Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 16, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Liberated Syndication Inc. | |
Entity Central Index Key | 0001667489 | |
Amendment Flag | false | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
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 Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 000-55779 | |
Entity Common Stock, Shares Outstanding | 26,588,220 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Cash | $ 13,818,169 | $ 16,621,272 |
Accounts receivable, net | 377,053 | 549,044 |
Related party receivables | 918,852 | 0 |
Prepaid expenses | 843,488 | 614,417 |
Total current assets | 15,957,562 | 17,784,733 |
Property and equipment, net | 1,120,903 | 1,536,930 |
Goodwill | 16,388,171 | 16,388,171 |
Definite life - intangible assets, net | 5,065,886 | 5,929,371 |
Deferred tax assets | 938,904 | 1,847,979 |
Prepaid expense | 422,469 | 363,091 |
Operating lease right-of-use assets | 438,776 | 751,731 |
Total assets | 40,332,671 | 44,602,006 |
CURRENT LIABILITIES: | ||
Accounts payable | 753,189 | 760,163 |
Accrued expenses | 975,476 | 1,087,271 |
Income tax payable | 1,365,948 | 2,047,917 |
Deferred revenue | 2,563,687 | 2,511,682 |
Current portion of capital lease obligation | 0 | 831 |
Current portion of loans payable, net | 2,647,987 | 2,643,824 |
Current portion of operating lease liabilities | 390,985 | 408,828 |
Total current liabilities | 8,697,272 | 9,460,516 |
LONG TERM LIABILITIES: | ||
Loans payable, net of current portion | 918,058 | 2,104,611 |
Deferred revenue, net of current portion | 701,555 | 601,234 |
Operating lease liabilities, net of current portion | 47,791 | 342,903 |
Line of credit | 2,000,000 | 2,000,000 |
Total long-term liabilities | 3,667,404 | 5,048,748 |
Total liabilities | 12,364,676 | 14,509,264 |
COMMITMENTS & CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Common stock | 26,825 | 29,272 |
Additional paid-in capital | 37,768,819 | 35,243,171 |
Accumulated deficit | (5,808,232) | (5,179,701) |
Common stock held in treasury (1,353,795 shares at September 30, 2020) | (4,019,417) | 0 |
Total stockholders' equity | 27,967,995 | 30,092,742 |
Total liabilities and stockholders' equity | $ 40,332,671 | $ 44,602,006 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 14,000 | $ 14,000 |
Treasury stock | $ 1,353,795 | $ 0 |
Common stock authorized | 200,000,000 | 200,000,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock issued | 26,824,429 | 29,721,974 |
Common stock outstanding | 26,824,429 | 29,721,974 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 6,511,707 | $ 6,219,119 | $ 19,114,200 | $ 18,202,733 |
Costs and operating expenses | ||||
Cost of revenue (excluding depreciation and amortization) | 937,863 | 881,171 | 2,367,400 | 2,581,659 |
General and administrative | 4,820,259 | 2,339,966 | 8,458,122 | 6,074,072 |
Technology | 595,393 | 478,372 | 1,754,245 | 1,390,161 |
Selling | 312,179 | 293,185 | 842,001 | 702,521 |
Customer support | 833,315 | 686,876 | 2,310,430 | 1,995,309 |
Depreciation and amortization | 428,241 | 712,024 | 1,452,571 | 2,199,214 |
Total costs and operating expenses | 7,927,250 | 5,391,594 | 17,184,769 | 14,942,936 |
Operating income | (1,415,543) | 827,525 | 1,929,431 | 3,259,797 |
Other income (expense) | ||||
Gain on revaluation of put option | 137,500 | 0 | 137,500 | 0 |
Interest expense | (27,319) | (75,280) | (123,823) | (245,002) |
Interest income | 7,387 | 66,862 | 74,772 | 178,551 |
Other income | 1,238 | 277 | 12,587 | 1,650 |
Total other income (expense) | (118,806) | (8,141) | (101,036) | (64,801) |
Income (loss) before income taxes | (1,296,737) | 819,384 | 2,030,467 | 3,194,996 |
Income tax expense | 727,269 | 178,129 | 2,685,998 | 689,071 |
Net income (loss) | $ (2,024,006) | $ 641,255 | $ (628,531) | $ 2,505,925 |
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE | $ (0.07) | $ 0.02 | $ (0.02) | $ 0.09 |
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 27,453,697 | 29,271,974 | 28,667,685 | 29,441,754 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance, shares at Dec. 31, 2018 | 29,721,974 | ||||
Balance, amount at Dec. 31, 2018 | $ 29,722 | $ 0 | $ 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 | 677,087 | 677,087 | |||
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 | 0 | 34,857,139 | (6,812,919) | 28,073,942 |
Balance, shares at Dec. 31, 2018 | 29,721,974 | ||||
Balance, amount at Dec. 31, 2018 | $ 29,722 | 0 | 35,010,552 | (8,013,542) | 27,026,732 |
Net income | 2,505,925 | ||||
Balance, shares at Sep. 30, 2019 | 29,271,974 | ||||
Balance, amount at Sep. 30, 2019 | $ 29,272 | 0 | 34,857,590 | (5,507,617) | 29,379,245 |
Balance, shares at Mar. 31, 2019 | 29,721,974 | ||||
Balance, amount at Mar. 31, 2019 | $ 29,722 | 0 | 34,857,139 | (6,812,919) | 28,073,942 |
Stock forfeiture, shares | (45,000) | ||||
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 | 0 | 34,857,590 | (6,148,872) | 28,737,990 |
Net income | 641,255 | 641,255 | |||
Balance, shares at Sep. 30, 2019 | 29,271,974 | ||||
Balance, amount at Sep. 30, 2019 | $ 29,272 | 0 | 34,857,590 | (5,507,617) | 29,379,245 |
Balance, shares at Dec. 31, 2019 | 29,721,974 | ||||
Balance, amount at Dec. 31, 2019 | $ 29,722 | 35,243,171 | (5,179,701) | 30,092,742 | |
Common stock issued for services, shares | 18,750 | ||||
Common stock issued for services, amount | $ 19 | 70,294 | 70,313 | ||
Net income | 1,120,111 | 1,120,111 | |||
Balance, shares at Mar. 31, 2020 | 29,290,724 | ||||
Balance, amount at Mar. 31, 2020 | $ 29,291 | 35,313,465 | (4,059,590) | 31,283,166 | |
Balance, shares at Dec. 31, 2019 | 29,721,974 | ||||
Balance, amount at Dec. 31, 2019 | $ 29,722 | 35,243,171 | (5,179,701) | 30,092,742 | |
Net income | (628,531) | ||||
Balance, shares at Sep. 30, 2020 | 26,824,429 | ||||
Balance, amount at Sep. 30, 2020 | $ 26,825 | (4,019,417) | 37,768,819 | (5,808,232) | 27,967,995 |
Balance, shares at Mar. 31, 2020 | 29,290,724 | ||||
Balance, amount at Mar. 31, 2020 | $ 29,291 | 35,313,465 | (4,059,590) | 31,283,166 | |
Common stock issued for services, shares | 18,750 | ||||
Common stock issued for services, amount | $ 19 | 70,294 | 70,313 | ||
Net income | 275,364 | 275,364 | |||
Balance, shares at Jun. 30, 2020 | 29,309,474 | ||||
Balance, amount at Jun. 30, 2020 | $ 29,310 | 35,383,759 | (3,784,226) | 31,628,843 | |
Cancelled shares - expired grants, shares | (300,000) | ||||
Cancelled shares - expired grants, amount | $ (300) | 300 | 0 | ||
Cancelled shares - CEO separation, shares | (1,325,000) | ||||
Cancelled shares - CEO separation, amount | $ (1,325) | 1,325 | 0 | ||
Stock buyback - CEO separation, shares | (1,353,795) | ||||
Stock buyback - CEO separation, amount | $ (1,354) | (4,019,417) | (4,020,771) | ||
Cancelled shares - Camac, shares | (300,000) | ||||
Cancelled shares - Camac, amount | $ (300) | 300 | 0 | ||
Stock grant, shares | 775,000 | ||||
Stock grant, amount | $ 775 | 2,300,975 | 2,301,750 | ||
Common stock issued for services, shares | 18,750 | ||||
Common stock issued for services, amount | $ 19 | 70,293 | 70,312 | ||
Unvested restricted stock accretion | 11,867 | 11,867 | |||
Net income | (2,024,006) | (2,024,006) | |||
Balance, shares at Sep. 30, 2020 | 26,824,429 | ||||
Balance, amount at Sep. 30, 2020 | $ 26,825 | $ (4,019,417) | $ 37,768,819 | $ (5,808,232) | $ 27,967,995 |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Flows from Operating Activities | ||
Net income | $ (628,531) | $ 2,505,925 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 1,452,571 | 2,199,214 |
Deferred income taxes | 909,075 | (298,902) |
Non-cash compensation expense, net of recapture | 2,524,555 | (153,412) |
Amortization of right-of-use asset | 312,955 | 382,379 |
Discount on loan fees | 17,611 | 21,483 |
Change in assets and liabilities: | ||
Accounts receivable | 171,991 | (66,974) |
Other receivables | (918,852) | 0 |
Prepaid expenses | (288,449) | (356,525) |
Accounts payable | (6,974) | 360,845 |
Income taxes payable | (681,970) | 987,973 |
Accrued expense | (111,795) | 864,290 |
Operating lease liabilities | (312,955) | (382,379) |
Deferred revenue | 152,326 | 198,521 |
Net cash provided by operating activities | 2,591,558 | 6,262,438 |
Cash Flows from Investing Activities: | ||
Purchase of property and equipment | (173,059) | (353,040) |
Net cash used in investing activities | (173,059) | (353,040) |
Cash Flows from Financing Activities: | ||
Treasury stock purchases | (4,020,771) | 0 |
Repayment on term loan | (1,200,000) | (1,200,000) |
Repayment on capital lease | (831) | (54,377) |
Net cash used in financing activities | (5,221,602) | (1,254,377) |
Net increase in cash | (2,803,103) | 4,655,021 |
Cash at beginning of period | 16,621,272 | 11,079,941 |
Cash at end of period | 13,818,169 | 15,734,962 |
Supplemental Disclosures of Cash Flow Information | ||
Cash paid during the periods for: interest | 106,212 | 223,519 |
Cash paid during the periods for: income taxes | 2,431,846 | 0 |
Supplemental Disclosures of Cash Flow Investing and Financing Activities | ||
Right-of-use operating lease assets obtained in exchange for operating lease liabilities | $ 0 | $ 1,397,821 |
ORGANIZATION AND BACKGROUND
ORGANIZATION AND BACKGROUND | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BACKGROUND | Organization Liberated Syndication, Inc. (the “Company”, “we,” or “us”) 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. Libsyn offers hosting and distribution tools, including storage, bandwidth, syndication creation, distribution, and statistics tracking. Libsyn offers an enterprise solution for professional media producers and corporate customers and a premium subscription service that provides producers a custom app and a podcast website where listeners can access their show, login to purchase a subscription, and get access to premium content. On December 27, 2017, the Company purchased all the issued and outstanding shares of Pair Networks Inc. (“Pair”), a Pennsylvania corporation, and subsidiaries Ryousha Kokusai, LLC (“Ryousha”) and 660837NB, Inc. (“NB”), in a transaction accounted for as a purchase. Pair 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, CO, and a remote site back-up location in Pittsburgh, PA. Ryousha (dba Pair International), a wholly owned single-member limited liability company subsidiary of Pair, was formed on January 1, 2015. Value added taxes (“VAT”) related to sales occurring in European Union countries, which are subject to VAT, are paid through Ryousha. 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 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, 2020. 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, 2019 (the “2019 Form 10-K”). Accounting Estimates The preparation of financial statements in conformity with GAAP 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 accounts receivable reserves, depreciation of fixed assets, deferred taxes 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 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; and ● 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. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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, 2020, the Company had $13,494,298 of 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. Accounts Receivable Accounts receivable consist of trade receivables arising in the normal course of business. At September 30, 2020 and December 31, 2019, the Company had 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, 2020 and 2019, the Company did not adjust the allowance for bad debt. Definite-life intangible assets The Company evaluates its long-lived assets for impairment whenever events or changes 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. Technology 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 expense during the nine months ended September 30, 2020 and 2019. Technology costs totaled $1,754,245 and $1,390,161 for the nine months ended September 30, 2020 and 2019, respectively. Technology costs totaled $595,393 and $478,372 for the three months ended September 30, 2020 and 2019, respectively. Goodwill Goodwill is evaluated for impairment annually on December 31, 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 quarter ended September 30, 2020. Advertising Costs Advertising costs are expensed as incurred and amounted to $178,729 and $64,254 for the nine months ended September 30, 2020 and 2019, respectively. Advertising costs totaled $77,331 and $21,746 for the three months ended September 30, 2020 and 2019, respectively. Fair Value of Financial Instruments The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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. The fair value of the Company’s equity-based awards recorded in the Company’s financial statements are determined using a Monte Carlo simulation valuation methodology based upon a Geometric Brownian Motion stock path, a Level 3 measurement, or Black-Scholes modeling, as appropriate. Volatility is based on historical volatility of the Company’s common stock over commensurate periods. The expected life is based on the contractual term of the award, and the risk-free interest rate is based on the implied yield available on U.S. Treasury Securities with a maturity similar to the awards’ expected life. Assets and liabilities reported at fair value on a recurring basis: September 30, 2020 December 31, 2019 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities: Accounts payable and accrued liabilities: Put option $ $ $ 181,500 $ $ $ On July 31, 2020 the Company entered into a separation agreement with our former CEO. Included in this agreement was a right for our former CEO to put to the company up to 550,000 shares of common stock at a price of $2.50 per share between December 30, 2020 and December 29, 2021. The corresponding put option liability has been recorded as a short term liability and included in accounts payable on the balance sheet. The put option was valued using a Black-Scholes put model. The company used the following inputs for the put option: · Annual volatility – 63% · Risk free rate – .12% · Term – 1.4 years Revenue Recognition The Company accounts for revenue in accordance with ASC Topic 606. 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 result in a reduced amount of revenue recognized over the contract term of the applicable service compared to the amount originally expected. Our revenue is categorized and disaggregated as follows: Domains Hosting Services Podcast Hosting Media Subscription Services Advertising Equity-Based Compensation Our equity-based awards are comprised of stock and are accounted for using the fair value method. Stock is measured based on the fair market value of the underlying common stock on the date of grant. Awards vest and compensation is recognized over the requisite service period. The measurement date for performance vesting awards is the date on which the applicable performance criteria are approved by our board of directors. Leases The Company accounts for leases in accordance with FASB ASC Topic 842. Leases that meet one or more of the finance lease criteria are recorded as a finance lease, and all other leases are operating leases. Earnings Per Share The Company computes earnings per share in accordance with FASB ASC Topic 260, which requires the Company to present basic earnings per share and diluted earnings per share when the effect is dilutive (see Note 10). 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 8). Recently Enacted Accounting Standards 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. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | The following is a summary of property and equipment at: Life September 30, 2020 December 31, 2019 Furniture, fixtures, and equipment 3-10 yrs $ 8,262,929 $ 8,262,929 Leasehold improvements 3-5 yrs 2,646,399 2,646,399 Software 3 yrs 688,040 514,981 11,597,368 11,424,309 Less: Accumulated depreciation (10,476,465 ) (9,887,379 ) Property and equipment, net $ 1,120,903 $ 1,536,930 Depreciation expense for the nine months ended September 30, 2020 and 2019 was $589,085 and $806,229, respectively. Depreciation expense for the three months ended September 30, 2020 and 2019 was $140,412 and $247,696, respectively. |
GOODWILL AND OTHER DEFINITE-LIF
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS | Goodwill The following is a summary of goodwill: September 30, 2020 December 31, 2020 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 Other intangible assets consist of customer relationships, intellectual property, and trade name, which were generated through the acquisition of Pair. Management considers these intangible assets to have finite-lives except trade name assets. These assets are being amortized on a straight-line basis over their estimated useful lives. As of September 30, 2020, identifiable intangible assets consisted of the following: Preliminary Fair Value Weighted Average Useful Life (in Years) Accumulated Amortization Net Carrying Amount Customer Relationships $ 3,947,000 7 $ 1,550,606 $ 2,396,393 Intellectual Property 3,709,000 7 1,457,106 2,251,893 Trade Name 576,000 10 158,400 417,600 Total $ 8,232,000 $ 3,166,114 $ 5,065,886 As of December 31, 2019, identifiable intangible assets consisted of the following: Preliminary Fair Value Weighted Average Useful Life (in Years) Accumulated Amortization Net Carrying Amount Customer Relationships $ 3,947,000 7 $ 1,127,714 $ 2,819,286 Intellectual Property 3,709,000 7 1,059,714 2,649,285 Trade Name 576,000 10 115,200 460,800 Non-compete 1,412,000 2 1,412,000 - Total $ 9,644,000 $ 3,714,628 $ 5,929,371 Amortization expense for the nine months ended September 30, 2020 and 2019 was $863,485 and $1,392,986, respectively. Amortization expense for the three months ended September 30, 2020 and 2019 was $287,828 and $464,328, respectively. The estimated future amortization expenses related to other intangible assets as of September 30, 2020 are as follows: For twelve months ending September 30, 2021 $ 1,151,314 2022 1,151,314 2023 1,151,314 2024 1,151,315 2025 460,629 Total $ 5,065,886 |
LOANS
LOANS | 9 Months Ended |
Sep. 30, 2020 | |
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 September 30, 2020, $2,000,000 was drawn down on the revolving line and there was no additional availability under the Revolving Credit Facility. The Term Loan currently accrues interest at LIBOR (London Interbank Offered Rate) plus 125 basis points or prime plus 75 basis points at the election of the Company. As of September 30, 2020, the Company had elected LIBOR plus 125 basis points or 1.4%. 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 shares of the Company’s common stock, (2) 100% of the proceeds from the sale of assets not immediately replaced, and (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 2019 audited financial statements in the 2019 Form 10-K, the Company demonstrated excess liquidity per the Loan Agreement. As such, the Company has included the expected $1,066,667 payment to the Bank as a current liability as of September 30, 2020. As of September 30, 2020, the balance on the Term Loan was $3,600,000. 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 Libsyn and Pair 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 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. 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, 2020, the discount was $33,955. Future maturities of the Term Loan at September 30, 2020 are as follows: Twelve months ending September 30, 2021 $ 2,666,667 2022 800,000 2023 133,333 Total $ 3,600,000 As a result of the Company’s tax normalization efforts, the Company has not been in compliance with the Fixed Charges Coverage Ratio (as defined in the Loan Agreement) required under the Loan Agreement since the quarter ended March 31, 2020 and has provided the required notice and explanation to the Bank. The Company has more than adequate available cash to pay off the remaining loan balance under the Facility if required by the Bank. |
CAPITAL STOCK
CAPITAL STOCK | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
CAPITAL STOCK | Common Stock Outside of routine awards granted to directors and employees, the following transactions occurred during the nine months ended September 30, 2020: On February 18, 2020, the Compensation Committee of the Board of Directors approved the award of 25,000 shares of restricted common stock to each of Eric Shahinian, Bradley Tirpak and Brian Kibby as members of the Board of Directors, which shares shall vest in four equal quarterly tranches at the end of each quarter of 2020 and all such shares shall vest immediately in the event of certain changes in control of the Company. On July 1, 2020, 300,000 shares of common stock were forfeited by three directors as certain performance milestones were not achieved by the Company. In connection with the Separation and Transition Services Agreement and General Release (the “Separation Agreement”) entered into on July 31, 2020 by the Company and Christopher Spencer, the Company’s former chief executive officer (“CEO”), (i) the Company purchased 1,353,795 shares from Mr. Spencer at market price, which shares were retained as Treasury stock; (ii) Mr. Spencer forfeited 1,325,000 shares of common stock due to certain performance milestones that the Company did not achieve; (iii) Mr. Spencer forfeited 150,000 shares in accordance with the settlement agreement, dated October 4, 2019, with Camac Fund, LP, and its affiliates Camac Partners, LLC, Camac Capital, LLC and Eric Shahinian (the “Camac Settlement Agreement”); and (iv) the Company granted 775,000 unrestricted shares of common stock to Mr. Spencer. On September 30, 2020, 150,000 shares of the Company’s common stock granted to John Busshaus, the Company’s former chief financial officer, were forfeited in accordance with the terms of the Camac Settlement Agreement. |
DEFERRED REVENUE
DEFERRED REVENUE | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Revenue [Abstract] | |
DEFERRED REVENUE | Deferred revenue consists of the following: September 30, 2020 December 31, 2019 Current: Hosting services $ 1,605,575 $ 1,664,811 Domains 763,788 688,717 Media subscription 194,324 158,154 $ 2,563,687 $ 2,511,682 Noncurrent: Hosting services 45,375 29,309 Domains 656,181 571,925 701,556 601,234 Total Deferred Revenue $ 3,265,243 $ 3,112,916 Deferred revenue as of September 30, 2020 is expected to be recognized as revenue as follows: Remainder of 2020 2021 2022 2023 2024 Thereafter Total Domains $ 266,762 $ 580,782 $ 255,509 $ 175,907 $ 101,235 $ 39,845 $ 1,420,040 Hosting 1,013,536 622,070 15,274 - - - 1,650,880 Media Subscription 194,323 - - - - - 194,323 $ 1,474,621 $ 1,202,852 $ 270,783 $ 175,907 $ 101,235 $ 39,845 $ 3,265,243 Disaggregated revenue consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Hosting services $ 2,149,223 $ 2,335,098 $ 6,475,562 $ 6,953,733 Podcast hosting 3,919,927 3,415,664 11,163,757 9,880,191 Advertising 82,945 105,999 302,677 437,884 Domains 294,236 260,764 861,097 746,601 Other 65,376 101,594 311,107 184,324 $ 6,511,707 $ 6,219,119 $ 19,114,200 $ 18,202,733 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Our provision for income taxes for the nine-month periods ended September 30, 2020 and 2019 was a tax expense of approximately $2,685,998 and $689,071, respectively, which resulted in an effective tax rate of 131% and 22%, respectively. Our provision for income taxes for the three-month periods ended September 30, 2020 and 2019 was a tax expense of approximately $727,269 and $178,129, respectively, which resulted in an effective tax rate of (56)% and 22%, respectively. We account for uncertain tax positions pursuant to the recognition and measurement criteria under ASC Topic 740. It is reasonably possible that $1.2 million of uncertain tax positions will be recognized within the next 12 months due to our inability to respond to IRS requests related to an ongoing IRS examination. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
LEASES | We lease two office spaces, a Denver data center, and three Xerox machines. These leases are all classified as operating leases. There is one finance lease for Emerson batteries that is immaterial to our condensed consolidated financial statements, which was paid off during the quarter ended March 31, 2020. 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 Sheets. 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 September 30, 2020 was 1.18 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 September 30, 2020 was 4.42%. For the nine months ended September 30, 2020 and 2019, cash paid for amounts in the measurement of lease liabilities was $333,057 and $417,893, respectively. Total operating lease costs during the same periods were $333,276 and $419,137, respectively. Maturity of lease liabilities: Twelve months ending September 30, Operating Leases 2021 $ 402,527 2022 47,950 2023 644 Total lease payments $ 451,121 Less amount of lease payment representing interest (12,345 ) Total present value of lease payments $ 438,776 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | Basic earnings per share is computed by dividing net income attributable to the Company by the weighted-average number of shares of common stock outstanding during the period. As of September 30, 2020, 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 Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Income from operations available to common stockholders (numerator) $ (2,024,006 ) $ 641,255 $ (628,531 ) $ 2,505,925 Income available to common stockholders (numerator) $ (2,024,006 ) $ 641,255 $ (628,531 ) $ 2,505,925 Weighted average number of common shares outstanding during the period used in earnings per share (denominator) 27,453,697 29,271,974 28,667,685 29,441,754 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
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 distribution by FAB Universal Corp. (“FAB”) to its stockholders of the Company’s common stock (the “Spin-Off”), it is possible that the Company could be required to assume responsibility for certain obligations retained by 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. For example, FAB is currently undergoing both domestic and international audits by the Internal Revenue Service (“IRS”). 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. On October 2, 2019, the Company formally accepted the resignation of John Busshaus, the former Chief Financial Officer of the Company. The Company received a letter from Mr. Busshaus, providing notice of his intent to resign for “Good Reason” as defined in Section 8(c) of the Employment Agreement pursuant to which he claimed to be entitled to the “Effect of Termination” under the Employment Agreement in Section 9(c). The Company contends that there was not “Good Reason” for his resignation and therefore he is not entitled to the “Effect of Termination” under Section 9(c) of the Employment Agreement. On April 24, 2020, Mr. Busshaus filed a complaint against the Company with the American Arbitration Association (“AAA”) asserting claims arising from his employment relationship with the Company, including, inter alia, claims for wages, compensation and benefits, and claims of unlawful discharge and wrongful termination. The Company denies Mr. Busshaus’ claims in their entirety and intends to vigorously defend its position. As of September 30, 2020, there has been no further update to the complaint filed against the Company. The Company has entered into employment agreements with its current and former executive officers that provide for a bonus payment to be paid at the end of such agreement, and a bonus payment to be paid upon an executive’s termination without cause or for good reason, or following a change of control by the Company. As of September 30, 2020, the bonus accrual totaled $805,110. |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | ASC Topic 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 reporting information about geographical areas, business segments and major customers in the Company’s financial statements. 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, 2020 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, 2020 and 2019, respectively: 2020 2019 (in thousands) Libsyn Pair Total Libsyn Pair Total Revenue $ 11,828 $ 7,286 $ 19,114 $ 10,563 $ 7,640 $ 18,203 Cost of revenue 1,450 917 2,367 1,738 844 2,582 Total assets $ 24,190 $ 17,256 $ 41,446 $ 26,357 $ 18,251 $ 44,608 Depreciation and amortization $ 62 $ 527 $ 589 $ 60 $ 2,139 $ 2,199 The following table presents summary information by segment for the three months ended September 30, 2020 and 2019, respectively: 2020 2019 (in thousands) Libsyn Pair Total Libsyn Pair Total Revenue $ 4,078 $ 2,434 $ 6,512 $ 3,638 $ 2,581 $ 6,219 Cost of revenue 490 448 938 585 296 881 Depreciation and amortization $ 7,750 $ 4,852 $ 12,602 $ 23 $ 689 $ 712 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On October 8, 2020, Mr. Spencer, the Company’s former chief executive officer, satisfied his withholding tax liability, related to his separation agreement, of $918,852 by tendering 236,209 shares of stock, with a stock price of $3.89 per share, to the Company. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
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, 2020, the Company had $13,494,298 of 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. |
Accounts Receivable | Accounts receivable consist of trade receivables arising in the normal course of business. At September 30, 2020 and December 31, 2019, the Company had 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, 2020 and 2019, the Company did not adjust the allowance for bad debt. |
Definite-life Intangible Assets | The Company evaluates its long-lived assets for impairment whenever events or changes 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. |
Technology 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 expense during the nine months ended September 30, 2020 and 2019. Technology costs totaled $1,754,245 and $1,390,161 for the nine months ended September 30, 2020 and 2019, respectively. Technology costs totaled $595,393 and $478,372 for the three months ended September 30, 2020 and 2019, respectively. |
Goodwill | Goodwill is evaluated for impairment annually on December 31, 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 quarter ended September 30, 2020. |
Advertising Costs | Advertising costs are expensed as incurred and amounted to $178,729 and $64,254 for the nine months ended September 30, 2020 and 2019, respectively. Advertising costs totaled $77,331 and $21,746 for the three months ended September 30, 2020 and 2019, respectively. |
Fair Value of Financial Instruments | The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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. The fair value of the Company’s equity-based awards recorded in the Company’s financial statements are determined using a Monte Carlo simulation valuation methodology based upon a Geometric Brownian Motion stock path, a Level 3 measurement, or Black-Scholes modeling, as appropriate. Volatility is based on historical volatility of the Company’s common stock over commensurate periods. The expected life is based on the contractual term of the award, and the risk-free interest rate is based on the implied yield available on U.S. Treasury Securities with a maturity similar to the awards’ expected life. Assets and liabilities reported at fair value on a recurring basis: September 30, 2020 December 31, 2019 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities: Accounts payable and accrued liabilities: Put option $ $ $ 181,500 $ $ $ On July 31, 2020 the Company entered into a separation agreement with our former CEO. Included in this agreement was a right for our former CEO to put to the company up to 550,000 shares of common stock at a price of $2.50 per share between December 30, 2020 and December 29, 2021. The corresponding put option liability has been recorded as a short term liability and included in accounts payable on the balance sheet. The put option was valued using a Black-Scholes put model. The company used the following inputs for the put option: · Annual volatility – 63% · Risk free rate – .12% · Term – 1.4 years |
Revenue Recognition | The Company accounts for revenue in accordance with ASC Topic 606. 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 result in a reduced amount of revenue recognized over the contract term of the applicable service compared to the amount originally expected. Our revenue is categorized and disaggregated as follows: Domains Hosting Services Podcast Hosting Media Subscription Services Advertising |
Equity-Based Compensation | Our equity-based awards are comprised of stock and are accounted for using the fair value method. Stock is measured based on the fair market value of the underlying common stock on the date of grant. Awards vest and compensation is recognized over the requisite service period. The measurement date for performance vesting awards is the date on which the applicable performance criteria are approved by our board of directors. |
Leases | The Company accounts for leases in accordance with FASB ASC Topic 842. Leases that meet one or more of the finance lease criteria are recorded as a finance lease, and all other leases are operating leases. |
Earnings Per Share | The Company computes earnings per share in accordance with FASB ASC Topic 260, which requires the Company to present basic earnings per share and diluted earnings per share when the effect is dilutive (see Note 10). |
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 8). |
Recently Enacted Accounting Standards | 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. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Assets and liabilities reported at fair value on a recurring basis | September 30, 2020 December 31, 2019 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities: Accounts payable and accrued liabilities: Put option $ $ $ 181,500 $ $ $ |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Life September 30, 2020 December 31, 2019 Furniture, fixtures, and equipment 3-10 yrs $ 8,262,929 $ 8,262,929 Leasehold improvements 3-5 yrs 2,646,399 2,646,399 Software 3 yrs 688,040 514,981 11,597,368 11,424,309 Less: Accumulated depreciation (10,476,465 ) (9,887,379 ) Property and equipment, net $ 1,120,903 $ 1,536,930 |
GOODWILL AND OTHER DEFINITE-L_2
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of goodwill | September 30, 2020 December 31, 2020 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 $ 1,550,606 $ 2,396,393 Intellectual Property 3,709,000 7 1,457,106 2,251,893 Trade Name 576,000 10 158,400 417,600 Total $ 8,232,000 $ 3,166,114 $ 5,065,886 As of December 31, 2019, identifiable intangible assets consisted of the following: Preliminary Fair Value Weighted Average Useful Life (in Years) Accumulated Amortization Net Carrying Amount Customer Relationships $ 3,947,000 7 $ 1,127,714 $ 2,819,286 Intellectual Property 3,709,000 7 1,059,714 2,649,285 Trade Name 576,000 10 115,200 460,800 Non-compete 1,412,000 2 1,412,000 - Total $ 9,644,000 $ 3,714,628 $ 5,929,371 |
Schedule of estimated future amortization expenses related to other intangible assets | For twelve months ending September 30, 2021 $ 1,151,314 2022 1,151,314 2023 1,151,314 2024 1,151,315 2025 460,629 Total $ 5,065,886 |
LOANS (Tables)
LOANS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Loans Payable [Abstract] | |
Future maturities of the loans | Twelve months ending September 30, 2021 $ 2,666,667 2022 800,000 2023 133,333 Total $ 3,600,000 |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Revenue [Abstract] | |
Schedule of deferred revenue | September 30, 2020 December 31, 2019 Current: Hosting services $ 1,605,575 $ 1,664,811 Domains 763,788 688,717 Media subscription 194,324 158,154 $ 2,563,687 $ 2,511,682 Noncurrent: Hosting services 45,375 29,309 Domains 656,181 571,925 701,556 601,234 Total Deferred Revenue $ 3,265,243 $ 3,112,916 |
Deferred revenue expected to be recognized | Remainder of 2020 2021 2022 2023 2024 Thereafter Total Domains $ 266,762 $ 580,782 $ 255,509 $ 175,907 $ 101,235 $ 39,845 $ 1,420,040 Hosting 1,013,536 622,070 15,274 - - - 1,650,880 Media Subscription 194,323 - - - - - 194,323 $ 1,474,621 $ 1,202,852 $ 270,783 $ 175,907 $ 101,235 $ 39,845 $ 3,265,243 |
Disaggregated revenue | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Hosting services $ 2,149,223 $ 2,335,098 $ 6,475,562 $ 6,953,733 Podcast hosting 3,919,927 3,415,664 11,163,757 9,880,191 Advertising 82,945 105,999 302,677 437,884 Domains 294,236 260,764 861,097 746,601 Other 65,376 101,594 311,107 184,324 $ 6,511,707 $ 6,219,119 $ 19,114,200 $ 18,202,733 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Maturity of lease liabilities | Twelve months ending September 30, Operating Leases 2021 $ 402,527 2022 47,950 2023 644 Total lease payments $ 451,121 Less amount of lease payment representing interest (12,345 ) Total present value of lease payments $ 438,776 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Income from operations available to common stockholders (numerator) $ (2,024,006 ) $ 641,255 $ (628,531 ) $ 2,505,925 Income available to common stockholders (numerator) $ (2,024,006 ) $ 641,255 $ (628,531 ) $ 2,505,925 Weighted average number of common shares outstanding during the period used in earnings per share (denominator) 27,453,697 29,271,974 28,667,685 29,441,754 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment reporting | 2020 2019 (in thousands) Libsyn Pair Total Libsyn Pair Total Revenue $ 11,828 $ 7,286 $ 19,114 $ 10,563 $ 7,640 $ 18,203 Cost of revenue 1,450 917 2,367 1,738 844 2,582 Total assets $ 24,190 $ 17,256 $ 41,446 $ 26,357 $ 18,251 $ 44,608 Depreciation and amortization $ 62 $ 527 $ 589 $ 60 $ 2,139 $ 2,199 The following table presents summary information by segment for the three months ended September 30, 2020 and 2019, respectively: 2020 2019 (in thousands) Libsyn Pair Total Libsyn Pair Total Revenue $ 4,078 $ 2,434 $ 6,512 $ 3,638 $ 2,581 $ 6,219 Cost of revenue 490 448 938 585 296 881 Depreciation and amortization $ 7,750 $ 4,852 $ 12,602 $ 23 $ 689 $ 712 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Level 1 | ||
Accounts payable and accrued liabilities: | ||
Put option | $ 0 | $ 0 |
Level 2 | ||
Accounts payable and accrued liabilities: | ||
Put option | 0 | 0 |
Level 3 | ||
Accounts payable and accrued liabilities: | ||
Put option | $ 0 | $ 181,500 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||||
Cash balances in excess of federally insured limits | $ 13,494,298 | $ 13,494,298 | |||
Allowance for doubtful accounts | 14,000 | 14,000 | $ 14,000 | ||
Technology costs | 595,393 | $ 478,372 | 1,754,245 | $ 1,390,161 | |
Advertising costs | $ 77,331 | $ 21,746 | $ 178,729 | $ 64,254 |
PROPERY AND EQUIPMENT (Details)
PROPERY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Sep. 30, 2020 | |
Property and equipment | $ 11,424,309 | $ 11,597,368 |
Less: accumulated depreciation | (9,887,379) | (10,476,465) |
Property and equipment, net | 1,536,930 | 1,120,903 |
Furniture, Fixtures and Equipment | ||
Property and equipment | $ 8,262,929 | 8,262,929 |
Furniture, Fixtures and Equipment | Minimum | ||
Life | 3 years | |
Furniture, Fixtures and Equipment | Maximum | ||
Life | 10 years | |
Leasehold Improvements | ||
Property and equipment | $ 2,646,399 | 26,463,399 |
Leasehold Improvements | Minimum | ||
Life | 3 years | |
Leasehold Improvements | Maximum | ||
Life | 5 years | |
Software | ||
Property and equipment | $ 514,981 | $ 688,040 |
Life | 3 years |
PROPERY AND EQUIPMENT (Details
PROPERY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 140,412 | $ 247,696 | $ 589,085 | $ 806,229 |
GOODWILL AND OTHER DEFINITE-L_3
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Pair | $ 4,903,920 | $ 4,903,920 |
Libsyn | 11,484,251 | 11,484,251 |
Goodwill | $ 16,388,171 | $ 16,388,171 |
GOODWILL AND OTHER DEFINITE-L_4
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Sep. 30, 2019 | |
Preliminary fair value | $ 8,232,000 | $ 9,644,000 | ||
Accumulated amortization | 3,166,114 | 3,714,628 | ||
Net carrying amount | 5,065,886 | $ 5,929,371 | 5,929,371 | |
Customer Relationships | ||||
Preliminary fair value | $ 3,947,000 | 3,947,000 | ||
Weighted average useful life | 7 years | 7 years | ||
Accumulated amortization | $ 1,550,606 | 1,127,714 | ||
Net carrying amount | 2,396,393 | 2,819,286 | ||
Intellectual Property | ||||
Preliminary fair value | $ 3,709,000 | 3,709,000 | ||
Weighted average useful life | 7 years | 7 years | ||
Accumulated amortization | $ 1,457,106 | 1,059,714 | ||
Net carrying amount | 2,251,893 | 2,649,285 | ||
Trade Name | ||||
Preliminary fair value | $ 576,000 | 576,000 | ||
Weighted average useful life | 10 years | 10 years | ||
Accumulated amortization | $ 158,400 | 115,200 | ||
Net carrying amount | $ 417,600 | $ 460,800 | ||
Non-compete | ||||
Preliminary fair value | $ 1,412,000 | $ 0 | ||
Weighted average useful life | 2 years | |||
Accumulated amortization | $ 1,412,000 | 0 | ||
Net carrying amount | $ 0 | $ 0 |
GOODWILL AND OTHER DEFINITE-L_5
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS (Details 2) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
2021 | $ 1,151,314 | ||
2022 | 1,151,314 | ||
2023 | 1,151,314 | ||
2024 | 1,151,315 | ||
2025 | 460,269 | ||
Total | $ 5,929,371 | $ 5,065,886 | $ 5,929,371 |
GOODWILL AND OTHER DEFINITE-L_6
GOODWILL AND OTHER DEFINITE-LIFE INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 287,828 | $ 464,328 | $ 863,485 | $ 1,392,986 |
LOANS (Details)
LOANS (Details) | Sep. 30, 2020USD ($) |
Loans Payable [Abstract] | |
2021 | $ 2,666,667 |
2022 | 800,000 |
2023 | 133,333 |
Total | $ 3,600,000 |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Stockholders' Equity Note [Abstract] | ||
Common stock authorized | 200,000,000 | 200,000,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock issued | 26,824,429 | 29,721,974 |
Common stock outstanding | 26,824,429 | 29,721,974 |
DEFERRED REVENUE (Details)
DEFERRED REVENUE (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current revenue | $ 2,563,687 | $ 2,511,682 |
Noncurrent revenue | 701,555 | 601,234 |
Deferred revenue | 3,265,243 | 3,112,916 |
Hosting Services | ||
Current revenue | 1,605,575 | 1,664,811 |
Noncurrent revenue | 45,375 | 29,309 |
Deferred revenue | 1,650,880 | |
Domains | ||
Current revenue | 763,788 | 688,717 |
Noncurrent revenue | 656,181 | 571,925 |
Deferred revenue | 1,420,040 | |
Media Subscription | ||
Current revenue | 194,324 | $ 158,154 |
Deferred revenue | $ 194,323 |
DEFERRED REVENUE (Details 1)
DEFERRED REVENUE (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
2020 | $ 1,474,621 | |
2021 | 1,202,852 | |
2022 | 270,783 | |
2023 | 175,907 | |
2024 | 101,235 | |
Thereafter | 39,845 | |
Total | 3,265,243 | $ 3,112,916 |
Domains | ||
2020 | 266,762 | |
2021 | 580,782 | |
2022 | 255,509 | |
2023 | 175,907 | |
2024 | 101,235 | |
Thereafter | 39,845 | |
Total | 1,420,040 | |
Hosting Services | ||
2020 | 1,013,536 | |
2021 | 622,070 | |
2022 | 15,274 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Total | 1,650,880 | |
Media Subscription | ||
2020 | 194,323 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Total | $ 194,323 |
DEFERRED REVENUE (Details 2)
DEFERRED REVENUE (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | $ 6,511,707 | $ 6,219,119 | $ 19,114,200 | $ 18,202,733 |
Hosting Services | ||||
Revenue | 2,149,223 | 2,335,098 | 6,475,562 | 6,953,733 |
Podcast Hosting | ||||
Revenue | 3,919,927 | 3,415,664 | 11,163,757 | 9,880,191 |
Advertising | ||||
Revenue | 82,945 | 105,999 | 302,677 | 437,884 |
Domains | ||||
Revenue | 294,236 | 260,764 | 861,097 | 746,601 |
Other | ||||
Revenue | $ 65,376 | $ 101,594 | $ 311,107 | $ 184,324 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 727,269 | $ 178,129 | $ 2,685,998 | $ 689,071 |
Effective tax rate | (56.00%) | 22.00% | 131.00% | 22.00% |
LEASES (Details)
LEASES (Details) | Sep. 30, 2020USD ($) |
Leases [Abstract] | |
2021 | $ 402,527 |
2022 | 47,950 |
2023 | 644 |
Total payments | 451,121 |
Less: imputed interest | (12,345) |
Total operating lease liability | $ 438,776 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Weighted average remaining lease term | 1 year 2 months 5 days | |
Weighted average discount rate | 4.42% | |
Cash paid for amounts in the measurement of lease liabilities | $ 333,057 | $ 417,893 |
Operating lease costs | $ 333,276 | $ 419,137 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||||||
Income from operations available to common stockholders (numerator) | $ (2,024,006) | $ 275,364 | $ 1,120,111 | $ 641,255 | $ 664,047 | $ 1,200,623 | $ (628,531) | $ 2,505,925 |
Income available to common stockholders (numerator) | $ (2,024,006) | $ 275,364 | $ 1,120,111 | $ 641,255 | $ 664,047 | $ 1,200,623 | $ (628,531) | $ 2,505,925 |
Weighted average number of common shares outstanding during the period used in earnings per share (denominator) | 27,453,697 | 29,271,974 | 28,667,685 | 29,441,754 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | Sep. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Bonus accrual | $ 805,110 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | $ 6,512 | $ 6,219 | $ 19,114 | $ 18,203 |
Cost of revenue | 938 | 881 | 2,367 | 2,582 |
Total assets | 41,446 | 44,608 | 41,446 | 44,608 |
Depreciation and amortization | 12,602 | 712 | 589 | 2,199 |
Libsyn | ||||
Revenue | 4,078 | 3,638 | 11,828 | 10,563 |
Cost of revenue | 490 | 585 | 1,450 | 1,738 |
Total assets | 24,190 | 26,357 | 24,190 | 26,357 |
Depreciation and amortization | 7,750 | 23 | 62 | 60 |
Pair | ||||
Revenue | 2,434 | 2,581 | 7,286 | 7,640 |
Cost of revenue | 448 | 296 | 917 | 844 |
Total assets | 17,256 | 18,251 | 17,256 | 18,251 |
Depreciation and amortization | $ 4,852 | $ 689 | $ 527 | $ 2,139 |