Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 07, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Inuvo, Inc. | |
Entity Central Index Key | 829,323 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 28,797,198 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash | $ 4,145,878 | $ 4,084,686 |
Accounts receivable, net of allowance for doubtful accounts of $83,789. | 7,458,261 | 10,759,250 |
Prepaid expenses and other current assets | 296,675 | 400,191 |
Total current assets | 11,900,814 | 15,244,127 |
Property and equipment, net | 2,379,914 | 2,306,279 |
Other assets | ||
Goodwill | 9,853,342 | 9,853,342 |
Intangible assets, net of accumulated amortization | 10,454,559 | 10,808,018 |
Other assets | 35,171 | 36,070 |
Total other assets | 20,343,072 | 20,697,430 |
Total assets | 34,623,800 | 38,247,836 |
Current liabilities | ||
Accounts payable | 11,115,188 | 13,614,053 |
Accrued expenses and other current liabilities | 2,855,598 | 2,887,816 |
Revolving credit line - current portion | 4,900,000 | 4,900,000 |
Total current liabilities | 18,870,786 | 21,401,869 |
Long-term liabilities | ||
Deferred tax liability | 2,331,900 | 2,331,900 |
Other long-term liabilities | 363,949 | 426,725 |
Total long-term liabilities | 2,695,849 | 2,758,625 |
Preferred stock: | ||
Preferred stock, $.001 par value: Authorized shares 500,000, none issued and outstanding | 0 | 0 |
Common stock: | ||
Common stock, $.001 par value: Authorized shares 40,000,000; issued shares 29,173,725 and 28,994,981, respectively; outstanding shares 28,797,198 and 28,618,454, respectively | 29,174 | 28,996 |
Additional paid-in capital | 136,411,636 | 136,033,967 |
Accumulated deficit | (121,987,086) | (120,579,062) |
Treasury stock, at cost - 376,527 shares | (1,396,559) | (1,396,559) |
Total stockholders' equity | 13,057,165 | 14,087,342 |
Total liabilities and stockholders' equity | $ 34,623,800 | $ 38,247,836 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Allowance for doubtful accounts | $ 83,789 | $ 83,789 |
Stockholders Equity | ||
Preferred stock par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock shares issued (in shares) | 0 | 0 |
Preferred stock shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock shares issued (in shares) | 29,173,725 | 28,994,981 |
Common stock shares outstanding (in shares) | 28,797,198 | 28,618,454 |
Treasury stock (in shares) | 376,527 | 376,527 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Net revenue | $ 20,503,985 | $ 17,215,862 |
Cost of revenue | 8,778,594 | 7,891,723 |
Gross profit | 11,725,391 | 9,324,139 |
Operating expenses | ||
Marketing costs (traffic acquisition costs or TAC) | 8,294,294 | 6,467,311 |
Compensation | 2,619,515 | 2,387,711 |
Selling, general and administrative | 2,126,362 | 2,118,118 |
Total operating expenses | 13,040,171 | 10,973,140 |
Operating loss | (1,314,780) | (1,649,001) |
Interest expense, net | (100,889) | (42,944) |
Loss from continuing operations before taxes | (1,415,669) | (1,691,945) |
Income tax benefit | 7,645 | 0 |
Net loss from continuing operations | (1,408,024) | (1,691,945) |
Net loss from discontinued operations | 0 | (1,109) |
Net loss | $ (1,408,024) | $ (1,693,054) |
Per common share data: Basic and diluted | ||
Net loss from continuing operations (in usd per share) | $ (0.05) | $ (0.06) |
Net loss from discontinued operations (in usd per share) | 0 | 0 |
Net loss (in usd per share) | $ (0.05) | $ (0.06) |
Weighted average shares | ||
Basic (in shares) | 28,652,230 | 27,025,763 |
Diluted (in shares) | 28,652,230 | 27,025,763 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating activities: | ||
Net loss | $ (1,408,024) | $ (1,693,054) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 791,644 | 693,175 |
Stock based compensation | 377,847 | 292,334 |
Amortization of financing fees | 6,400 | 6,400 |
Adjustment of European liabilities related to discontinued operations | 0 | 1,109 |
Change in operating assets and liabilities: | ||
Accounts receivable | 3,300,989 | 2,740,326 |
Prepaid expenses and other assets | 98,015 | 109,577 |
Accounts payable | (2,498,865) | (2,844,928) |
Accrued expenses and other liabilities | (38,910) | (989,738) |
Net cash provided by (used in) operating activities | 629,096 | (1,684,799) |
Investing activities: | ||
Net cash received from 2017 asset acquisition | 0 | 235,763 |
Purchases of equipment and capitalized development costs | (514,065) | (151,424) |
Net cash (used in) provided by investing activities | (514,065) | 84,339 |
Financing activities: | ||
Net proceeds on revolving credit line | 0 | 3,600,000 |
Payoff of 2017 asset acquisition debt acquired | 0 | (2,015,577) |
Payments on capital leases | (53,839) | (7,250) |
Net cash (used in) provided by financing activities | (53,839) | 1,577,173 |
Net change – cash | 61,192 | (23,287) |
Cash, beginning of year | 4,084,686 | 3,946,804 |
Cash, end of period | 4,145,878 | 3,923,517 |
Supplemental information: | ||
Interest paid | 94,428 | 25,317 |
Non cash investing and financing activities: | ||
2017 asset acquisition stock issuance (See Note 13) | 0 | 4,459,244 |
Write-down of domain names and corresponding contingent liability | $ 0 | $ 222,477 |
Organization and Business
Organization and Business | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Company Overview We develop technology that connects advertisers with consumers through interactions with content across devices. Inuvo provides the means to interact with tens of thousands of advertisers (Demand) and tens of thousands of online publishers (Supply). We interact with Demand/Supply constituents directly and indirectly. We serve ads within content, video and slideshows. We target ads to consumers using our proprietary IntentKey, a form of artificial intelligence ("AI") that uses the Internet content as a source of information from which the machine learns Intent. The result of the AI includes a database of over 500 million machine profiles, of which 100 million are updated each week. We use this AI as the means to develop and deliver highly targeted online audiences to our advertisers. We earn revenue when consumers view and/or click on our ads. Our business scales as we add Demand and Supply relationships with many barriers to entry including the ability to process hundreds of thousands of transactions per second. Collectively, our technology platforms facilitate the buying and selling of media in a manner that positions Inuvo as an advertising exchange. Our intellectual property is protected by 18 issued and eight pending patents. We count among our many contractual relationships, three clients who collectively manage over 50% of all US digital advertising budgets. Included within our Supply portfolio is a collection of owned websites such as alot.com and earnspendlive.com, where we create content in health, finance, travel, careers, auto, education and living categories. These sites provide the means to test advertising technologies, while also delivering high quality consumers to advertisers through interaction with proprietary content in the form of images, videos, slideshows and the written word. Liquidity On April 18, 2018, we entered into the Tenth Business Financing Modification Agreement with Western Alliance Bank ("Western Alliance Bank"), the parent company of Bridge Bank, N.A., our original lender (see Note 15). The agreement provides continued access to the revolving line of credit up to $10 million through September 2018. As of March 31, 2018 , the balance of the revolving line of credit was $4.9 million and had approximately $1.2 million of available credit. During the third quarter of 2017, we filed an S-3 registration statement with the Securities and Exchange Commission ("SEC") to replace the existing, expiring S-3 "shelf" registration statement, which permits us to offer and sell up to $15 million of our securities from time to time in one or more offerings. To date, we have not taken down any sales from this shelf registration statement. The revolving line of credit and cash generated by operations may not provide sufficient cash for operations over the next twelve months. We may elect to sell stock to the public or to selected investors, or borrow under the current or any replacement line of credit or other debt instruments in order to fund the development of our technologies, make acquisitions, pursue new business opportunities or grow existing businesses. Customer concentration We generated the majority of our revenue from three Demand side customers, Yahoo!, Google, and OpenX as noted below: For the Three Months Ended March 31, 2018 2017 Yahoo! 70.5 % 75.4 % Google 9.5 % 12.9 % OpenX 6.7 % 2.6 % Total 86.7 % 90.9 % As of March 31, 2018 and December 31, 2017 , these three customers accounted for 76.0% and 79.9% , respectively, of our gross accounts receivable balance. Though the Yahoo! and Google concentration is declining as a percentage of overall revenue, we still source the majority of our Demand revenue through these relationships where we have access to advertiser budgets indirectly. While this strategy creates a concentration risk, we believe that it also provides upside opportunities including; access to hundreds of thousands of advertisers across geographies; the ability to scale our business across verticals; an avoidance of the sales costs associated with a large direct to advertisers’ sales force; access to innovation; overall media budget market insights; attractive payment terms; and low risk on receivables. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of presentation The consolidated financial statements presented are for Inuvo, Inc. and its consolidated subsidiaries. The accompanying unaudited consolidated financial statements have been prepared based upon SEC rules that permit reduced disclosure for interim periods. Certain information and footnote disclosures have been condensed or omitted in accordance with those rules and regulations. The accompanying consolidated balance sheet as of December 31, 2017 , was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). In our opinion, these consolidated financial statements reflect all adjustments that are necessary for a fair presentation of results of operations and financial condition for the interim periods shown including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year. For a more complete discussion of significant accounting policies and certain other information, this report should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2017 , which was filed with the SEC on February 8, 2018. Use of estimates The preparation of financial statements, in accordance with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying consolidated financial statements are based upon management’s regular evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. We regularly evaluate estimates and assumptions related to allowances for doubtful accounts, accrued sales reserve, goodwill and purchased intangible asset valuations, lives of intangible assets, deferred income tax asset valuation allowances, contingent liabilities, including the Arkansas grant contingency, and stock compensation. Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements, and such differences could be material. Revenue Recognition In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Topic 606) "Revenue from contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605) and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted this guidance on January 1, 2018 using the modified retrospective approach. The adoption of Topic 606 from Topic 605 had no cumulative impact on retained earnings and no impact on revenue reported as of March 31, 2018. Effective January 1, 2018, we recognize revenue following the five-step process outlined in Topic 606. We identify and have on file contracts with all customers. Our contracts with our major search partners pay upon delivery of a click. Additionally, our contracts with advertisers pay upon the serving of impressions. Our performance obligation is met when we deliver a click to a search partner or serve an impression to a digital publisher. We satisfy the performance obligation and recognize revenue when a click occurs from advertisements served to our digital properties or to those of our publishing partners in the period in which the click occurs. We serve as the principal in our contracts because we control the service to be performed by our publishing partners. The Company is ultimately responsible for fulfilling the promise to its customers and has latitude in pricing and publisher selection. There is no transaction price allocated to unsatisfied performance obligation and there were no contract assets or liabilities as of the date of adoption or March 31, 2018. Inuvo allows advertisers and publishers the opportunity to buy and sell advertising space in real time and includes the following products: • ValidClick: A software as a service and delivery platform for publishers that offers a pay-per-click solution where advertisements are targeted to consumers based on content and behaviors. • Digital Publishing: Branded web properties like alot.com, earnspendlive.com, search4answers.com and many more with content developed, edited and published by Inuvo in categories like health, finance, travel, entertainment, careers, education, lifestyle and automotive. • Visual Monetization Platform ("VMP"): A Supply Side Platform ("SSP") that offers publishers numerous forms of monetization both visually (images and video) and within or surrounding content. • Audience Delivery Solutions: Inuvo’s audience delivery solution is a campaign management and optimization service for advertisers that uses the IntentKey and our proprietary Demand Side Platform (“DSP”). • MYAP: A proprietary online affiliate management solution that provides advertisers with the ability to sign up, manage and track the activities of publishers through a privately-branded platform with full data transparency. Typically, each MYAP customer is supported by a customized software implementation Revenue from these products consists of the following as of: March 31, 2018 March 31, 2017 ValidClick $ 10,836,169 $ 10,998,584 Digital Publishing 6,552,010 4,098,262 VMP 2,122,422 999,671 Audience Delivery Solutions and Other 993,384 1,119,345 Total $ 20,503,985 $ 17,215,862 Recent accounting pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard will require all leases with durations greater than twelve months to be recognized on the balance sheet and is effective for interim and annual reporting periods beginning after December 15, 2018, although early adoption is permitted. We believe adoption of this standard will have an impact on our Consolidated Balance Sheets. Although we have not completed our assessment, we do not expect the adoption to change the recognition, measurement or presentation of lease expenses within the results of operations. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment The net carrying value of property and equipment was as follows as of: March 31, 2018 December 31, 2017 Furniture and fixtures $ 292,304 $ 288,536 Equipment 1,515,489 1,509,464 Capitalized internal use and purchased software 8,035,984 7,582,181 Leasehold improvements 421,016 455,850 Subtotal 10,264,793 9,836,031 Less: accumulated depreciation and amortization (7,884,879 ) (7,529,752 ) Total $ 2,379,914 $ 2,306,279 During the three months ended March 31, 2018 and March 31, 2017 depreciation expense was $438,185 and $328,054 , respectively. |
Other Intangible Assets and Goo
Other Intangible Assets and Goodwill | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets and Goodwill | Other Intangible Assets and Goodwill The following is a schedule of intangible assets as of March 31, 2018 : Term Carrying Value Accumulated Amortization and Impairment Net Carrying Value Year-to-date Amortization Customer list, Google 20 years $ 8,820,000 $ (2,682,750 ) $ 6,137,250 $ 110,250 Technology 5 years 3,600,000 (840,000 ) 2,760,000 180,000 Customer list, all other 10 years 1,610,000 (979,441 ) 630,559 40,251 Customer relationships 20 years 570,000 (33,250 ) 536,750 7,125 Trade names, web properties (1) - 390,000 — 390,000 — Brand 1 year 121,000 (121,000 ) — 10,083 Non-competition agreements 1 year 69,000 (69,000 ) — 5,750 Intangible assets classified as long-term $ 15,180,000 $ (4,725,441 ) $ 10,454,559 $ 353,459 Goodwill, total - $ 9,853,342 $ — $ 9,853,342 $ — (1) The trade names related to our web properties have an indefinite life, and as such are not amortized. Amortization expense over the next five years and thereafter is as follows: 2018 $ 1,012,878 2019 1,350,504 2020 1,350,504 2021 1,350,504 2022 556,294 Thereafter 4,443,875 Total $ 10,064,559 |
Revolving credit line
Revolving credit line | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Revolving credit line | Revolving credit line The following table summarizes our revolving credit line balances as of: March 31, 2018 December 31, 2017 Revolving credit line - 5.5 percent at March 31, 2018 (prime plus .75 percent), due September 29, 2018 $ 4,900,000 $ 4,900,000 Total $ 4,900,000 $ 4,900,000 On March 1, 2012, we entered into a Business Financing Agreement with Bridge Bank, which is now owned by Western Alliance Bank. On April 18, 2018, we entered into the Tenth Business Financing Modification Agreement with Western Alliance Bank the parent company of Bridge Bank, N.A., our original lender (see Note 15). The agreement provided us with a revolving credit line of up to $10 million which we use to help satisfy our working capital needs. We have provided Western Alliance Bank with a first priority perfected security interest in all of our accounts and personal property as collateral for the credit facility. Available funds under the revolving credit line are 85% of eligible accounts receivable balances up to a limit of $10 million . Eligible accounts receivable is generally defined as those from United States based customers that are not more than 90 days from the date of invoice less certain contra accounts. We had approximately $1.2 million available under the revolving credit line as of March 31, 2018 . While we periodically utilize our line of credit for operating needs, as of March 31, 2018 , the balance of the revolving line of credit was $4.9 million . We were in compliance with all bank covenants as of March 31, 2018 . |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities The accrued expenses and other current liabilities consist of the following as of: March 31, 2018 December 31, 2017 Accrued marketing costs $ 1,795,480 $ 1,107,404 Accrued expenses and other 406,393 624,688 Accrued payroll and commission liabilities 363,049 867,634 Capital leases, current portion 212,040 209,940 Accrued sales allowance 50,000 50,000 Accrued taxes 28,636 25,905 Deferred Arkansas grant, current portion — 2,245 Total $ 2,855,598 $ 2,887,816 |
Other Long-Term Liabilities
Other Long-Term Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Other Long-Term Liabilities | Other Long-Term Liabilities Other long-term liabilities consist of the following as of: March 31, 2018 December 31, 2017 Capital leases, less current portion $ 225,531 $ 281,470 Deferred rent 124,655 131,493 Accrued taxes, less current portion 13,763 13,762 Total $ 363,949 $ 426,725 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We have a deferred tax liability of $2,331,900 as of March 31, 2018 , related to intangible assets acquired in March 2012 and February 2017. We also have a net deferred tax asset of approximately $32,503,735 . We believe it is more likely than not that essentially none of our deferred tax assets will be realized, and we have recorded a valuation allowance for the net deferred tax assets that may not be realized as of March 31, 2018 . |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation We maintain a stock-based compensation program intended to attract, retain and provide incentives for talented employees and directors and align stockholder and employee interests. Currently, we grant options and restricted stock units ("RSUs") from the 2010 Equity Compensation Plan (“2010 ECP”) and 2017 Equity Compensation Plan ("2017 ECP"). Option and RSUs vesting periods are generally up to three years and/or achieving certain financial targets. Compensation Expense For the three months ended March 31, 2018 and March 31, 2017 , we recorded stock-based compensation expense for all equity incentive plans of $377,847 and $292,334 , respectively. Total compensation cost not yet recognized at March 31, 2018 was $865,921 to be recognized over a weighted-average recognition period of 1.1 years. Significant Grants and Cancellations On July 27, 2015 and August 4, 2015, we granted certain employees service and performance RSUs totaling 965,500 shares with a weighted average fair value of $3.03 per share. The service RSUs vest annually over a three year period, commencing in July 2016, at the rate of 25% of the grant in year one and year two and the remaining 50% of the grant vesting on the third anniversary of the grant date. The awarding of the performance RSUs is contingent upon achieving certain revenue and profit targets and vest annually, one-third upon each anniversary of the grant date. On July 27, 2017, August 4, 2017, and August 5, 2017, the second measurement period targets were achieved and the number of shares issued totaled 294,152 with a weighted average fair value of $1.00 . On February 7, 2017, we granted former employees from the 2017 asset acquisition service RSUs totaling 186,828 shares with a weighted average fair value of $1.65 per share which vest annually over a three year period. On February 15, 2017, we granted a former employee from the 2017 asset acquisition 20,520 RSUs with a weighted average fair value of $1.62 which fully vested on August 7, 2017. On April 1, 2017, we granted members of our board of directors a total of 116,280 RSUs with a weighted average fair value of $1.29 a share which fully vested on March 31, 2018. On June 19, 2017, we granted a newly hired executive 125,000 service and performance RSUs with a weighted average fair value of $1.04 per share. The service RSUs vest annually over a three year period. The awarding of the performance RSUs is contingent upon achieving certain revenue and profit targets and vest annually over a three year period. Additionally, we granted certain former employees from the 2017 asset acquisition service and performance RSUs totaling 400,000 shares with a weighted average fair value of $1.04 per share. The service RSUs vest annually over a three year period. The awarding of the performance RSUs is contingent upon achieving certain revenue and profit targets and vest annually, one-third upon each anniversary of the grant date. On December 31, 2017, the first measurement period targets were not achieved and the number of shares canceled totaled 92,487 . On July 7, 2017, we granted an employee 20,000 RSUs with a weighted average fair value of $1.02 which vest annually over a three year period. On February 15, 2018, we granted an employee 30,000 service and performance RSUs with a weighted average fair value of $0.87 per share. The service RSUs vest annually over a 28 -month period. The awarding of the performance RSUs is contingent upon achieving certain revenue and profit targets and vest annually over a two year period. Additionally, we granted another employee 7,500 RSUs with a weighted average fair value of $0.87 which vest annually over a three year period. The following table summarizes the stock grants outstanding under our 2005 Long-Term Incentive Plan ("2005 LTIP"), the 2010 ECP and the 2017 ECP as of March 31, 2018 : Options Outstanding RSUs Outstanding Options and RSUs Exercised Available Shares Total 2017 ECP — 125,000 — 1,875,000 2,000,000 2010 ECP 250,498 805,420 2,959,358 566,742 4,582,018 2005 LTIP (*) 13,748 — 950,085 — 963,833 Total 264,246 930,420 3,909,443 2,441,742 7,545,851 (*) Expired June 2015 |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations Certain of our subsidiaries previously operated in the European Union ("EU"). Though our operations ceased in 2009, statutory requirements required a continued presence in the EU for varying terms until November 2015. Profits and losses generated from the remaining assets and liabilities are accounted for as discontinued operations. In the third quarter of 2016, our petition with the UK (United Kingdom) Companies House to strike off and dissolve our remaining subsidiary in the EU was approved. As a result, for the three months ended March 31, 2017 , we recorded a net loss of $1,109 due to a charge from a service provider. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share During the three month periods ended March 31, 2018 and March 31, 2017 , we generated a net loss from continuing operations and as a result, all of our shares are anti-dilutive. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2018 | |
Leases [Abstract] | |
Leases | Leases We lease certain office space and equipment. As leases expire, it can be expected that they will be renewed or replaced in the normal course of business. Rent expense from continuing operations was $104,446 for the three months ended March 31, 2018 and $107,299 for the three months ended March 31, 2017 . Minimum future lease payments under non-cancelable operating leases as of March 31, 2018 are: 2018 $ 352,985 2019 477,319 2020 405,606 2021 242,558 2022 163,283 Total $ 1,641,751 In April 2015, we entered into a five -year agreement to lease office space in Little Rock, Arkansas commencing October 1, 2015, to serve as our headquarters. The lease is for 12,245 square feet and will cost approximately $171,000 during its first year. Thereafter, the lease payment increases by 2% . In June 2017, we entered into an agreement with Dell Financial Services to lease computer equipment for our data centers. The lease has a term of three years and will cost approximately $173,000 over the life of the lease. In June 2017, we entered into an agreement to lease 4,801 square feet of office space in San Jose, CA commencing on July 17, 2017. The lease has a term of five years and will cost approximately $216,000 during its first year. Thereafter, the lease payments increase by 3% . As part of the 2017 asset acquisition, Inuvo assumed the office space lease and a lease obligation in Sunnyvale, CA. The lease was for 15,717 square feet and cost approximately $95,000 for the remaining term of the lease which expired in July 2017. In June 2017, we entered into an agreement to lease 4,801 square feet of office space in San Jose, CA commencing on July 17, 2017. The lease has a term of five years and will cost approximately $216,000 during its first year. After the first year, the lease payment will increase by 3% per annum. Capital lease obligations and future minimum lease payments under non-cancelable capital leases as of March 31, 2018 are: Lease Payments 2018 $ 180,202 2019 $ 213,685 2020 $ 82,404 Total payments under capital lease obligations $ 476,291 Less amount representing interest (38,720 ) Present value of capital lease obligations 437,571 Current portion of capital lease obligations (212,040 ) Capital lease obligations, net of current portion $ 225,531 Assets acquired under capital lease obligations are included in property and equipment in the accompanying consolidated balance sheets. Cost and related accumulated depreciation are as follows: March 31, 2018 December 31, 2017 Equipment $ 707,264 $ 707,264 Less accumulated depreciation (296,873 ) (242,169 ) Equipment, net $ 410,391 $ 465,095 Depreciation expense on assets under capital lease obligations was $54,703 and $18,241 for the three months ended March 31, 2018 and March 31, 2017 , respectively and included in the consolidated statements of operations. In February 2017, we acquired assets and certain liabilities including the capital lease for computer equipment with a remaining value at that time of $88,575 . In June 2017, we entered into an agreement with Dell Financial Services to lease computer equipment for our data centers. The lease has a term of three years and will cost approximately $516,000 over the life of the lease. |
2017 Asset Acquisition
2017 Asset Acquisition | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
2017 Asset Acquisition | 2017 Asset Acquisition On February 6, 2017, we entered into an Asset Purchase Agreement to acquire substantially all of the assets and certain liabilities and personnel obligations, in exchange for 3,529,000 shares of our common stock. Of this amount, 529,350 shares were deposited into escrow with our counsel under the terms of an escrow agreement pending possible post-closing adjustments in the purchase price related to working capital and audited financial statement adjustments, as well as in connection with possible indemnification claims post-closing. The operating results of this acquisition have been included in the consolidated statements of operations since the acquisition date. As a result of the business acquisition, the Company recognized goodwill in the amount of $4,013,034 . The factors contributing to the recognition of the amount of goodwill are based on strategic benefits that are expected to be realized from the asset acquisition. The Company incurred approximately $350,000 in acquisition related costs, which are recorded in selling, general and administrative expenses in the accompanying consolidated statements of operations. Total consideration paid in common stock (with marketability discount applied) $ 4,459,244 Fair value of assets acquired: Accounts receivable, net (2,292,485 ) Prepaid expenses and other current assets (236,163 ) Property and equipment, net (119,101 ) Goodwill (4,013,034 ) Intangible assets (4,360,000 ) Fair value of liabilities assumed: Accounts payable $ 3,579,787 Accrued expenses and other current liabilities 1,152,789 Other long-term liabilities 49,149 Debt 2,015,577 Cash received in acquisition $ 235,763 In accordance with ASC guidance related to business combinations, net consideration was first allocated to the fair value of assets acquired, including specifically identifiable intangible assets and liabilities assumed, with the excess being recorded as goodwill. Goodwill related to this acquisition is not deductible for tax purposes and is not amortized, but instead is subject to periodic impairment tests. The purchase includes the assumption of gross customer accounts receivable totaling $2,292,485 . The Company estimates that most of these receivables will be collected. Therefore, the receivables are recorded at the estimated fair value, which equals the gross contractual amount. Specifically, identifiable intangible assets consist of $4,360,000 and are amortized on a straight-line basis over the estimated useful life. Additionally, revenue totaling approximately $1.9 million as of March 31, 2017 from the 2017 asset acquisition is included in the consolidated statement of operations. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions For the three months ended March 31, 2018 and March 31, 2017 , the Company received a total of $10,500 and $34,986 , respectively, from First Orion Corp., which is partially owned by two directors and shareholders of Inuvo, for providing IT services. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event On April 18, 2018, the Company entered into the Tenth Business Financing Modification Agreement with Western Alliance Bank, the parent company of Bridge Bank, our original lender, that modified the existing agreement, as amended. The modified terms require a monthly quick ratio of not less than .60 to 1.00 from February 1, 2018 through November 30, 2018; and a monthly quick ratio of not less than .70 to 1.00 on and after December 31, 2018; and the quarterly consolidated Adjusted EBITDA shall not negatively deviate from financial projections by more than $18,000 for the quarter ending March 31, 2018, $57,000 for the quarter ending June 30, 2018, $191,000 for the quarter ended September 30, 2018 and $496,000 for the quarter ended December 31, 2018, or with respect to any quarter in 2019 and beyond, by more than 25% from projections. In addition, the finance charge for outstanding advances is equal to Prime Rate plus one basis point. The revolving line of credit is effective to September 2018. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation | The consolidated financial statements presented are for Inuvo, Inc. and its consolidated subsidiaries. The accompanying unaudited consolidated financial statements have been prepared based upon SEC rules that permit reduced disclosure for interim periods. Certain information and footnote disclosures have been condensed or omitted in accordance with those rules and regulations. The accompanying consolidated balance sheet as of December 31, 2017 , was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). In our opinion, these consolidated financial statements reflect all adjustments that are necessary for a fair presentation of results of operations and financial condition for the interim periods shown including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year. |
Use of estimates | The preparation of financial statements, in accordance with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying consolidated financial statements are based upon management’s regular evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. We regularly evaluate estimates and assumptions related to allowances for doubtful accounts, accrued sales reserve, goodwill and purchased intangible asset valuations, lives of intangible assets, deferred income tax asset valuation allowances, contingent liabilities, including the Arkansas grant contingency, and stock compensation. Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements, and such differences could be material. |
Revenue Recognition | Inuvo allows advertisers and publishers the opportunity to buy and sell advertising space in real time and includes the following products: • ValidClick: A software as a service and delivery platform for publishers that offers a pay-per-click solution where advertisements are targeted to consumers based on content and behaviors. • Digital Publishing: Branded web properties like alot.com, earnspendlive.com, search4answers.com and many more with content developed, edited and published by Inuvo in categories like health, finance, travel, entertainment, careers, education, lifestyle and automotive. • Visual Monetization Platform ("VMP"): A Supply Side Platform ("SSP") that offers publishers numerous forms of monetization both visually (images and video) and within or surrounding content. • Audience Delivery Solutions: Inuvo’s audience delivery solution is a campaign management and optimization service for advertisers that uses the IntentKey and our proprietary Demand Side Platform (“DSP”). • MYAP: A proprietary online affiliate management solution that provides advertisers with the ability to sign up, manage and track the activities of publishers through a privately-branded platform with full data transparency. Typically, each MYAP customer is supported by a customized software implementation |
Recent accounting pronouncements | In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard will require all leases with durations greater than twelve months to be recognized on the balance sheet and is effective for interim and annual reporting periods beginning after December 15, 2018, although early adoption is permitted. We believe adoption of this standard will have an impact on our Consolidated Balance Sheets. Although we have not completed our assessment, we do not expect the adoption to change the recognition, measurement or presentation of lease expenses within the results of operations. |
Organization and Business (Tabl
Organization and Business (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Customer Concentration | Customer concentration We generated the majority of our revenue from three Demand side customers, Yahoo!, Google, and OpenX as noted below: For the Three Months Ended March 31, 2018 2017 Yahoo! 70.5 % 75.4 % Google 9.5 % 12.9 % OpenX 6.7 % 2.6 % Total 86.7 % 90.9 % |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Revenue from Products and Services | Revenue from these products consists of the following as of: March 31, 2018 March 31, 2017 ValidClick $ 10,836,169 $ 10,998,584 Digital Publishing 6,552,010 4,098,262 VMP 2,122,422 999,671 Audience Delivery Solutions and Other 993,384 1,119,345 Total $ 20,503,985 $ 17,215,862 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Net Carrying Value of Property and Equipment | The net carrying value of property and equipment was as follows as of: March 31, 2018 December 31, 2017 Furniture and fixtures $ 292,304 $ 288,536 Equipment 1,515,489 1,509,464 Capitalized internal use and purchased software 8,035,984 7,582,181 Leasehold improvements 421,016 455,850 Subtotal 10,264,793 9,836,031 Less: accumulated depreciation and amortization (7,884,879 ) (7,529,752 ) Total $ 2,379,914 $ 2,306,279 |
Other Intangible Assets and G25
Other Intangible Assets and Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets from Continuing Operations | The following is a schedule of intangible assets as of March 31, 2018 : Term Carrying Value Accumulated Amortization and Impairment Net Carrying Value Year-to-date Amortization Customer list, Google 20 years $ 8,820,000 $ (2,682,750 ) $ 6,137,250 $ 110,250 Technology 5 years 3,600,000 (840,000 ) 2,760,000 180,000 Customer list, all other 10 years 1,610,000 (979,441 ) 630,559 40,251 Customer relationships 20 years 570,000 (33,250 ) 536,750 7,125 Trade names, web properties (1) - 390,000 — 390,000 — Brand 1 year 121,000 (121,000 ) — 10,083 Non-competition agreements 1 year 69,000 (69,000 ) — 5,750 Intangible assets classified as long-term $ 15,180,000 $ (4,725,441 ) $ 10,454,559 $ 353,459 Goodwill, total - $ 9,853,342 $ — $ 9,853,342 $ — (1) The trade names related to our web properties have an indefinite life, and as such are not amortized. |
Schedule of Amortization Expense | Amortization expense over the next five years and thereafter is as follows: 2018 $ 1,012,878 2019 1,350,504 2020 1,350,504 2021 1,350,504 2022 556,294 Thereafter 4,443,875 Total $ 10,064,559 |
Revolving credit line (Tables)
Revolving credit line (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | The following table summarizes our revolving credit line balances as of: March 31, 2018 December 31, 2017 Revolving credit line - 5.5 percent at March 31, 2018 (prime plus .75 percent), due September 29, 2018 $ 4,900,000 $ 4,900,000 Total $ 4,900,000 $ 4,900,000 |
Accrued Expenses and Other Cu27
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and other Current Liabilities | The accrued expenses and other current liabilities consist of the following as of: March 31, 2018 December 31, 2017 Accrued marketing costs $ 1,795,480 $ 1,107,404 Accrued expenses and other 406,393 624,688 Accrued payroll and commission liabilities 363,049 867,634 Capital leases, current portion 212,040 209,940 Accrued sales allowance 50,000 50,000 Accrued taxes 28,636 25,905 Deferred Arkansas grant, current portion — 2,245 Total $ 2,855,598 $ 2,887,816 |
Other Long-Term Liabilities (Ta
Other Long-Term Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Long-Term Liabilities | Other long-term liabilities consist of the following as of: March 31, 2018 December 31, 2017 Capital leases, less current portion $ 225,531 $ 281,470 Deferred rent 124,655 131,493 Accrued taxes, less current portion 13,763 13,762 Total $ 363,949 $ 426,725 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Based Compensation Grants | The following table summarizes the stock grants outstanding under our 2005 Long-Term Incentive Plan ("2005 LTIP"), the 2010 ECP and the 2017 ECP as of March 31, 2018 : Options Outstanding RSUs Outstanding Options and RSUs Exercised Available Shares Total 2017 ECP — 125,000 — 1,875,000 2,000,000 2010 ECP 250,498 805,420 2,959,358 566,742 4,582,018 2005 LTIP (*) 13,748 — 950,085 — 963,833 Total 264,246 930,420 3,909,443 2,441,742 7,545,851 (*) Expired June 2015 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Leases [Abstract] | |
Schedule of Minimum Future Lease Payments of Operating Leases | Minimum future lease payments under non-cancelable operating leases as of March 31, 2018 are: 2018 $ 352,985 2019 477,319 2020 405,606 2021 242,558 2022 163,283 Total $ 1,641,751 |
Schedule of Capital Lease Obligations and Future Minimum Lease Payments | Capital lease obligations and future minimum lease payments under non-cancelable capital leases as of March 31, 2018 are: Lease Payments 2018 $ 180,202 2019 $ 213,685 2020 $ 82,404 Total payments under capital lease obligations $ 476,291 Less amount representing interest (38,720 ) Present value of capital lease obligations 437,571 Current portion of capital lease obligations (212,040 ) Capital lease obligations, net of current portion $ 225,531 |
Schedule of Assets Under Capital Leases | Cost and related accumulated depreciation are as follows: March 31, 2018 December 31, 2017 Equipment $ 707,264 $ 707,264 Less accumulated depreciation (296,873 ) (242,169 ) Equipment, net $ 410,391 $ 465,095 |
2017 Asset Acquisition (Tables)
2017 Asset Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions | Total consideration paid in common stock (with marketability discount applied) $ 4,459,244 Fair value of assets acquired: Accounts receivable, net (2,292,485 ) Prepaid expenses and other current assets (236,163 ) Property and equipment, net (119,101 ) Goodwill (4,013,034 ) Intangible assets (4,360,000 ) Fair value of liabilities assumed: Accounts payable $ 3,579,787 Accrued expenses and other current liabilities 1,152,789 Other long-term liabilities 49,149 Debt 2,015,577 Cash received in acquisition $ 235,763 |
Organization and Business (Deta
Organization and Business (Details) machine_profile in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018USD ($)machine_profilepatentclient | Dec. 31, 2017USD ($) | Apr. 18, 2018USD ($) | Sep. 30, 2017USD ($) | |
Debt Instrument [Line Items] | ||||
Number of machine profiles in database | machine_profile | 500 | |||
Number of machine profiles updated weekly | machine_profile | 100 | |||
Number of issued patents | patent | 18 | |||
Number of pending patents | patent | 8 | |||
Number of clients who collectively manage US digital advertising budgets | client | 3 | |||
Percentage of all US digital advertising budgets managed by group of clients | 50.00% | |||
Debt balance | $ 4,900,000 | $ 4,900,000 | ||
Period of sufficient liquidity | 12 months | |||
Shelf Registration Statement | ||||
Debt Instrument [Line Items] | ||||
Shares authorized for sale | $ 15,000,000 | |||
Accounts Receivable | Customer Concentration Risk | Yahoo!, OpenX and Google | ||||
Debt Instrument [Line Items] | ||||
Percentage of concentration risk (as percent) | 76.00% | 79.90% | ||
Bridge Bank – Revolving Credit Line - March 1, 2012 | Bridge Bank, N.A. | Revolving Credit Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Debt balance | $ 4,900,000 | |||
Remaining borrowing capacity | $ 1,200,000 | |||
Subsequent Event | Bridge Bank – Revolving Credit Line - March 1, 2012 | Bridge Bank, N.A. | Revolving Credit Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 10,000,000 |
Organization and Business - Cus
Organization and Business - Customer Concentration (Details) - Customer Concentration Risk - Net Revenue | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Yahoo!, OpenX and Google | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk (as percent) | 86.70% | 90.90% |
Yahoo! | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk (as percent) | 70.50% | 75.40% |
Concentration Risk [Line Items] | ||
Percentage of concentration risk (as percent) | 9.50% | 12.90% |
OpenX | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk (as percent) | 6.70% | 2.60% |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 20,503,985 | $ 17,215,862 |
ValidClick | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 10,836,169 | 10,998,584 |
Digital Publishing | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 6,552,010 | 4,098,262 |
VMP | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 2,122,422 | 999,671 |
Audience Delivery Solutions and Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 993,384 | $ 1,119,345 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 10,264,793 | $ 9,836,031 | |
Less: accumulated depreciation and amortization | (7,884,879) | (7,529,752) | |
Total | 2,379,914 | 2,306,279 | |
Depreciation expense | 438,185 | $ 328,054 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 292,304 | 288,536 | |
Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 1,515,489 | 1,509,464 | |
Capitalized internal use and purchased software | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 8,035,984 | 7,582,181 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 421,016 | $ 455,850 |
Other Intangible Assets and G36
Other Intangible Assets and Goodwill - Schedule of Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | ||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | |||
Net Carrying Value | $ 10,064,559 | ||
Year-to-date Amortization | 353,459 | ||
Intangible assets classified as long-term | |||
Carrying Value | 15,180,000 | ||
Accumulated Amortization and Impairment | (4,725,441) | ||
Net Carrying Value | 10,454,559 | $ 10,808,018 | |
Goodwill, Impaired, Accumulated Impairment Loss | |||
Carrying Value | 9,853,342 | ||
Net Carrying Value | 9,853,342 | $ 9,853,342 | |
Trade names, web properties | |||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | |||
Carrying value, indefinite-lived | [1] | 390,000 | |
Net carrying value, indefinite-lived | [1] | $ 390,000 | |
Customer list, Google | |||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | |||
Term | 20 years | ||
Carrying Value | $ 8,820,000 | ||
Accumulated Amortization and Impairment | (2,682,750) | ||
Net Carrying Value | 6,137,250 | ||
Year-to-date Amortization | $ 110,250 | ||
Technology | |||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | |||
Term | 5 years | ||
Carrying Value | $ 3,600,000 | ||
Accumulated Amortization and Impairment | (840,000) | ||
Net Carrying Value | 2,760,000 | ||
Year-to-date Amortization | $ 180,000 | ||
Customer list, all other | |||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | |||
Term | 10 years | ||
Carrying Value | $ 1,610,000 | ||
Accumulated Amortization and Impairment | (979,441) | ||
Net Carrying Value | 630,559 | ||
Year-to-date Amortization | $ 40,251 | ||
Customer relationships | |||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | |||
Term | 20 years | ||
Carrying Value | $ 570,000 | ||
Accumulated Amortization and Impairment | (33,250) | ||
Net Carrying Value | 536,750 | ||
Year-to-date Amortization | $ 7,125 | ||
Brand | |||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | |||
Term | 1 year | ||
Carrying Value | $ 121,000 | ||
Accumulated Amortization and Impairment | (121,000) | ||
Net Carrying Value | 0 | ||
Year-to-date Amortization | $ 10,083 | ||
Non-competition agreements | |||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | |||
Term | 1 year | ||
Carrying Value | $ 69,000 | ||
Accumulated Amortization and Impairment | (69,000) | ||
Net Carrying Value | 0 | ||
Year-to-date Amortization | $ 5,750 | ||
[1] | The trade names related to our web properties have an indefinite life, and as such are not amortized. |
Other Intangible Assets and G37
Other Intangible Assets and Goodwill - Amortization Expense (Details) | Mar. 31, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,018 | $ 1,012,878 |
2,019 | 1,350,504 |
2,020 | 1,350,504 |
2,021 | 1,350,504 |
2,022 | 556,294 |
Thereafter | 4,443,875 |
Net Carrying Value | $ 10,064,559 |
Revolving credit line - Schedul
Revolving credit line - Schedule of Notes Payable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||
Total | $ 4,900,000 | $ 4,900,000 |
Line of Credit | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Revolving credit line - 5.5 percent at March 31, 2018 (prime plus .75 percent), due September 29, 2018 | $ 4,900,000 | $ 4,900,000 |
Stated interest rate | 5.50% | |
Line of Credit | Revolving Credit Facility | Prime Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.75% |
Revolving credit line - Narrati
Revolving credit line - Narrative (Details) - Line of Credit - Revolving Credit Facility - USD ($) | Apr. 30, 2018 | Apr. 18, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||||
Balance of revolving line of credit | $ 4,900,000 | $ 4,900,000 | ||
Bridge Bank – Revolving Credit Line - March 1, 2012 | Bridge Bank, N.A. | ||||
Debt Instrument [Line Items] | ||||
Remaining borrowing capacity | $ 1,200,000 | |||
Subsequent Event | Bridge Bank – Revolving Credit Line - March 1, 2012 | Bridge Bank, N.A. | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 10,000,000 | |||
Debt instrument, allowable borrowings, percentage of eligible accounts receivable (as percent) | 85.00% | |||
Period for eligible accounts receivable | 90 days | |||
Subsequent Event | Tenth Business Financing Modification Agreement With Western Alliance Bank | ||||
Debt Instrument [Line Items] | ||||
Percentage change in finance charge for outstanding advances (as percent) | 0.01% |
Accrued Expenses and Other Cu40
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued marketing costs | $ 1,795,480 | $ 1,107,404 |
Accrued expenses and other | 406,393 | 624,688 |
Accrued payroll and commission liabilities | 363,049 | 867,634 |
Capital leases, current portion | 212,040 | 209,940 |
Accrued sales allowance | 50,000 | 50,000 |
Accrued taxes | 28,636 | 25,905 |
Deferred Arkansas grant, current portion | 0 | 2,245 |
Total | $ 2,855,598 | $ 2,887,816 |
Other Long-Term Liabilities - C
Other Long-Term Liabilities - Components of Other Long-Term Liabilities(Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Other Liabilities Disclosure [Abstract] | ||
Capital leases, less current portion | $ 225,531 | $ 281,470 |
Deferred rent | 124,655 | 131,493 |
Accrued taxes, less current portion | 13,763 | 13,762 |
Total | $ 363,949 | $ 426,725 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Deferred tax liability | $ 2,331,900 | $ 2,331,900 |
Deferred tax asset | $ 32,503,735 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) | Feb. 15, 2018 | Jul. 07, 2017 | Jun. 19, 2017 | Apr. 01, 2017 | Feb. 15, 2017 | Feb. 07, 2017 | Aug. 04, 2015 | Aug. 11, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Option and restricted stock unit vesting period (up to) | 3 years | ||||||||||
Stock based compensation | $ 377,847 | $ 292,334 | |||||||||
Compensation cost related to non vested awards not yet recognized | $ 865,921 | ||||||||||
Average remaining expense recognition period | 1 year 1 month | ||||||||||
Restricted Stock Units (RSUs) and Performance Restricted Stock Units (RSUs) | Employees | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Option and restricted stock unit vesting period (up to) | 3 years | ||||||||||
Equity instruments other than options, grants in period (in shares) | 30,000 | 125,000 | 965,500 | ||||||||
Grants in period, weighted average grant date fair value (in usd per share) | $ 0.87 | $ 1.04 | $ 3.03 | ||||||||
Issued in period (in shares) | 294,152 | ||||||||||
Issued in period, weighted average grant date fair value (in usd per share) | $ 1 | ||||||||||
Restricted Stock Units (RSUs) and Performance Restricted Stock Units (RSUs) | Former NetSeer Employees | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Option and restricted stock unit vesting period (up to) | 3 years | ||||||||||
Equity instruments other than options, grants in period (in shares) | 400,000 | ||||||||||
Grants in period, weighted average grant date fair value (in usd per share) | $ 1.04 | ||||||||||
Number of shares canceled (in shares) | 92,487 | ||||||||||
Restricted Stock Units- Service Based | Employees | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Option and restricted stock unit vesting period (up to) | 28 months | 3 years | |||||||||
Restricted Stock Units- Service Based | Employees | Vesting percentage, Year 1 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting rights (as percent) | 25.00% | ||||||||||
Restricted Stock Units- Service Based | Employees | Vesting percentage, Year 2 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting rights (as percent) | 25.00% | ||||||||||
Restricted Stock Units- Service Based | Employees | Vesting percentage, Year 3 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting rights (as percent) | 50.00% | ||||||||||
Restricted Stock Units- Performance Based | Employees | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Option and restricted stock unit vesting period (up to) | 2 years | ||||||||||
Restricted Stock Units- Performance Based | Employees | Vesting percentage, Year 1 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting rights (as percent) | 33.33% | 33.33% | |||||||||
Restricted Stock Units- Performance Based | Employees | Vesting percentage, Year 2 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting rights (as percent) | 33.33% | 33.33% | |||||||||
Restricted Stock Units- Performance Based | Employees | Vesting percentage, Year 3 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting rights (as percent) | 33.33% | 33.33% | |||||||||
Restricted Stock Units- Performance Based | Former NetSeer Employees | Vesting percentage, Year 1 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting rights (as percent) | 33.33% | ||||||||||
Restricted Stock Units- Performance Based | Former NetSeer Employees | Vesting percentage, Year 2 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting rights (as percent) | 33.33% | ||||||||||
Restricted Stock Units- Performance Based | Former NetSeer Employees | Vesting percentage, Year 3 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting rights (as percent) | 33.33% | ||||||||||
Restricted Stock Units | Employees | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Option and restricted stock unit vesting period (up to) | 3 years | 3 years | |||||||||
Equity instruments other than options, grants in period (in shares) | 7,500 | 20,000 | 20,520 | 186,828 | |||||||
Grants in period, weighted average grant date fair value (in usd per share) | $ 0.87 | $ 1.02 | $ 1.62 | $ 1.65 | |||||||
Restricted Stock Units | Board of Directors | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Equity instruments other than options, grants in period (in shares) | 116,280 | ||||||||||
Grants in period, weighted average grant date fair value (in usd per share) | $ 1.29 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Grants (Details) | Mar. 31, 2018shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options Outstanding (in shares) | 264,246 | |
RSUs Outstanding (in shares) | 930,420 | |
Options and RSUs Exercised (in shares) | 3,909,443 | |
Available Shares (in shares) | 2,441,742 | |
Total (in shares) | 7,545,851 | |
2017 ECP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options Outstanding (in shares) | 0 | |
RSUs Outstanding (in shares) | 125,000 | |
Options and RSUs Exercised (in shares) | 0 | |
Available Shares (in shares) | 1,875,000 | |
Total (in shares) | 2,000,000 | |
2010 ECP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options Outstanding (in shares) | 250,498 | |
RSUs Outstanding (in shares) | 805,420 | |
Options and RSUs Exercised (in shares) | 2,959,358 | |
Available Shares (in shares) | 566,742 | |
Total (in shares) | 4,582,018 | |
2005 LTIP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options Outstanding (in shares) | 13,748 | [1] |
RSUs Outstanding (in shares) | 0 | [1] |
Options and RSUs Exercised (in shares) | 950,085 | [1] |
Available Shares (in shares) | 0 | [1] |
Total (in shares) | 963,833 | [1] |
[1] | Expired June 2015 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Net income (loss) from discontinued operations | $ 0 | $ (1,109) |
Leases (Details)
Leases (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017USD ($)ft² | Apr. 30, 2015USD ($)ft² | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Jul. 31, 2017USD ($)ft² | Dec. 31, 2017USD ($) | Feb. 28, 2017USD ($) | |
Leases [Abstract] | |||||||
Rent expense, operating leases (credits) | $ 104,446 | $ 107,299 | |||||
Lease Payments | |||||||
2,018 | 352,985 | ||||||
2,019 | 477,319 | ||||||
2,020 | 405,606 | ||||||
2,021 | 242,558 | ||||||
2,022 | 163,283 | ||||||
Total | 1,641,751 | ||||||
Operating Leased Assets [Line Items] | |||||||
Capital leases depreciation expense | 54,703 | $ 18,241 | |||||
Capital Leases, Future Minimum Payments, Net Present Value [Abstract] | |||||||
2,018 | 180,202 | ||||||
2,019 | 213,685 | ||||||
2,020 | 82,404 | ||||||
Total payments under capital lease obligations | 476,291 | ||||||
Less amount representing interest | (38,720) | ||||||
Present value of capital lease obligations | 437,571 | ||||||
Current portion of capital lease obligations | (212,040) | $ (209,940) | |||||
Capital leases, less current portion | 225,531 | 281,470 | |||||
NetSeer | |||||||
Operating Leased Assets [Line Items] | |||||||
Number of square feet | ft² | 15,717 | ||||||
Operating lease, payments | $ 95,000 | ||||||
Office Space | |||||||
Operating Leased Assets [Line Items] | |||||||
Lease term | 5 years | 5 years | |||||
Number of square feet | ft² | 4,801 | 12,245 | |||||
Operating leases, future minimum payments due, next twelve months | $ 216,000 | $ 171,000 | |||||
Annual lease payment increase, percentage | 3.00% | 2.00% | |||||
Computer equipment | |||||||
Operating Leased Assets [Line Items] | |||||||
Lease term | 3 years | ||||||
Operating leases, future minimum payments due, next twelve months | $ 173,000 | ||||||
Lease term | 3 years | ||||||
Capital leases, payments | $ 516,000 | ||||||
Assets Held under Capital Leases | NetSeer | |||||||
Operating Leased Assets [Line Items] | |||||||
Capital lease acquired | $ 88,575 | ||||||
Equipment | |||||||
Capital Leases, Balance Sheet, Assets by Major Class, Net [Abstract] | |||||||
Equipment | 707,264 | 707,264 | |||||
Less accumulated depreciation | (296,873) | (242,169) | |||||
Equipment, net | $ 410,391 | $ 465,095 |
2017 Asset Acquisition - Narrat
2017 Asset Acquisition - Narrative (Details) - USD ($) | Feb. 06, 2017 | Mar. 31, 2017 | Mar. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 9,853,342 | $ 9,853,342 | ||
NetSeer | ||||
Business Acquisition [Line Items] | ||||
Shares issued in asset purchase agreement (in shares) | 3,529,000 | |||
Shares deposited into escrow (in shares) | 529,350 | |||
Goodwill | $ 4,013,034 | |||
Accounts receivable | 2,292,485 | |||
Intangible assets | 4,360,000 | |||
Netseer revenue | $ 1,900,000 | |||
NetSeer | Selling, General and Administrative Expenses | ||||
Business Acquisition [Line Items] | ||||
Acquisition related costs | $ 350,000 |
2017 Asset Acquisition - Schedu
2017 Asset Acquisition - Schedule of Assets and Liabilities Acquired (Details) - USD ($) | Feb. 06, 2017 | Mar. 31, 2018 | Dec. 31, 2017 |
Fair value of assets acquired: | |||
Goodwill | $ (9,853,342) | $ (9,853,342) | |
NetSeer Asset Acquisition | |||
Business Acquisition [Line Items] | |||
Total consideration paid in common stock (with marketability discount applied) | $ 4,459,244 | ||
Fair value of assets acquired: | |||
Accounts receivable, net | (2,292,485) | ||
Prepaid expenses and other current assets | (236,163) | ||
Property and equipment, net | (119,101) | ||
Goodwill | (4,013,034) | ||
Intangible assets | (4,360,000) | ||
Fair value of liabilities assumed: | |||
Accounts payable | 3,579,787 | ||
Accrued expenses and other current liabilities | 1,152,789 | ||
Other long-term liabilities | 49,149 | ||
Debt | 2,015,577 | ||
Cash received in acquisition | $ 235,763 |
Related Party Transactions (Det
Related Party Transactions (Details) | 3 Months Ended | |
Mar. 31, 2018USD ($)director | Mar. 31, 2017USD ($) | |
Related Party Transactions [Abstract] | ||
Revenue from related party | $ | $ 10,500 | $ 34,986 |
Number of directors partially owning First Orion Corp. | director | 2 |
Subsequent Event (Details)
Subsequent Event (Details) - Line of Credit - Revolving Credit Facility - Tenth Business Financing Modification Agreement With Western Alliance Bank - Subsequent Event | Apr. 18, 2018USD ($) |
Period From February 1, 2018 Through November 30, 2018 | |
Subsequent Event [Line Items] | |
Quick ratio (not less than) | 0.60 |
Period From December 31, 2018 And After | |
Subsequent Event [Line Items] | |
Quick ratio (not less than) | 0.70 |
Quarter Ending March 31, 2018 | |
Subsequent Event [Line Items] | |
Maximum decline in Adjusted EBITDA from projected amount | $ 18,000 |
Quarter ending June 30, 2017 | |
Subsequent Event [Line Items] | |
Maximum decline in Adjusted EBITDA from projected amount | 57,000 |
Quarter Ending September 30, 2018 | |
Subsequent Event [Line Items] | |
Maximum decline in Adjusted EBITDA from projected amount | 191,000 |
Quarter Ending December 31, 2018 | |
Subsequent Event [Line Items] | |
Maximum decline in Adjusted EBITDA from projected amount | $ 496,000 |
Period From January 1, 2019 and After | |
Subsequent Event [Line Items] | |
Maximum percentage of decline in revenue from projected amount (as percent) | 25.00% |