Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 31, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Planet Payment Inc | |
Entity Central Index Key | 1,362,925 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 50,376,325 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 10,486,645 | $ 14,675,515 |
Restricted cash | 4,561,278 | 5,050,147 |
Accounts receivable, net of allowances of $0.1 million as of June 30, 2016 and December 31, 2015 | 5,762,559 | 6,406,496 |
Prepaid expenses and other assets | 2,026,928 | 1,800,566 |
Total current assets | 22,837,410 | 27,932,724 |
Other assets: | ||
Restricted cash | 551,862 | 551,917 |
Property and equipment, net | 1,602,882 | 1,811,619 |
Software development costs, net | 4,104,959 | 3,964,454 |
Intangible assets, net | 1,117,235 | 1,378,264 |
Goodwill | 292,041 | 286,852 |
Deferred tax asset and other long-term assets | 8,293,159 | 8,581,082 |
Total other assets | 15,962,138 | 16,574,188 |
Total assets | 38,799,548 | 44,506,912 |
Current liabilities: | ||
Accounts payable | 317,308 | 306,520 |
Accrued expenses | 3,824,694 | 6,438,600 |
Due to merchants | 4,812,012 | 5,240,427 |
Current portion of capital leases | 244,223 | 290,911 |
Total current liabilities | 9,198,237 | 12,276,458 |
Long-term liabilities: | ||
Long-term debt | 9,916,000 | |
Other long-term liabilities | 1,424,243 | 1,666,938 |
Total long-term liabilities | 11,340,243 | 1,666,938 |
Total liabilities | 20,538,480 | 13,943,396 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity: | ||
Convertible preferred stock-10,000,000 shares authorized as of June 30, 2016 and December 31, 2015, $0.01 par value: Series A-2,243,750 issued and 1,535,398 outstanding as of June 30, 2016 and 2,243,750 issued and outstanding as of December 31, 2015; $6,141,592 and $8,975,000 aggregate liquidation preference as of June 30, 2016 and December 31, 2015, respectively | 15,354 | 22,438 |
Common stock-250,000,000 shares authorized as of June 30, 2016 and December 31, 2015, $0.01 par value, and 59,087,147 issued and 50,330,051 shares outstanding as of June 30, 2016, and 56,191,389 issued and 52,585,503 shares outstanding as of December 31, 2015 | 590,871 | 561,914 |
Treasury stock, at cost, 8,757,096 shares and 3,605,886 shares as of June 30, 2016 and December 31, 2015, respectively | (25,726,459) | (7,883,012) |
Additional paid-in capital | 109,224,346 | 106,741,026 |
Accumulated other comprehensive loss | (517,667) | (510,445) |
Accumulated deficit | (65,325,377) | (68,368,405) |
Total stockholders' equity | 18,261,068 | 30,563,516 |
Total liabilities and stockholders' equity | $ 38,799,548 | $ 44,506,912 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowances (in dollars) | $ 100,000 | $ 100,000 |
Series A Convertible preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Series A Convertible preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Series A Convertible preferred stock, shares issued | 2,243,750 | 2,243,750 |
Series A Convertible preferred stock, shares outstanding | 1,535,398 | 2,243,750 |
Series A Convertible preferred stock, aggregate liquidation preference (in dollars) | $ 6,141,592 | $ 8,975,000 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued | 59,087,147 | 56,191,389 |
Common stock, shares outstanding | 50,330,051 | 52,585,503 |
Treasury stock, shares | 8,757,096 | 3,605,886 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenue: | ||||
Net revenue | $ 13,103,376 | $ 12,683,359 | $ 26,787,889 | $ 24,816,129 |
Cost of revenue: | ||||
Payment processing service fees | 2,734,689 | 2,590,885 | 5,425,913 | 5,179,089 |
Processing and service costs | 3,524,123 | 3,385,658 | 7,024,791 | 6,623,598 |
Total cost of revenue | 6,258,812 | 5,976,543 | 12,450,704 | 11,802,687 |
Selling, general and administrative expenses | 5,204,892 | 4,712,704 | 10,685,606 | 9,183,104 |
Restructuring charges | 125,268 | 125,268 | ||
Total operating expenses | 11,588,972 | 10,689,247 | 23,261,578 | 20,985,791 |
Income from operations | 1,514,404 | 1,994,112 | 3,526,311 | 3,830,338 |
Other (expense) income: | ||||
Interest expense | (83,021) | (13,830) | (97,697) | (28,443) |
Interest income | 398 | 365 | 822 | 791 |
Total other expense, net | (82,623) | (13,465) | (96,875) | (27,652) |
Income from operations before provision for income taxes | 1,431,781 | 1,980,647 | 3,429,436 | 3,802,686 |
Provision for income taxes | (149,058) | (105,319) | (386,408) | (215,732) |
Net income | $ 1,282,723 | $ 1,875,328 | $ 3,043,028 | $ 3,586,954 |
Basic net income per share applicable to common stockholders ( in dollars per share) | $ 0.02 | $ 0.03 | $ 0.06 | $ 0.06 |
Diluted net income per share applicable to common stockholders (in dollars per share) | $ 0.02 | $ 0.03 | $ 0.05 | $ 0.06 |
Weighted-average common stock outstanding (basic) (in shares) | 49,602,206 | 53,082,296 | 50,186,828 | 53,439,467 |
Weighted-average common stock outstanding (diluted) (in shares) | 51,987,695 | 53,830,534 | 52,401,790 | 54,090,469 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 1,282,723 | $ 1,875,328 | $ 3,043,028 | $ 3,586,954 |
Foreign currency translation adjustment | (80,052) | 60,612 | (7,222) | (196,819) |
Total comprehensive income | $ 1,202,671 | $ 1,935,940 | $ 3,035,806 | $ 3,390,135 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 3,043,028 | $ 3,586,954 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation expense | 1,180,899 | 461,590 |
Depreciation and amortization expense | 1,330,238 | 1,439,778 |
Provision (recovery) for doubtful accounts | 58,595 | (193) |
Disposal of property and equipment | 500 | |
Gain on insurance settlement | (517,930) | |
Changes in operating assets and liabilities: | ||
Decrease (increase) in settlement assets | 498,553 | (244,451) |
Decrease in accounts receivables, prepaid expenses and other current assets | 358,980 | 1,529,933 |
Decrease (increase) in other long-term assets | 287,923 | (181,213) |
(Decrease) increase in accounts payable and accrued expenses | (3,540,524) | 239,331 |
(Decrease) increase in due to merchants | (438,099) | 240,034 |
Other | (26,219) | (53,259) |
Net cash provided by operating activities | 2,753,874 | 6,500,574 |
Cash flows from investing activities: | ||
Increase (decrease) in restricted cash | (9,629) | 11,506 |
Increase (decrease) in merchant reserves | 9,684 | (131,599) |
Purchase of property and equipment | (109,555) | (168,282) |
Capitalized software development | (677,822) | (593,946) |
Purchase of intangible assets | (353) | (13,454) |
Net cash used for investing activities | (787,675) | (895,775) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 1,965,380 | 22,949 |
Principal payments on capital lease obligations | (193,002) | (287,168) |
Borrowings under credit facility | 13,916,000 | |
Repayments under credit facility | (4,000,000) | |
Purchase of treasury stock | (17,843,447) | (1,647,211) |
Net cash used for financing activities | (6,155,069) | (1,911,430) |
Net (decrease) increase in cash and cash equivalents | (4,188,870) | 3,693,369 |
Cash and cash equivalents at beginning of period | 14,675,515 | 9,837,791 |
Cash and cash equivalents at end of period | 10,486,645 | 13,531,160 |
Cash paid for: | ||
Interest | 14,718 | 30,785 |
Income taxes | 504,398 | 395,294 |
Non-cash investing and financing activities: | ||
Common stock issued for preferred stock conversion | 21,629 | |
Common stock issued for stock options exercised | 98 | |
Assets acquired under capital leases | 122,630 | 79,291 |
Accrued capitalized hardware, software and fixed assets | 63,291 | 12,071 |
Capitalized stock-based compensation | $ 14,018 | $ 20,015 |
Business description and basis
Business description and basis of presentation | 6 Months Ended |
Jun. 30, 2016 | |
Business description and basis of presentation | |
Business description and basis of presentation | 1. Business description and basis of presentation Business description Planet Payment, Inc. together with its wholly-owned subsidiaries (“Planet Payment,” the “Company,” “we,” or “our”) is a provider of international payment and transaction processing and multi currency processing services. The Company provides its services to approximately 178,000 active merchant locations in 22 countries and territories across the Asia- Pacific region, the Americas, the Middle East, Africa and Europe, primarily through its acquiring bank and processor customers, as well as through its own direct sales force. The Company provides banks and their merchants with innovative services to accept, process and reconcile electronic payments. The Company’s point-of-sale multi-currency payment processing services are designed for merchants in the retail, restaurant, and hospitality environments. We also provide payment services for e-commerce and mail and telephone order merchants. Our point-of-sale and e-commerce services help merchants sell more goods and services to consumers, and are integrated within the payment card transaction process enabling its acquiring customers to process and reconcile payment transactions in multiple currencies, geographies and channels. The Company’s ATM services provide its domestic and international acquirers with additional processing capabilities to help them increase revenue and improve customer satisfaction. The Company also offers non - financial transaction processing services that allow merchants to offer a range of commercial services including pre - paid mobile phone top - up and bill payments using the same point - of - sale devices deployed to accept payment cards. The Company is a registered third party processor with the major card associations and operates in accordance with industry standards, including the Payment Card Industry, or PCI, Security Council’s Data Security Standards. Basis of presentation The unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying unaudited condensed consolidated interim financial statements include the accounts of Planet Payment, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. Unaudited condensed consolidated interim financial information The accompanying unaudited condensed consolidated interim financial statements as of June 30, 2016 and for the periods ended June 30, 2016 and 2015 have been prepared on the same basis as the annual consolidated financial statements. In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, which are normal and recurring, necessary for a fair presentation of the statement of operations, financial position and cash flows. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Operating results for the interim period ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The December 31, 2015 balance sheet information has been derived from the audited financial statements at that date. Certain information and disclosures normally included in annual consolidated financial statements have been omitted pursuant to the rules and regulation of the Securities and Exchange Commission (“SEC”). |
Recent accounting pronouncement
Recent accounting pronouncements | 6 Months Ended |
Jun. 30, 2016 | |
Recent accounting pronouncements | |
Recent accounting pronouncements | 2. Recent accounting pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The new guidance includes a cohesive set of disclosure requirements intended to provide users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from a company’s contracts with customers . The original effective date of ASU 2014-09 of January 1, 2017 has been delayed until January 1, 2018. Early adoption is not permitted before the original effective date. The standard allows for either retrospective application to each reporting period presented or retrospective application with the cumulative effect of initially applying this update recognized at the date of initial application. The Company is currently evaluating the effect ASU 2014-09 will have on the Company’s condensed consolidated financial statements and disclosures . In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU No. 2016-02”) . The new standard establishes a right-of-use (ROU) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in ASU No. 2016-02 is permitted for all entities. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the effect ASU 2016-02 will have on the Company’s condensed consolidated financial statements and disclosures. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606) (“ASU 2016-08”). The amendments in ASU 2016-08 do not change the core principle of the guidance. The amendments clarify the implementation guidance on principal versus agent considerations. The update suggests that entities recognize 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 effective date and transition requirements for the amendments in ASU 2016-08 are the same as the effective date and transition requirements of ASU 2014-09. The Company is currently evaluating the effect ASU 2016-08 will have on the Company’s condensed consolidated financial statements and disclosures. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU No. 2016-09”) . This update is part of the FASB’s Simplification Initiative, which simplifies the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. We do not expect a material impact on our financial condition, results of operations or cash flows from the adoption of this guidance . In April 2016, the FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606) (“ASU 2016-10”). The amendments in this update do not change the core principle of the guidance. The amendments in this update clarify the identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The amendments in this update clarify that contractual provisions that, explicitly or implicitly, require an entity to transfer control of additional goods or services to a customer should be distinguished from contractual provisions that, explicitly or implicitly, define the attributes of a single promised license . The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of update ASU 2014-09. The Company is currently evaluating the effect ASU 2016-10 will have on the Company’s condensed consolidated financial statements and disclosures. In May 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers (Topic 606) (“ASU 2016-12”), in which the FASB finalized the guidance in the new revenue standard on collectibility, noncash consideration, presentation of sales tax, and transition. The amendments are intended to address implementation issues that were raised by stakeholders and discussed by the Revenue Recognition Transition Resource Group (TRG), and provide additional practical expedients. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of update ASU 2014-09. The Company is currently evaluating the effect ASU 2016-12 will have on the Company’s condensed consolidated financial statements and disclosures. |
Concentration of credit risk
Concentration of credit risk | 6 Months Ended |
Jun. 30, 2016 | |
Concentration of credit risk | |
Concentration of credit risk | 3. Concentration of credit risk The Company’s assets that are exposed to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and receivables from clients. The Company places some of its cash, cash equivalents, and restricted cash with financial banking institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 . The Company also maintains cash balances at foreign banking institutions, which are not insured by the FDIC. The Company maintains an allowance for uncollectible accounts receivable based on expected collectability and performs ongoing credit evaluations of customers’ financial condition. The Company’s accounts receivable concentrations of 10% and greater are as follows: As of As of June 30, December 31, 2016 2015 Customer A % % Customer B * Customer D * Customer H * * Less than 10% accounts receivable concentration. The Company’s revenue concentrations of 10% and greater are as follows: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Customer A % % % % Customer C * * Customer G * * * Less than 10% revenue concentration. a |
Net income per share
Net income per share | 6 Months Ended |
Jun. 30, 2016 | |
Net income per share | |
Net income per share | 4. Net income per share The Company computes net income per share in accordance with ASC 260, Earnings per Share (“ASC topic 260”). Under ASC topic 260, securities that contain rights to receive non-forfeitable dividends (whether paid or unpaid) are participating securities and should be included in the two-class method of computing earnings per share. The Company’s preferred stockholders are entitled to participate in dividends and earnings when, and if, dividends are declared on the common stock. As such, the Company calculates net income per share using the two-class method. The two-class method is an earnings formula that treats a participating security as having rights to dividends that otherwise would have been available to common and preferred stockholders based on their respective rights to receive dividends. Losses are not allocated to the preferred stockholders for computing net loss per share under the two-class method because the preferred stockholders do not have contractual obligations to share in the losses of the Company. Basic earnings per share is calculated by dividing net income, adjusted for amounts allocated to participating securities under the two-class method, if applicable, by the weighted average number of common stock outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted average number of shares of the Company’s common stock outstanding, assuming dilution, during the period. The diluted earnings per share calculation assumes (i) all stock options and warrants which are in the money are exercised at the beginning of the period and (ii) each issue or series of issues of potential common stock are considered in sequence from the most dilutive to the least dilutive. That is, dilutive potential common stock with the lowest “earnings add-back per incremental share” shall be included in dilutive earnings per share before those shares with higher earnings add back per incremental share. The following table sets forth the computation of basic and diluted net income per share: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Numerator: Net income $ $ $ $ Amounts allocated to participating preferred stockholders under the two-class method Net income applicable to common stockholders (basic and dilutive) $ $ $ $ Denominator: Weighted-average common stock outstanding (basic) Common equivalent shares from options and warrants to purchase common stock Weighted-average common stock outstanding (diluted)(1) Basic net income per share applicable to common stockholders $ $ $ $ Diluted net income per share applicable to common stockholders(1) $ $ $ $ (1) In accordance with ASC 260-10-45-48, for the three and six months ended June 30, 201 6 and 2015, the Company excluded 396,500 and 718,407 , respectively, of contingently -issued restricted shares from diluted weighted average common stock outstanding as the contingencies were neither (a) satisfied at the reporting date nor (b) would have been satisfied if the reporting date was at the end of the contingency period. The following table sets forth the weighted average securities outstanding that have been excluded from the diluted net income per share calculation because the effect would have been anti-dilutive: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Stock options Restricted stock awards — Convertible preferred stock(1) Total anti-dilutive securities (1) Diluted net income per share increases when convertible preferred stock is included in the required sequence in the diluted earnings per share computation. As such, convertible preferred stock is excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2016 and 2015. |
Stock-based compensation expens
Stock-based compensation expense | 6 Months Ended |
Jun. 30, 2016 | |
Stock-based compensation expense and assumptions | |
Stock-based compensation expense and assumptions | 5. Stock-based compensation expense Stock-based compensation expense is measured at the grant date based on fair value, and recognized as an expense over the requisite service period, net of an estimated forfeiture rate. During the first quarter of 2016, 0.8 million stock options were granted to certain employees of the Company , with a grant fair value of $0.7 million. The actual number of shares that will be issued upon exercise of the options is subject to the achievement of service-based vesting conditions. Stock-based compensation expense is recorded on a straight line basis from the date of the grant over the requisite service period of 36 months. During the second quarter of 2016, 0.1 million restricted stock awards with a grant fair value of $0.2 million were granted to certain members of the Company’s Board of Directors. The final number of vested shares is subject to service-based vesting conditions. Stock-based compensation expense is recorded on a straight line basis from the date of the grant over the requisite service period of 12 months. During the second quarter of 2016, 0.5 million shares of the 2015 restricted stock awards granted to certain officers of the Company vested. The market condition was achieved as the Company’s volume weighted average price on NASDAQ was greater than or equal to $3.50 per share for seven consecutive trading days, or any ten trading days over a consecutive thirty-five day period. The market condition was valued at $0.7 million, of which $0.5 million was expensed as of March 31, 2016 and an additional $0.2 million was expensed during the three months ended June 30, 2016. The following summarizes stock-based compensation expense recognized by income statement classification: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Processing and service costs $ $ $ $ Selling, general and administrative expenses Total stock-based compensation expense $ $ $ $ The following summarizes stock-based compensation expense recognized by type: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Stock options $ $ $ $ Restricted stock awards Total stock-based compensation expense $ $ $ $ |
Property and equipment
Property and equipment | 6 Months Ended |
Jun. 30, 2016 | |
Property and equipment | |
Property and equipment | 6. Property and equipment Property and equipment, net consist of the following: Estimated As of As of useful life June 30, December 31, (in years) 2016 2015 Equipment - 7 $ $ Computer hardware - 5 Furniture and fixtures - 7 Leasehold improvements - 10 Total property and equipment Less: Accumulated depreciation and amortization Property and equipment, net $ $ Property and equipment depreciation and amortization expense is as follows: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Depreciation and amortization expense $ $ $ $ Included in depreciation and amortization expense for the three and six months ended June 30, 2016 is $0.1 million of expense related to the acceleration of amortization on certain assets due to exiting a floor in the Company’s corporate location before the end of the lease term. The cease use date is September 30, 2016. For additional information on the Company’s restructuring charges disclosure, refer to Note 14. |
Goodwill and intangible assets
Goodwill and intangible assets | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and intangible assets | |
Goodwill and intangible assets | 7. Goodwill and intangible assets The change in carrying amount of goodwill for the six months ended June 30, 2016 is as follows: Goodwill, gross, as of December 31, 2015 $ Impact of change in Euro exchange rate Accumulated impairment losses as of June 30, 2016 — Goodwill, net, as of June 30, 2016 $ The entire goodwill balance is assigned to the payment processing services segment. Intangible assets are recorded at estimated fair value and are amortized ratably over their estimated useful lives to processing and service costs, which are included in cost of revenue. The gross book value, accumulated amortization and amortization periods of intangible assets are as follows: As of June 30, 2016 As of December 31, 2015 Amortization Gross book Accumulated Net book Gross book Accumulated Net book period value amortization value value amortization value (in years) Trademarks and patents $ $ $ $ $ $ - 21 Technology Intangible assets, net $ $ $ $ $ $ Amortization expense related to intangible assets is as follows: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Amortization expense $ $ $ $ |
Commitments and contingencies
Commitments and contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and contingencies | |
Commitments and contingencies | 8. Commitments and contingencies Employment agreements Pursuant to employment agreements with certain employees, the Company had a commitment to pay severance of approximately $1.2 million as of June 30, 2016 and $0.9 million as of December 31, 2015, in the event of an involuntary termination, as defined in the employment agreements. Additionally, in the event of termination upon a change of control, as defined in the agreements, the Company had a commitment to pay severance of approximately $ 1.2 million as of June 30, 2016 and $1.1 million as of December 31, 2015. Contingent liabilities In instances where the Company is acting as the merchant acquirer, the Company bears a risk that a merchant may engage in fraud by submitting for payment certain credit card transactions that may have been manipulated, are fictitious, or are otherwise not bona fide . Similarly, the Company bears the risk that a merchant becomes insolvent, owing money to cardholders. To the extent that such fraud or insolvency occurs in circumstances where the Company is liable to make good on any resultant losses, this could affect the Company’s operating results and cash flows. The Company has required certain merchants to post cash reserves of approximately $1.0 million with the sponsoring bank against such liabilities and has itself paid the acquirer a reserve of $0.3 million in connection therewith, which is included in long-term “Restricted cash” on the condensed consolidated balance sheets. In addition, the Company holds merchant reserves of approximately $2.2 million. This reserve amount is included in “Restricted cash” with an offset in “Due to merchants.” Under FASB ASC 460, Guarantees , the Company evaluates its ultimate risk and records an estimate of potential loss for chargeback’s related to merchant fraud and processing errors based upon an assessment of actual historical fraud rates and errors in processing compared to recent bank card processing volume levels . No contingent liability has been recorded as of June 30, 2016 and December 31, 201 5, as the risk of material loss is considered remote. The Company monitors these contingent liabilities on a quarterly basis and will provide for a reserve if deemed necessary . Outstanding litigation From time to time, the Company’s operating entities are involved in legal proceedings in the ordinary course of business. While any litigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on the financial condition or results of operations of the Company. Acquiring bank sponsorship agreement In order to offer merchant acquiring services for Visa and MasterCard transactions, the Company must be sponsored by a financial institution that is a principal member of the Visa and MasterCard networks. The Company entered into a five -year agreement with a sponsoring bank effective September 1, 2013. The Company was required to pay minimum annual sponsorship transaction fees of $0.3 million in year one . The minimum fees escalate each subsequent year with minimum fees of $0.5 million due in year five for total minimum fees of $1.8 million to be paid over the term of the agreement. Sponsorship fees are recorded to payment processing service fees cost of sales with the total agreement minimum of $1.8 million recognized on a straight line basis over the term of the agreement. Pursuant to the agreement, the Company is liable for all losses incurred by the sponsoring bank with respect to the activities of its merchants sponsored under the agreement. No contingent liability has been recorded as of June 30, 2016 as the risk of material loss is considered remote based on historical information. The Company monitors this contingent liability on a quarterly basis and will provide for a reserve if deemed necessary. |
Credit Facility
Credit Facility | 6 Months Ended |
Jun. 30, 2016 | |
Convertible debt | |
Credit Facility | 9. Credit Facility On June 10, 2015, the Company entered into a $10.0 million secured revolving credit facility (the “Credit Facility”) with Citizens Bank, N.A. (“Citizens”) pursuant to a Credit and Security Agreement by and among the Company, certain affiliates thereof as borrowers or guarantors, and Citizens (the “Credit Agreement”). On January 28, 2016, the Company entered into a Second Amendment to Credit and Security Agreement with Citizens and certain subsidiary affiliates of the Company as borrowers and/or guarantors (the “Amendment”). The Amendment amends the Credit Agreement and provides for an increase in the Company’s line of credit (the “Line of Credit”) with Citizens from $10.0 million to $20.0 million. The Line of Credit is secured by substantially all of the Company’s personal property, including the Company’s intellectual property and that of its subsidiaries that are borrowers or guarantors. The interest rate applicable to committed borrowings is tied to LIBOR plus a margin of 2.5% . The Credit Agreement also provides for a letter of credit sub-facility of up to $2.0 million. The Credit Agreement contains customary affirmative and negative covenants, including, among others, financial covenants based on the Company’s leverage and fixed charge coverage ratios, as well as an obligation to maintain a minimum availability requirement of at least $5.0 million in the aggregate of cash and availability under the line of credit. The Credit Facility will provide funds for general corporate purposes and repurchases of issued and outstanding capital stock of the Company. The Credit Facility matures on December 31, 2020 and is payable in full upon maturity. On April 12, 2016, the Company borrowed approximately $13.9 million under the Credit Facility. Subsequently, on April 26, 2016, the Company repaid $4.0 million on the Credit Facility. As of June 30, 2016, the Company had $9.9 million outstanding under the Credit Facility and was in compliance with all financial covenants contained in the Credit Agreement. |
Convertible preferred stock
Convertible preferred stock | 6 Months Ended |
Jun. 30, 2016 | |
Convertible preferred stock. | |
Convertible preferred stock | 10. Convertible preferred stock On April 11, 2016, 708,352 shares of Series A Preferred Stock were converted into 2,162,907 shares of common stock at a conversion ratio of approximately 3.05 shares of common stock per share of Series A Preferred Stock. As of June 30, 2016, the remaining preferred stock consists of 1,535,398 shares designated (and issued) as Series A Preferred Stock, and 1,756,250 shares which are undesignated (and unissued). Each issued share of Series A Preferred Stock is convertible into approximately 3.05 shares of common stock, for a total of 4,688,237 shares of common stock. For additional information on the Company’s convertible preferred stock disclosure, refer to Note 9 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. |
Accrued expenses
Accrued expenses | 6 Months Ended |
Jun. 30, 2016 | |
Accrued expenses | |
Accrued expenses | 11. Accrued expenses The following are the components of accrued expenses: As of As of June 30, December 31, 2016 2015 Bonus $ $ Deferred revenue(*) Deferred incentive(**) Other(***) Total accrued expenses $ $ (*) Current deferred revenue will be recognized as revenue ratably over the next 12 months. As of June 30, 2016, included in the balance sheet classification “Other long-term liabilities,” is the non-current portion of deferred revenue in the amount of $0.7 million. The long-term portion of deferred revenue balance as of December 31, 2015 was approximately $0.6 million. (**) As of June 30, 2016, the Company recorded approximately $0.7 million in short-term incentives in relation to future obligations under a contract. As of June 30, 2016 and December 31, 2015, included in the balance sheet classification “Other long-term liabilities” is the non ‑current portion of these incentives of approximately $0.3 million and $0.7 million, respectively. (***) As of June 30, 2016 and December 31, 2015, included in “other” were third party referral commissions of approximately $0.2 million and $1.6 million, respectively. No other amount included in “Other” exceeded 10% of total current liabilities. |
Segment information
Segment information | 6 Months Ended |
Jun. 30, 2016 | |
Segment information | |
Segment information | 12. Segment information General information The segment and geographic information provided in the table below is being reported consistent with the Company’s method of internal reporting. Operating segments are defined as components of an enterprise for which separate financial information is available and which is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM reviews net revenue and gross profit by service by geographical region. The Company operates in two reportable segments: multi-currency processing services and payment processing services. Information about revenue, profit and assets The CODM evaluates performance and allocates resources based on net revenue and gross profit of each segment. For purposes of analyzing segments, gross profit of the multi-currency processing services segment is equal to net revenue less multi-currency cost of sales of $0.6 million and $0.7 million, which is included in “processing and services costs” for the three months ended June 30, 2016 and 2015, respectively, and $1.4 million and $1.3 million for the six months ended June 30, 2016 and 2015, respectively. The gross profit for the payment processing services segment includes net revenue of the segment less the cost of revenue component “payment processing services fees,” which includes interchange and card network fees and assessments. Net revenue and gross profit by geographical region is based upon where the transaction originated. Lastly, the Company does not evaluate performance or allocate resources using segment asset data. Long-lived assets are primarily located in the Americas and Europe and as of June 30, 2016 and December 31, 2015, long-lived asset amounts are $7.1 million and $7.4 million, respectively. The Company conducts its business primarily in three geographical regions: Asia-Pacific (“APAC”); the Americas; and Europe, Middle East and Africa (“EMEA”). The following table provides revenue concentration by geographic region. Analysis of revenue by segment and geographical region and reconciliations to consolidated revenue, gross profit, and income before the provision for income taxes are as follows: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Net Revenue: APAC $ $ $ $ The Americas EMEA Total multi-currency processing services revenue Payment processing services revenue Net revenue $ $ $ $ Gross Profit: APAC $ $ $ $ The Americas EMEA Total multi-currency processing services gross profit Payment processing services gross profit Total reportable segment gross profit Corporate allocated cost of sales Total gross profit $ $ $ $ Income from operations before provision for income taxes: Total gross profit $ $ $ $ Selling, general and administrative expenses Restructuring charges — — Income from operations Interest expense Interest income Total other expense, net Income from operations before provision for income taxes $ $ $ $ Payment processing services revenue and gross profit are the result of transactions that primarily originated in the Americas. For the three months ended June 30, 2016, Customer B and Customer G had revenue concentration of 16% and 29% , respectively, and for the six months ended June 30, 2016, Customer B and Customer G had revenue concentration of 15% and 28% , respectively. For the three months ended June 30, 2015, Customer B and Customer G had revenue concentration of 14% and 24% , respectively and for the six months ended June 30, 2015, Customer B and Customer G had revenue concentration of 15% and 22% , respectively. “Corporate allocated cost of sales” includes expenses of running its platform infrastructure including: Internet connectivity, hosting and data storage expenses, amortization expenses of capitalized software development costs, compensation and related benefits of its technology personnel and a portion of general overhead expenses. Concentration of revenue by customer by geographical region: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Multi-currency processing services revenue: APAC: Customer A % % % % The Americas: Customer D * Customer E * * Customer F * * Customer I * * Customer J * * * EMEA: Customer C Customer H (*) Less than 10% revenue concentration. |
Stock repurchase program
Stock repurchase program | 6 Months Ended |
Jun. 30, 2016 | |
Stock Repurchase Program | |
Stock repurchase program | 13. Stock Repurchases Stock repurchase program In October 2014, the Company announced that its Board of Directors authorized the repurchase of up to $6.0 million of the Company’s outstanding shares of common stock. As of December 31, 2015, the Board expanded its share repurchase authorization by an aggregate of $7.5 million. From January 1, 2016 to March 9, 2016, prior to the tender offer discussed below, the Company repurchased approximately 1.3 million shares of common stock for an aggregate price of $3.6 million. As of March 9, 2016, the total amount of common stock repurchased under the program was 4.9 million shares for an aggregate price of $11.5 million and $2.0 million remained available for repurchase under the program. As of March 10, 2016, the stock repurchase program was suspended in connection with the tender offer. On August 2, 2016, the Board of Directors reinstated the Company’s share repurchase program and expanded the authorization by an incremental $4.0 million, bringing its total current authorization to $6.0 million. Tender offer On March 10, 2016, the Board of Directors authorized the Company to commence a modified “Dutch auction” tender offer to repurchase up to $15.0 million of its outstanding shares of common stock at a tender price of not less than $3.20 per share or greater than $3.60 per share. The tender offer commenced on March 14, 2016 and expired on April 11, 2016. On April 12, 2016, the Company paid $14.2 million, including transaction costs, to repurchase approximately 3.9 million shares at a tender price of $3.60 per share. The repurchased shares of common stock became treasury shares of the Company. |
Restructuring charges
Restructuring charges | 6 Months Ended |
Jun. 30, 2016 | |
Restructuring charges | |
Restructuring charges | 14. Restructuring charges For the three months ended June 30, 2016, the Company incurred total restructuring charges of approximately $125,000 , of which, approximately $100,000 represents the accelerated amortization of certain assets due to exiting a floor in its corporate location before the end of the lease term. The cease use date is September 30, 2016. The remaining amount represents the cash components of severance and benefits paid during the period. |
Concentration of credit risk (T
Concentration of credit risk (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Accounts Receivable | |
Concentration of credit risk | |
Schedule of concentrations of 10% and greater | As of As of June 30, December 31, 2016 2015 Customer A % % Customer B * Customer D * Customer H * * Less than 10% accounts receivable concentration. |
Revenue | |
Concentration of credit risk | |
Schedule of concentrations of 10% and greater | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Customer A % % % % Customer C * * Customer G * * * Less than 10% revenue concentration. |
Net income per share (Tables)
Net income per share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Net income per share | |
Schedule of computation of basic and diluted net income (loss) per share | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Numerator: Net income $ $ $ $ Amounts allocated to participating preferred stockholders under the two-class method Net income applicable to common stockholders (basic and dilutive) $ $ $ $ Denominator: Weighted-average common stock outstanding (basic) Common equivalent shares from options and warrants to purchase common stock Weighted-average common stock outstanding (diluted)(1) Basic net income per share applicable to common stockholders $ $ $ $ Diluted net income per share applicable to common stockholders(1) $ $ $ $ In accordance with ASC 260-10-45-48, for the three and six months ended June 30, 201 6 and 2015, the Company excluded 396,500 and 718,407 , respectively, of contingently -issued restricted shares from diluted weighted average common stock outstanding as the contingencies were neither (a) satisfied at the reporting date nor (b) would have been satisfied if the reporting date was at the end of the contingency period. |
Schedule of weighted average securities outstanding that have been excluded from the diluted net income (loss) per share calculation because the effect would have been anti-dilutive | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Stock options Restricted stock awards — Convertible preferred stock(1) Total anti-dilutive securities Diluted net income per share increases when convertible preferred stock is included in the required sequence in the diluted earnings per share computation. As such, convertible preferred stock is excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2016 and 2015. |
Stock-based compensation expe23
Stock-based compensation expense (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Stock-based compensation expense and assumptions | |
Summary of stock-based compensation expense recognized by income statement classification | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Processing and service costs $ $ $ $ Selling, general and administrative expenses Total stock-based compensation expense $ $ $ $ |
Summary of stock-based compensation expense recognized by type | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Stock options $ $ $ $ Restricted stock awards Total stock-based compensation expense $ $ $ $ |
Property and equipment (Tables)
Property and equipment (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Property and equipment | |
Schedule of property and equipment, net | Estimated As of As of useful life June 30, December 31, (in years) 2016 2015 Equipment - 7 $ $ Computer hardware - 5 Furniture and fixtures - 7 Leasehold improvements - 10 Total property and equipment Less: Accumulated depreciation and amortization Property and equipment, net $ $ |
Schedule of property and equipment depreciation and amortization expense | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Depreciation and amortization expense $ $ $ $ |
Goodwill and intangible assets
Goodwill and intangible assets (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and intangible assets | |
Schedule of changes in carrying amount of goodwill | Goodwill, gross, as of December 31, 2015 $ Impact of change in Euro exchange rate Accumulated impairment losses as of June 30, 2016 — Goodwill, net, as of June 30, 2016 $ |
Schedule of the gross book value, accumulated amortization and amortization periods of intangible assets | As of June 30, 2016 As of December 31, 2015 Amortization Gross book Accumulated Net book Gross book Accumulated Net book period value amortization value value amortization value (in years) Trademarks and patents $ $ $ $ $ $ - 21 Technology Intangible assets, net $ $ $ $ $ $ |
Schedule of amortization expense related to intangible assets | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Amortization expense $ $ $ $ |
Accrued expenses (Tables)
Accrued expenses (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Accrued expenses | |
Schedule of the components of accrued expenses | As of As of June 30, December 31, 2016 2015 Bonus $ $ Deferred revenue(*) Deferred incentive(**) Other(***) Total accrued expenses $ $ (*) Current deferred revenue will be recognized as revenue ratably over the next 12 months. As of June 30, 2016, included in the balance sheet classification “Other long-term liabilities,” is the non-current portion of deferred revenue in the amount of $0.7 million. The long-term portion of deferred revenue balance as of December 31, 2015 was approximately $0.6 million. (**) As of June 30, 2016, the Company recorded approximately $0.7 million in short-term incentives in relation to future obligations under a contract. As of June 30, 2016 and December 31, 2015, included in the balance sheet classification “Other long-term liabilities” is the non ‑current portion of these incentives of approximately $0.3 million and $0.7 million, respectively. (***) As of June 30, 2016 and December 31, 2015, included in “other” were third party referral commissions of approximately $0.2 million and $1.6 million, respectively. No other amount included in “Other” exceeded 10% of total current liabilities. |
Segment information (Tables)
Segment information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment information | |
Schedule of revenue by segment and geographical region and reconciliations to consolidated revenue and gross profit | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Net Revenue: APAC $ $ $ $ The Americas EMEA Total multi-currency processing services revenue Payment processing services revenue Net revenue $ $ $ $ Gross Profit: APAC $ $ $ $ The Americas EMEA Total multi-currency processing services gross profit Payment processing services gross profit Total reportable segment gross profit Corporate allocated cost of sales Total gross profit $ $ $ $ Income from operations before provision for income taxes: Total gross profit $ $ $ $ Selling, general and administrative expenses Restructuring charges — — Income from operations Interest expense Interest income Total other expense, net Income from operations before provision for income taxes $ $ $ $ |
Schedule of concentration of revenue by customer by geographical region | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Multi-currency processing services revenue: APAC: Customer A % % % % The Americas: Customer D * Customer E * * Customer F * * Customer I * * Customer J * * * EMEA: Customer C Customer H (*) Less than 10% revenue concentration. |
Business description and basi28
Business description and basis of presentation (Details) | Jun. 30, 2016item |
Business description and basis of presentation | |
Number of active merchant locations to which the Company provides services | 178,000 |
Number of countries in which the entity provides services | 22 |
Concentration of credit risk (D
Concentration of credit risk (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Concentration of credit risk | |||||
Cash, cash equivalents, and restricted cash with financial banking institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") | $ 250,000 | $ 250,000 | |||
Accounts Receivable | Credit concentration risk | Customer A | |||||
Concentration of credit risk | |||||
Concentration risk (as a percent) | 16.00% | 15.00% | |||
Accounts Receivable | Credit concentration risk | Customer B | |||||
Concentration of credit risk | |||||
Concentration risk (as a percent) | 17.00% | ||||
Accounts Receivable | Credit concentration risk | Customer D | |||||
Concentration of credit risk | |||||
Concentration risk (as a percent) | 10.00% | ||||
Accounts Receivable | Credit concentration risk | Customer H | |||||
Concentration of credit risk | |||||
Concentration risk (as a percent) | 11.00% | ||||
Revenue | Customer concentration risk | Customer A | |||||
Concentration of credit risk | |||||
Concentration risk (as a percent) | 15.00% | 19.00% | 16.00% | 20.00% | |
Revenue | Customer concentration risk | Customer C | |||||
Concentration of credit risk | |||||
Concentration risk (as a percent) | 10.00% | 10.00% | |||
Revenue | Customer concentration risk | Customer G | |||||
Concentration of credit risk | |||||
Concentration risk (as a percent) | 12.00% | 11.00% |
Net income per share (Details)
Net income per share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Numerator: | ||||
Net income | $ 1,282,723 | $ 1,875,328 | $ 3,043,028 | $ 3,586,954 |
Amounts allocated to participating preferred stockholders under the two-class method | (110,402) | (214,905) | (261,909) | (411,051) |
Net income applicable to common stockholders (basic and dilutive) | $ 1,172,321 | $ 1,660,423 | $ 2,781,119 | $ 3,175,903 |
Denominator: | ||||
Weighted-average common stock outstanding (basic) (in shares) | 49,602,206 | 53,082,296 | 50,186,828 | 53,439,467 |
Common equivalent shares from options and warrants to purchase common stock (in shares) | 2,385,489 | 748,238 | 2,214,962 | 651,002 |
Weighted average common stock outstanding (diluted) (in shares) | 51,987,695 | 53,830,534 | 52,401,790 | 54,090,469 |
Basic net income per share applicable to common stockholders ( in dollars per share) | $ 0.02 | $ 0.03 | $ 0.06 | $ 0.06 |
Diluted net income per share applicable to common stockholders (in dollars per share) | $ 0.02 | $ 0.03 | $ 0.05 | $ 0.06 |
Total anti-dilutive securities (in shares) | 4,960,758 | 11,673,467 | 6,637,513 | 12,890,660 |
Contingently issued restricted shares | ||||
Denominator: | ||||
Total anti-dilutive securities (in shares) | 396,500 | 718,407 |
Net income per share other (Det
Net income per share other (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Anti-dilutive securities excluded from computation of diluted earnings per share | ||||
Total anti-dilutive securities (in shares) | 4,960,758 | 11,673,467 | 6,637,513 | 12,890,660 |
Stock options | ||||
Anti-dilutive securities excluded from computation of diluted earnings per share | ||||
Total anti-dilutive securities (in shares) | 11,071 | 4,762,323 | 592,170 | 5,979,516 |
Restricted stock | ||||
Anti-dilutive securities excluded from computation of diluted earnings per share | ||||
Total anti-dilutive securities (in shares) | 60,000 | 30,004 | 60,000 | |
Convertible preferred stock | ||||
Anti-dilutive securities excluded from computation of diluted earnings per share | ||||
Total anti-dilutive securities (in shares) | 4,949,687 | 6,851,144 | 6,015,339 | 6,851,144 |
Stock-based compensation expe32
Stock-based compensation expense (Details) shares in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016USD ($)$ / sharesitemshares | Mar. 31, 2016USD ($)shares | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)$ / shares | Jun. 30, 2015USD ($) | |
Stock-based expense | |||||
Options granted (in shares) | shares | 0.8 | ||||
Total stock-based compensation expense | $ 576,931 | $ 228,128 | $ 1,180,899 | $ 461,590 | |
Processing and service costs | |||||
Stock-based expense | |||||
Total stock-based compensation expense | 50,255 | 50,084 | 99,061 | 100,581 | |
Selling general and administrative expenses | |||||
Stock-based expense | |||||
Total stock-based compensation expense | $ 526,676 | 178,044 | 1,081,838 | 361,009 | |
Stock options | |||||
Stock-based expense | |||||
Fair value of options granted | $ 700,000 | ||||
Requisite service period | 36 months | 36 months | |||
Total stock-based compensation expense | $ 267,833 | 124,433 | 549,229 | 255,705 | |
Restricted stock | |||||
Stock-based expense | |||||
Total stock-based compensation expense | $ 309,098 | $ 103,695 | 631,670 | $ 205,885 | |
Restricted stock | Officers | |||||
Number of Awards | |||||
Awards vested (in shares) | shares | 0.5 | ||||
Restricted stock awards vested (in shares) | shares | 0.5 | ||||
Number of consecutive trading days equal or over $3.50 per share | item | 7 | ||||
Number of trading days equal or over $3.50 per share over a consecutive thirty-five day period | item | 10 | ||||
Number of consecutive days which any ten trading days equal or over $3.50 per share | item | 35 | ||||
Value at market condition | $ 700,000 | ||||
Restricted stock awards expensed | $ 200,000 | $ 500,000 | |||
Restricted stock | Officers | Awarded third quarter 2015 expires December 31, 2017 | |||||
Number of Awards | |||||
Minimum volume weighted average price on NASDAQ (per share) | $ / shares | 3.50 | 3.50 | |||
Restricted stock | Directors | |||||
Stock-based expense | |||||
Awards granted (in shares) | shares | 0.1 | ||||
Fair value of awards granted | $ 200,000 | ||||
Requisite service period | 12 months |
Property and equipment (Details
Property and equipment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 18 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Dec. 31, 2015 | |
Property and equipment | ||||||
Total property and equipment | $ 5,392,831 | $ 5,392,831 | $ 5,392,831 | $ 5,163,309 | ||
Less: Accumulated depreciation and amortization | (3,789,949) | (3,789,949) | (3,789,949) | (3,351,690) | ||
Property and equipment, net | 1,602,882 | 1,602,882 | 1,602,882 | 1,811,619 | ||
Depreciation and amortization expense | 277,433 | $ 153,243 | 440,559 | $ 324,472 | ||
Accelerated Depreciation on abandoned assets | 100,000 | 100,000 | ||||
Equipment | ||||||
Property and equipment | ||||||
Total property and equipment | 1,006,334 | 1,006,334 | $ 1,006,334 | 958,175 | ||
Equipment | Minimum | ||||||
Property and equipment | ||||||
Estimated useful life | 2 years | |||||
Equipment | Maximum | ||||||
Property and equipment | ||||||
Estimated useful life | 7 years | |||||
Computer hardware | ||||||
Property and equipment | ||||||
Total property and equipment | 3,405,534 | 3,405,534 | $ 3,405,534 | 3,266,233 | ||
Computer hardware | Minimum | ||||||
Property and equipment | ||||||
Estimated useful life | 3 years | |||||
Computer hardware | Maximum | ||||||
Property and equipment | ||||||
Estimated useful life | 5 years | |||||
Furniture and fixtures | ||||||
Property and equipment | ||||||
Total property and equipment | 202,859 | 202,859 | $ 202,859 | 192,565 | ||
Furniture and fixtures | Minimum | ||||||
Property and equipment | ||||||
Estimated useful life | 5 years | |||||
Furniture and fixtures | Maximum | ||||||
Property and equipment | ||||||
Estimated useful life | 7 years | |||||
Leasehold improvements | ||||||
Property and equipment | ||||||
Total property and equipment | $ 778,104 | $ 778,104 | $ 778,104 | $ 746,336 | ||
Leasehold improvements | Minimum | ||||||
Property and equipment | ||||||
Estimated useful life | 3 years | |||||
Leasehold improvements | Maximum | ||||||
Property and equipment | ||||||
Estimated useful life | 10 years |
Goodwill and intangible asset34
Goodwill and intangible assets - Goodwill (Details) | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Goodwill | |
Goodwill, gross, at the Beginning of the period | $ 286,852 |
Impact of change in Euro exchange rate | 5,189 |
Goodwill, net, at the end of the period | $ 292,041 |
Goodwill and intangible asset35
Goodwill and intangible assets - Intangible assets (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 18 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Dec. 31, 2015 | |
Intangible assets | ||||||
Gross book value | $ 3,630,480 | $ 3,630,480 | $ 3,630,480 | $ 3,573,464 | ||
Accumulated amortization | (2,513,245) | (2,513,245) | (2,513,245) | (2,195,200) | ||
Net book value | 1,117,235 | 1,117,235 | 1,117,235 | 1,378,264 | ||
Amortization expense | 145,880 | $ 142,789 | 288,018 | $ 287,789 | ||
Trademarks and patents | ||||||
Intangible assets | ||||||
Gross book value | 1,198,419 | 1,198,419 | 1,198,419 | 1,184,612 | ||
Accumulated amortization | (516,602) | (516,602) | (516,602) | (472,914) | ||
Net book value | 681,817 | 681,817 | $ 681,817 | 711,698 | ||
Trademarks and patents | Minimum | ||||||
Intangible assets | ||||||
Amortization period | 15 years | |||||
Trademarks and patents | Maximum | ||||||
Intangible assets | ||||||
Amortization period | 21 years | |||||
Technology | ||||||
Intangible assets | ||||||
Gross book value | 2,432,061 | 2,432,061 | $ 2,432,061 | 2,388,852 | ||
Accumulated amortization | (1,996,643) | (1,996,643) | (1,996,643) | (1,722,286) | ||
Net book value | $ 435,418 | $ 435,418 | $ 435,418 | $ 666,566 | ||
Amortization period | 5 years |
Commitments and contingencies (
Commitments and contingencies (Details) - USD ($) $ in Millions | Sep. 01, 2013 | Sep. 30, 2013 | Jun. 30, 2016 | Dec. 31, 2015 |
Employment agreements | ||||
Commitment to pay severance in event of employment termination without cause | $ 1.2 | $ 0.9 | ||
Commitment to pay severance in event of employment termination upon change of control | 1.2 | $ 1.1 | ||
Fraud related to certain credit card transactions | ||||
Employment agreements | ||||
Reserves posted by merchants with sponsor bank | 1 | |||
Reserves posted by entity | 0.3 | |||
Cash reserves required to be posted by merchant, entity | 2.2 | |||
Contingent liability | 0 | |||
Bank Sponsorship Agreement | ||||
Employment agreements | ||||
Contingent liability | $ 0 | |||
Term of Bank Sponsorship Agreement | 5 years | 5 years | ||
Bank Sponsorship Agreement | Financial Guarantee | Minimum | ||||
Employment agreements | ||||
Bank sponsorship agreement annual fees in year one | $ 0.3 | |||
Bank sponsorship agreement fees final year | 0.5 | |||
Cost of sales | Bank Sponsorship Agreement | Financial Guarantee | Minimum | ||||
Employment agreements | ||||
Bank sponsorship agreement fees due | $ 1.8 |
Credit Facility (Details)
Credit Facility (Details) - USD ($) | Apr. 26, 2016 | Jan. 28, 2016 | Jun. 30, 2016 | Apr. 12, 2016 | Jun. 10, 2015 |
Debt Instrument [Line Items] | |||||
Credit Facility repaid | $ 4,000,000 | ||||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 20,000,000 | $ 10,000,000 | |||
Minimum availability requirement | $ 5,000,000 | ||||
Credit Facility borrowed | $ 9,900,000 | $ 13,900,000 | |||
Credit Facility repaid | $ 4,000,000 | ||||
Revolving Credit Facility | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Variable interest rate | 2.50% | ||||
Revolving Credit Facility | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 2,000,000 |
Convertible preferred stock (De
Convertible preferred stock (Details) - shares | Jun. 30, 2016 | Apr. 11, 2016 | Dec. 31, 2015 |
Convertible preferred stock | |||
Shares designated (and issued) | 2,243,750 | 2,243,750 | |
Series A Preferred stock | |||
Convertible preferred stock | |||
Number of Series A Preferred Stock converted | 708,352 | ||
Number of common stock that Series A Preferred Stock converted into | 2,162,907 | ||
Conversion ratio of common stock per share of Series A Preferred Stock | 3.05 | 3.05 | |
Shares designated (and issued) | 1,535,398 | ||
Shares undesignated (and unissued) | 1,756,250 | ||
Number of common shares into which each issued share to be converted | 3.05 | 3.05 | |
Total number of common shares into which issued shares to be converted | 4,688,237 |
Accrued expenses (Details)
Accrued expenses (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | |
Bonus | $ 159,432 | $ 710,739 | |
Deferred revenue | 719,726 | 688,418 | |
Deferred incentive | 700,000 | 950,000 | |
Other | 2,245,536 | 4,089,443 | |
Total accrued expenses | $ 3,824,694 | 6,438,600 | |
Recognition period of deferred revenue | 12 months | ||
Non-current portion of deferred revenue | 600,000 | ||
Noncurrent Portion Of Deferred Incentive | $ 300,000 | 700,000 | |
Multicurrency Referral Commissions | $ 200,000 | $ 1,600,000 | |
Maximum percentage of total current liabilities | 10.00% | 10.00% | |
Long-term lease and deferred income | |||
Non-current portion of deferred revenue | $ 700,000 | $ 700,000 |
Segment information - Informati
Segment information - Information about revenue, profit and assets (Detai) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Segment information | |||||
Number of reportable segments | item | 2 | ||||
Cost of sales included in processing and services costs | $ 3,524,123 | $ 3,385,658 | $ 7,024,791 | $ 6,623,598 | |
Long-lived assets | 7,100,000 | $ 7,100,000 | $ 7,400,000 | ||
Number of geographical regions in which the entity conducts its business | item | 3 | ||||
Net Revenue: | |||||
Net revenue | 13,103,376 | 12,683,359 | $ 26,787,889 | 24,816,129 | |
Gross Profit: | |||||
Total gross profit | 6,844,564 | 6,706,816 | 14,337,185 | 13,013,442 | |
Income from operations before provision for income taxes: | |||||
Total gross profit | 6,844,564 | 6,706,816 | 14,337,185 | 13,013,442 | |
Selling, general and administrative expenses | 5,204,892 | 4,712,704 | 10,685,606 | 9,183,104 | |
Restructuring charges | 125,268 | 125,268 | |||
Income from operations | 1,514,404 | 1,994,112 | 3,526,311 | 3,830,338 | |
Interest expense | (83,021) | (13,830) | (97,697) | (28,443) | |
Interest income | 398 | 365 | 822 | 791 | |
Total other expense, net | (82,623) | (13,465) | (96,875) | (27,652) | |
Income from operations before provision for income taxes | 1,431,781 | 1,980,647 | 3,429,436 | 3,802,686 | |
Operating segments | |||||
Gross Profit: | |||||
Total gross profit | 9,745,551 | 9,405,479 | 19,998,418 | 18,337,274 | |
Income from operations before provision for income taxes: | |||||
Total gross profit | 9,745,551 | 9,405,479 | 19,998,418 | 18,337,274 | |
Corporate allocated cost of sales | |||||
Gross Profit: | |||||
Total gross profit | 2,900,987 | 2,698,663 | 5,661,233 | 5,323,832 | |
Income from operations before provision for income taxes: | |||||
Total gross profit | 2,900,987 | 2,698,663 | 5,661,233 | 5,323,832 | |
Multi-currency processing services | |||||
Segment information | |||||
Cost of sales included in processing and services costs | 600,000 | 700,000 | 1,400,000 | 1,300,000 | |
Net Revenue: | |||||
Net revenue | 7,958,606 | 8,061,689 | 16,592,838 | 15,743,454 | |
Multi-currency processing services | Operating segments | |||||
Gross Profit: | |||||
Total gross profit | 7,335,470 | 7,374,695 | 15,229,280 | 14,443,689 | |
Income from operations before provision for income taxes: | |||||
Total gross profit | 7,335,470 | 7,374,695 | 15,229,280 | 14,443,689 | |
Payment processing services | |||||
Net Revenue: | |||||
Net revenue | 5,144,770 | 4,621,670 | 10,195,051 | 9,072,675 | |
Payment processing services | Operating segments | |||||
Gross Profit: | |||||
Total gross profit | 2,410,081 | 2,030,784 | 4,769,138 | 3,893,585 | |
Income from operations before provision for income taxes: | |||||
Total gross profit | 2,410,081 | 2,030,784 | 4,769,138 | 3,893,585 | |
APAC | |||||
Net Revenue: | |||||
Net revenue | 3,761,918 | 4,226,769 | 7,578,982 | 8,263,045 | |
APAC | Multi-currency processing services | Operating segments | |||||
Gross Profit: | |||||
Total gross profit | 3,731,646 | 4,187,113 | 7,525,150 | 8,193,825 | |
Income from operations before provision for income taxes: | |||||
Total gross profit | 3,731,646 | 4,187,113 | 7,525,150 | 8,193,825 | |
Americas | |||||
Net Revenue: | |||||
Net revenue | 2,444,187 | 1,750,920 | 4,629,561 | 3,244,050 | |
Americas | Multi-currency processing services | Operating segments | |||||
Gross Profit: | |||||
Total gross profit | 2,261,907 | 1,641,963 | 4,296,595 | 3,038,241 | |
Income from operations before provision for income taxes: | |||||
Total gross profit | 2,261,907 | 1,641,963 | 4,296,595 | 3,038,241 | |
EMEA | |||||
Net Revenue: | |||||
Net revenue | 1,752,501 | 2,084,000 | 4,384,295 | 4,236,359 | |
EMEA | Multi-currency processing services | Operating segments | |||||
Gross Profit: | |||||
Total gross profit | 1,341,917 | 1,545,619 | 3,407,535 | 3,211,623 | |
Income from operations before provision for income taxes: | |||||
Total gross profit | $ 1,341,917 | $ 1,545,619 | $ 3,407,535 | $ 3,211,623 |
Segment information - Concentra
Segment information - Concentration of revenue by customer by geographical region (Details) - Revenue | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Geographical concentration risk | Multi-currency processing services | Customer I | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 13.00% | 10.00% | ||
Geographical concentration risk | Multi-currency processing services | Customer J | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 11.00% | |||
Geographical concentration risk | Multi-currency processing services | APAC | Customer A | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 52.00% | 57.00% | 56.00% | 59.00% |
Geographical concentration risk | Multi-currency processing services | Americas | Customer D | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 19.00% | 23.00% | 12.00% | |
Geographical concentration risk | Multi-currency processing services | Americas | Customer E | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 16.00% | 15.00% | ||
Geographical concentration risk | Multi-currency processing services | Americas | Customer F | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 19.00% | 19.00% | ||
Geographical concentration risk | Multi-currency processing services | EMEA | Customer C | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 60.00% | 55.00% | 62.00% | 59.00% |
Geographical concentration risk | Multi-currency processing services | EMEA | Customer H | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 39.00% | 45.00% | 37.00% | 41.00% |
Customer concentration risk | Customer A | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 15.00% | 19.00% | 16.00% | 20.00% |
Customer concentration risk | Customer C | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 10.00% | 10.00% | ||
Customer concentration risk | Customer G | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 12.00% | 11.00% | ||
Customer concentration risk | Multi-currency processing services | Customer B | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 16.00% | 14.00% | 15.00% | 15.00% |
Customer concentration risk | Multi-currency processing services | Customer G | ||||
Revenue concentration | ||||
Concentration risk (as a percent) | 29.00% | 24.00% | 28.00% | 22.00% |
Stock Repurchase Program (Detai
Stock Repurchase Program (Details) - USD ($) $ / shares in Units, shares in Millions | Apr. 12, 2016 | Mar. 09, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Mar. 09, 2016 | Aug. 02, 2016 | Mar. 10, 2016 | Dec. 21, 2015 | Oct. 31, 2014 |
Shares repurchased, authorized amount | $ 6,000,000 | $ 6,000,000 | |||||||
Shares repurchased, increased authorized amount | $ 4,000,000 | $ 7,500,000 | |||||||
Repurchase of common stock paid | $ 17,843,447 | $ 1,647,211 | |||||||
Common stock repurchased (in shares) | 1.3 | 4.9 | |||||||
Stock repurchased, aggregate price | $ 3,600,000 | $ 11,500,000 | |||||||
Remaining shares available for purchase, value | $ 2,000,000 | $ 2,000,000 | |||||||
Credit Facility repaid | $ 4,000,000 | ||||||||
Modified "Dutch auction" tender offer | |||||||||
Shares repurchased, authorized amount | $ 15,000,000 | ||||||||
Share price (in dollars per share) | $ 3.60 | ||||||||
Repurchase of common stock paid | $ 14,200,000 | ||||||||
Common stock repurchased (in shares) | 3.9 | ||||||||
Modified "Dutch auction" tender offer | Maximum | |||||||||
Share price (in dollars per share) | $ 3.60 | ||||||||
Modified "Dutch auction" tender offer | Minimum | |||||||||
Share price (in dollars per share) | $ 3.20 |
Restructuring charges (Details)
Restructuring charges (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Restructuring charges | ||
Restructuring charges | $ 125,268 | $ 125,268 |
Accelerated Depreciation on abandoned assets | $ 100,000 | $ 100,000 |