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, 2016
Dec. 31, 2015
Cash flows from operating activities:    
Net loss $ (4,108,502) $ (38,255,271)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 3,323,711 3,650,747
Deferred tax expense (benefit) (1,289,634) 1,919,497
Gain on litigation settlement (1,740,297)
Gain on lease cancellation (423,998)
Impairment expense 27,140,126
Stock-based compensation expense 264,331 446,107
Amortization of deferred financing costs 1,527,672
Amortization of prepaid license fees 112,500 225,000
Amortization of premium on short-term investments, net 76,878
Amortization of customer deposits (112,500) (225,000)
Change in fair value of warrant liability 401,000 (93,789)
Loss on sale of property and equipment 34,147
Provision for bad debt 70,000
Write off property and equipment 191,946
Gain on settlement of debt (148,112) (20,161)
Accretion of debt discount 7,814
Changes in operating assets and liabilities:    
Accounts receivable 340,001 835,937
Prepaid expenses and other current assets (545,548) (30,535)
Incremental direct costs 600,893 (123,048)
Accounts payable (553,312) (475,194)
Accrued expenses 127,572 154,292
Deferred income (4,481,294) (2,139,137)
Deferred rent 10,563 19,209
Other liabilities 30,890 426,267
Net cash used in operating activities (6,664,064) (6,164,168)
Cash flows from investing activities:    
Proceeds from maturities of short-term investments 500,000 5,547,000
Purchases of short-term investments (925,000)
Costs incurred to develop technology (419,359)
Purchases of property and equipment (5,292) (84,237)
Proceeds from the sale of property and equipment 9,060
Security deposits 163,032 (12,476)
Net cash provided by investing activities 657,740 4,114,988
Cash flows from financing activities:    
Proceeds from the sale of common stock 17,063,203 5,235,300
Exercise of warrants 687,500
Payment of offering costs (3,530,326) (670,877)
Repurchase of common stock (3,000,000)
Proceeds from line of credit 2,159,362
Repayment of line of credit (2,159,362)
Payment of deferred financing costs related to Master Credit Facility (744,214)
Repayment of note payable (300,000) (1,336,944)
Merchant reserve (166,078) (400,000)
Shares repurchased on vesting of restricted stock (5,481) (211,841)
Payments of capital leases (15,232)
Net cash provided by financing activities 10,004,604 2,600,406
Net increase in cash and cash equivalents 3,998,280 551,226
Cash and cash equivalents, beginning of year 2,070,693 1,519,467
Cash and cash equivalents, end of year 6,068,973 2,070,693
Supplemental disclosures of other cash flow information:    
Cash paid for income taxes 19,375
Cash paid for interest 37,492
Non-cash disclosures:    
Working capital adjustment to note payable 32,281
Increase in goodwill resulting from NAPW legal settlement $ 133,693