Results of Operations
ACCELERIZE INC.
UNAUDITED CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
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Increase/
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Increase/
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Three-month periods ended
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(Decrease)
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(Decrease)
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March 31,
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in $ 2018
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in % 2018
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2018
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2017
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vs 2017
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vs 2017
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Revenues
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$
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5,992,748
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$
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5,956,724
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$
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36,024
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0.6
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%
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Cost of revenues
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2,353,860
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1,545,345
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808,515
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52.3
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%
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Gross Profit
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3,638,888
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4,411,379
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(772,491
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)
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-17.5
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%
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Operating expenses:
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Research and development
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1,122,623
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1,043,119
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79,504
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7.6
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%
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Sales and marketing
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1,170,484
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1,216,490
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(46,006
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)
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-3.8
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%
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General and administrative
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1,999,886
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1,926,242
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73,644
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3.8
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%
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Total operating expenses
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4,292,993
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4,185,851
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107,142
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2.6
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%
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Operating (loss) income
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(654,105
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)
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225,528
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(879,633
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)
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-390.0
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%
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Other income (expense):
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Other income (loss)
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761
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(300
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)
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1,061
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353.7
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%
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Other expense
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(603,115
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)
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(280,452
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)
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(322,663
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)
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-115.1
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%
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Total other expenses
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(602,354
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)
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(280,752
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)
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(321,602
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)
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-114.6
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%
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Net loss
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$
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(1,256,459
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)
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$
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(55,224
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$
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(1,201,235
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)
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-2175.2
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%
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Discussion of Results for Three-Month Periods Ended March 31, 201
8
and 201
7
Revenues
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Three Months Ended
March 31,
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%
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2018
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2017
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Change
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Revenues
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$
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5,992,748
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$
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5,956,724
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0.6
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%
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We generate revenues from monthly recurring license fees, overage fees (based on volume of clicks, impressions, or leads), training and implementation fees, and in certain cases, professional services fees and royalties. Our revenue breakdown for the three-month periods ended March 31, 2018 and 2017 were as follows.
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Three Months Ended
March 31,
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%
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2018
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2017
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Change
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License
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$
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4,650,688
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$
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4,934,155
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-5.7
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%
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Overage
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1,075,618
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797,431
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34.9
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%
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Other
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266,442
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225,138
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18.3
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%
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Total
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$
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5,992,748
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$
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5,956,724
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0.6
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%
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The slight increase in total revenues during the three-month period ended March 31, 2018, when compared to the same period in 2017, is mainly due to a 35% increase in overage fees from our existing customers resulting from greater adoption and higher usage of our SaaS platform and a 20% increase in other revenue, which consists primarily of professional service fees and other partner revenue which was offset by a 6% decrease in license fees when compared to the same period in 2017. Our monthly license fee revenue constitutes the contractually recurring portion of our revenue and comprises the bulk of our total revenue, or 78% during the three-month period ended March 31, 2018. Our number of clients increased 3% during the three-month period ended March 31, 2018, when compared to the same period in 2017 and our average monthly revenue per customer decreased 3% during the three-month period ended March 31, 2018 when compared to the same period in 2017.
We believe that our SaaS revenues will continue to increase during the remainder of 2018.
Cost of Revenues
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Three Months Ended
March 31,
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%
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2018
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2017
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Change
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Cost of revenues
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$
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2,353,860
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$
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1,545,345
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52.3
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%
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Cost of revenues consists primarily of web hosting and personnel costs associated with supporting customer on-boarding and training activities, consisting of salaries, benefits, and related infrastructure costs. Web hosting fees are partially correlated to our revenues, depending on each specific agreement we have with our clients. The majority of our clients’ services are hosted on non-dedicated servers, on which capacity can be maximized by server, while certain customers prefer to have their services hosted on dedicated servers, on which capacity can only be maximized by customer and by server. Additionally, our resources associated with on-boarding are usually allocated at the beginning of the relationship with the new customer (usually, the first two months). Accordingly, our personnel costs associated with supporting customer on-boarding activities are not necessarily correlated with our revenues.
During the three-month period ended March 31, 2018, when compared to the same period in 2017, cost of revenues increased mainly as a result of higher web hosting fees incurred to support our operations, which increased by approximately $860,000.
We believe that our cost of revenues will stabilize during the remainder of 2018.
Research and Development Expenses
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Three Months Ended
March 31,
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%
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2018
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2017
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Change
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Research and development
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$
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1,122,623
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$
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1,043,119
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7.6
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%
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Research and development expenses consist primarily of personnel costs associated with the enhancement and the maintenance of our SaaS product offerings, consisting of salaries, benefits, and related infrastructure costs, offset by capitalized software development costs.
Our research and development expenses increased during the three-month period ended March 31, 2018, when compared to the same period in 2017 mainly due to lower capitalized software expenses of approximately $140,000.
We believe that our research and development expenses will remain flat during the remainder of 2018.
Sales and Marketing Expenses
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Three Months Ended
March 31,
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%
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2018
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2017
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Change
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Sales and marketing
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$
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1,170,484
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$
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1,216,490
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-3.8
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%
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Sales and marketing expenses primarily consist of personnel costs associated with the sale and the marketing of our SaaS products, including salaries, benefits, and related infrastructure, as well as the costs of related marketing programs, such as trade shows and public relations.
We experienced a slight decrease in sales and marketing expenses during the three-month period ended March 31, 2018, when compared to the same period in 2017.
We believe that our sales and marketing expenses will increase slightly in 2018 as we continue to execute on proven marketing programs.
General and Administrative Expenses
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Three Months Ended
March 31,
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%
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2018
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2017
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Change
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General and administrative
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$
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1,999,886
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$
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1,926,242
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3.8
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%
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General and administrative expenses primarily consist of personnel costs associated with the support of our operations consisting of salaries, benefits, and related infrastructure. Also included are non-personnel costs, such as audit and legal fees, as well as professional fees, insurance, investor relations, and other corporate expenses.
General and administrative expenses during the three-month period ended March 31, 2018, when compared to the same period in 2017, remained relatively unchanged.
We believe that our general and administrative expenses will increase during the remainder of 2018 at lower percentages than our anticipated increase in revenues as we continue to increase the scope of our operations.
Other (Loss) Income
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Three Months Ended
March 31,
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%
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2018
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2017
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Change
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Other (loss) income
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$
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761
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$
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(300
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)
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353.7
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%
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Other Income during the three-month periods ended March 31, 2018 and 2017 consisted mainly of the sale of non-inventory assets.
Other Expense
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Three Months Ended
March 31,
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%
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2018
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2017
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Change
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Other expense
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$
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603,115
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$
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280,452
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-115.1
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%
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Other expenses consist of interest charges and amortization of deferred financing costs associated with our loans.
The increase in interest expenses during the three-month period ended March 31, 2018 when compared to the same period in 2017, is primarily due to higher levels of borrowings we have made from time to time under the credit facility.
Liquidity and Capital Resources
We had a working capital deficit of $1,804,833 and an accumulated deficit of $32,799,143 as of March 31, 2018. We also had a net loss of $1,256,459 and cash used in operating activities of $1,099,773.
Our plan to continue as a going concern includes raising capital in the form of debt or equity, increased gross profit from revenue growth and managing and reducing operating and overhead costs. However, we cannot provide any assurances that we will be successful in accomplishing our plans. We also cannot provide any assurance that unforeseen circumstances that could occur at any time within the next twelve months or thereafter will not increase the need for us to raise additional capital on an immediate basis.
However, based upon our plans, we believe that we are a going concern.
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Ending balance at
March 31,
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Average balance during
three months ended
March 31,
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2018
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2017
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2018
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2017
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Cash
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$
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805,880
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$
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513,641
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$
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486,382
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$
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1,096,884
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Restricted cash
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50,000
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50,000
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50,000
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50,000
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Accounts receivable
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2,856,152
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2,322,942
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2,774,394
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2,276,276
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Accounts payable and accrued expenses
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2,242,116
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1,910,041
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2,360,600
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2,274,525
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Short term line of credit, net of deferred financing cost
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3,243,367
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(1)
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2,221,312
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(1)
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3,149,590
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2,130,129
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Short term loan, net of deferred financing cost
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-
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445,628
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612,097
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476,248
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Long term loan, net of deferred financing cost
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6,841,709
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4,515,359
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5,622,349
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4,551,793
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Long term other liabilities
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956,250
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1,381,250
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1,009,375
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1,434,375
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(1)
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Short-term portion constitutes scheduled amortization payments for the next 12 months which create immediate access to additional borrowing availability equal to the amount of amortization payments
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At March 31, 2018 and 2017, 43% and 42%, respectively, of our total assets consisted of cash and cash equivalents and accounts receivable.
We extend unsecured credit in the normal course of business to our customers. The determination of the appropriate amount of the reserve for uncollectible accounts is based upon a review of the amount of credit extended, the length of time each receivable has been outstanding, and the specific customers from whom the receivables are due.
The objective of liquidity management is to ensure that we have ready access to sufficient funds to meet commitments while implementing our growth strategy. Our primary sources of liquidity historically include the sale of our securities and borrowings from our loans and credit facilities.
We do not have any material commitments for capital expenditures of tangible items.
Agility Loan
On March 11, 2016, we entered into a subordinated loan with Agility Capital which provides for total availability of $625,000 and was to originally mature, prior to amendment, on March 31, 2017. The Agility Loan has a fixed interest rate of 12% per year and requires $25,000 monthly amortization payments beginning on June 1, 2016. The Agility Loan also requires fees of approximately $130,000 over the life of the loan, and is subject to a total aggregate minimum interest of $50,000 in the event of a prepayment. The Agility Loan contains covenants to achieve specified Adjusted EBITDA levels, as defined, limiting capital expenditures, restricting our ability to pay dividends, purchase and sell assets outside the ordinary course and incur additional indebtedness. As of December 31, 2017, and at repayment of the Agility Loan, we were in compliance with these covenants. The Agility Loan requires a security interest in all of our personal property and intellectual property, second in priority to SaaS Capital Funding II, LLC.
In connection with the Agility Loan, on June 30, 2016, as a result of outstanding amounts under the Agility Loan, we issued to Agility Capital a warrant to purchase up to 69,444 shares of our Common Stock at an exercise price of $0.45 per share. This warrant expires on March 11, 2021. The fair value of the warrant amounted to $15,880 and was capitalized as deferred financing costs, of which $3,970 and $0 was expensed during the three-month periods ended March 31, 2017 and 2016, respectively.
On November 29, 2016, we entered into an amendment of our Agility Loan, or the Agility Loan Amendment, which waived any event of default and the breach of any covenant, representation, warranty, and any other agreement contained in the Agility Loan as a result of our entering into the Settlement Agreement. On the date of the amendment, a loan modification fee in the amount of $100,000, fully earned and non-refundable, was added to the outstanding loan balance and shall accrue interest, expensed in the statement of operations. Additionally, the maturity date was extended to December 31, 2017. On November 29, 2016, we issued to Agility Capital a warrant to purchase up to 187,500 shares of our Common Stock at an exercise price of $0.40 per share. This warrant expires on November 29, 2021. The fair value of the warrant amounted to $42,427 and was capitalized as deferred financing costs, of which $9,791 and $0 was expensed during the three-month periods ended March 31, 2017 and 2016, respectively.
On August 14, 2017, we entered into a consent to waiver of the Agility Loan, to permit the issuance of the Promissory Notes to the Lenders, as further described below.
On November 8, 2017, we entered into the Third Amendment of the Agility Loan whereby Agility Capital agreed to loan an additional $300,000 to us, such that the aggregate principal amount owing to Agility Capital as of November 9, 2017 was $625,000. The Third Amendment extended the maturity date of the Agility Loan from December 31, 2017 to December 31, 2018. A loan modification fee of $125,000 was deducted from the Additional Loan amount. This arrangement was treated as a substantial modification of existing debt pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”). Because the net present value of the modified notes was greater than 10% of the present value of the remaining cash flows under the old debt, the transaction was treated as a debt extinguishment and reissuance of a new debt instrument, with the fair value of $606,034 and therefore recorded $106,034 as a loss on debt extinguishment. The carrying value of the $625,000 did not change as a result of the extinguishment since the discounts recognized at inception of these new notes were fully amortized at the time of the issuance.
On January 26, 2018, we repaid the Agility Loan by paying Agility Capital approximately $581,000 which terminated the loan agreement between us and Agility Capital and released Agility Capital’s security interest in our assets. We owed $0 and $600,000 under the Agility Loan at March 31, 2018 and December 31, 2017, respectively.
Credit Facility - SaaS Capital Loan
On May 5, 2016, we entered into the SaaS Capital Loan, with SaaS Capital Funding II, LLC to borrow up to a maximum of $8,000,000. Initial amounts borrowed will accrue interest at the rate of 10.25% per annum with future amounts borrowed bearing interest at the greater of 10.25% or 9.21% plus the three-year treasury rate at the time of advance. Accrued interest on amounts borrowed is payable monthly for the first six months and thereafter 36 equal monthly payments of principal and interest is payable. Prepayments will be subject to a 10%, 6% or 3% of principal premium if prepaid prior to 12 months, between 12 and 24 months, or between 24 months and maturity, respectively. Advances may be requested until May 5, 2018. The initial minimum advance amount of $5,000,000, on May 5, 2016, was used to repay the outstanding Line of Credit balance of $4,572,223. A facility fee of $80,000 was paid by us in connection with the initial advance and an additional $80,000 is payable on May 5, 2017. Additionally, the Company incurred initial financing costs of $160,000 which was capitalized as deferred financing costs, of which $13,333 and $0 was expensed during the three-month periods ended March 31, 2017 and 2016, respectively.
The SaaS Capital Loan contains customary covenants including, but not limited to, covenants to achieve specified Adjusted EBITDA levels and revenue renewal levels, limiting capital expenditures and restricting our ability to pay dividends, purchase and sell assets outside the ordinary course and incur additional indebtedness. As of March 31, 2017, we were in compliance with such covenants. The occurrence of a material adverse change will be an event of default under the SaaS Capital Loan, in addition to other customary events of default. We granted SaaS Capital Funding II, LLC a security interest in all of our personal property and intellectual property through the SaaS Capital Loan and the Patent, Trademark and Copyright Security Agreement between us and SaaS Capital Funding II, LLC.
On May 5, 2016, in connection with the SaaS Capital Loan, we issued to SaaS Capital Partners II, LP, an affiliate of SaaS Capital Funding II, LLC, a warrant to purchase up to 1,333,333 shares of our common stock at an exercise price of $0.45 per share subject to certain adjustments for dividends, splits or reclassifications. The Warrant is exercisable until the earlier of May 5, 2026, or the date that is 5 years from the date our equity securities are first listed for trading on NASDAQ. We paid approximately $169,000 in financing costs through December 31, 2016. The fair value of the warrant amounted to $383,128 and was capitalized as deferred financing costs, of which $31,927 and $0 was expensed during the three-month periods ended March 31, 2017 and 2016, respectively.
On November 29, 2016, we entered into an amendment of our SaaS Capital Loan to receive consent from SaaS Capital to enter into the Settlement Agreement. The amendment required a loan modification fee of $120,000, payable at $10,000 a month for one year, expensed in the statement of operations. In connection with this amendment, we agreed to issue SaaS Capital a warrant to purchase up to 200,000 shares of our Common Stock at an exercise price of $0.36 per share. This warrant expires on November 29, 2026. The fair value of the warrant amounted to $60,185 and was fully expensed at December 31, 2016.
On May 10, 2017, we entered into a second amendment of the SaaS Capital Loan with SaaS Capital which adjusted the Minimum Adjusted EBITDA covenant of the SaaS Capital Loan from $0 to ($150,000) until August 31, 2017 to give us added flexibility in completing our hosting migration to a new platform and to allow for potentially augmented marketing and sales efforts.
On June 16, 2017, we entered into a third amendment of the SaaS Capital Loan with SaaS Capital to provide that any advance made within 6 months of the final advance date will be for a 36-month period with interest only payments due from the date of advance until the final advance date.
On August 14, 2017, we entered into a fourth amendment of the SaaS Capital Loan with SaaS Capital to permit the issuance of the Promissory Notes to the Lenders.
On November 8, 2017, we entered into the Fifth Amendment which adjusted the Minimum Adjusted EBITDA covenant of the SaaS Capital Loan from $0 to ($170,000) until October 31, 2017, to ($150,000) from November 1, 2017 to December 31, 2017, to ($100,000) from January 1, 2018 to May 31, 2018, to ($50,000) from June 1, 2018 to August 31, 2018, and to $0 thereafter. The Fifth Amendment added a new minimum liquidity covenant for a cash balance of $600,000 effective January 31, 2018. The Fifth Amendment also memorialized SaaS Capital’s waiver of the Minimum Adjusted EBITDA covenant for September 2017. In connection with the Fifth Amendment, we agreed to pay to SaaS Capital a fee of $375,000 upon the payment in full of all outstanding advances.
On January 25, 2018, we entered into the Sixth Amendment to permit us to enter into the Beedie Credit Agreement and to permit the repayment of Agility Capital and of the Promissory Notes to the Lenders. The Sixth Amendment also amended our adjusted EBITDA covenant and added covenants requiring a minimum gross margin and specified debt to monthly recurring revenue ratios. This arrangement was treated as a normal modification of existing debt pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”). Because the net present value of the modified notes was lesser than 10% of the present value of the remaining cash flows under the old debt, the transaction was treated as a debt modification. In connection with the Sixth Amendment, we agreed to issue SaaS Capital a warrant to purchase up to 200,000 shares of our Common Stock at an exercise price of $0.35 per share, subject to certain adjustments for dividends, splits or reclassifications. The fair value of the warrant amounted to $56,834 and was capitalized as deferred financing costs, of which $3,157 and $0 was expensed during the three-month period ended March 31, 2018 and 2017, respectively.
During the three months ended March 31, 2018, we borrowed $0 from the SaaS Capital Loan, and made principal payments of $662,058.
We owed $7,042,326 and $7,704,384 under the SaaS Capital Loan at March 31, 2018 and December 31, 2017, respectively.
Promissory Notes
On August 14, 2017, we borrowed an aggregate of $1,000,000 from the Lenders, and issued the Promissory Notes for the repayment of the amounts borrowed. The Lenders are all accredited investors, certain of the Lenders are our shareholders, one of the Lenders is an affiliate of our director, Greg Akselrud, and two of the lenders are each affiliated with a partner of Mr. Akselrud’s in the law firm of Stubbs Alderton and Markiles, LLP. The Promissory Notes are unsecured, have a maturity date of August 14, 2019 and all principal is due upon maturity. Amounts borrowed accrue interest at 12% per annum and accrued interest is payable monthly. We also issued to the Lenders three-year warrants to purchase an aggregate of 1,000,000 shares of our Common Stock at an exercise price of $0.35 per share. The fair value of the warrant amounted to $104,676 and was capitalized as deferred financing costs, of which $82,868 and $0 was expensed during the three-month period ended March 31, 2018 and 2017, respectively.
On January 26, 2018, we paid approximately $1,074,000 to repay the Promissory Notes issued to the Lenders, which includes approximately $65,000 in additional interest expenses due to the repayment date which was prior to the maturity date. We owed $0 and $1,000,000 under the Promissory Notes at March 31, 2018 and December 31, 2017 respectively.
Beedie Credit Agreement
On January 25, 2018, we entered into the Beedie Credit Agreement to borrow up to a maximum of $7,000,000. Outstanding principal will accrue interest at the rate of 12% per annum increasing to 14% per annum if our gross margins fall below amounts specified in the Beedie Credit Agreement. Accrued interest on outstanding principal is payable monthly in arrears. We paid Beedie a commitment fee of $175,000 and will pay to Beedie a monthly standby fee of 0.325% on the unadvanced and available amount. Advances may be requested until July 25, 2020 and outstanding principal must be paid in full on January 25, 2021. Prepayment, which if at our option must be made in full and is otherwise required following certain asset dispositions, will be subject to a fee of 24 months accrued interest less all interest previously paid by us on the outstanding principal amount if paid prior to January 25, 2020. The initial minimum advance amount of $4,500,000 was advanced on January 26, 2018. Approximately $581,000 of the initial advance was used to repay Agility Capital to terminate the loan agreement between us and Agility dated March 11, 2016, as amended, and to release Agility Capital’s security interest in our assets. Approximately $1,074,000 of the initial advance was used to repay the Promissory Notes issued to the Lenders on August 14, 2017. The $175,000 commitment fee was capitalized as deferred financing costs, of which $9,722 and $0 was expensed during the three-month period ended March 31, 2018 and 2017, respectively.
The Beedie Credit Agreement contains customary covenants including, but not limited to, covenants to achieve specified adjusted EBITDA levels, to maintain minimum revenue renewal and liquidity levels, to maintain minimum gross margins, to maintain specified debt to monthly recurring revenue ratios, that limit capital expenditures and restrict the Company's ability to pay dividends, purchase and sell assets outside the ordinary course, and that limit the Company’s ability to incur additional indebtedness. As of March 31, 2018, we were in compliance with these covenants. The occurrence of a material adverse change will be an event of default under the Beedie Credit Agreement, in addition to other customary events of default. Default interest will be charged at 18% per annum. We granted Beedie a security interest, subordinated to the security interest of SaaS Capital, in all of our assets through a pledge and security agreement, patent security agreement and trademark security agreement, each between us and Beedie. As additional security, the Subsidiary issued an unlimited guarantee to Beedie. Beedie is entitled to board of director observation rights during the term of the Beedie Credit Agreement.
In connection with the Beedie Credit Agreement, we issued the Beedie Warrant to purchase up to 4,500,000 shares of our common stock at an exercise price of $0.35 per share subject to certain adjustments for dividends, splits or reclassifications, and a weighted average adjustment for certain issuances of common stock below the exercise price prior to January 26, 2019. Up to 2,500,000 additional shares of common stock under the Beedie Warrant will be exercisable on a pro rata basis to additional amounts borrowed if and when advanced under the Beedie Credit Agreement. We adopted ASU 2017-11 which revises ASC 815-10-15-74 to allow instruments with a down round features to qualify for equity classification. Under the new guidance, the issuer would recognize the value of the feature only when it is activated and there is an actual reduction of the strike price or conversion feature. The value of the adjustment is then to be recorded as deemed dividend and a reduction of income available to common stockholders. The fair value of the warrant amounted to $1,099,861 and was capitalized as deferred financing costs, of which $61,103 and $0 was expensed during the three-month period ended March 31, 2018 and 2017, respectively.
Changes in Cash Flows
|
|
Three-month periods ended
March 31,
|
|
|
|
2018
|
|
|
2017
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,256,459
|
)
|
|
$
|
(55,224
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
119,059
|
|
|
|
169,028
|
|
Amortization of deferred financing cost
|
|
|
202,898
|
|
|
|
59,807
|
|
Provision for bad debt
|
|
|
(235,441
|
)
|
|
|
2,386
|
|
Fair value of options and warrants
|
|
|
99,352
|
|
|
|
219,700
|
|
Loss on sale and disposal of fixed assets
|
|
|
-
|
|
|
|
902
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
71,925
|
|
|
|
(95,718
|
)
|
Prepaid expenses
|
|
|
32,894
|
|
|
|
(140,115
|
)
|
Accounts payable and accrued expenses
|
|
|
(308,112
|
)
|
|
|
(860,096
|
)
|
Deferred revenues
|
|
|
176,894
|
|
|
|
40,583
|
|
Other assets
|
|
|
(2,783
|
)
|
|
|
(813
|
)
|
Net cash used in operating activities
|
|
|
(1,099,773
|
)
|
|
|
(659,560
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Capitalized software for internal use
|
|
|
(375,000
|
)
|
|
|
(515,454
|
)
|
Capital expenditures
|
|
|
(13,402
|
)
|
|
|
(9,799
|
)
|
Proceeds from sale of assets
|
|
|
-
|
|
|
|
795
|
|
Net cash used in investing activities
|
|
|
(388,402
|
)
|
|
|
(524,458
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Principal repayment of credit facility and loan
|
|
|
(662,058
|
)
|
|
|
(486,548
|
)
|
Proceeds from credit facility
|
|
|
3,771,600
|
|
|
|
500,000
|
|
Repayments of promissory notes
|
|
|
(1,000,000
|
)
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
2,109,542
|
|
|
|
13,452
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
17,630
|
|
|
|
4,080
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
638,997
|
|
|
|
(1,166,486
|
)
|
|
|
|
|
|
|
|
|
|
Cash, beginning of period
|
|
|
166,883
|
|
|
|
1,680,127
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
805,880
|
|
|
$
|
513,641
|
|
Comparison of three months ended March 31, 201
8
to March 31, 201
7
As of March 31, 2018, we had cash of approximately $806,000.
Net cash used in operating activities was approximately $1.1 million during the three-month period ended March 31, 2018 compared to net cash provided by operations of approximately $660,000 during the same period in 2017. The change in operating cash flow was primarily due to a decrease in accounts payable and accrued expenses.
Net cash used in investing activities was approximately $390,000 for the three-month period ended March 31, 2018 compared to $525,000 for the same period in 2017. The decrease in capitalization of development costs for internal-use software of $140,000 offset by an increase in capital expenditures of approximately $4,000 accounted for the decrease in cash used in investing activities.
Net cash provided by financing activities was approximately $2.1 million for the three-month period ended March 31, 2018 compared to approximately $13,000 for the same period in 2017. The increase in cash provided by financing activities is primarily due to proceeds from our credit facility of $4.5 million, offset by related financing costs of $175,000 and repayments of short-term loan and promissory notes of approximately $1.6 million.
Exercise of warrants and options
There were no proceeds generated from the exercise of warrants or options during the three-month period ended March 31, 2018.
Other outstanding obligations at March 31, 201
8
Warrants
As of March 31, 2018, 16,110,517 shares of our Common Stock are issuable pursuant to the exercise of warrants.
Options
As of March 31, 2018, 8,257,500 shares of our Common Stock are issuable pursuant to the exercise of options.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.