2.	*Summary of Significant Accounting Policies*

Basis of Presentation

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries. All inter-company accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation.

Quarterly Reporting

The accompanying consolidated financial statements and notes of the Company have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared under Generally Accepted Accounting Principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s balance sheets, statements of operations, statement of changes in stockholders’ equity and statements of cash flows have been included and are of a normal and recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on March 8, 2018. The consolidated statements of operations for the three and six months ended June 30, 2018 and 2017 and the consolidated statements of cash flows for the six months ended June 30, 2018 and 2017 are not necessarily indicative of full year results.

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates related to the adoption of the new revenue recognition standard (as described below) include the amortization period for capitalized commissions and the allocation of the transaction price when a contract includes multiple performance obligations. See “Recently Adopted Accounting Pronouncements” below and Note 4 for additional information. Actual results could differ from those estimates.

From time to time, the Company has been, is or may in the future be a defendant in various legal actions arising in the normal course of business. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. The outcome of any litigation is uncertain; it is possible that a judgment in any legal actions to which the Company is a party, or which are proposed or threatened, will have a material adverse effect on the consolidated financial statements. See Note 11.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) 2014-09, Revenue from Contracts with Customers. On January 1, 2018, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers, ASC 340-40 Other Assets and Deferred Costs—Contracts with Customers and all the related amendments (collectively, “ASU 2014-09” or the “new standard”) to all contracts using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new standard as an adjustment to the opening balance of retained earnings. The cumulative effect change in accounting principle is reflected on the consolidated statement of changes in stockholders’ equity to reconcile from the previously reported December 31, 2017 balances to the recast amounts after giving effect to ASU 2014-09. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods in accordance with the modified retrospective method.

In addition to modifying the accounting for revenue recognition, the new standard modifies the accounting for certain incremental costs associated with obtaining contracts with customers, such as commissions, which is the most impactful aspect of the new standard on the Company’s accounting. ASU 2014-09 requires these costs to be capitalized and amortized over the estimated life of the asset. Previously, these costs were expensed as incurred. The Company’s incremental costs of obtaining a contract consist of sales commissions and related payroll taxes.

The cumulative effect adjustments resulting from the adoption of the new standard, including income tax implications, as of January 1, 2018 were as follows:


	Balance at December 31, 2017		Adjustments due to ASU 2014-09 Adoption		Balance at January 1, 2018
Balance Sheet
Assets
Deferred tax asset, net	$	12,072,118	$	(588,223)	$	11,483,895
Other assets	$	217,161	$	3,110,472	$	3,327,633
Total assets	$	121,603,733	$	2,522,249	$	124,125,982

Liabilities
Accrued expenses and other liabilities	$	4,149,363	$	683,291	$	4,832,654
Deferred revenue	$	26,533,983	$	24,724	$	26,558,707
Other long-term liabilities	$	2,447,037	$	133,915	$	2,580,952
Total liabilities	$	33,130,383	$	841,930	$	33,972,313

Equity
Retained earnings (deficit)	$	(21,117,601)	$	1,680,319	$	(19,437,282)
Total stockholders’ equity	$	88,473,350	$	1,680,319	$	90,153,669

The impact of the new standard on the Company’s consolidated statements of operations and balance sheet as of and for the three and six months ended June 30, 2018 was as follows:


	For the Three Months Ended June 30, 2018
	As Reported		Balances Without Adoption of ASU 2014-09 (A)		Effect of Change Higher/(Lower)
Statement of Operations Data

Revenue
Subscription revenue	$	11,520,201	$	11,517,939	$	2,262
Other revenue		463,693		478,693		(15,000)

Total revenue	$	11,983,894	$	11,996,632	$	(12,738)


Operating expenses
Sales and marketing	$	3,234,762	$	3,128,080	$	106,682
(Loss) before income taxes		(580,003)		(460,583)		(119,420)
Income tax (benefit)		(121,000)		(90,000)		(31,000)

Net (loss)	$	(459,003)	$	(370,583)	$	88,420


Net (loss) per common share	$	(0.04)	$	(0.03)


	For the Six Months Ended June 30, 2018
	As Reported		Balances Without Adoption of ASU 2014-09 (A)		Effect of Change Higher/(Lower)
Statement of Operations Data
Revenue
Subscription revenue	$	23,077,356	$	23,097,092	$	(19,736)
Other revenue		686,193		701,193		(15,000)

Total revenue	$	23,763,549	$	23,798,285	$	(34,736)


Operating expenses
Sales and marketing	$	6,233,321	$	6,050,909	$	182,412
(Loss) before income taxes		(976,104)		(758,956)		(217,148)
Income tax (benefit)		(165,000)		(109,000)		(56,000)

Net (loss)	$	(811,104)	$	(649,956)	$	(161,148)


Net (loss) per common share	$	(0.07)	$	(0.06)


	As of June 30, 2018
	As reported		Balances without Adoption of ASU 2014-09 (A)		Effect of change Higher/(Lower)
Balance Sheet Data
Assets
Deferred tax asset, net	$	11,683,895	$	12,211,118	$	(527,223)
Other assets	$	3,238,422	$	182,382	$	3,056,040

Liabilities
Accrued expenses and other liabilities	$	4,825,408	$	4,055,961	$	769,447
Deferred revenue	$	25,890,104	$	25,818,991	$	71,113
Other long-term liabilities	$	2,531,017	$	2,355,278	$	175,739

Equity
Retained earnings (deficit)	$	(24,681,312)	$	(23,168,794)	$	(1,512,518)

(A)	Represents the amounts that would have been reported under GAAP that existed prior to the January 1, 2018 adoption of ASU 2014-09.

See Note 4 for additional information regarding the Company’s revenue recognition policies and disclosures.

In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 provides criteria to determine when an integrated set of assets and activities (a “set”) is not a business and narrows the definition of the term output so that it is consistent with the description of outputs in ASC 606. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 and early adoption is only permitted for transactions that have not been reported in financial statements that have been issued or made available for issuance. The adoption of ASU 2017-01 by the Company on January 1, 2018 did not have a material impact on its consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases, and subsequently issued related amendments to address certain implementation issues. The new guidance requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Lessees will classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard allows for a modified retrospective application with certain practical expedients available and is effective for the Company as of the first quarter of 2019. Entities are allowed to apply the modified retrospective approach either (1) retrospectively to each prior reporting period presented in the financial statements with the cumulative-effect adjustment recognized at the beginning of the earliest comparative period presented (January 1, 2017) or (2) retrospectively at the beginning of the period of adoption (January 1, 2019) through a cumulative-effect adjustment, while continuing to present all prior periods under previous lease accounting guidance. The Company is currently evaluating the impact the pending adoption of the new standard will have on its consolidated financial statements and disclosures and expects the adoption may result in a material increase in assets and liabilities on its consolidated balance sheet due to the recognition of the right-of-use asset and liability for its operating leases.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 replaces the current incurred loss impairment methodology for credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and disclosures.