidated Statement of Cash Flows for the six months ended June 30, 2019 also changed as a result of the deferred income taxes and income tax payable for 2019. During the 2019 audit process, it was discovered through an ongoing IRS examination it was discovered 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 tax expenses 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 was decreased by $183,932, or $0.01 per basic and diluted share for the three months ended June 30, 2019. As a result of the restatement, reported net income was decreased by $510,942, or $0.02 per basic and diluted share for the six months ended June 30, 2019. Total assets increased by $1,657,765 at June 30, 2019. Current and total liabilities increased by $1,583,159 at June 30, 2019. Accumulated deficit decreased by $74,606 at June 30, 2019. 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 three and six months ended June 30, 2019, Unaudited Consolidated Balance Sheet at June 30, 2019, and Unaudited Statement of Stockholders’ Equity for the period ended June 30, 2019. 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 June 30, 2019 As Reported Corrections June 30, 2019 As Restated Deferred Tax Assets - 1,657,765 1,657,765 Total Assets 41,948,551 1,657,765 43,606,316 Income Taxes Payable - 1,583,159 1,583,159 Total Current Liabilities 7,246,535 1,583,159 8,829,694 Total Liabilities 13,285,167 1,583,159 14,868,326 Accumulated Deficit (6,223,478 ) 74,606 (6,148,872) Stockholder’s Equity 28,663,384 74,606 28,737,990 Unaudited Consolidated Statement of Operations Six months ended June 30, 2019 As Reported Corrections Six months ended June 30, 2019 As Restated Income Tax (Benefit) Expense - 510,942 510,942 Net Income 2,375,612 (510,942 ) 1,864,670 Basic and Diluted Income Per Common Share 0.08 (0.02 ) 0.06 Unaudited Consolidated Statement of Operations Three months ended June 30, 2019 As Reported Corrections Three months ended June 30, 2019 As Restated Income Tax (Benefit) Expense - 183,932 183,932 Net Income 847,979 (183,932 ) 664,047 Basic and Diluted Income Per Common Share 0.03 (0.01 ) 0.02 Unaudited Statement of Stockholders’ Equity June 30, 2019 As Reported Corrections June 30, 2019 As Restated Net Income 2,375,612 (510,942 ) 1,864,670 Accumulated Deficit (6,223,478 ) 74,606 (6,148,872) |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Organization | 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. |
Basis of Presentation | Basis of Presentation 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, 2019. 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, 2018 (the 2018 Form 10-K). |
Prior Period Reclassifications | Prior Period Reclassifications - |
Accounting Estimates | 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 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 | Cash and Cash Equivalents |
Depreciation | Depreciation |
Accounts Receivable | Accounts Receivable |
Definite-life Intangible Assets | Definite-life intangible assets |
Technology Costs | Technology Costs |
Goodwill | Goodwill |
Advertising Costs | Advertising Costs |
Fair Value of Financial Instruments | 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. The fair value of the Company’s equity-based awards recorded in the Company’s financial statements during the first quarter of 2019 was determined using a Monte Carlo simulation valuation methodology based upon a Geometric Brownian Motion stock path, a Level 3 measurement. Volatility was based on historical volatility of the Company’s common stock over commensurate periods. The expected life was based on the contractual term of the award, and the risk-free interest rate was based on the implied yield available on U.S. Treasury Securities with a maturity similar to the awards’ expected life. 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 | Revenue Recognition 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 | Equity-Based Compensation - |
Leases | Leases 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 8 – Leases. There was not a material cumulative-effect adjustment to our beginning retained earnings as a result of adopting ASC 842. We have recognized additional operating lease assets and obligations of $1.4 million and $1.1 million as of January 1, 2019 and June 30, 2019, respectively. For additional disclosure and detail, see Note 8 – Leases. |
Earnings Per Share | Earnings Per Share |
Income Taxes | Income Taxes |
Recently Enacted Accounting Standards | Recently Enacted Accounting Standards - |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Life June 30, 2019 December 31, 2019 Furniture, fixtures, and equipment 3-10 yrs $ 8,262,927 $ 8,155,322 Leasehold improvements 3 - 5 yrs 2,646,400 2,646,400 Software 3 yrs 459,038 262,046 11,368,365 11,063,768 Less: Accumulated depreciation (9,393,006 ) (8,834,474 ) Property & equipment, net $ 1,975,359 $ 2,229,294 |
GOODWILL AND OTHER DEFINITE-L_2
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of goodwill | June 30, December 31, 2019 2018 Pair $ 4,903,920 $ 4,903,920 Libsyn 11,484,251 11,484,251 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 $ 845,786 $ 3,101,214 Intellectual Property 3,709,000 7 794,786 2,914,214 Trade Name 576,000 10 86,400 489,600 Non-compete 1,412,000 2 1,059,000 353,000 Total $ 9,644,000 $ 2,785,972 $ 6,858,028 |
Schedule of estimated future amortization expenses related to other intangible assets | For twelve months ending June 30, 2020 $ 1,504,314 2021 1,151,315 2022 1,151,315 2023 1,151,314 2024 1,151,314 Thereafter 748,456 Total $ 6,858,028 |
LOANS (Tables)
LOANS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Loans Payable [Abstract] | |
Future maturities of the loans | Twelve months ending June 30, 2020 $ 2,666,667 2021 1,600,000 2022 1,600,000 2023 1,733,333 Thereafter - Total $ 7,600,000 |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Deferred Revenue [Abstract] | |
Schedule of deferred revenue | June 30, 2019 December 31, 2018 Current: Hosting services $ 1,528,445 $ 1,601,335 Domains 647,175 535,273 Media subscription 199,328 139,471 $ 2,374,948 $ 2,276,079 Noncurrent: Hosting services 23,085 39,071 Domains 490,543 332,867 $ 2,888,576 $ 2,648,017 |
Deferred revenue expected to be recognized | Remainder of 2019 2020 2021 2022 2023 Thereafter Total Domains $ 414,430 $ 344,799 $ 154,464 $ 118,925 $ 79,941 $ 25,159 $ 1,137,718 Hosting 1,226,610 319,072 5,848 - - - 1,551,530 Media Subscription 173,191 26,137 - - - - 199,328 $ 1,814,231 $ 690,008 $ 160,312 $ 118,925 $ 79,941 $ 25,159 $ 2,888,576 |
Disaggregated revenue | Three Months Ended June 30 Six Months Ended June 30 2019 2018 2019 2018 Hosting services $ 1,890,719 $ 2,132,140 $ 4,618,635 $ 4,193,635 Podcast hosting 3,326,710 2,649,525 6,464,527 5,150,632 Advertising 158,244 250,750 331,884 571,414 Domains 244,306 116,499 485,838 188,295 Other 80,656 156,848 82,730 261,091 $ 5,700,635 $ 5,305,762 $ 11,983,614 $ 10,365,067 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Maturity of lease liabilities | Twelve months ending June 30, Operating Leases 2020 551,484 2021 482,581 2022 167,264 2023 2,150 2024 - Thereafter - Total lease payments 1,203,479 Less amount of lease payment representing interest (60,898 ) Total present value of lease payments 1,142,581 |
Schedule of future minimum lease payments | Twelve months ending December 31, Operating Leases 2019 544,284 2020 493,164 2021 365,562 2022 19,812 2023 - Thereafter - Total lease payments 1,422,822 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | For the Three Months For the Six Months June 30 June 30 2019 2018 2019 2018 Income from operations available to common stockholders (numerator)$ 664,047 $ 649,357 $ 1,864,670 $ 2,453,331 Income available to common stockholders (numerator) 664,047 $ 649,357 $ 1,864,670 $ 2,453,31 Weighted average number of common shares outstanding during the period used in earnings per share (denominator) 29,336,260 29,776,974 29,528,051 29,711,034 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment reporting | The following table presents summary information by segment for the six months ended June 30, 2019 and 2018, respectively: 2019 2018 (in thousands) Libsyn Pair Total Libsyn Pair Total Revenue $ 6,925 $ 5,059 $ 11,984 $ 5,908 $ 4,457 $ 10,365 Cost of revenue 1,153 547 1,700 1,074 338 1,412 Total assets $ 25,064 $ 18,542 $ 43,606 $ 21,946 $ 18,115 $ 40,061 Depreciation and amortization $ 38 $ 1,449 $ 1,487 $ 18 $ 1,518 $ 1,536 The following table presents summary information by segment for the three months ended June 30, 2019 and 2018, respectively: 2019 2018 (in thousands) Libsyn Pair Total Libsyn Pair Total Revenue $ 3,590 $ 2,110 $ 5,700 $ 3,025 $ 2,281 $ 5,306 Cost of revenue 586 275 861 539 166 705 Depreciation and amortization $ 20 $ 725 $ 745 $ 10 $ 759 $ 769 |
RESTATEMENT OF PREVIOUSLY REP_2
RESTATEMENT OF PREVIOUSLY REPORTED UNAUDITED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Restatement of financial statements | Unaudited Consolidated Balance Sheet June 30, 2019 As Reported Corrections June 30, 2019 As Restated Deferred Tax Assets - 1,657,765 1,657,765 Total Assets 41,948,551 1,657,765 43,606,316 Income Taxes Payable - 1,583,159 1,583,159 Total Current Liabilities 7,246,535 1,583,159 8,829,694 Total Liabilities 13,285,167 1,583,159 14,868,326 Accumulated Deficit (6,223,478 ) 74,606 (6,148,872) Stockholder’s Equity 28,663,384 74,606 28,737,990 Unaudited Consolidated Statement of Operations Six months ended June 30, 2019 As Reported Corrections Six months ended June 30, 2019 As Restated Income Tax (Benefit) Expense - 510,942 510,942 Net Income 2,375,612 (510,942 ) 1,864,670 Basic and Diluted Income Per Common Share 0.08 (0.02 ) 0.06 Unaudited Consolidated Statement of Operations Three months ended June 30, 2019 As Reported Corrections Three months ended June 30, 2019 As Restated Income Tax (Benefit) Expense - 183,932 183,932 Net Income 847,979 (183,932 ) 664,047 Basic and Diluted Income Per Common Share 0.03 (0.01 ) 0.02 Unaudited Statement of Stockholders’ Equity June 30, 2019 As Reported Corrections June 30, 2019 As Restated Net Income 2,375,612 (510,942 ) 1,864,670 Accumulated Deficit (6,223,478 ) 74,606 (6,148,872) |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | |||
Cash balances in excess of federally insured limits | $ 13,815,167 | ||
Allowance for doubtful accounts | 14,000 | $ 14,000 | |
Adjusted allowance for bad debt | 0 | $ 0 | |
Software development costs | $ 42,508 | $ 67,368 |
PROPERY AND EQUIPMENT (Details)
PROPERY AND EQUIPMENT (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Property and equipment | $ 11,368,365 | $ 11,063,768 |
Less: accumulated depreciation | (9,393,006) | (8,834,474) |
Property and equipment, net | 1,975,359 | 2,229,294 |
Furniture, fixtures and equipment | ||
Property and equipment | $ 8,262,927 | 8,155,322 |
Furniture, fixtures and equipment | Minimum | ||
Life | 3 years | |
Furniture, fixtures and equipment | Maximum | ||
Life | 10 years | |
Leasehold Improvements | ||
Property and equipment | $ 2,646,400 | 2,646,400 |
Leasehold Improvements | Minimum | ||
Life | 3 years | |
Leasehold Improvements | Maximum | ||
Life | 5 years | |
Software | ||
Property and equipment | $ 459,038 | $ 262,046 |
Life | 3 years |
PROPERY AND EQUIPMENT (Details
PROPERY AND EQUIPMENT (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 558,533 | $ 607,607 |
GOODWILL AND OTHER DEFINITE-L_3
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Goodwill | ||
Goodwill at beginning of period | $ 16,388,171 | $ 0 |
Pair | 4,903,920 | 4,903,920 |
Libsyn | 11,484,251 | 11,484,251 |
Goodwill at end of period | $ 16,388,171 | $ 16,388,171 |
GOODWILL AND OTHER DEFINITE-L_4
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS (Details 1) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Preliminary fair value | $ 9,644,000 | |
Accumulated amortization | 2,785,972 | |
Net carrying amount | 6,858,028 | $ 7,786,686 |
Customer relationships | ||
Preliminary fair value | $ 3,947,000 | |
Weighted average useful life | 7 years | |
Accumulated amortization | $ 845,786 | |
Net carrying amount | 3,101,214 | |
Intellectual property | ||
Preliminary fair value | $ 3,709,000 | |
Weighted average useful life | 7 years | |
Accumulated amortization | $ 794,786 | |
Net carrying amount | 2,914,214 | |
Trade name | ||
Preliminary fair value | $ 576,000 | |
Weighted average useful life | 10 years | |
Accumulated amortization | $ 86,400 | |
Net carrying amount | 489,600 | |
Non-compete | ||
Preliminary fair value | $ 1,412,000 | |
Weighted average useful life | 2 years | |
Accumulated amortization | $ 1,059,000 | |
Net carrying amount | $ 353,000 |
GOODWILL AND OTHER DEFINITE-L_5
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS (Details 2) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 1,504,314 | |
2021 | 1,151,315 | |
2022 | 1,151,315 | |
2023 | 1,151,314 | |
2024 | 1,151,314 | |
Thereafter | 748,456 | |
Total | $ 6,858,028 | $ 7,786,686 |
GOODWILL AND OTHER DEFINITE-L_6
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 928,657 | $ 928,657 |
LOANS (Details)
LOANS (Details) | Jun. 30, 2019USD ($) |
Loans Payable [Abstract] | |
2020 | $ 2,666,667 |
2021 | 1,600,000 |
2022 | 1,600,000 |
2023 | 1,733,333 |
Thereafter | 0 |
Total | $ 7,600,000 |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Stockholders' Equity Note [Abstract] | ||
Common stock authorized | 200,000,000 | 200,000,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock issued | 29,271,974 | 29,721,974 |
Common stock outstanding | 29,271,974 | 29,721,974 |
DEFERRED REVENUE (Details)
DEFERRED REVENUE (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current revenue | $ 2,374,948 | $ 2,276,079 |
Noncurrent revenue | 513,628 | 371,938 |
Deferred revenue | 2,888,576 | 2,648,017 |
Hosting Services | ||
Current revenue | 1,528,445 | 1,601,335 |
Noncurrent revenue | 23,085 | 39,071 |
Deferred revenue | 1,551,530 | |
Domains | ||
Current revenue | 647,175 | 535,273 |
Noncurrent revenue | 490,543 | 332,867 |
Deferred revenue | 1,137,718 | |
Media Subscription | ||
Current revenue | 199,328 | $ 139,471 |
Deferred revenue | $ 199,328 |
DEFERRED REVENUE (Details 1)
DEFERRED REVENUE (Details 1) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Remainder of 2019 | $ 1,814,231 | |
2020 | 690,008 | |
2021 | 160,312 | |
2022 | 118,925 | |
2023 | 79,941 | |
Thereafter | 25,159 | |
Total | 2,888,576 | $ 2,648,017 |
Domains | ||
Remainder of 2019 | 414,430 | |
2020 | 344,799 | |
2021 | 154,464 | |
2022 | 118,925 | |
2023 | 79,941 | |
Thereafter | 25,159 | |
Total | 1,137,718 | |
Hosting Services | ||
Remainder of 2019 | 1,226,610 | |
2020 | 319,072 | |
2021 | 5,848 | |
2022 | 0 | |
2023 | 0 | |
Thereafter | 0 | |
Total | 1,551,530 | |
Media Subscription | ||
Remainder of 2019 | 173,191 | |
2020 | 26,137 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
Thereafter | 0 | |
Total | $ 199,328 |
DEFERRED REVENUE (Details 2)
DEFERRED REVENUE (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 5,700,635 | $ 5,305,762 | $ 11,983,614 | $ 10,365,067 |
Hosting Services | ||||
Revenue | 1,890,719 | 2,132,140 | 4,618,635 | 4,193,635 |
Podcast Hosting | ||||
Revenue | 3,326,710 | 2,649,525 | 6,464,527 | 5,150,632 |
Advertising | ||||
Revenue | 158,244 | 250,750 | 331,884 | 571,414 |
Domains | ||||
Revenue | 244,306 | 116,499 | 485,838 | 188,295 |
Other | ||||
Revenue | $ 80,656 | $ 156,848 | $ 82,730 | $ 261,091 |
LEASES (Details)
LEASES (Details) | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 551,484 |
2021 | 482,581 |
2022 | 167,264 |
2023 | 2,150 |
2024 | 0 |
Therafter | 0 |
Total payments | 1,203,479 |
Less: imputed interest | (60,898) |
Total operating lease liability | $ 1,142,581 |
LEASES (Details 1)
LEASES (Details 1) | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 544,284 |
2020 | 493,164 |
2021 | 365,562 |
2022 | 19,812 |
2023 | 0 |
Thereafter | 0 |
Total minimum lease payment | $ 1,422,822 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||||||
Income from operations available to common stockholders (numerator) | $ 664,047 | $ 649,357 | $ 1,864,670 | $ 2,453,331 | ||
Income available to common stockholders (numerator) | $ 664,047 | $ 1,200,623 | $ 649,357 | $ 1,803,974 | $ 1,864,670 | $ 2,453,331 |
Restated Weighted average number of common shares outstanding during the period used in earnings per share (denominator) | 29,336,260 | 29,776,974 | 29,528,051 | 29,711,034 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 5,700 | $ 5,306 | $ 11,984 | $ 10,365 |
Cost of revenue | 861 | 705 | 1,700 | 1,412 |
Total assets | 43,606 | 40,061 | 43,606 | 40,061 |
Depreciation and amortization | 745 | 769 | 1,487 | 1,536 |
Libsyn | ||||
Revenue | 3,590 | 3,025 | 6,925 | 5,908 |
Cost of revenue | 586 | 539 | 1,153 | 1,074 |
Total assets | 25,064 | 21,946 | 25,064 | 21,946 |
Depreciation and amortization | 20 | 10 | 38 | 18 |
Pair | ||||
Revenue | 2,110 | 2,281 | 5,059 | 4,457 |
Cost of revenue | 275 | 166 | 547 | 338 |
Total assets | 18,542 | 18,115 | 18,542 | 18,115 |
Depreciation and amortization | $ 725 | $ 759 | $ 1,449 | $ 1,518 |
RESTATEMENT OF PREVIOUSLY REP_3
RESTATEMENT OF PREVIOUSLY REPORTED UNAUDITED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS (Details) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets | $ 1,657,765 | $ 1,454,077 | ||||
Total assets | 43,606,316 | 40,060,922 | ||||
Income taxes payable | 1,583,159 | 868,529 | ||||
Total current liabilities | 8,829,694 | 6,979,654 | ||||
Total liabilities | 14,868,326 | 13,034,190 | ||||
Accumulated deficit | (6,148,872) | (8,013,542) | ||||
Total stockholders' equity | 28,737,990 | $ 28,073,943 | $ 27,026,732 | $ 25,189,219 | $ 24,539,862 | $ 22,447,166 |
As Reported | ||||||
Deferred tax assets | 0 | |||||
Total assets | 41,948,551 | |||||
Income taxes payable | 0 | |||||
Total current liabilities | 7,246,535 | |||||
Total liabilities | 13,285,167 | |||||
Accumulated deficit | (6,223,478) | |||||
Total stockholders' equity | 28,663,384 | |||||
Corrections | ||||||
Deferred tax assets | 1,657,765 | |||||
Total assets | 1,657,765 | |||||
Income taxes payable | 1,583,159 | |||||
Total current liabilities | 1,583,159 | |||||
Total liabilities | 1,583,159 | |||||
Accumulated deficit | 74,606 | |||||
Total stockholders' equity | $ 74,606 |
RESTATEMENT OF PREVIOUSLY REP_4
RESTATEMENT OF PREVIOUSLY REPORTED UNAUDITED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income tax expense (benefit) | $ (183,932) | $ (173,209) | $ (510,942) | $ (1,097,850) | ||
Net Income (loss) | $ 664,047 | $ 1,200,623 | $ 649,357 | $ 1,803,974 | $ 1,864,670 | $ 2,453,331 |
Basic and Diluted Income per Common Share | $ 0.02 | $ 0.02 | $ 0.06 | $ 0.08 | ||
As Reported | ||||||
Income tax expense (benefit) | $ 0 | $ 0 | ||||
Net Income (loss) | $ 847,979 | $ 2,375,612 | ||||
Basic and Diluted Income per Common Share | $ 0.03 | $ 0.08 | ||||
Corrections | ||||||
Income tax expense (benefit) | $ (183,932) | $ (510,942) | ||||
Net Income (loss) | $ (183,932) | $ (510,942) | ||||
Basic and Diluted Income per Common Share | $ (0.01) | $ (0.02) |
RESTATEMENT OF PREVIOUSLY REP_5
RESTATEMENT OF PREVIOUSLY REPORTED UNAUDITED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS (Details 2) (USD $) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net Income (loss) | $ 664,047 | $ 1,200,623 | $ 649,357 | $ 1,803,974 | $ 1,864,670 | $ 2,453,331 |
Accumulated deficit | (6,148,872) | (6,148,872) | ||||
As Reported | ||||||
Net Income (loss) | 847,979 | 2,375,612 | ||||
Accumulated deficit | (6,223,478) | (6,223,478) | ||||
Corrections | ||||||
Net Income (loss) | (183,932) | (510,942) | ||||
Accumulated deficit | $ 74,606 | $ 74,606 |