Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 09, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | USIO, INC. | |
Entity Central Index Key | 0001088034 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding (in shares) | 17,058,348 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Shell Company | true | |
Entity Small Business | true | |
Entity Emerging Growth Company | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 3,276,511 | $ 2,695,177 |
Accounts receivable, net | 1,568,905 | 1,214,355 |
Settlement processing assets | 35,640,174 | 44,139,861 |
Prepaid expenses and other | 201,575 | 101,722 |
Notes receivable, net | 108,750 | 108,750 |
Current assets before merchant reserves | 40,795,915 | 48,259,865 |
Merchant reserves | 11,074,891 | 12,645,803 |
Total current assets | 51,870,806 | 60,905,668 |
Property and equipment, net | 1,782,323 | 1,932,660 |
Other assets: | ||
Intangibles, net | 3,176,427 | 3,676,427 |
Deferred tax asset | 1,394,000 | 1,394,000 |
Operating lease right-of-use assets | 2,614,006 | |
Other assets | 312,780 | 306,757 |
Total other assets | 7,497,213 | 5,377,184 |
Total assets | 61,150,342 | 68,215,512 |
Current liabilities: | ||
Accounts payable | 239,325 | 308,178 |
Accrued expenses | 1,593,824 | 1,388,196 |
Operating lease liabilities, current portion | 246,758 | |
Settlement processing obligations | 35,640,174 | 44,139,861 |
Deferred revenues | 150,000 | 20,000 |
Current liabilities before merchant reserve obligations | 37,870,081 | 45,856,235 |
Merchant reserve obligations | 11,074,891 | 12,645,803 |
Total current liabilities | 48,944,972 | 58,502,038 |
Non-current liabilities: | ||
Operating lease liabilities, non-current portion | 2,519,276 | |
Deferred rent | 0 | 79,748 |
Total liabilities | 51,464,248 | 58,581,786 |
Stockholders’ equity: | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at June 30, 2019 (unaudited) and December 31, 2018, respectively | 0 | 0 |
Common stock, $0.001 par value, 200,000,000 shares authorized; 18,008,577 and 17,129,680 issued, and 16,899,281 and 16,043,630 outstanding at June 30, 2019 (unaudited) and December 31, 2018, respectively | 186,439 | 185,561 |
Additional paid-in capital | 76,558,492 | 74,568,627 |
Treasury stock, at cost; 1,109,296 and 1,086,050 shares at June 30, 2019 (unaudited) and December 31, 2018, respectively | (1,864,061) | (1,813,546) |
Deferred compensation | (5,810,035) | (6,270,675) |
Accumulated deficit | (59,384,741) | (57,036,241) |
Total stockholders’ equity | 9,686,094 | 9,633,726 |
Total liabilities and stockholders’ equity | $ 61,150,342 | $ 68,215,512 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
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) | 18,008,577 | 17,129,680 |
Common stock, shares outstanding (in shares) | 16,899,281 | 16,043,630 |
Treasury stock, shares (in shares) | 1,109,296 | 1,086,050 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues | $ 7,157,379 | $ 6,283,875 | $ 13,745,411 | $ 12,127,540 |
Cost of services | 5,591,534 | 4,964,260 | 10,843,835 | 9,537,018 |
Gross profit | 1,565,845 | 1,319,615 | 2,901,576 | 2,590,522 |
Selling, general and administrative: | ||||
Stock-based compensation | 356,103 | 298,477 | 639,511 | 672,855 |
Other expenses | 1,970,555 | 1,595,276 | 3,632,294 | 3,093,927 |
Depreciation and amortization | 496,994 | 457,276 | 983,542 | 915,939 |
Total selling, general and administrative expenses | 2,823,652 | 2,351,029 | 5,255,347 | 4,682,721 |
Operating (loss) | (1,257,807) | (1,031,414) | (2,353,771) | (2,092,199) |
Other income and (expense): | ||||
Interest income | 22,620 | 15,396 | 45,694 | 26,917 |
Other income (expense) | (424) | (420) | (423) | (1,962) |
Other income and (expense), net | 22,196 | 14,976 | 45,271 | 24,955 |
(Loss) before income taxes | (1,235,611) | (1,016,438) | (2,308,500) | (2,067,244) |
Income taxes | 40,000 | 19,000 | 40,000 | 19,000 |
Net (loss) | $ (1,275,611) | $ (1,035,438) | $ (2,348,500) | $ (2,086,244) |
Basic (loss) per common share (in dollars per share) | $ (0.10) | $ (0.09) | $ (0.18) | $ (0.17) |
Diluted (loss) per common share (in dollars per share) | $ (0.10) | $ (0.09) | $ (0.18) | $ (0.17) |
Weighted average common shares outstanding | ||||
Basic (in shares) | 13,041,799 | 12,075,580 | 12,831,828 | 12,124,538 |
Diluted (in shares) | 13,041,799 | 12,075,580 | 12,831,828 | 12,124,538 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities: | ||
Net (loss) | $ (2,348,500) | $ (2,086,244) |
Adjustments to reconcile net (loss) to net cash (used) by operating activities: | ||
Depreciation | 483,542 | 415,939 |
Amortization | 500,000 | 500,001 |
Provision for loss on note receivable | 0 | 72,500 |
Non-cash stock based compensation | 639,511 | 672,855 |
Issuance of stock to consultant for services | 0 | 7,911 |
Amortization of warrant costs | 17,970 | 0 |
Changes in current assets and current liabilities: | ||
Accounts receivable | (354,550) | 30,280 |
Prepaid expenses and other | (99,853) | (65,661) |
Operating lease right-of-use assets | (2,614,006) | |
Other assets | (6,023) | (144,722) |
Accounts payable and accrued expenses | 136,772 | (167,581) |
Operating lease liabilities | 2,766,034 | |
Merchant reserves | (1,570,912) | (195,163) |
Deferred revenue | 130,000 | 50,000 |
Deferred rent | (79,748) | 0 |
Net cash (used) by operating activities | (2,399,763) | (882,469) |
Investing activities: | ||
Purchases of property and equipment | (333,205) | (431,815) |
Net cash (used) by investing activities | (333,205) | (431,815) |
Financing activities: | ||
Proceeds from public offering, net of expenses | 1,793,905 | 0 |
Purchases of treasury stock | (50,515) | (959,076) |
Net cash provided (used) by financing activities | 1,743,390 | (959,076) |
Change in cash, cash equivalents and merchant reserves | (989,578) | (2,273,360) |
Cash, cash equivalents and merchant reserves, beginning of period | 15,340,980 | 19,778,022 |
Cash, cash equivalents and merchant reserves, end of period | 14,351,402 | 17,504,662 |
Supplemental disclosure of cash flow information: | ||
Interest | 0 | 0 |
Income taxes | $ 72,081 | $ 49,000 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) | Total | Private Placement | Common Stock | Common StockPrivate Placement | Additional Paid - In Capital | Additional Paid - In CapitalPrivate Placement | Treasury Stock | Deferred Compensation | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2017 | 16,874,235 | ||||||||
Beginning balance at Dec. 31, 2017 | $ 13,123,353 | $ 186,299 | $ 74,041,083 | $ (831,059) | $ (7,012,544) | $ (53,260,426) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock under equity incentive plan (in shares) | 68,889 | ||||||||
Issuance of common stock under equity incentive plan | 147,300 | $ 69 | 147,231 | ||||||
Deferred compensation amortization | 227,078 | 227,078 | |||||||
Purchase of treasury stock | (956,134) | (956,134) | |||||||
Net (loss) | (1,050,806) | (1,050,806) | |||||||
Ending balance (in shares) at Mar. 31, 2018 | 16,943,124 | ||||||||
Ending balance at Mar. 31, 2018 | 11,490,791 | $ 186,368 | 74,188,314 | (1,787,193) | (6,785,466) | (54,311,232) | |||
Beginning balance (in shares) at Dec. 31, 2017 | 16,874,235 | ||||||||
Beginning balance at Dec. 31, 2017 | 13,123,353 | $ 186,299 | 74,041,083 | (831,059) | (7,012,544) | (53,260,426) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net (loss) | (2,086,244) | ||||||||
Ending balance (in shares) at Jun. 30, 2018 | 17,069,680 | ||||||||
Ending balance at Jun. 30, 2018 | 10,758,799 | $ 185,501 | 74,434,439 | (1,790,135) | (6,724,336) | (55,346,670) | |||
Beginning balance (in shares) at Mar. 31, 2018 | 16,943,124 | ||||||||
Beginning balance at Mar. 31, 2018 | 11,490,791 | $ 186,368 | 74,188,314 | (1,787,193) | (6,785,466) | (54,311,232) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock under equity incentive plan (in shares) | 28,223 | ||||||||
Issuance of common stock under equity incentive plan | 74,347 | $ 28 | 74,319 | ||||||
Issuance of common stock, employees, restricted (in shares) | 100,000 | ||||||||
Issuance of common stock, employees, restricted | 0 | $ 100 | 179,900 | (180,000) | |||||
Issuance of common stock, restricted (in shares) | 5,000 | ||||||||
Issuance of common stock, restricted | 7,911 | $ 5 | 7,906 | ||||||
Deferred compensation amortization | 229,655 | 229,655 | |||||||
Reversal of deferred compensation that did not vest (in shares) | (6,667) | ||||||||
Reversal of deferred compensation that did not vest | (5,525) | $ (1,000) | (16,000) | 11,475 | |||||
Purchase of treasury stock | (2,942) | (2,942) | |||||||
Net (loss) | (1,035,438) | (1,035,438) | |||||||
Ending balance (in shares) at Jun. 30, 2018 | 17,069,680 | ||||||||
Ending balance at Jun. 30, 2018 | 10,758,799 | $ 185,501 | 74,434,439 | (1,790,135) | (6,724,336) | (55,346,670) | |||
Beginning balance (in shares) at Dec. 31, 2018 | 17,129,680 | ||||||||
Beginning balance at Dec. 31, 2018 | 9,633,726 | $ 185,561 | 74,568,627 | (1,813,546) | (6,270,675) | (57,036,241) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock, public offering (shares) | 769,230 | ||||||||
Issuance of common stock, public offering | $ 1,793,905 | $ 769 | $ 1,793,136 | ||||||
Issuance of common stock under equity incentive plan (in shares) | 62,222 | ||||||||
Issuance of common stock under equity incentive plan | 58,613 | $ 62 | 58,551 | ||||||
Warrant compensation costs | 8,985 | 8,985 | |||||||
Deferred compensation amortization | 224,795 | 224,795 | |||||||
Purchase of treasury stock | (21,822) | (21,822) | |||||||
Net (loss) | (1,072,889) | (1,072,889) | |||||||
Ending balance (in shares) at Mar. 31, 2019 | 17,961,132 | ||||||||
Ending balance at Mar. 31, 2019 | 10,625,313 | $ 186,392 | 76,429,299 | (1,835,368) | (6,045,880) | (58,109,130) | |||
Beginning balance (in shares) at Dec. 31, 2018 | 17,129,680 | ||||||||
Beginning balance at Dec. 31, 2018 | 9,633,726 | $ 185,561 | 74,568,627 | (1,813,546) | (6,270,675) | (57,036,241) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net (loss) | (2,348,500) | ||||||||
Ending balance (in shares) at Jun. 30, 2019 | 18,008,577 | ||||||||
Ending balance at Jun. 30, 2019 | 9,686,094 | $ 186,439 | 76,558,492 | (1,864,061) | (5,810,035) | (59,384,741) | |||
Beginning balance (in shares) at Mar. 31, 2019 | 17,961,132 | ||||||||
Beginning balance at Mar. 31, 2019 | 10,625,313 | $ 186,392 | 76,429,299 | (1,835,368) | (6,045,880) | (58,109,130) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock under equity incentive plan (in shares) | 53,445 | ||||||||
Issuance of common stock under equity incentive plan | 133,515 | $ 53 | 133,462 | ||||||
Warrant compensation costs | 8,985 | 8,985 | |||||||
Deferred compensation amortization | 222,585 | 222,585 | |||||||
Reversal of deferred compensation that did not vest (in shares) | (6,000) | ||||||||
Reversal of deferred compensation that did not vest | 0 | $ (6) | (13,254) | 13,260 | |||||
Purchase of treasury stock | (28,693) | (28,693) | |||||||
Net (loss) | (1,275,611) | (1,275,611) | |||||||
Ending balance (in shares) at Jun. 30, 2019 | 18,008,577 | ||||||||
Ending balance at Jun. 30, 2019 | $ 9,686,094 | $ 186,439 | $ 76,558,492 | $ (1,864,061) | $ (5,810,035) | $ (59,384,741) |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of Usio, 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, 2018 , as filed with the Securities and Exchange Commission on March 27, 2019. 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. Revenue is recognized during the period in which the transactions are processed or when the related services are performed. The Company complies with ASC 606-10 and reports revenues at gross as a principal versus net as an agent. Although some of the Company's processing agreements vary with respect to specific credit risks, the Company has determined for each agreement it is acting in the principal role. 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. Sales taxes billed are reported directly as a liability to the taxing authority and are not included in revenue. Deferred Revenues: The Company records deferred revenues when it receives payments or issues invoices in advance of transferring control of promised goods or services to a customer. The advance consideration received from a customer is deferred until the Company provides the customer that product or service. The deferred revenues totaled $150,000 and $20,000 at June 30, 2019 and December 31, 2018, respectively. 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. Merchant Reserves: The Company has merchant reserve requirements associated with Automated Clearing House ("ACH") transactions. The merchant reserve assets are carried on the Company's balance sheet with a corresponding liability. Merchant Reserves are set for each merchant. Funds are collected from each merchant and held as collateral to minimize contingent liabilities associated with any losses that may occur under the merchant agreement. While this cash is not restricted in its use, the Company believes that designating this cash to collateralize Merchant Reserves strengthens our fiduciary standing with the Company's member sponsors and is in accordance with the guidelines set by the card networks. The reconciliation of cash and cash equivalents to cash, cash equivalents and merchant reserves is as follows for each period presented: June 30, 2019 June 30, 2018 Beginning cash, cash equivalents and merchant reserves: Cash and cash equivalents 2,695,177 4,800,554 Merchant reserves 12,645,803 14,977,468 Total $ 15,340,980 $ 19,778,022 Ending cash, cash equivalents and merchant reserves: Cash and cash equivalents 3,276,511 2,722,357 Merchant reserves 11,074,891 14,782,305 Total $ 14,351,402 $ 17,504,662 Allowance for Estimated Losses: The Company maintains an allowance for estimated doubtful accounts receivable resulting from the inability or failure of the Company’s customers to make required payments. The Company determines the allowance for estimated doubtful accounts receivable 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. The allowance for estimated doubtful accounts was $62,000 and $55,212 at June 30, 2019 and December 31, 2018 , 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 three months ended June 30, 2019 and June 30, 2018 , the Company capitalized $238,248 and $66,705 , respectively of such costs. Valuation of Long-Lived and Intangible Assets: The Company assesses the impairment of long-lived and intangible assets 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 2018 or during the three months ended June 30, 2019 . 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 multiple 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 June 30, 2019 and December 31, 2018 , the Company’s reserve for processing losses was $440,153 and $374,153 , respectively. Recently Adopted Accounting Pronouncements: In May 2014, the Financial Accounting Standards Board, or FASB, issued 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 has adopted the provisions of this new standard beginning January 1, 2018. The Company functions as the merchant of record and has primary responsibility for providing end-to-end payment processing services for its clients. The customers of the Company contract with the Company for all credit card processing services including transaction authorization, settlement, dispute resolution, security and risk management solutions, reporting and other value-added services. As such, the Company is the primary obligor in these transactions and is solely responsible for all processing costs, including interchange fees. Further, the Company sets prices as it deems reasonable for each merchant. The gross fees the Company collects are intended to cover the interchange, assessments and other processing fees and include the Company's margin on transactions processed. For these reasons, the Company is the principal obligor in the contractual relationship with its customers and therefor, the Company records its revenues, including interchange and assessments on a gross basis. The Company's existing revenue recognition process remains intact, and the Company will continue to record revenues at the gross amount billed due to the Company's primary responsibility for providing end-to-end payment processing services for its clients. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash , which requires that the reconciliation of the beginning of period and the end of period amounts shown in the statement of cash flows include restricted cash and restricted cash equivalents. If restricted cash is presented separately from cash and cash equivalents on the balance sheet, companies will be required to reconcile the amounts presented on the statement of cash flows to the amounts on the balance sheet. This guidance is required to be applied retrospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. As required, the Company applied the provisions of ASU 2016-18 as of January 1, 2018. As a result, the change in restricted cash has been included in the change in cash, cash equivalents and merchant reserves. Operating Leases Right-of use Assets and Operating Lease Liabilities: In February 2016, the FASB issued, "Leases (Topic 842)." This update requires that a lessee recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing it right to use the underlying asset for the lease term. For leases with terms of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities. Similar to current guidance, the update continues to differentiate between finance leases and operating leases, however this distinction now primarily relates to differences in the manner of expense recognition over time and in the classification of lease payments in the statement of cash flows. The updated guidance leaves the accounting for leases by lessors largely unchanged from existing GAAP. The guidance became effective for the Company on January 1, 2019. As a lessee, this standard primarily impacted its accounting for leased facilities and office equipment, for which the Company recognized right of use assets of $2,688,412 and a corresponding lease liability of $2,775,259 on the Company's consolidated balance sheet on January 1, 2019. The Company adopted these provisions on January 1, 2019 using the optional transition method that permits the Company to apply the new disclosure requirements in 2019 and continue to present comparative period information as required under FASB ASC Topic 840, "Leases." The Company did not have a cumulative-effect adjustment to the opening balance of retained earnings at the date of adoption. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed it to exclude leases with an initial term of 12 months or less from the right-of-use assets and liabilities. Adoption of the standards had no impact on the Company's results of operations or liquidity. If the Company determines that an arrangement is or contains a lease, the Company recognizes a right-of-use (ROU) asset and lease liability at the commencement date of the lease. ROU assets represent it's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation which expands the scope of current guidance to include all share-based payment arrangements related to the acquisition of goods or services from both non-employees and employees. The guidance is effective for the Company for all fiscal years beginning after December 15, 2018. The adoption of the new standard did not result in a change to the previously presented financial statements. Accounting standards that have been issued or proposed by the FASB, the SEC or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company leases facilities and office equipment under various operating leases, which generally are expected to be renewed or replaced by other leases. For the three and six month periods ended June 30, 2019 , operating lease expense totaled $119,435 and $278,057 , compared to $123,115 and $211,089 for the three and six month periods ended June 30, 2018 , respectively. Maturities of lease liabilities are as follows at June 30, 2019 . June 30, 2019 Operating Leases 2019 (Remaining 6 months) $ 186,396 2020 356,184 2021 343,424 2022 351,334 2023 357,695 Thereafter 1,825,929 Total minimum lease payments 3,420,962 Less imputed interest (654,347 ) Total lease liabilities $ 2,766,615 |
Notes Receivable
Notes Receivable | 6 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
Notes Receivable | Note Receivable Under a loan and security agreement dated February 2, 2016, the Company loaned a principal amount of $200,000 to C2Go, Inc. with an interest rate of 10% per annum for a term of 18 months. The loan was secured by a first lien on all assets of C2Go. C2Go defaulted under the note by failing to repay the loan plus interest on August 2, 2017. On December 7, 2017, the Company entered into a note purchase and settlement agreement with C2Go and Mercury Investment Partners LLC. Pursuant to the note purchase and settlement agreement, Mercury Investment Partners agreed to purchase the note and the rights secured by the security agreement with all rights and obligations and to pay to a sum of $200,000 in three installments. The first installment of $50,000 was paid on December 7, 2017. The second installment of $50,000 was due on April 30, 2018, and the remaining amount of $100,000 was due on October 31, 2018. In return, the Company agreed to waive all interest due and payable under the terms of the C2Go loan. Mercury Investment Partners has not paid the amount due April 30, 2018 or the amount due on October 31, 2018. The Company issued a letter of default. The Company agreed to extend the due date of the $50,000 payment due April 30, 2018 to May 16, 2018. $5,000 of the $50,000 due was received on July 5, 2018. On or about August 14, 2018, a notice of default was sent to Mercury Investment Partners. Mercury Investment Partners did not respond to the letter or make payment in full to the Company. On September 4, 2018, the Company filed suit against Mercury Investment Partners in Bexar County District Court. The default judgment against Mercury Investment Partners was granted on December 21, 2018. The Company retained the services of legal counsel to represent the Company in collecting on the judgment. Counsel has domesticated the Texas judgment and the Company was issued a lien on a property owned by Mercury that is valued over $1.0 million by the court. We our unsure if any equity exists for us to potentially recover the funds owed. On or about June 7, 2019, Mercury Investment Partners was served a subpoena to produce certain documents on July 3, 2019 in Colorado. A representative of Mercury Investment Partners did not appear in court on the assigned date and time. Subsequently, Mercury placed the property up for sale and Mercury is aware that we have a valid lien in place on the property. There are no assurances that the Company will be able to recover the remaining $145,000 principal and there are no assurances there will be any assets for the Company to recover from its lien on all the assets of C2Go if payment in full of the obligation is not made. Due to the uncertainty of the situation and “more likely than not” recognition threshold, the Company recorded a $72,500 loss reserve on the note receivable for the periods from June 30, 2018 through September 30, 2018. Given the granting of the default judgment in Texas and the steps underway by legal counsel in Colorado, the loss reserve was reduced to $36,250 from December 31, 2018 through June 30, 2019 reflecting a "more likely than not" recognition threshold. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following balances: June 30, 2019 December 31, 2018 Accrued commissions $ 289,878 $ 243,317 Reserve for merchant losses 440,153 374,153 Other accrued expenses 721,158 582,720 Accrued taxes 52,003 80,888 Accrued salaries 90,632 107,118 Total accrued expenses $ 1,593,824 $ 1,388,196 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Stock Warrants : On August 21, 2018, the Company issued University Fancards, LLC a warrant to purchase 150,000 shares of the Company's common stock. 30,000 warrants vested immediately upon the date on which the first financial transaction was processed on a card account issued under the prepaid agreement, which occurred on October 5, 2018. 120,000 warrants vest annually over 4 years in 30,000 warrant increments beginning on July 31, 2019 and becoming fully vested on July 31, 2022. The exercise price for the 30,000 warrants that vested immediately on October 5, 2018 was $1.80 per share. The exercise price for the remaining 120,000 warrants will be the lesser of $2.00 per share or one hundred and twenty percent ( 120% ) of the market price of the Company's common stock on the vesting date of the warrant. The warrants were valued using the Black-Scholes option pricing model. Assumptions used were as follows: (i) the fair value of the underlying stock was $0.94 for the 30,000 warrants and $0.90 for the 120,000 warrants; (ii) the risk-free interest rate is 2.77% ; (iii) the contractual life is 5 years; (iv) the dividend yield of 0% ; and (v) the volatility is 64.6% . The fair value of the warrants amounted to $135,764 and will be amortized over the life of the warrants as a reduction of revenues. The reduction of revenues recorded for the three and six months ended June 30, 2019 was $8,985 and $17,979 , respectively. There were no stock warrants issued as of June 30, 2018 . On February 14, 2019, we entered into a placement agency agreement with Maxim Group LLC with respect to the issuance and sale of an aggregate of 769,230 shares of common stock at an offering price of $2.60 per share in a public offering. We agreed to pay Maxim a cash fee of equal to 6% of the aggregate gross proceeds raised in the offering and legal fees and expenses of up to $40,000 . The net proceeds to us from the public offering were $1.8 million , after deducting the offering expenses and fees payable by us. We are using the net proceeds for general corporate purposes and working capital. |
Net (Loss) Per Share
Net (Loss) Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net (Loss) Per Share | Net (Loss) Per Share Basic (loss) per share (EPS) was computed by dividing net (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 (loss) for the three and six months aended June 30, 2019 and June 30, 2018 . Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Numerator: Numerator for basic and diluted (loss) per share, net income (loss) available to common shareholders (1,275,611 ) (1,035,438 ) (2,348,500 ) (2,086,244 ) Denominator: Denominator for basic (loss) per share, weighted average shares outstanding 13,041,799 12,075,580 12,831,828 12,124,538 Effect of dilutive securities — — — — Denominator for diluted earnings per share, adjust weighted average shares and assumed conversion 13,041,799 12,075,580 12,831,828 12,124,538 Basic (loss) per common share $ (0.10 ) $ (0.09 ) (0.18 ) (0.17 ) Diluted (loss) per common share and common share equivalent $ (0.10 ) $ (0.09 ) (0.18 ) (0.17 ) The awards and options to purchase shares of common stock that were outstanding at June 30, 2019 and June 30, 2018 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows: Six Months Ended June 30, 2019 2018 Anti-dilutive awards and options 3,874,139 3,846,141 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
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 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 approximately $1.4 million and has recorded a valuation allowance of approximately $8.9 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, 2018, the Company had available net operating loss carryforwards of approximately $45.3 million , which expire beginning in the year 2022. 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 | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Louis Hoch During the six months ended June 30, 2019 and the year ended December 31, 2018 , the Company purchased a total of $2,588 and $9,476 , respectively, of corporate imprinted sportswear and caps from Angry Pug Sportswear. Louis Hoch, the Company’s President and Chief Executive Officer, is a 50% owner of Angry Pug Sportswear. Miguel Chapa and Louis Hoch During the six months ended June 30, 2019 and the year ended December 31, 2018 , the Company received $4,086 and $26,709 , respectively, in revenue from Lush Rooftop. Miguel Chapa, a member of the Company’s Board of Directors, is an owner of Lush Rooftop. Louis Hoch, the Company’s President and Chief Executive Officer, is also a minority owner in Lush Rooftop. During the six months ended June 30, 2019 and the year ended December 31, 2018 , the Company received $9,688 and $4,525 in revenue from BLVD Bar and Lounge. Miguel Chapa, a member of the Company's Board of Directors, is an owner in BLVD Bar and Lounge. Louis Hoch, the Company’s President and Chief Executive Officer, is also an owner in BLVD Bar and Lounge. Directors and Officers On January 6, 2019, the Company repurchased 11,860 shares of common stock at a closing price on January 6, 2019 of $1.84 per share from Tom Jewell, the Company's Chief Financial Officer to cover taxes due. On January 8, 2018 and January 9, 2018, the Company repurchased 397,845 shares of common stock for $956,128 in a private transaction at the closing prices on January 8, 2018 and January 9, 2018 from officers, employees and director's to cover the respective employees', officers' and directors' share of taxes for shares that vested on that day, as approved by the Audit Committee and the Board of Directors on the same day, with the respective officers and directors recusing themselves. In particular, the Company repurchased the following shares from Named Executive Officers and directors: • Michael Long (Chairman of the Board): 158,476 shares valued at $2.40 per share or total of $380,342 ; • Louis Hoch (President and Chief Executive Officer): 158,476 shares valued at $2.40 per share or total of $380,342 ; and • Tom Jewell (Chief Financial Officer): 13,060 shares valued at $2.50 per share or total of $32,650 . |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings Under a loan and security agreement dated February 2, 2016, the Company loaned a principal amount of $200,000 to C2Go, Inc. with an interest rate of 10% per annum for a term of 18 months. The loan was secured by a first lien on all assets of C2Go. C2Go defaulted under the note by failing to repay the loan plus interest on August 2, 2017. On December 7, 2017, the Company entered into a note purchase and settlement agreement with C2Go and Mercury Investment Partners LLC. Pursuant to the note purchase and settlement agreement, Mercury Investment Partners agreed to purchase the note and the rights secured by the security agreement with all rights and obligations and to pay to us a sum of $200,000 in three installments. The first installment of $50,000 was paid on December 7, 2017. The second installment of $50,000 was due on April 30, 2018, and the remaining amount of $100,000 was due on October 31, 2018. In return, the Company agreed to waive all interest due and payable under the terms of the C2Go loan. Mercury Investment Partners has not paid the amount due April 30, 2018 or the amount due on October 31, 2018. The Company issued a letter of default. The Company agreed to extend the due date of the $50,000 payment due April 30, 2018 to May 16, 2018. $5,000 of the $50,000 due was received on July 5, 2018. On or about August 14, 2018, a notice of default was sent to Mercury Investment Partners. Mercury Investment Partners did not respond to the letter or make payment in full. On September 4, 2018, FiCentive filed suit against Mercury Investment Partners in Bexar County District Court. The court granted a default judgment against Mercury Investment Partners on December 21, 2018. Counsel has domesticated the Texas judgment and the Company was issued a lien on a property owned by Mercury that is valued over $1.0 million by the court. We our unsure if any equity exists for us to potentially recover the funds owed. On or about June 7, 2019, Mercury Investment Partners was served a subpoena to produce certain documents on July 3, 2019 in Colorado. A representative of Mercury Investment Partners did not appear in court on the assigned date and time. Subsequently, Mercury placed the property up for sale and Mercury is aware that we have a valid lien in place on the property. There are no assurances that the Company will be able to recover the remaining $145,000 principal, and there are no assurances there will be any assets for the Company to recover from our lien on all the assets of C2Go if payment in full of the obligation is not made. Due to the uncertainty of the situation and “more likely than not” recognition threshold, we recorded a $72,500 loss reserve on the note receivable from June 30, 2018 through September 30, 2018. Given the granting of the default judgment in Texas and the steps underway by legal counsel to domesticate the Texas judgment, the loss reserve has been reduced to $36,250 from December 31, 2018 through June 30, 2019 reflecting a "more likely than not" recognition threshold. 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 its business, financial condition or results of operations. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of Usio, 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, 2018 , as filed with the Securities and Exchange Commission on March 27, 2019. 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. Revenue is recognized during the period in which the transactions are processed or when the related services are performed. The Company complies with ASC 606-10 and reports revenues at gross as a principal versus net as an agent. Although some of the Company's processing agreements vary with respect to specific credit risks, the Company has determined for each agreement it is acting in the principal role. 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. Sales taxes billed are reported directly as a liability to the taxing authority and are not included in revenue. |
Deferred Revenue | Deferred Revenues: The Company records deferred revenues when it receives payments or issues invoices in advance of transferring control of promised goods or services to a customer. The advance consideration received from a customer is deferred until the Company provides the customer that product or service. |
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. |
Merchant Reserves | Merchant Reserves: The Company has merchant reserve requirements associated with Automated Clearing House ("ACH") transactions. The merchant reserve assets are carried on the Company's balance sheet with a corresponding liability. Merchant Reserves are set for each merchant. Funds are collected from each merchant and held as collateral to minimize contingent liabilities associated with any losses that may occur under the merchant agreement. While this cash is not restricted in its use, the Company believes that designating this cash to collateralize Merchant Reserves strengthens our fiduciary standing with the Company's member sponsors and is in accordance with the guidelines set by the card networks. |
Allowance for Estimated Losses | Allowance for Estimated Losses: The Company maintains an allowance for estimated doubtful accounts receivable resulting from the inability or failure of the Company’s customers to make required payments. The Company determines the allowance for estimated doubtful accounts receivable 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 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 2018 or during the three months ended June 30, 2019 . 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 multiple 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. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements: In May 2014, the Financial Accounting Standards Board, or FASB, issued 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 has adopted the provisions of this new standard beginning January 1, 2018. The Company functions as the merchant of record and has primary responsibility for providing end-to-end payment processing services for its clients. The customers of the Company contract with the Company for all credit card processing services including transaction authorization, settlement, dispute resolution, security and risk management solutions, reporting and other value-added services. As such, the Company is the primary obligor in these transactions and is solely responsible for all processing costs, including interchange fees. Further, the Company sets prices as it deems reasonable for each merchant. The gross fees the Company collects are intended to cover the interchange, assessments and other processing fees and include the Company's margin on transactions processed. For these reasons, the Company is the principal obligor in the contractual relationship with its customers and therefor, the Company records its revenues, including interchange and assessments on a gross basis. The Company's existing revenue recognition process remains intact, and the Company will continue to record revenues at the gross amount billed due to the Company's primary responsibility for providing end-to-end payment processing services for its clients. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash , which requires that the reconciliation of the beginning of period and the end of period amounts shown in the statement of cash flows include restricted cash and restricted cash equivalents. If restricted cash is presented separately from cash and cash equivalents on the balance sheet, companies will be required to reconcile the amounts presented on the statement of cash flows to the amounts on the balance sheet. This guidance is required to be applied retrospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. As required, the Company applied the provisions of ASU 2016-18 as of January 1, 2018. As a result, the change in restricted cash has been included in the change in cash, cash equivalents and merchant reserves. Operating Leases Right-of use Assets and Operating Lease Liabilities: In February 2016, the FASB issued, "Leases (Topic 842)." This update requires that a lessee recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing it right to use the underlying asset for the lease term. For leases with terms of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities. Similar to current guidance, the update continues to differentiate between finance leases and operating leases, however this distinction now primarily relates to differences in the manner of expense recognition over time and in the classification of lease payments in the statement of cash flows. The updated guidance leaves the accounting for leases by lessors largely unchanged from existing GAAP. The guidance became effective for the Company on January 1, 2019. As a lessee, this standard primarily impacted its accounting for leased facilities and office equipment, for which the Company recognized right of use assets of $2,688,412 and a corresponding lease liability of $2,775,259 on the Company's consolidated balance sheet on January 1, 2019. The Company adopted these provisions on January 1, 2019 using the optional transition method that permits the Company to apply the new disclosure requirements in 2019 and continue to present comparative period information as required under FASB ASC Topic 840, "Leases." The Company did not have a cumulative-effect adjustment to the opening balance of retained earnings at the date of adoption. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed it to exclude leases with an initial term of 12 months or less from the right-of-use assets and liabilities. Adoption of the standards had no impact on the Company's results of operations or liquidity. If the Company determines that an arrangement is or contains a lease, the Company recognizes a right-of-use (ROU) asset and lease liability at the commencement date of the lease. ROU assets represent it's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation which expands the scope of current guidance to include all share-based payment arrangements related to the acquisition of goods or services from both non-employees and employees. The guidance is effective for the Company for all fiscal years beginning after December 15, 2018. The adoption of the new standard did not result in a change to the previously presented financial statements. Accounting standards that have been issued or proposed by the FASB, the SEC or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of cash and cash equivalents | The reconciliation of cash and cash equivalents to cash, cash equivalents and merchant reserves is as follows for each period presented: June 30, 2019 June 30, 2018 Beginning cash, cash equivalents and merchant reserves: Cash and cash equivalents 2,695,177 4,800,554 Merchant reserves 12,645,803 14,977,468 Total $ 15,340,980 $ 19,778,022 Ending cash, cash equivalents and merchant reserves: Cash and cash equivalents 3,276,511 2,722,357 Merchant reserves 11,074,891 14,782,305 Total $ 14,351,402 $ 17,504,662 |
Restrictions on cash and cash equivalents | The reconciliation of cash and cash equivalents to cash, cash equivalents and merchant reserves is as follows for each period presented: June 30, 2019 June 30, 2018 Beginning cash, cash equivalents and merchant reserves: Cash and cash equivalents 2,695,177 4,800,554 Merchant reserves 12,645,803 14,977,468 Total $ 15,340,980 $ 19,778,022 Ending cash, cash equivalents and merchant reserves: Cash and cash equivalents 3,276,511 2,722,357 Merchant reserves 11,074,891 14,782,305 Total $ 14,351,402 $ 17,504,662 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of maturities of lease liabilities | Maturities of lease liabilities are as follows at June 30, 2019 . June 30, 2019 Operating Leases 2019 (Remaining 6 months) $ 186,396 2020 356,184 2021 343,424 2022 351,334 2023 357,695 Thereafter 1,825,929 Total minimum lease payments 3,420,962 Less imputed interest (654,347 ) Total lease liabilities $ 2,766,615 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consisted of the following balances: June 30, 2019 December 31, 2018 Accrued commissions $ 289,878 $ 243,317 Reserve for merchant losses 440,153 374,153 Other accrued expenses 721,158 582,720 Accrued taxes 52,003 80,888 Accrued salaries 90,632 107,118 Total accrued expenses $ 1,593,824 $ 1,388,196 |
Net (Loss) Per Share (Tables)
Net (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of the numerators and the denominators of the basic and diluted per share computations for net (loss) | The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for net (loss) for the three and six months aended June 30, 2019 and June 30, 2018 . Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Numerator: Numerator for basic and diluted (loss) per share, net income (loss) available to common shareholders (1,275,611 ) (1,035,438 ) (2,348,500 ) (2,086,244 ) Denominator: Denominator for basic (loss) per share, weighted average shares outstanding 13,041,799 12,075,580 12,831,828 12,124,538 Effect of dilutive securities — — — — Denominator for diluted earnings per share, adjust weighted average shares and assumed conversion 13,041,799 12,075,580 12,831,828 12,124,538 Basic (loss) per common share $ (0.10 ) $ (0.09 ) (0.18 ) (0.17 ) Diluted (loss) per common share and common share equivalent $ (0.10 ) $ (0.09 ) (0.18 ) (0.17 ) |
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 June 30, 2019 and June 30, 2018 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows: Six Months Ended June 30, 2019 2018 Anti-dilutive awards and options 3,874,139 3,846,141 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Jan. 01, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Deferred revenues | $ 150,000 | $ 20,000 | ||
Allowance for estimated doubtful accounts | 62,000 | 55,212 | ||
Capitalized computer software, additions | 238,248 | $ 66,705 | ||
Asset impairment charges | $ 0 | 0 | ||
Reserve for processing losses | 440,153 | $ 374,153 | ||
Operating lease right-of-use assets | 2,614,006 | $ 2,688,412 | ||
Operating lease, liability | $ 2,766,615 | $ 2,775,259 |
Basis of Presentation - Reconci
Basis of Presentation - Reconciliation of Cash and Cash Equivalents to Cash, Cash Equivalents and Merchant Reserves (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 3,276,511 | $ 2,695,177 | $ 2,722,357 | $ 4,800,554 |
Merchant reserves | 11,074,891 | 12,645,803 | 14,782,305 | 14,977,468 |
Total | $ 14,351,402 | $ 15,340,980 | $ 17,504,662 | $ 19,778,022 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jan. 01, 2019 | |
Leases [Abstract] | |||||
Operating lease expense | $ 119,435 | $ 278,057 | |||
Operating lease expense | $ 123,115 | $ 211,089 | |||
Operating Lease Liabilities, Payments Due [Abstract] | |||||
2019 (Remaining 6 months) | 186,396 | 186,396 | |||
2020 | 356,184 | 356,184 | |||
2021 | 343,424 | 343,424 | |||
2022 | 351,334 | 351,334 | |||
2023 | 357,695 | 357,695 | |||
Thereafter | 1,825,929 | 1,825,929 | |||
Total minimum lease payments | 3,420,962 | 3,420,962 | |||
Less imputed interest | (654,347) | (654,347) | |||
Total lease liabilities | $ 2,766,615 | $ 2,766,615 | $ 2,775,259 |
Notes Receivable (Details)
Notes Receivable (Details) | Dec. 21, 2018USD ($) | Dec. 07, 2017USD ($)installment | Feb. 02, 2016USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Oct. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jul. 05, 2018USD ($) | Jun. 30, 2018USD ($) | May 16, 2018USD ($) | Apr. 30, 2018USD ($) |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||||
Notes receivable, net | $ 108,750 | $ 108,750 | ||||||||||
C2Go Loan | ||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||||
Notes receivable, net | $ 200,000 | |||||||||||
Notes receivable, stated interest rate | 10.00% | |||||||||||
Notes receivable, term | 18 months | |||||||||||
C2Go Loan | Defaults of Mutual Loan and Security Agreement | Settled Litigation | FiCentive, Inc. V. C2Go, Inc. | ||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||||
Amount awarded from other party | $ 1,000,000 | $ 200,000 | ||||||||||
Number of installments | installment | 3 | |||||||||||
Gain related to litigation settlement | $ 50,000 | |||||||||||
Unrecorded amount | $ 145,000 | $ 100,000 | $ 50,000 | $ 50,000 | ||||||||
Former gain contingency, recognized in current period | $ 5,000 | |||||||||||
Loss reserve | $ 36,250 | $ 36,250 | $ 72,500 | $ 72,500 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accrued commissions | $ 289,878 | $ 243,317 |
Reserve for merchant losses | 440,153 | 374,153 |
Other accrued expenses | 721,158 | 582,720 |
Accrued taxes | 52,003 | 80,888 |
Accrued salaries | 90,632 | 107,118 |
Total accrued expenses | $ 1,593,824 | $ 1,388,196 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Feb. 14, 2019 | Jun. 30, 2019 | Jun. 30, 2019 | Oct. 05, 2018 | Aug. 21, 2018 | Jun. 30, 2018 |
Class of Warrant or Right, Common Stock | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of securities called by warrants (in shares) | 150,000 | |||||
Warrants and rights outstanding | $ 135,764 | |||||
Warrants outstanding, reduction of revenue during period | $ 8,985 | $ 17,979 | ||||
Warrant issued (in shares) | 0 | |||||
Class of Warrant or Right, Common Stock, Tranche One | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of securities called by warrants (in shares) | 30,000 | 30,000 | ||||
Exercise price of warrants (in dollars per share) | $ 1.80 | |||||
Class of Warrant or Right, Common Stock, Tranche Two through Five | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of securities called by warrants (in shares) | 120,000 | |||||
Warrants, term | 4 years | |||||
Exercise price of warrants, maximum percentage of market price of common stock | 120.00% | |||||
Class of Warrant or Right, Common Stock, Tranche Two through Five | Maximum | ||||||
Class of Warrant or Right [Line Items] | ||||||
Exercise price of warrants (in dollars per share) | $ 2 | |||||
Class of Warrant or Right, Common Stock, Tranche Two | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of securities called by warrants (in shares) | 30,000 | |||||
Measurement Input, Share Price | Class of Warrant or Right, Common Stock, Tranche One | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants, measurement input | 0.94 | |||||
Measurement Input, Share Price | Class of Warrant or Right, Common Stock, Tranche Two through Five | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants, measurement input | 0.90 | |||||
Measurement Input, Risk Free Interest Rate | Class of Warrant or Right, Common Stock | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants, measurement input | 0.0277 | |||||
Measurement Input, Expected Term | Class of Warrant or Right, Common Stock | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants, measurement input | 5 | |||||
Measurement Input, Expected Dividend Rate | Class of Warrant or Right, Common Stock | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants, measurement input | 0 | |||||
Measurement Input, Price Volatility | Class of Warrant or Right, Common Stock | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants, measurement input | 0.646 | |||||
Public Stock Offering | ||||||
Class of Warrant or Right [Line Items] | ||||||
Sale of stock, number of shares issued in transaction (in shares) | 769,230 | |||||
Sale of stock, price per share (in dollars per share) | $ 2.60 | |||||
Sale of stock, cash fee, percentage of aggregate gross proceeds | 6.00% | |||||
Sale of stock, consideration received on transaction | $ 1,800,000 | |||||
Public Stock Offering | Maximum | ||||||
Class of Warrant or Right [Line Items] | ||||||
Payments of stock issuance costs (up to) | $ 40,000 |
Net (Loss) Per Share - Earnings
Net (Loss) Per Share - Earnings per Share Numerator and Denominator (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator: | ||||||
Numerator for basic and diluted (loss) per share, net income (loss) available to common shareholders | $ (1,275,611) | $ (1,072,889) | $ (1,035,438) | $ (1,050,806) | $ (2,348,500) | $ (2,086,244) |
Denominator: | ||||||
Denominator for basic (loss) per share, weighted average shares outstanding (in shares) | 13,041,799 | 12,075,580 | 12,831,828 | 12,124,538 | ||
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) | 13,041,799 | 12,075,580 | 12,831,828 | 12,124,538 | ||
Basic (loss) per common share (in dollars per share) | $ (0.10) | $ (0.09) | $ (0.18) | $ (0.17) | ||
Diluted (loss) per common share and common share equivalent (in dollars per share) | $ (0.10) | $ (0.09) | $ (0.18) | $ (0.17) |
Net (Loss) Per Share - Antidilu
Net (Loss) Per Share - Antidilutive Securities Excluded from Calculation of EPS (Details) - shares | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive awards and options (in shares) | 3,874,139 | 3,846,141 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Goodwill amortization period | 15 years | |
Deferred tax assets, net | $ 1.4 | |
Deferred tax assets, valuation allowance | $ 8.9 | |
Operating loss carryforwards | $ 45.3 | |
Portion subject to an IRS Section 382 limitation from 1999 | ||
Income Tax Contingency [Line Items] | ||
Operating loss carryforwards, limitations on use, amount | $ 0.1 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jan. 06, 2019 | Jan. 09, 2018 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Related Party Transaction [Line Items] | |||||||||
Revenues | $ 7,157,379 | $ 6,283,875 | $ 13,745,411 | $ 12,127,540 | |||||
Treasury stock, value, acquired | $ 28,693 | $ 21,822 | $ 2,942 | $ 956,134 | |||||
Louis Hoch | |||||||||
Related Party Transaction [Line Items] | |||||||||
Treasury stock acquired (in shares) | 158,476 | ||||||||
Treasury stock acquired, average cost per share (in dollars per share) | $ 2.40 | ||||||||
Treasury stock, value, acquired | $ 380,342 | ||||||||
Louis Hoch | Ownership of Angry Pug Sportswear | |||||||||
Related Party Transaction [Line Items] | |||||||||
Purchases from related party | 2,588 | $ 9,476 | |||||||
Ownership percentage | 50.00% | ||||||||
Miguel Chapa | Ownership of Lush Rooftop | |||||||||
Related Party Transaction [Line Items] | |||||||||
Revenues | 4,086 | 26,709 | |||||||
Miguel Chapa | Ownership of BLVD Bar and Lounge | |||||||||
Related Party Transaction [Line Items] | |||||||||
Revenues | $ 9,688 | $ 4,525 | |||||||
Tom Jewell | |||||||||
Related Party Transaction [Line Items] | |||||||||
Treasury stock acquired (in shares) | 11,860 | 13,060 | |||||||
Treasury stock acquired, average cost per share (in dollars per share) | $ 1.84 | $ 2.50 | |||||||
Treasury stock, value, acquired | $ 32,650 | ||||||||
Officers, Employees and Directors | |||||||||
Related Party Transaction [Line Items] | |||||||||
Treasury stock acquired (in shares) | 397,845 | ||||||||
Treasury stock, value, acquired | $ 956,128 | ||||||||
Michael Long | |||||||||
Related Party Transaction [Line Items] | |||||||||
Treasury stock acquired (in shares) | 158,476 | ||||||||
Treasury stock acquired, average cost per share (in dollars per share) | $ 2.40 | ||||||||
Treasury stock, value, acquired | $ 380,342 |
Legal Proceedings (Details)
Legal Proceedings (Details) | Dec. 21, 2018USD ($) | Dec. 07, 2017USD ($)installment | Feb. 02, 2016USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Oct. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jul. 05, 2018USD ($) | Jun. 30, 2018USD ($) | May 16, 2018USD ($) | Apr. 30, 2018USD ($) |
Loss Contingencies [Line Items] | ||||||||||||
Notes receivable, net | $ 108,750 | $ 108,750 | ||||||||||
C2Go Loan | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Notes receivable, net | $ 200,000 | |||||||||||
Notes receivable, stated interest rate | 10.00% | |||||||||||
Notes receivable, term | 18 months | |||||||||||
C2Go Loan | Defaults of Mutual Loan and Security Agreement | FiCentive, Inc. V. C2Go, Inc. | Settled Litigation | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Amount awarded from other party | $ 1,000,000 | $ 200,000 | ||||||||||
Number of installments | installment | 3 | |||||||||||
Gain related to litigation settlement | $ 50,000 | |||||||||||
Unrecorded amount | $ 145,000 | $ 100,000 | $ 50,000 | $ 50,000 | ||||||||
Former gain contingency, recognized in current period | $ 5,000 | |||||||||||
Loss reserve | $ 36,250 | $ 36,250 | $ 72,500 | $ 72,500 |