Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
 12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Cash flows from operating activities:    
Net loss $ (35,795,554) $ (3,658,076)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 3,650,747 1,084,451
Deferred tax expense (benefit) $ 1,919,497 (3,062,108)
Gain on bargain purchase of business $ (429,956)
Impairment expense $ 25,113,034
Stock-based compensation expense $ 446,107 $ 565,188
Fair value of warrants issued to advisor in connection with acquisition 138,768
Amortization of prepaid license fees $ 225,000 112,500
Amortization of premium on short-term investments, net 76,878 86,655
Amortization of customer deposits (225,000) (112,500)
Change in fair value of warrant liability (93,789) $ 8,568
Loss on sale of property and equipment 34,147
Provision for bad debt 70,000
Write off of property and equipment 191,946
Write off of note payable (20,161)
Accretion of debt discount 7,814 $ 2,604
Changes in operating assets and liabilities:    
Accounts receivable 835,937 371,277
Prepaid expenses and other current assets (30,535) 38,968
Incremental direct costs $ (123,048) 30,258
Prepaid license fee (450,000)
Accounts payable $ (475,194) (2,547,059)
Accrued expenses 154,292 (1,629,998)
Deferred income (2,571,762) 174,518
Deferred rent $ 19,209 25,946
Customer deposits $ 450,000
Other liabilities $ 426,267
Other assets $ 10,000
Net cash used in operating activities $ (6,164,168) (8,789,996)
Cash flows from investing activities:    
Proceeds from maturities of short-term investments 5,547,000 10,240,000
Purchases of short-term investments $ (925,000) (15,525,533)
Cash paid for acquisition, net of cash acquired (3,110,646)
Costs incurred to develop technology $ (419,359) (180,314)
Purchases of property and equipment (84,237) $ (37,850)
Proceeds from sale of property and equipment 9,060
Security deposits (12,476)
Net cash provided by (used in) investing activities 4,114,988 $ (8,614,343)
Cash flows from financing activities:    
Proceeds from the sale of common stock 5,235,300
Payment of offering costs (670,877)
Repayment of note payable (1,336,944)
Merchant reserve (400,000) $ 667,709
Shares repurchased on vesting of restricted stock (211,841)
Payments of capital leases $ (15,232) $ (7,165)
Repurchase of common stock (25,862)
Merchant cash advances (447,371)
Net cash provided by financing activities $ 2,600,406 187,311
Net increase (decrease) in cash and cash equivalents 551,226 (17,217,028)
Cash and cash equivalents, beginning of year 1,519,467 18,736,495
Cash and cash equivalents, end of period $ 2,070,693 $ 1,519,467
Supplemental disclosures of other cash flow information:    
Cash paid for income taxes
Cash paid for interest
Non-cash disclosures:    
Working capital adjustment to note payable $ 32,281
Increase in goodwill resulting from NAPW legal settlement $ 133,693
Common stock issued in connection with acquisition of NAPW $ 35,272,033
Fair value of options issued in connection with acquisition of NAPW 556,496
Fair value of warrants issued in connection with acquisition of NAPW 294,342
Promissory note issued in connection with acquisition of Global Outreach $ 1,389,386