Usio (USIO) 10-Q 14 Nov 17 2017 Q3 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 10, 2017
Document And Entity Information
Entity Registrant Name	PAYMENT DATA SYSTEMS INC
Entity Central Index Key	1,088,034
Trading Symbol	pyds
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		13,615,343
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3
Amendment Flag	false

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 2,199,849	$ 4,120,738
Accounts receivable, net	805,350	907,750
Settlement processing assets	31,521,290	43,851,311
Prepaid expenses and other	226,812	142,029
Notes receivable	200,000	200,000
Current assets before restricted cash	34,953,301	49,221,828
Restricted cash	14,908,900	15,803,641
Total current assets	49,862,201	65,025,469
Property and equipment, net	2,274,201	2,494,510
Other assets:
Intangibles, net	4,967,212	172,899
Deferred tax asset	1,621,000	1,621,000
Other assets	136,368	200,808
Total other assets	6,724,580	1,994,707
Total assets	58,860,982	69,514,686
Current liabilities:
Accounts payable	185,770	145,044
Accrued expenses	882,696	703,322
Settlement processing obligations	31,521,290	43,851,311
Current liabilities before restricted cash	32,589,756	44,699,677
Restricted cash	14,908,900	15,803,641
Total current liabilities	47,498,656	60,503,318
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at September 30, 2017 (unaudited) and December 31, 2016, respectively	0	0
Common stock, $0.001 par value, 200,000,000 shares authorized; 14,286,084 and 12,392,288 issued, and 13,615,343 and 11,795,939 outstanding at September 30, 2017 (unaudited) and December 31, 2016, respectively	183,711	181,818
Additional paid-in capital	68,147,195	63,881,365
Treasury stock, at cost; 670,741 and 596,349 shares at September 30, 2017 (unaudited) and December 31, 2016, respectively	(827,531)	(718,149)
Deferred compensation	(4,178,463)	(4,082,025)
Accumulated deficit	(51,962,586)	(50,251,641)
Total stockholders’ equity	11,362,326	9,011,368
Total liabilities and stockholders’ equity	$ 58,860,982	$ 69,514,686

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	14,286,084	12,392,288
Common stock, shares outstanding (in shares)	13,615,343	11,795,939
Treasury stock, shares (in shares)	670,741	596,349

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Revenues	$ 3,588,853	$ 3,067,335	$ 8,950,038	$ 9,186,027
Operating expenses:
Cost of services	2,764,236	2,101,850	6,486,587	6,291,072
Selling, general and administrative:
Stock-based compensation	230,206	264,154	655,885	835,590
Cancellation of stock-based compensation	0	(44,875)	0	(44,875)
Other expenses	1,172,021	1,095,344	2,800,033	2,505,233
Depreciation and amortization	314,789	225,759	770,607	675,536
Total operating expenses	4,481,252	3,642,232	10,713,112	10,262,556
Operating (loss)	(892,399)	(574,897)	(1,763,074)	(1,076,529)
Other income and (expense):
Interest income	16,381	25,754	88,927	72,739
Other income (expense)	993	(480)	(121)	97,199
Other income and (expense), net	17,374	25,274	88,806	169,938
Income (loss) before income taxes	(875,025)	(549,623)	(1,674,268)	(906,591)
Income taxes	15,000	16,334	36,677	46,668
Net (loss)	$ (890,025)	$ (565,957)	$ (1,710,945)	$ (953,259)
Basic earnings per common share (in dollars per share)	$ (0.10)	$ (0.07)	$ (0.20)	$ (0.12)
Diluted earnings per common share (in dollars per share)	$ (0.10)	$ (0.07)	$ (0.20)	$ (0.12)
Weighted average common shares outstanding
Basic (in shares)	8,954,831	7,819,608	8,637,169	7,759,205
Diluted (in shares)	8,954,831	7,819,608	8,637,169	7,759,205

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Operating activities:
Net (loss)	$ (1,710,945)	$ (953,259)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Depreciation	564,920	553,182
Amortization	205,687	122,354
Bad debt expense	71,667	0
Non-cash stock based compensation	655,885	835,590
Cancellation of non-cash stock based compensation	0	(44,875)
Issuance of stock to consultant	15,400	34,300
Changes in current assets and current liabilities:
Accounts receivable	30,733	134,178
Prepaid expenses and other	(84,783)	(29,826)
Other assets	64,440	3,103
Accounts payable and accrued expenses	220,100	(69,166)
Deferred revenue	0	0
Net cash provided by operating activities	33,104	585,581
Investing activities:
Purchases of property and equipment	(344,611)	(151,597)
Purchase of Singular Payments, LLC	(900,000)	0
Notes receivable	(600,000)	(200,000)
Net cash (used) by investing activities	(1,844,611)	(351,597)
Financing activities:
Purchases of treasury stock	(109,382)	0
Net cash (used) by financing activities	(109,382)	0
Change in cash and cash equivalents	(1,920,889)	233,984
Cash and cash equivalents, beginning of period	4,120,738	4,059,606
Cash and cash equivalents, end of period	2,199,849	4,293,590
Supplemental disclosure of cash flow information:
Interest	0	0
Income taxes	21,677	0
Non-cash transactions:
Non-cash purchase of Singular Payments, LLC	3,500,000	0
Issuance of deferred compensation to Vaden Landers	$ 630,000	$ 0

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of Payment Data Systems, Inc. and its subsidiaries (the “Company”) have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, the accompanying interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position, results of operations and cash flows for such periods. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2016 , as filed with the Securities and Exchange Commission on April 6, 2017. Results of operations for interim periods are not necessarily indicative of results that may be expected for any other interim periods or the full fiscal year. Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. Actual results could differ from those estimates. Revenue Recognition: Revenue consists primarily of fees generated through the electronic processing of payment transactions and related services, and is recognized as revenue during the period the transactions are processed or when the related services are performed. Merchants may be charged for these processing services at a bundled rate based on a percentage of the dollar amount of each transaction and, in some instances, additional fees are charged for each transaction. Certain merchant customers are charged a flat fee per transaction, while others may also be charged miscellaneous fees, including fees for chargebacks or returns, monthly minimums, and other miscellaneous services. Revenues derived from electronic processing of credit, debit, and prepaid card transactions that are authorized and captured through third-party networks are reported gross of amounts paid to sponsor banks as well as interchange and assessments paid to credit card associations (Visa, MasterCard and Discover). Revenue also includes any up-front fees for the work involved in implementing the basic functionality required to provide electronic payment processing services to a customer. Revenue from such implementation fees is recognized over the term of the related service contract. Sales taxes billed are reported directly as a liability to the taxing authority, and are not included in revenue. Cash and Cash Equivalents : Cash and cash equivalents includes cash and other money market instruments. The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents. Allowance for Estimated Losses: The Company maintains an allowance for estimated doubtful accounts resulting from the inability or failure of the Company’s customers to make required payments. The Company determines the allowance for estimated doubtful account losses based on an account-by-account review, taking into consideration such factors as the age of the outstanding balance, historical pattern of collections and financial condition of the customer. Past losses incurred by the Company due to bad debts have been within its expectations. If the financial conditions of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make contractual payments, additional allowances might be required. Estimates for doubtful account losses are variable based on the volume of transactions processed and could increase or decrease accordingly. At September 30, 2017 and December 31, 2016 , the Company’s allowance for estimated doubtful accounts was $61,558 and $26,556 , respectively. Accounting for Internal Use Software: The Company capitalizes the costs associated with software being developed or obtained for internal use when both the preliminary project stage is completed and it is probable that computer software being developed will be completed and placed-in service. Capitalized costs include only (i) external direct costs of materials and services consumed in developing or obtaining internal-use software, (ii) payroll and other related costs for employees who are directly associated with and who devote time to the internal-use software project, and (iii) interest costs incurred, when material, while developing internal-use software. The Company ceases capitalization of such costs no later than the point at which the project is substantially complete and ready for its intended purpose. In the nine months ended September 30, 2017 , the Company capitalized $243,039 of such costs. Valuation of Long-Lived and Intangible Assets: The Company assesses the impairment of long-lived and intangible assets periodically, or at least annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important, which could trigger an impairment review, include the following: significant under performance relative to historical or projected future cash flows; significant changes in the manner of use of the assets or the strategy of the overall business; and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured as the excess of the assets’ carrying value over the estimated fair value. No impairment losses were recorded in 2016 or during the nine months ended September 30, 2017 . Management is not aware of any impairment changes that may currently be required; however, the Company cannot predict the occurrence of events that might adversely affect the reported values in the future. Reserve for Processing Losses: If, due to insolvency or bankruptcy of one of the Company’s merchant customers, or for any other reason, the Company is not able to collect amounts from its credit card, ACH or prepaid customers that have been properly "charged back" by the customer, or if a prepaid cardholder incurs a negative balance, the Company must bear the credit risk for the full amount of the transaction. The Company may require cash deposits and other types of collateral from certain merchants to minimize any such risk. In addition, the Company utilizes a number of systems and procedures to manage merchant risk. ACH, prepaid and credit card merchant processing loss reserves are primarily determined by performing a historical analysis of the Company’s loss experience and considering other factors that could affect that experience in the future, such as the types of transactions processed and nature of the merchant relationship with its consumers and the Company’s relationship with the Company’s prepaid card holders. This reserve amount is subject to the risk that actual losses may be greater than the Company’s estimates. The Company has not incurred any significant processing losses to date. Estimates for processing losses are variable based on the volume of transactions processed and could increase or decrease accordingly. At September 30, 2017 , the Company’s reserve for processing losses was $172,832 and was unchanged from December 31, 2016. New Accounting Pronouncement: In May 2014, the Financial Accounting Standards Board (FASB) issued accounting standards update, ASU 2014-09 , “Revenue from Contracts with Customers (Topic 606)" and a subsequent amendment to the standard in March 2016, ASU 2016-08 “Revenue from Contracts with Customers, Principal versus Agent Consideration (Reporting Revenue Gross versus Net) ." The original standard provides guidance on recognizing revenue, including a five step model to determine when revenue recognition is appropriate. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendment to the standard clarifies implementation guidance on principal versus agent considerations. Adoption of the new standards is effective for reporting periods beginning after December 15, 2017, with early adoption not permitted. The Company is currently reviewing gross versus net reporting pronouncements and evaluating the potential impact that the adoption of this standard will have on its financial position, results of operations, and related disclosures, and will adopt the provisions of this new standard in the first quarter of 2018. In February 2016, the FASB issued, “ Leases (Topic 842), ” which is intended to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee will be required to recognize on the balance sheet an asset (right to use) and a liability (lease obligation) for leases with terms of more than 12 months. Accounting by lessors will remain largely unchanged from current U.S. generally accepted accounting principles. The new standard is effective for public companies for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. Management does not expect that adopting this standard will have a significant impact on its financial statements and related disclosures.

Acquisition of Singular Payment

Acquisition of Singular Payments, LLC.	9 Months Ended
	Sep. 30, 2017
Business Combinations [Abstract]
Acquisition of Singular Payments, LLC.	Acquisition of Singular Payments, LLC. On September 1, 2017, the Company entered into a membership interest purchase agreement with Singular Payments, LLC (“Singular”), a Florida limited liability company in the business of credit card processing, pursuant to which the Company agreed to purchase all of the membership interest in Singular Payments, LLC. The aggregate purchase was $5,000,000 and consisted of a cash payment of $1,500,000 at closing, minus the balance on the outstanding note receivable of $600,000 and subject to adjustment based on net working capital, and $3,500,000 in shares of common stock, or 1,515,152 shares of the Company's common stock, $0.001 par value per share, valued at $2.31 per share. Such shares are unregistered and subject to a lock-up agreement of 24 months. The final number of shares issued, and the related value per each such share, was determined using the volume-weighted average daily closing price for the shares of common stock for the 5 business days immediately preceding September 1, 2017, or $2.31 The purchase price was allocated to the net assets acquired based upon their estimated fair values as follows: Customer list $ 5,000,000 Total $ 5,000,000 The unaudited proforma results including the effects of the Singular Payments acquisition as if it had been consummated on January 1, 2016 will be included in a Form 8-K/A to be filed on or before November 17, 2017.

Notes Receivable

Notes Receivable	9 Months Ended
	Sep. 30, 2017
Receivables [Abstract]
Notes Receivable	Notes Receivable On February 2, 2016, the Company entered into a loan and security agreement with C2Go, Inc., a Nevada corporation, pursuant to which the Company agreed to loan a principal amount of $200,000 to C2Go with an interest rate of 10% per annum for a term of 18 months. C2Go’s obligations under the loan and security agreement are secured by a first lien on all assets of C2Go. The debt is senior, and any future debt incurred by C2Go must be subordinated to the debt of the loan and security agreement. Upon maturity of the debt, C2Go was required to issue to the Company 5% of the issued and outstanding shares of common stock of C2Go as of the date of issuance, on a fully diluted basis, giving effect to any convertible securities, warrants, etc., such shares being validly issued, fully-paid and non-assessable shares for no additional consideration. C2Go defaulted on the Note, therefore the interest rate under the loan and security agreement rose to 18% per annum. The full principal of the note, plus accrued and unpaid interest, was due to be repaid on or before August 2, 2017. C2Go did not make any payment on that date. Pursuant to the Note, C2Go had until August 16, 2017 to cure the payment default. The default was not cured. On August 28, 2017, our wholly-owned subsidiary, FiCentive, Inc. filed a lawsuit against C2Go, Inc, alleging multiple defaults of our mutual loan and security agreement. The case is pending in Bexar County, San Antonio, TX. The Company is in ongoing settlement discussions with C2Go regarding the payment due on the note. C2Go has brought forward an investor interested in buying out the Note via extended payment terms to cover the principal. However, the Company has not reached a final agreement with this investor. Due to the uncertainty of the situation and “more likely than not” recognition threshold as of September 30, 2017, the Company has not recorded a loss reserve on the note receivable. At September 30, 2017, the Company wrote off the accrued interest of $31,667 previously recognized on the C2Go note receivable. On March 7, 2017, the Company agreed to provide $500,000 to Singular Payments, LLC, a Florida limited liability company, under a secured line of credit promissory note. Interest on the note did not accrue until the earlier of August 31, 2017, the date of closing and funding the Company’s proposed acquisition of Singular Payments or the termination of a non-binding letter of intent regarding the proposed acquisition, or until such mutually agreed upon extended date. The loan was increased to $600,000 on August 2, 2017. The Singular Payments, LLC acquisition closed on September 1, 2017. The note receivable was applied to the cash purchase price as part of the Purchase Agreement.

Accrued Expenses

Accrued Expenses	9 Months Ended
	Sep. 30, 2017
Payables and Accruals [Abstract]
Accrued Expenses	Accrued Expenses Accrued expenses consisted of the following balances: September 30, 2017 December 31, 2016 Accrued commissions $ 195,099 $ 221,837 Reserve for merchant losses 172,832 172,832 Other accrued expenses 358,728 192,769 Accrued taxes 34,057 38,469 Accrued salaries 121,980 77,415 Total accrued expenses $ 882,696 $ 703,322

Net Earnings (Loss) Per Share

Net Earnings (Loss) Per Share	9 Months Ended
	Sep. 30, 2017
Earnings Per Share [Abstract]
Net Earnings (Loss) Per Share	Net Earnings (Loss) Per Share Basic earnings (loss) per share (EPS) were computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted EPS differs from basic EPS due to the assumed conversion of potentially dilutive awards and options that were outstanding during the period. The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for net income (loss) for the three and nine months ended September 30, 2017 and September 30, 2016 . Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Numerator: Numerator for basic and diluted earnings per share, net income (loss) available to common shareholders (890,025 ) (565,957 ) (1,710,945 ) (953,259 ) Denominator: Denominator for basic earnings per share, weighted average shares outstanding 8,954,831 7,819,608 8,637,169 7,759,205 Effect of dilutive securities — — — — Denominator for diluted earnings per share, adjust weighted average shares and assumed conversion 8,954,831 7,819,608 8,637,169 7,759,205 Basic earnings (loss) per common share $ (0.10 ) $ (0.07 ) $ (0.20 ) $ (0.12 ) Diluted earnings (loss) per common share and common share equivalent $ (0.10 ) $ (0.07 ) $ (0.20 ) $ (0.12 ) The awards and options to purchase shares of common stock that were outstanding at September 30, 2017 and September 30, 2016 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows: Nine Months Ended September 30, 2017 2016 Anti-dilutive awards and options 3,433,543 4,377,182

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes Deferred tax assets and liabilities are recorded based on the difference between financial reporting and tax basis of assets and liabilities and are measured by the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Deferred tax assets are computed with the presumption that they will be realizable in future periods when taxable income is generated. Predicting the ability to realize these assets in future periods requires a great deal of judgment by management. U.S. generally accepted accounting principles prescribe a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Income tax benefits that meet the “more likely than not” recognition threshold should be recognized. Goodwill is amortized over 15 years for tax purposes. The Company has recognized a deferred tax asset of $1.6 million and has recorded a valuation allowance of $12.7 million to reduce the other deferred tax assets. The Company reviews the assessment of the deferred tax asset and valuation allowance on an annual basis or more often when events indicate a change to the valuation allowance may be warranted. At December 31, 2016, the Company had available net operating loss carryforwards of approximately $40.2 million , which expire beginning in the year 2020. Approximately $0.1 million of the total net operating loss carryforward is subject to an IRS Section 382 limitation from 1999. Management is not aware of any tax positions that would have a significant impact on the Company’s financial position.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2017
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions Nikole Killough During the nine months ended September 30, 2017 and the year ended December 31, 2016 , the Company purchased a total of $1,826 and $2,250 , respectively, of corporate imprinted sportswear and caps from Angry Pug Sportswear. Nikole Killough and Louis Hoch, the Company’s President and Chief Executive Officer, are each 50% owners of Angry Pug Sportswear. Miguel Chapa During the nine months ended September 30, 2017 and the year ended December 31, 2016 , the Company received $21,907 and $51,500 , respectively, in revenue from Lush Rooftop. Miguel Chapa, a member of the Company’s Board of Directors, is a managing member of Lush Rooftop. Louis Hoch, the Company’s President and Chief Executive Officer, is a minority owner in Lush Rooftop.

Legal Proceedings

Legal Proceedings	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Legal Proceedings	Legal Proceedings On April 26, 2016, Michael McFarland, derivatively on behalf the Company, re-filed a class-action lawsuit in United States District Court, District of Nevada that had been previously filed and dismissed. The suit alleges breach of fiduciary duties and unjust enrichment by the Company’s Board of Directors and certain executive officers and directors in connection with excessive and unfair compensation paid or awarded during fiscal years 2013 and 2014. The lawsuit seeks disgorgement of excessive compensation as well as damages in an unspecified amount. In July 2016, the Company filed a motion to dismiss the case. In January 2017, the court granted a partial dismissal of the claims and suggested the plaintiffs re-file their petition. Subsequently, the Company re-filed a motion to dismiss the case. On October 7, 2017, the court granted a full dismissal of all claims. On August 28, 2017, our wholly-owned subsidiary, FiCentive, Inc. filed a lawsuit against C2Go, Inc. alleging multiple defaults of our mutual Loan and Security agreement executed February 2, 2016. The case is still pending in Bexar County, San Antonio, TX. The full principal of the note, plus accrued and unpaid interest, was due to be repaid on or before August 2, 2017. We are in ongoing settlement discussions with C2Go abnd their investor to pay the principal. Hower, we have not reached a final agreement with this investor and or C2Go, Inc. There are no assurances that we will be able to recover the $200,000 principal and or the interest tha is due nor are there assurances there will be any assets for us to recover form our lien on all the assets of C2Go, Inc. if any settlement is not achieved. Aside from the lawsuit described above, the Company may be involved in legal matters arising in the ordinary course of business from time to time. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is or could become involved in litigation will not have a material adverse effect on the Company’s business, financial condition or results of operations.

Basis of Presentation (Policies

Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of Payment Data Systems, Inc. and its subsidiaries (the “Company”) have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, the accompanying interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position, results of operations and cash flows for such periods. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2016 , as filed with the Securities and Exchange Commission on April 6, 2017. Results of operations for interim periods are not necessarily indicative of results that may be expected for any other interim periods or the full fiscal year.
Use of Estimates	Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. Actual results could differ from those estimates.
Revenue Recognition	Revenue Recognition: Revenue consists primarily of fees generated through the electronic processing of payment transactions and related services, and is recognized as revenue during the period the transactions are processed or when the related services are performed. Merchants may be charged for these processing services at a bundled rate based on a percentage of the dollar amount of each transaction and, in some instances, additional fees are charged for each transaction. Certain merchant customers are charged a flat fee per transaction, while others may also be charged miscellaneous fees, including fees for chargebacks or returns, monthly minimums, and other miscellaneous services. Revenues derived from electronic processing of credit, debit, and prepaid card transactions that are authorized and captured through third-party networks are reported gross of amounts paid to sponsor banks as well as interchange and assessments paid to credit card associations (Visa, MasterCard and Discover). Revenue also includes any up-front fees for the work involved in implementing the basic functionality required to provide electronic payment processing services to a customer. Revenue from such implementation fees is recognized over the term of the related service contract. Sales taxes billed are reported directly as a liability to the taxing authority, and are not included in revenue.
Cash and Cash Equivalents	Cash and Cash Equivalents : Cash and cash equivalents includes cash and other money market instruments. The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents.
Allowance for Estimated Losses	Allowance for Estimated Losses: The Company maintains an allowance for estimated doubtful accounts resulting from the inability or failure of the Company’s customers to make required payments. The Company determines the allowance for estimated doubtful account losses based on an account-by-account review, taking into consideration such factors as the age of the outstanding balance, historical pattern of collections and financial condition of the customer. Past losses incurred by the Company due to bad debts have been within its expectations. If the financial conditions of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make contractual payments, additional allowances might be required. Estimates for doubtful account losses are variable based on the volume of transactions processed and could increase or decrease accordingly.
Accounting for Internal Use Software	Accounting for Internal Use Software: The Company capitalizes the costs associated with software being developed or obtained for internal use when both the preliminary project stage is completed and it is probable that computer software being developed will be completed and placed-in service. Capitalized costs include only (i) external direct costs of materials and services consumed in developing or obtaining internal-use software, (ii) payroll and other related costs for employees who are directly associated with and who devote time to the internal-use software project, and (iii) interest costs incurred, when material, while developing internal-use software. The Company ceases capitalization of such costs no later than the point at which the project is substantially complete and ready for its intended purpose.
Valuation of Long-Lived and Intangible Assets	Valuation of Long-Lived and Intangible Assets: The Company assesses the impairment of long-lived and intangible assets periodically, or at least annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important, which could trigger an impairment review, include the following: significant under performance relative to historical or projected future cash flows; significant changes in the manner of use of the assets or the strategy of the overall business; and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured as the excess of the assets’ carrying value over the estimated fair value. No impairment losses were recorded in 2016 or during the nine months ended September 30, 2017 . Management is not aware of any impairment changes that may currently be required; however, the Company cannot predict the occurrence of events that might adversely affect the reported values in the future.
Reserve for Processing Losses	Reserve for Processing Losses: If, due to insolvency or bankruptcy of one of the Company’s merchant customers, or for any other reason, the Company is not able to collect amounts from its credit card, ACH or prepaid customers that have been properly "charged back" by the customer, or if a prepaid cardholder incurs a negative balance, the Company must bear the credit risk for the full amount of the transaction. The Company may require cash deposits and other types of collateral from certain merchants to minimize any such risk. In addition, the Company utilizes a number of systems and procedures to manage merchant risk. ACH, prepaid and credit card merchant processing loss reserves are primarily determined by performing a historical analysis of the Company’s loss experience and considering other factors that could affect that experience in the future, such as the types of transactions processed and nature of the merchant relationship with its consumers and the Company’s relationship with the Company’s prepaid card holders. This reserve amount is subject to the risk that actual losses may be greater than the Company’s estimates. The Company has not incurred any significant processing losses to date. Estimates for processing losses are variable based on the volume of transactions processed and could increase or decrease accordingly.
New Accounting Pronouncement	New Accounting Pronouncement: In May 2014, the Financial Accounting Standards Board (FASB) issued accounting standards update, ASU 2014-09 , “Revenue from Contracts with Customers (Topic 606)" and a subsequent amendment to the standard in March 2016, ASU 2016-08 “Revenue from Contracts with Customers, Principal versus Agent Consideration (Reporting Revenue Gross versus Net) ." The original standard provides guidance on recognizing revenue, including a five step model to determine when revenue recognition is appropriate. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendment to the standard clarifies implementation guidance on principal versus agent considerations. Adoption of the new standards is effective for reporting periods beginning after December 15, 2017, with early adoption not permitted. The Company is currently reviewing gross versus net reporting pronouncements and evaluating the potential impact that the adoption of this standard will have on its financial position, results of operations, and related disclosures, and will adopt the provisions of this new standard in the first quarter of 2018. In February 2016, the FASB issued, “ Leases (Topic 842), ” which is intended to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee will be required to recognize on the balance sheet an asset (right to use) and a liability (lease obligation) for leases with terms of more than 12 months. Accounting by lessors will remain largely unchanged from current U.S. generally accepted accounting principles. The new standard is effective for public companies for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. Management does not expect that adopting this standard will have a significant impact on its financial statements and related disclosures.

Acquisition of Singular Payme15

Acquisition of Singular Payments, LLC. (Tables)	9 Months Ended
	Sep. 30, 2017
Business Combinations [Abstract]
Schedule of acquisition purchase price	The purchase price was allocated to the net assets acquired based upon their estimated fair values as follows: Customer list $ 5,000,000 Total $ 5,000,000

Accrued Expenses (Tables)

Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2017
Payables and Accruals [Abstract]
Schedule of accrued expenses	Accrued expenses consisted of the following balances: September 30, 2017 December 31, 2016 Accrued commissions $ 195,099 $ 221,837 Reserve for merchant losses 172,832 172,832 Other accrued expenses 358,728 192,769 Accrued taxes 34,057 38,469 Accrued salaries 121,980 77,415 Total accrued expenses $ 882,696 $ 703,322

Net Earnings (Loss) Per Share (

Net Earnings (Loss) Per Share (Tables)	9 Months Ended
	Sep. 30, 2017
Earnings Per Share [Abstract]
Schedule of the numerators and the denominators of the basic and diluted per share computations for net income (loss)	The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for net income (loss) for the three and nine months ended September 30, 2017 and September 30, 2016 . Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Numerator: Numerator for basic and diluted earnings per share, net income (loss) available to common shareholders (890,025 ) (565,957 ) (1,710,945 ) (953,259 ) Denominator: Denominator for basic earnings per share, weighted average shares outstanding 8,954,831 7,819,608 8,637,169 7,759,205 Effect of dilutive securities — — — — Denominator for diluted earnings per share, adjust weighted average shares and assumed conversion 8,954,831 7,819,608 8,637,169 7,759,205 Basic earnings (loss) per common share $ (0.10 ) $ (0.07 ) $ (0.20 ) $ (0.12 ) Diluted earnings (loss) per common share and common share equivalent $ (0.10 ) $ (0.07 ) $ (0.20 ) $ (0.12 )
Schedule of the awards and options to purchase shares of common stock that were outstanding	The awards and options to purchase shares of common stock that were outstanding at September 30, 2017 and September 30, 2016 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows: Nine Months Ended September 30, 2017 2016 Anti-dilutive awards and options 3,433,543 4,377,182

Basis of Presentation (Details)

Basis of Presentation (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Allowance for estimated doubtful accounts	$ 61,558	$ 26,556
Capitalized computer software, additions	243,039
Asset impairment charges	0	0
Reserve for processing losses	$ 172,832	$ 172,832

Acquisition of Singular Payme19

Acquisition of Singular Payments, LLC. (Details) - USD ($)	Sep. 01, 2017	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Business Acquisition [Line Items]
Cash payments to acquire businesses		$ 900,000	$ 0
Common stock, par value (in dollars per share)		$ 0.001		$ 0.001
Singular Payments, LLC
Business Acquisition [Line Items]
Aggregate purchase price	$ 5,000,000
Cash payments to acquire businesses	1,500,000
Outstanding balance of note receivable assumed	600,000
Equity interest issued or issuable, value	$ 3,500,000
Equity interest issued or issuable, number of shares (in shares)	1,515,152
Common stock, par value (in dollars per share)	$ 0.001
Share price (in dollars per share)	$ 2.31
Equity interest issued, lock-up agreement, term	24 months
Equity interest issued, basis for determining value, number of business days preceding September 1, 2017	5 days

Acquisition of Singular Payme20

Acquisition of Singular Payments, LLC. - Purchase Price (Details) - Singular Payments, LLC	Sep. 01, 2017USD ($)
Business Acquisition [Line Items]
Customer list	$ 5,000,000
Total	$ 5,000,000

Notes Receivable (Details)

Notes Receivable (Details) - USD ($)	Feb. 02, 2016	Sep. 30, 2017	Aug. 02, 2017	Mar. 07, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable		$ 200,000			$ 200,000
C2Go Loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable	$ 200,000
Notes receivable, stated interest rate	10.00%
Notes receivable, term	18 months
Notes receivable, repayment shares of payee issued to company, percent	5.00%
Notes receivable, interest rate in event of default	18.00%
Notes receivable, loss reserve		0
Notes receivable, write-off of accrued interest		$ 31,667
Singular Payments, LLC
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable			$ 600,000	$ 500,000

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Accrued commissions	$ 195,099	$ 221,837
Reserve for merchant losses	172,832	172,832
Other accrued expenses	358,728	192,769
Accrued taxes	34,057	38,469
Accrued salaries	121,980	77,415
Total accrued expenses	$ 882,696	$ 703,322

Net Earnings (Loss) Per Share -

Net Earnings (Loss) Per Share - Earnings per Share Numerator and Denominator (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Numerator:
Numerator for basic and diluted earnings per share, net income (loss) available to common shareholders	$ (890,025)	$ (565,957)	$ (1,710,945)	$ (953,259)
Denominator:
Denominator for basic earnings per share, weighted average shares outstanding (in shares)	8,954,831	7,819,608	8,637,169	7,759,205
Effect of dilutive securities (in shares)	0	0	0	0
Denominator for diluted earnings per share, adjust weighted average shares and assumed conversion (in shares)	8,954,831	7,819,608	8,637,169	7,759,205
Basic earnings (loss) per common share (in dollars per share)	$ (0.10)	$ (0.07)	$ (0.20)	$ (0.12)
Diluted earnings (loss) per common share and common share equivalent (in dollars per share)	$ (0.10)	$ (0.07)	$ (0.20)	$ (0.12)

Net Earnings (Loss) Per Share24

Net Earnings (Loss) Per Share - Antidilutive Securities Excluded from Calculation of EPS (Details) - shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	3,433,543	4,377,182

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Goodwill amortization period	15 years
Deferred tax assets, net	$ 1.6
Deferred tax assets, valuation allowance	$ 12.7
Income Tax Contingency [Line Items]
Operating loss carryforwards		$ 40.2
Portion subject to an IRS Section 382 limitation from 1999
Income Tax Contingency [Line Items]
Operating loss carryforwards		$ 0.1

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Angry Pug Sportswear
Related Party Transaction [Line Items]
Purchases from related party	$ 1,826	$ 2,250
Nikole Killough | Ownership Of Angry Pug Sportswear
Related Party Transaction [Line Items]
Ownership percentage	50.00%
Louis A. Hoch | Ownership Of Angry Pug Sportswear
Related Party Transaction [Line Items]
Ownership percentage	50.00%
Club Rio Maroc Bar, Lush Rooftop, and Nirvana Bar and Rock
Related Party Transaction [Line Items]
Revenue from related parties	$ 21,907	$ 51,500

Legal Proceedings (Details)

Legal Proceedings (Details)	1 Months Ended
	Sep. 30, 2017USD ($)
C2Go, Inc. | Pending Litigation
Loss Contingencies [Line Items]
Damages sought, value	$ 200,000