REVENUE

Except for the changes below, the Company has consistently applied its accounting policies to all periods presented in the consolidated financial statements. On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method, under which comparative periods will not be restated and the cumulative effect of applying the standard will be recognized at the date of initial adoption on January 1, 2018. As a result, the opening balance of retained earnings as of January 1, 2018 decreased by $98,822 and the comparative information in prior year periods continues to be reported under ASC 605.

Initial Adoption Change

The effects to the condensed consolidated balance sheet as of December 31, 2017, as adjusted for the adoption of ASC 606 on January 1, 2018, are as follows:



	As Reported 12/31/17			Adjustments			As Adjusted 1/1/2018
Assets
Current:
Cash and cash equivalents	$	3,906,797					$	3,906,797
Accounts receivable, net	3,647,025			92,405			3,739,430
Prepaid expenses	389,104						389,104
Other current assets	9,140						9,140
Total current assets	7,952,066			92,405			8,044,471

Property and equipment, net	286,043						286,043
Goodwill	3,604,720						3,604,720
Intangible assets, net	667,909						667,909
Software development costs, net	967,927						967,927
Security deposits	148,638						148,638
Total assets	$	13,627,303		$	92,405		$	13,719,708

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,756,841					$	1,756,841
Accrued expenses	1,592,356						1,592,356
Unearned revenue	3,070,502			191,227			3,261,729
Line of credit	500,550						500,550
Current portion of deferred rent	45,127						45,127
Current portion of acquisition costs payable	741,155						741,155
Total current liabilities	7,706,531			191,227			7,897,758

Deferred rent, less current portion	17,419						17,419
Acquisition costs payable, less current portion	609,768						609,768
Total liabilities	8,333,718			191,227			8,524,945

Stockholders’ equity:
Common stock, $.0001 par value; 200,000,000 shares authorized; 5,733,981 issued and outstanding	573						573
Additional paid-in capital	52,570,432						52,570,432
Accumulated deficit	(47,277,420		)	(98,822		)	(47,376,242		)
Total stockholders’ equity	5,293,585			(98,822		)	5,194,763

Total liabilities and stockholders’ equity	$	13,627,303		$	92,405		$	13,719,708

Dual Reporting

The effects to the condensed consolidated financial statements as of September 30, 2018, as a result of applying ASC 606, rather than previous GAAP for revenue ("ASC 605") are as follows:



	As Reported (ASC 606)			Adjustments			Previous GAAP (ASC 605)
Balance Sheet:
Accounts receivable, net	$	6,811,029		$	156,315		$	6,967,344
Contract liabilities	5,631,096			(5,631,096		)	—
Unearned revenue	—			5,659,184			5,659,184
Accumulated deficit	(52,401,946		)	128,227			(52,273,719		)

Statements of Operations:
Revenue:
Three months ended September 30, 2018	$	5,780,941		16,459			5,797,400
Nine months ended September 30, 2018	$	13,798,342		29,405			13,827,747

The changes reflected above were primarily due to the Company's delivery of its managed services related to influencer marketing services. Under ASC 605, these were recognized as separate elements at a point in time as services were delivered to the customer and under ASC 606, these are recognized as a single performance obligation over time based on an input model utilizing cost-to-cost methodology.

Disaggregation of Revenue

The following table illustrates our revenue by product service type:



	Three Months Ended		Nine Months Ended
	September 30, 2018		September 30, 2018
Managed Services	$	4,859,435	$	12,660,949
Marketplace Spend Fees, net	378,768		388,492
License Fees	485,651		538,262
Legacy Workflow, net	48,409		164,994
Other	8,678		45,645
Total Revenue from Customers	$	5,780,941	$	13,798,342

Contract Balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.



	September 30, 2018	January 1, 2018
Accounts receivable, net	6,811,029	3,739,430
Contract liabilities (unearned revenue)	5,631,096	3,261,729

Contract receivables are recognized when the receipt of consideration is unconditional. The increase in contract receivables was primarily due to timing of billings, increased revenue during the period, and the addition of TapInfluence accounts. The Company did not recognize any contract assets as of September 30, 2018 or January 1, 2018. Contract liabilities relate to advance consideration received from customers under the terms of our contracts, which will be earned in future periods. The increase in contract liabilities is due to additional orders received during the quarter that are billed in advance and fulfilled throughout the year.

During the three and nine months ended September 30, 2018, the Company recognized revenue of $93,719 and $2,106,571, respectively relating to amounts that were included as a contract liability at January 1, 2018.

As a practical expedient, the Company expenses the costs of sales commissions that are paid to its sales force associated with obtaining contracts less than one year in length in the period incurred.

Remaining Performance Obligations

The Company typically enters into contracts that are one year or less in length. As such, the remaining performance obligations at September 30, 2018 are equal to the contract liabilities disclosed above. The Company expects to recognize the full balance of the unearned revenue at September 30, 2018 within the next year.