Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended |
Jun. 30, 2014 | |
Document and Entity Information [Abstract] | ' |
Entity Registrant Name | 'FlexShopper, Inc. |
Entity Central Index Key | '0001397047 |
Amendment Flag | 'false |
Current Fiscal Year End Date | '--12-31 |
Document Type | '10-Q |
Document Period End Date | 30-Jun-14 |
Document Fiscal Period Focus | 'Q2 |
Document Fiscal Year Focus | '2014 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 29,692,683 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
CURRENT ASSETS: | ' | ' |
Cash | $4,692,819 | $960,032 |
Accounts receivable, net of allowance for doubtful accounts of $141,523 in 2014 | 19,394 | 119 |
Prepaid expenses | 152,486 | 50,188 |
Lease merchandise, net | 1,619,068 | 8,004 |
Assets of discontinued operations | 140,412 | 5,363,728 |
Total current assets | 6,624,179 | 6,382,071 |
PROPERTY AND EQUIPMENT, net | 132,076 | 58,079 |
OTHER ASSETS: | ' | ' |
Intangible assets - patent costs | 30,760 | 30,760 |
Security deposits | 57,253 | 9,485 |
Total other assets | 88,013 | 40,245 |
Total Assets | 6,844,268 | 6,480,395 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable | 389,357 | 20,349 |
Accrued payroll and related taxes | 117,000 | 68,140 |
Accrued expenses | 116,644 | 3,693 |
Liabilities of discontinued operations | 396,276 | 3,331,955 |
Total current liabilities | 1,019,277 | 3,424,137 |
STOCKHOLDERS' EQUITY PREFERRED STOCK, net of issuance costs of | ' | ' |
PREFERRED STOCK, net of issuance costs of $1,209,383 | 671,409 | 671,409 |
COMMON STOCK | 2,970 | 2,115 |
ADDITIONAL PAID IN CAPITAL | 12,935,865 | 8,548,162 |
ACCUMULATED DEFICIT | -7,785,253 | -6,165,428 |
Total Stockholders' Equity | 5,824,991 | 3,056,258 |
Total Liabilities and Stockholder's Equity | $6,844,268 | $6,480,395 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parentheticals) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Statement Of Financial Position [Abstract] | ' | ' |
Allowance for doubtful accounts | $141,523 | ' |
Issuance cost of convertible preferred stock (in dollars) | $1,209,383 | $1,209,383 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
REVENUE: | ' | ' | ' | ' |
LEASE REVENUE AND FEES | $689,329 | ' | $793,250 | ' |
COST OF REVENUE: | ' | ' | ' | ' |
COST OF LEASE REVENUE AND FEES | 396,720 | ' | 444,846 | ' |
COST OF LEASE MERCHANDISE SOLD | 107,145 | ' | 110,550 | ' |
Cost of revenue, Total | 503,865 | ' | 555,396 | ' |
GROSS PROFIT | 185,464 | ' | 237,854 | ' |
GENERAL AND ADMINISTRATIVE EXPENSES | 1,429,533 | ' | 2,683,298 | ' |
INCOME TAXES | ' | ' | ' | ' |
LOSS FROM CONTINUING OPERATIONS | -1,244,069 | ' | -2,445,444 | ' |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS (including income from the sale of discontinued assets of $445,474 in 2014 ) (See note 3) | 570,973 | -15,196 | 825,619 | 37,720 |
NET (LOSS) INCOME | ($673,096) | ($15,196) | ($1,619,825) | $37,720 |
BASIC EARNINGS PER COMMON SHARE: | ' | ' | ' | ' |
LOSS FROM CONTINUING OPERATIONS | ($0.05) | ' | ($0.11) | ' |
INCOME FROM DISCOUNTINUED OPERATIONS | $0.02 | ' | $0.04 | ' |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | ($0.03) | ' | ($0.07) | ' |
DILUTED EARNINGS PERCOMMON SHARE: | ' | ' | ' | ' |
LOSS FROM CONTINUING OPERATIONS | ($0.05) | ' | ($0.11) | ' |
INCOME FROM DISCOUNTINUED OPERATIONS | $0.02 | ' | $0.04 | ' |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | ($0.03) | ' | ($0.07) | ' |
WEIGHTED AVERAGE SHARES | ' | ' | ' | ' |
Basic | 24,676,348 | 18,634,369 | 22,912,605 | 18,634,369 |
Dilutive | 24,676,348 | 20,739,580 | 22,912,605 | 20,710,206 |
Consolidated_Statements_of_Ope1
Consolidated Statements of Operations (Parenthetical) (USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Income Statement [Abstract] | ' |
Income from the sale of discontinued assets | $445,474 |
Consolidated_Statement_of_Chan
Consolidated Statement of Changes In Stockholders' Equity (USD $) | Total | Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Deficit |
Balance at Dec. 31, 2013 | $3,056,258 | $671,409 | $2,115 | $8,548,162 | ($6,165,428) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Provision for compensation expense related to issued stock options | 234,500 | ' | ' | 234,500 | ' |
Provision for compensation expense related to issued warrants | 7,000 | ' | ' | 7,000 | ' |
Sale of common stock, net of issuance costs | 3,147,058 | ' | 673 | 3,146,385 | ' |
Conversion of shareholders loans to common stock | 1,000,000 | ' | 182 | 999,818 | ' |
Net loss | -1,619,825 | ' | ' | ' | -1,619,825 |
Balance at Jun. 30, 2014 | $5,824,991 | $671,409 | $2,970 | $12,935,865 | ($7,785,253) |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($1,619,825) | $37,720 |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ' | ' |
Income from discontinued operation | -825,619 | -37,720 |
Depreciation and amortization | 33,396 | ' |
Depreciation of lease merchandise | 341,846 | ' |
Impairment of lease merchandise | 103,000 | ' |
Compensation expense related to issuance of stock options | 234,500 | ' |
Compensation expense related to issuance of warrants | 7,000 | ' |
Allowance for uncollectible accounts | 141,523 | ' |
Changes in operating assets and liabilities: | ' | ' |
(Increase) in accounts receivable | -160,798 | ' |
(Increase) in prepaid expenses and other | -102,299 | ' |
(Increase) in lease merchandise | -2,055,910 | ' |
(Increase) in security deposits | -47,768 | ' |
Increase in accounts payable | 369,008 | ' |
Increase in accrued payroll and related taxes | 48,860 | ' |
Increase in accrued expenses | 112,951 | ' |
Net cash used by operating activities - continuing operations | -3,420,135 | ' |
Net cash provided (used) by operating activities - discontinued operations | 6,072,337 | -278,089 |
Net cash provided by (used in) operating activities | 2,652,202 | -278,089 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -107,393 | ' |
Net cash used in investing activities - continuing operations | -107,393 | ' |
Net cash used in investing activities - discontinued operations | ' | -33,584 |
Net cash used in investing activities | -107,393 | -33,584 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Loans from shareholders | 1,000,000 | ' |
Proceeds from sale of common stock | 3,186,058 | ' |
Payment of costs related to issuance of common stock | -39,000 | ' |
Net cash provided by financing operations - continuing operations | 4,147,058 | ' |
Net cash used by financing operations - discontinued operations | -2,959,080 | 446,856 |
Net cash provided by financing activities | 1,187,978 | 446,856 |
INCREASE IN CASH | 3,732,787 | 135,183 |
CASH, beginning of period | 960,032 | 610,439 |
CASH, end of period | $4,692,819 | $745,622 |
Background_and_Description_of_
Background and Description of Business | 6 Months Ended |
Jun. 30, 2014 | |
Background and Description of Business [Abstract] | ' |
BACKGROUND AND DESCRIPTION OF BUSINESS | ' |
1. BACKGROUND AND DESCRIPTION OF BUSINESS: | |
The consolidated financial statements include the accounts of FlexShopper, Inc. (formerly Anchor Funding Services, Inc. the “Company”) and its wholly owned subsidiary, FlexShopper, LLC (“FlexShopper”). FlexShopper, Inc. is a Delaware holding corporation. FlexShopper, Inc. has no operations; substantially all operations of the Company are the responsibility of FlexShopper. | |
FlexShopper is a North Carolina Limited Liability Company formed in June 2013 that provides certain types of durable goods to consumers on a lease-to-own basis and also provides lease-to-own terms to consumers of third party retailers and e-tailers. The Company has been generating revenues from this new line of business since December 2013. Management believes that the introduction of FlexShopper's lease-to-own (LTO) programs support broad untapped expansion opportunities within the U.S. consumer e-commerce and retail marketplaces. FlexShopper and its online LTO products provide consumers the ability to acquire durable goods, including electronics, computers and furniture on an affordable payment, lease basis. Concurrently, e-tailers and retailers that work with FlexShopper may increase their sales by utilizing FlexShopper's online channels to connect with consumers that want to acquire products on an LTO basis. The Company anticipates additional expenses of approximately $450,000 per month or potentially higher as FlexShopper implements its programs and continues to build an infrastructure to support its revenues and business objectives. These expenses are funded by the sale of Anchor and a sale of the Company’s restricted stock. FlexShopper incurred a net loss from continuing operations of approximately $2,445,000 which is reflected in the statements of operations for the six months ended June 30, 2014. | |
Anchor is a North Carolina limited liability company. Anchor was formed for the purpose of providing factoring and back office services to businesses located throughout the United States of America. | |
During 2013, the Company decided to concentrate its efforts on the operations of FlexShopper and subsequently on March 6, 2014 the Company signed a non-binding letter of intent with a financial institution to sell substantially all of the operating assets of its wholly owned subsidiary, Anchor Funding Services, LLC (“Anchor”). The sale was finalized in May 2014 (See Note 3). The consolidated statements of operations for the three and six months ended June 30, 2014 and the consolidated statements of cash flows for the six months ended June 30, 2014 and 2013 reflect the historical operations of Anchor as discontinued operations. The 2014 consolidated balance sheet contains amounts attributable to Anchor and are classified as discontinued. Accordingly, we have generally presented the notes to our consolidated financial statements on the basis of continuing operations. In addition, unless stated otherwise, any reference to statement of operations items in these financial statements refers to results from continuing operations. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 6 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||||||||||
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of FlexShopper, Inc. and, its wholly owned subsidiary FlexShopper, LLC. The company’s wholly owned subsidiary, Anchor Funding Services, LLC (“Anchor”) is reflected in the consolidated statements of operations and the consolidated statements of cash flows as discontinued operations for the three and six months ended June 30, 2014 and 2013. | |||||||||||||||||||||||||
Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||||||||||||||
The Lease Purchase Transaction -The lease purchase transaction is a flexible alternative for consumers to obtain use and enjoyment of brand name merchandise with no long-term obligation. Key features of the lease purchase transaction in our program include: | |||||||||||||||||||||||||
Brand name merchandise. We offer the ability to acquire on-line or in participating retailers well-known brands of home electronics, appliances, computers and/or tablets; and furniture. | |||||||||||||||||||||||||
Convenient payment drafting. We charge our customers’ bank account or debit card primarily on a weekly basis and will accommodate bi-weekly requests. Lease payments together with applicable fees, constitute our primary revenue source. | |||||||||||||||||||||||||
Flexible options to obtain ownership. Ownership of the merchandise generally transfers to the customer if the customer has completed the payments required in the lease purchase agreement to own the merchandise, generally 52 weeks, or exercises the 90 day same as cash early purchase option. Under this option, if within 90 days of the lease the customer pays the cash price inclusive of a nominal processing fee, ownership transfers to the customer. | |||||||||||||||||||||||||
Revenue Recognition - Merchandise is leased to customers pursuant to lease purchase agreements which provide for weekly and bi-weekly lease terms with non-refundable lease payments. Generally the customer has the right to acquire title either through a 90 day same as cash option or through payments of all required lease payments for ownership. Lease revenues are recognized in the month they are due on the accrual basis of accounting. For internal management reporting purposes, lease revenues from sales and lease ownership agreements are recognized as revenue in the month the cash is collected. On a monthly basis, we record an accrual for lease revenues due but not yet received, net of allowances, and a deferral of revenue for lease payments received prior to their due date. Our revenue recognition accounting policy matches the lease revenue with the corresponding costs, mainly depreciation associated with the leased merchandise. | |||||||||||||||||||||||||
Lease Merchandise – Lease merchandise consists primarily of residential furniture, consumer electronics, computers, appliances and household accessories and is recorded at cost. The Company depreciates leased merchandise using the straight line method over the applicable agreement period for a consumer to acquire ownership generally twelve months with no salvage value. When indicators of impairment exist the Company records an impairment reserve against the carrying value of the leased merchandise. The Company is developing historical charge off information to assess recoverability and estimate of the impairment reserve. The net leased merchandise balances consisted of the following as of June 30, 2014. | |||||||||||||||||||||||||
Leased merchandise – gross | $ | 2,064,037 | |||||||||||||||||||||||
Accumulated depreciation | (341,969 | ) | |||||||||||||||||||||||
Impairment reserve | (103,000 | ) | |||||||||||||||||||||||
Leased merchandise – net | $ | 1,619,068 | |||||||||||||||||||||||
Intangible Assets - Intangible assets, primarily patent costs, are stated at cost less any accumulated amortization and any provision for impairment. Patent costs are amortized by using the straight line method over the shorter of their legal (20 years) or useful lives from the time they are first available for use. | |||||||||||||||||||||||||
Cost of Lease Merchandise Sold – Cost of merchandise sold represents the net book value of rental merchandise at the time of sale. | |||||||||||||||||||||||||
General and Administrative Expenses – General and Administrative expenses include all corporate overhead expenses such as salaries, payroll taxes and benefits, stock based compensation, occupancy, administrative, bad debts and other expenses. | |||||||||||||||||||||||||
Advertising Costs – The Company charges advertising costs to expense as incurred. Total advertising costs were approximately $153,200 and $188,200 for the three months and six months ended June 30, 2014. Prior year advertising costs are included in discontinued operations. | |||||||||||||||||||||||||
Earnings per Share (EPS) – Basic net income per share is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period. Dilutive earnings per share include the potential impact of dilutive securities, such as convertible preferred stock, stock options and stock warrants. The dilutive effect of stock options and warrants is computed using the treasury stock method, which assumes the repurchase of common shares at the average market price. | |||||||||||||||||||||||||
Under the treasury stock method, options and warrants will have a dilutive effect when the average price of common stock during the period exceeds the exercise price of options or warrants. | |||||||||||||||||||||||||
Also when there is a year-to date loss from operations, potential common shares are not included in the computation of diluted earnings per share, since they have an anti-dilutive effect. For the three and six months ending June 30, 2014 there was a net loss. There was a net loss for the three months ended June 30, 2013. | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(Denominator) | (Denominator) | ||||||||||||||||||||||||
Weighted- | Per | Weighted- | Per | ||||||||||||||||||||||
(Numerator) | Average | Share | (Numerator) | Average | Share | ||||||||||||||||||||
Net Loss | Shares | Amount | Net Income | Shares | Amount | ||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||
Basic EPS | $ | (673,096 | ) | 24,676,348 | $ | (0.03 | ) | $ | (15,196 | ) | 18,634,369 | $ | − | ||||||||||||
Effect of Dilutive Securities – Options and | |||||||||||||||||||||||||
Convertible Preferred Stock | - | - | - | - | 2,105,211 | − | |||||||||||||||||||
Diluted EPS | $ | (673,096 | ) | 24,676,348 | $ | (0.03 | ) | $ | (15,196 | ) | 20,739,580 | $ | − | ||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
Basic EPS | $ | (1,619,825 | ) | 22,912,605 | $ | (0.07 | ) | $ | 37,720 | 18,634,369 | $ | − | |||||||||||||
Effect of Dilutive Securities – Options and | |||||||||||||||||||||||||
Convertible Preferred Stock | - | - | - | - | 2,075,837 | − | |||||||||||||||||||
Diluted EPS | $ | (1,619,825 | ) | 22,912,605 | $ | (0.07 | ) | $ | 37,720 | 20,710,206 | $ | − | |||||||||||||
Stock Based Compensation - The fair value of transactions in which the Company exchanges its equity instruments for employee services (share-based payment transactions) is recognized as an expense in the financial statements as services are performed. | |||||||||||||||||||||||||
Compensation expense is determined by reference to the fair value of an award on the date of grant and is amortized on a straight-line basis over the vesting period. We have elected to use the Black-Scholes-Merton (BSM) pricing model to determine the fair value of all stock option awards. | |||||||||||||||||||||||||
See Note 8 to our financial statements for the impact on the operating results for the three and six months ended June 30, 2014 and 2013. | |||||||||||||||||||||||||
Fair Value of Financial Instruments – The carrying value of cash equivalents, accounts payable and accrued liabilities and loan payable officer due to their short term nature approximate fair value. | |||||||||||||||||||||||||
Cash and Cash Equivalents – Cash and cash equivalents consist primarily of highly liquid cash investment funds with original maturities of three months or less when acquired. | |||||||||||||||||||||||||
Income Taxes – The Company is a “C” corporation for income tax purposes. In a “C” corporation income taxes are provided for the tax effects of transactions reported in the financial statements plus deferred income taxes related to the differences between financial statement and taxable income. | |||||||||||||||||||||||||
The primary differences between financial statement and taxable income for the Company are as follows: | |||||||||||||||||||||||||
· Expense related to the issuance of equity instruments | |||||||||||||||||||||||||
· Use of the reserve method of accounting for bad debts | |||||||||||||||||||||||||
· Net operating loss carryforwards. | |||||||||||||||||||||||||
The deferred tax asset represents the future tax return consequences of utilizing these items. Deferred tax assets are reduced by a valuation reserve, when management is uncertain if the net deferred tax assets will ever be realized. | |||||||||||||||||||||||||
The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. The Company applied this guidance to all its tax positions, including tax positions taken and those expected to be taken, under the transition provision of the interpretation. For the six months ended June 30, 2014 and 2013, the Company concluded that it had no material uncertain tax positions. | |||||||||||||||||||||||||
The Company classifies interest accrued on unrecognized tax benefits with interest expense. Penalties accrued on unrecognized tax benefits are classified with operating expenses. | |||||||||||||||||||||||||
Recent Accounting Pronouncements – | |||||||||||||||||||||||||
The FASB amended the Comprehensive Income topic of the ASC in February 2013 with ASU No. 2013-02. The amendment addresses reporting of amounts reclassified out of accumulated other comprehensive income. Specifically, the amendment does not change the current requirements for reporting net income or other comprehensive income in the financial statements. However, the amendment does require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, in certain circumstances an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. The guidance became effective for the Company in the first quarter of fiscal year 2014. This amendment did not have a material effect on the Company’s financial statements. | |||||||||||||||||||||||||
In July 2013, the FASB issued ASU 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, " which among other things, require an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as denoted within the ASU. The guidance became effective for the Company in the first quarter of fiscal year 2014. The guidance did not have a material effect on the Company’s financial statements. | |||||||||||||||||||||||||
In April 2014, the FASB issued ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. ASU No. 2014-08 changes the definition of a discontinued operation to include only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity's operations and financial results. ASU No. 2014-08 is effective prospectively for fiscal years beginning after December 15, 2014. The Company has early adopted this update in the second quarter of 2014. | |||||||||||||||||||||||||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This new standard provides guidance for the recognition, measurement and disclosure of revenue resulting from contracts with customers and will supersede virtually all of the current revenue recognition guidance under U.S. GAAP. The standard is effective for the first interim period within annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of the provisions of this new standard on its financial position and results of operations. | |||||||||||||||||||||||||
In June 2014, FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. ASU 2014-12 is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. The Company is evaluating the potential impacts of the new standard on its existing stock-based compensation plans. | |||||||||||||||||||||||||
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact in the Company’s financial position, results of operations or cash flows. |
Discontinued_Operations
Discontinued Operations | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Discontinued Operations [Abstract] | ' | ||||||||||||||||
DISCONTINUED OPERATIONS: | ' | ||||||||||||||||
3. DISCONTINUED OPERATIONS: | |||||||||||||||||
During 2013, the Company decided to concentrate its efforts on the operations of FlexShopper and subsequently on April 30, 2014, Anchor entered into an Asset Purchase and Sale Agreement (the “Purchase Agreement”) with a Bank, pursuant to which Anchor sold to the Bank substantially all of its assets (the “Anchor Assets”), consisting primarily of its factoring portfolio (the “Portfolio Accounts”). The purchase price for the Anchor Assets was equal to (1) 110% of the total funds outstanding associated with the Portfolio Accounts plus (2) an amount equal to 50% of the factoring fee and interest income earned by the Portfolio Accounts during the 12 month period following acquisition (“Earnout Payments”). The sale of the Anchor Assets was made in a series of closings through June 16, 2014. In connection with each closing, Anchor used the proceeds thereof to pay to Bank all amounts due for factor advances associated with the Portfolio Accounts acquired pursuant to such closing under Anchor’s Rediscount Facility Agreement with the Bank entered into as of November 30, 2011 (the “Rediscount Facility Agreement”). In accordance with the Purchase Agreement, following the final closing thereunder all obligations of Anchor under the Rediscount Facility Agreement (and the associated Validity Warranty) were paid and satisfied in full and the agreement was terminated to have no further force and effect. Anchor recorded a gain of $445,474 on the sale of these assets for the six months ended June 30, 2014 which is included in income from discontinued operations. | |||||||||||||||||
The assets, other assets and liabilities of the discontinued operations are presented separately under the captions “Assets of discontinued operations,” “Non-current assets of discontinued operations” and “Liabilities of discontinued operations” in the accompanying Balance Sheets at June 30, 2014 and December 31, 2013 and consist of the following: | |||||||||||||||||
30-Jun-14 | 31-Dec-13 | ||||||||||||||||
Assets of discontinued operations: | |||||||||||||||||
Retained interest in purchased accounts receivable | $ | 38,716 | $ | 4,966,338 | |||||||||||||
Earned but uncollected fees | 1,805 | 141,077 | |||||||||||||||
Due from client | 99,891 | 256,313 | |||||||||||||||
$ | 140,412 | $ | 5,363,728 | ||||||||||||||
Liabilities of discontinued operations: | |||||||||||||||||
Accounts payable | $ | 94,858 | $ | 26,966 | |||||||||||||
Accrued expenses | 3,694 | 51,719 | |||||||||||||||
Due to financial institution | 281,861 | 3,240,942 | |||||||||||||||
Deferred revenue | 15,863 | 12,328 | |||||||||||||||
$ | 396,276 | $ | 3,331,955 | ||||||||||||||
Major classes of income and expenses shown as income from discontinued operations in the Consolidated Statement of Operations are as follows: | |||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||
30-Jun-14 | 30-Jun-13 | 30-Jun-14 | 30-Jun-13 | ||||||||||||||
Finance revenues | $ | 246,025 | $ | 703,602 | $ | 709,867 | $ | 1,306,209 | |||||||||
Interest expense-financial institution | (38,732 | ) | (108,032 | ) | (109,346 | ) | (210,413 | ) | |||||||||
Provision for credit losses | 25,768 | (105,000 | ) | 24,904 | (105,000 | ) | |||||||||||
Net finance revenues | 233,061 | 490,570 | 625,425 | 990,796 | |||||||||||||
Operating expenses | (107,562 | ) | (497,271 | ) | (245,280 | ) | (940,418 | ) | |||||||||
Gain on sale of discontinued assets | 445,474 | - | 445,474 | - | |||||||||||||
Depreciation | - | (8,495 | ) | - | (12,658 | ) | |||||||||||
Net income (loss) from discontinued operations | $ | 570,973 | $ | (15,196 | ) | $ | 825,619 | $ | 37,720 |
Property_and_Equipment
Property and Equipment | 6 Months Ended | |||||||||
Jun. 30, 2014 | ||||||||||
Property and Equipment [Abstract] | ' | |||||||||
PROPERTY AND EQUIPMENT: | ' | |||||||||
4. PROPERTY AND EQUIPMENT: | ||||||||||
Property and equipment consisted of the following: | ||||||||||
Estimated | ||||||||||
Useful Lives | 30-Jun-14 | 31-Dec-13 | ||||||||
Furniture and fixtures | 2-5 years | $ | 99,982 | $ | 64,945 | |||||
Computers and software | 3-7 years | 323,881 | 251,525 | |||||||
423,863 | 316,470 | |||||||||
Less: accumulated depreciation | (291,787 | ) | (258,391 | ) | ||||||
$ | 132,076 | $ | 58,079 | |||||||
Depreciation expense was $18,408 and $8,495 for the quarters ended June 30, 2014 and 2013, respectively and $33,396 and $12,658 for the six months ended June 30, 2014 and 2013, respectively. |
Loan_Payable_Shareholders
Loan Payable Shareholders | 6 Months Ended |
Jun. 30, 2014 | |
Loan Payable to Shareholders [Abstract] | ' |
LOANS PAYABLE SHAREHOLDERS: | ' |
5. LOANS PAYABLE SHAREHOLDERS: | |
On March 19, 2014 upon approval of the Board of Directors, FlexShopper entered into two Promissory Notes totaling $1,000,000, one with CEO Morry Rubin and the other with a major shareholder and Director of the company. Each demand Promissory Note is for $500,000 and earns interest (payable monthly) at 10% per annum. The Promissory Notes were to assist FlexShopper in purchasing merchandise for lease to support FlexShopper’s growth. In June 2014 these loans were converted into shares of the Company’s Common Stock. (See Note 6). |
Capital_Structure
Capital Structure | 6 Months Ended |
Jun. 30, 2014 | |
Capital Structure [Abstract] | ' |
CAPITAL STRUCTURE: | ' |
6. CAPITAL STRUCTURE: | |
The Company’s capital structure consists of preferred and common stock as described below: | |
Preferred Stock – The Company is authorized to issue 10,000,000 shares of $.001 par value preferred stock. The Company’s Board of Directors determines the rights and preferences of its preferred stock. | |
On January 31, 2007, the Company filed a Certificate of Designation with the Secretary of State of Delaware. Effective with this filing, 2,000,000 preferred shares became Series 1 Convertible Preferred Stock. Series 1 Convertible Preferred Stock will rank senior to Common Stock. | |
Series 1 Convertible Preferred Stock was convertible into 5.1 shares of the Company’s Common Stock, subject to certain anti-dilution rights. As a result of the Common Stock offering described below and the sale of Common Stock to officers and/or directors as set forth under Note 7, each share of Series 1 Preferred Stock is currently convertible into 5.7 shares of the Company’s Common Stock. The holder of the Series 1 Convertible Preferred Stock has the option to convert the shares to Common Stock at any time. Upon conversion all accumulated and unpaid dividends will be paid as additional shares of Common Stock. | |
The dividend rate on Series 1 Convertible Preferred Stock was 8%. Dividends were paid between 2007 and 2009 annually on December 31st in the form of additional Series 1 Convertible Preferred Stock unless the Board of Directors approved a cash dividend. Dividends on Series 1 Convertible Preferred Stock ceased to accrue on the earlier of December 31, 2009, or on the date they were converted to Common Shares. Thereafter, the holders of Series 1 Convertible Preferred Stock have the same dividend rights as holders of Common Stock, as if the Series 1 Convertible Preferred Stock had been converted to Common Stock. | |
As of June 30, 2014 there were 376,387 shares of Series 1 Convertible Preferred Stock outstanding. | |
Common Stock – The Company is authorized to issue 65,000,000 shares of $.0001 par value Common Stock. Each share of Common Stock entitles the holder to one vote at all stockholder meetings. Dividends on Common Stock will be determined annually by the Company’s Board of Directors. | |
During the fourth quarter of 2013, the Company raised $1,000,000 from the sale of its restricted Common Stock at $.40 per share. An aggregate of 2,500,000 shares of Common Stock were sold under Rule 506 and/or Section 4(2) of the Securities Act of 1933 as amended. The Company also issued 14,493 shares to consultants for services rendered. | |
During the second quarter of 2014, the Company received net proceeds of $3,186,058 from the sale of 6,725,589 shares of its Common Stock under Rule 506 and/or Section 4(2) of the Securities Act of 1933 as amended. The foregoing excludes the issuance at the final closing date of seven year warrants to purchase 15% of the number of shares sold in the offering, which warrants are being issued to the placement agents. As of June 30, 2014, the placement agents have earned warrants to purchase 1,008,846 shares. | |
In addition, pursuant to the terms of the private placement offering, George Rubin and Morry F. Rubin, officers, directors and founders of the Company, each completed the funding of their $500,000 loan to the Company and converted these loans into shares of the Company’s Common Stock at the same offering price per share as that paid by investors in the offering. An aggregate of 1,818,182 shares of the Company’s Common Stock were issued to the Rubins from the conversion of the $1,000,000 total of their notes plus any accrued interest. |
Related_Party_Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTY TRANSACTIONS: | ' |
7. RELATED PARTY TRANSACTIONS: | |
Options granted to officers and directors. | |
On March 20, 2012, M. Rubin and B. Bernstein were each granted 10 year options to purchase 250,000 shares of common stock each for a total of 500,000 shares. These options were fully vested in 2013. See Note 8. | |
On March 24, 2014, B. Bernstein was granted 10 year options to purchase 250,000 shares of common stock. These options vested on the date of grant. | |
On March 19, 2014 upon approval of the Board of Directors, FlexShopper entered into two Promissory Notes totaling $1,000,000, one with CEO Morry Rubin and the other with a major shareholder and Director of the company. Each demand Promissory Note was for $500,000 and earned interest (payable monthly) at 10% per annum. The Promissory Notes were to assist FlexShopper in purchasing merchandise for lease to support FlexShopper’s growth. The Notes were converted into 1,818,182 shares of the Company’s Common Stock. |
Employment_and_Stock_Option_Ag
Employment and Stock Option Agreements | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Employment and Stock Option Agreements [Abstract] | ' | ||||
EMPLOYMENT AND STOCK OPTION AGREEMENTS: | ' | ||||
8. EMPLOYMENT AND STOCK OPTION AGREEMENTS: | |||||
On January 31, 2007, the Board adopted our 2007 Omnibus Equity Compensation Plan (the “Plan”), with 2,100,000 common shares authorized for issuance under the Plan. In October 2009, the Company's stockholders approved an increase in the number of shares covered by the Plan to 4,200,000 shares. | |||||
The general purpose of the plan is to provide an incentive to the Company’s employees, directors and consultants by enabling them to share in the future growth of the business. | |||||
At closing of the exchange transaction described above, M. Rubin and Brad Bernstein (“B. Bernstein”), the President of the Company, entered into employment contracts and stock option agreements. Additionally, at closing two non-employee directors entered into stock option agreements. | |||||
The following summarizes M. Rubin’s employment agreement and stock options: | |||||
● | The employment agreement with M. Rubin currently retains his services as Co-chairman and Chief Executive Officer through January 31, 2015. | ||||
● | On August 8, 2013, the Board agreed to modify M. Rubin’s employment agreement and approved an annual salary of $125,000. Previously, M. Rubin received an annual salary of $1.00. M. Rubin is eligible to receive periodic review of his base salary and annual bonuses as determined by the Company’s compensation committee. M. Rubin shall be entitled to a monthly automobile allowance of $1,500. | ||||
● | 10-year options to purchase 650,000 shares exercisable at $1.25 per share, pursuant to the Plan. All of the aforementioned options are fully vested. | ||||
The following summarizes B. Bernstein’s employment agreement and stock options: | |||||
● | The employment agreement with B. Bernstein currently retains his services as President through January 31, 2015. | ||||
● | An annual salary of $240,000. The Board may periodically review B. Bernstein’s base salary and may determine to increase (but not decrease) the base salary in accordance with such policies as the Company may hereafter adopt from time to time. | ||||
● | The Board approved an annual bonus program for Mr. Bernstein commencing with the 2011 fiscal year and ending with the 2013 fiscal year. The annual bonus was equal to 5% of annual net income provided net income is equal to or greater than $200,000. The bonus was calculated on the Company’s audited GAAP financial statements. For fiscal 2011, 2012 and 2013, B. Bernstein received a bonus of $14,486, $20,021 and $-0-, respectively. B. Bernstein is entitled to a monthly automobile allowance of $1,000. | ||||
● | 10-year options to purchase 950,000 shares exercisable at $1.25 per share, pursuant to the Plan. All of the aforementioned options are fully vested. | ||||
● | The following table summarizes information about stock options as of June 30, 2014: | ||||
Exercise | Number | Remaining | Number | ||
Price | Outstanding | Contractual Life | Exercisable | ||
$1.25 | 1,605,000 | 4 years | 1,605,000 | ||
$1.00 | 45,000 | 6 years | 45,000 | ||
$0.62 | 500,000 | 6 years | 500,000 | ||
$0.17 | 500,000 | 9 years | 500,000 | ||
$0.80 | 550,000 | 10 years | 550,000 | ||
$0.25 | 120,000 | 10 years | 120,000 | ||
$0.35 | 33,333 | 10 years | 33,333 | ||
$0.30 | 50,000 | 10 years | 16,667 | ||
$0.45 | 25,000 | 10 years | 8,333 | ||
$0.75 | 55,000 | 10 years | - | ||
$0.82 | 10,000 | 10 years | - | ||
$0.90 | 30,000 | 10 years | - | ||
$0.55 | 20,000 | 10 years | - | ||
3,543,333 | 3,378,333 | ||||
· | The Company measured the fair value of each option award on the date of grant using the Black Scholes option pricing model (BSM) with the following assumptions: | ||||
Exercise price | $ | .17 to $1.25 | |||
Term | 10 years | ||||
Volatility | 0.37 to 2.50 | ||||
Dividends | 0 | % | |||
Discount rate | 0.02% to 4.75% | ||||
· | The fair value amounts recorded for these options in the statements of operations was $3,500 and $2,226 for the three months ended June 30, 2014 and 2013, respectively and $234,500 and $47,373 for the six months ended June 30, 2014 and 2013, respectively. |
Warrants
Warrants | 6 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Warrants [Abstract] | ' | ||||||
WARRANTS: | ' | ||||||
9. WARRANTS: | |||||||
The Company has outstanding warrants to purchase 1,342,500 shares of the Company’s common stock, which warrants were due to expire on January 31, 2014 but were extended by the Company through January 31, 2018. These warrants are now exercisable at $1.10 per share. The following information was input into BSM to compute a per warrant price of $.104: | |||||||
Exercise price | $ | 1.1 | |||||
Term | 4 years | ||||||
Volatility | 37 | % | |||||
Dividends | 0 | % | |||||
Discount rate | 0.09 | % | |||||
For the three and six months ended June 30, 2014 and 2013, the Company recorded compensation expense of $4,200 and $1,916 and $7,000 and $1,916 respectively, related to the issuance of these warrants. | |||||||
On December 7, 2009, the Company received gross proceeds of $500,002 from the sale of 500,002 shares of common stock and ten year warrants to purchase 2,000,004 shares of common stock exercisable at $1.00 per share. The Black Scholes option pricing model was used to compute the fair value of the warrants. | |||||||
The following table summarizes information about stock warrants as of June 30, 2014: | |||||||
Weighted Average | |||||||
Exercise | Number | Remaining | Number | ||||
Price | Outstanding | Contractual Life | Exercisable | ||||
$1.10 | 1,342,500 | 4 years | 1,342,500 | ||||
$1.00 | 2,000,004 | 7 years | 2,000,004 |
Supplemental_Disclosures_of_Ca
Supplemental Disclosures of Cash Flow | 6 Months Ended |
Jun. 30, 2014 | |
Supplemental Disclosures of Cash Flow [Abstract] | ' |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW: | ' |
10. SUPPLEMENTAL DISCLOSURES OF CASH FLOW: | |
Non-cash financing and investing activities consisted of the following: | |
For the three and six months ending June 30, 2014 | |
Conversion of shareholders’ loans to common stock - $1,000,000 | |
For the three and six months ending June 30, 2013 | |
None |
Income_Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2014 | |
Income Taxes [Abstract] | ' |
INCOME TAXES: | ' |
11. INCOME TAXES: | |
As of June 30, 2014, the Company had approximately $4.3 million of net operating loss carryforwards (“NOL”) for income tax purposes. The NOL’s expire in various years from 2022 through 2025. The Company’s use of operating loss carryforwards is subject to limitations imposed by the Internal Revenue Code. Management believes that the deferred tax assets as of June 30, 2014 do not satisfy the realization criteria and has recorded a valuation allowance for the entire net tax asset. By recording a valuation allowance for the entire amount of future tax benefits, the Company has not recognized a deferred tax benefit for income taxes in its statements of operations. |
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Commitments and Contingencies [Abstract] | ' | ||||
COMMITMENTS AND CONTINGENCIES: | ' | ||||
12. COMMITMENTS AND CONTINGENCIES: | |||||
Lease Commitments | |||||
The Company has lease agreements for office space in Charlotte, NC, and Boca Raton, FL. All lease agreements are with unrelated parties. | |||||
The Company has two Charlotte leases for adjoining space that expired May 31, 2014. The monthly rent for the combined space is approximately $2,340. The Company renewed the leases for an additional year at the same terms. | |||||
On August 1, 2013, FlexShopper entered into a 39 month lease for office space in Boca Raton, FL to accommodate the FlexShopper business and its additional employees. The monthly rent was approximately $6,800. This lease agreement was amended in January 2014 to reflect a 63 month term for a larger suite in an adjoining building. Upon commencement the monthly base rent including operating expenses for the first year will be approximately $15,800 with annual three percent increases throughout the lease term. | |||||
Anchor had a lease for office space in Medley, FL, which was to expire on May 12, 2014. Anchor terminated this lease in 2013 and forfeited its security deposit. | |||||
The rental expense for the six months ended June 30, 2014 and 2013 was approximately $84,000 and $29,000, respectively. The future minimum annual lease payments are approximately as follows: | |||||
2015 | $ | 132,300 | |||
2016 | 119,700 | ||||
2017 | 123,400 | ||||
2018 | 127,200 | ||||
2019 | 130,900 | ||||
Thereafter | 11,200 | ||||
$ | 644,700 | ||||
Contingencies | |||||
We are not a party to any pending material legal proceedings except as described below. To our knowledge, no governmental authority is contemplating commencing a legal proceeding in which we would be named as a party. | |||||
On October 22, 2010, Anchor filed a complaint in the Superior Court of Stamford/Norwalk, Connecticut against the Administrators of the Estate of David Harvey (“Harvey”) to recoup a credit loss incurred by the Company’s former subsidiary, Brookridge Funding Services, LLC. Harvey was the owner of a Company that caused the credit loss and the Company is pursuing its rights under the personal guarantee that Harvey provided. The Complaint is demanding principal of approximately $485,000 plus interest and damages. |
Subsequent_Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
13. SUBSEQUENT EVENTS | |
In July 2014, the Company received gross proceeds of $991,750 from the sale of 1,803,182 shares of the Company’s Common Stock. As of July 31, 2014, the offering has resulted in gross proceeds of $4,690,850 and the offering is ongoing with a maximum offering of $8,030,000, subject to the right to increase the offering at the placement agents’ discretion to a maximum of $9,625,000. Exemption from registration is claimed under Rule 506 and/or Section 4(2) of the Securities Act of 1933, as amended. | |
On August 8, 2014, the Company closed its Charlotte office which performed certain accounting and merchant support functions and consolidated these operations into the Company’s Headquarters location in Boca Raton, Florida. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||||||||||
Principles of Consolidation | ' | ||||||||||||||||||||||||
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of FlexShopper, Inc. and, its wholly owned subsidiary FlexShopper, LLC. The company’s wholly owned subsidiary, Anchor Funding Services, LLC (“Anchor”) is reflected in the consolidated statements of operations and the consolidated statements of cash flows as discontinued operations for the three and six months ended June 30, 2014 and 2013. | |||||||||||||||||||||||||
Estimates | ' | ||||||||||||||||||||||||
Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||||||||||||||
The Lease Purchase Transaction | ' | ||||||||||||||||||||||||
The Lease Purchase Transaction -The lease purchase transaction is a flexible alternative for consumers to obtain use and enjoyment of brand name merchandise with no long-term obligation. Key features of the lease purchase transaction in our program include: | |||||||||||||||||||||||||
Brand name merchandise. We offer the ability to acquire on-line or in participating retailers well-known brands of home electronics, appliances, computers and/or tablets; and furniture. | |||||||||||||||||||||||||
Convenient payment drafting. We charge our customers’ bank account or debit card primarily on a weekly basis and will accommodate bi-weekly requests. Lease payments together with applicable fees, constitute our primary revenue source. | |||||||||||||||||||||||||
Flexible options to obtain ownership. Ownership of the merchandise generally transfers to the customer if the customer has completed the payments required in the lease purchase agreement to own the merchandise, generally 52 weeks, or exercises the 90 day same as cash early purchase option. Under this option, if within 90 days of the lease the customer pays the cash price inclusive of a nominal processing fee, ownership transfers to the customer. | |||||||||||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||||||||||
Revenue Recognition - Merchandise is leased to customers pursuant to lease purchase agreements which provide for weekly and bi-weekly lease terms with non-refundable lease payments. Generally the customer has the right to acquire title either through a 90 day same as cash option or through payments of all required lease payments for ownership. Lease revenues are recognized in the month they are due on the accrual basis of accounting. For internal management reporting purposes, lease revenues from sales and lease ownership agreements are recognized as revenue in the month the cash is collected. On a monthly basis, we record an accrual for lease revenues due but not yet received, net of allowances, and a deferral of revenue for lease payments received prior to their due date. Our revenue recognition accounting policy matches the lease revenue with the corresponding costs, mainly depreciation associated with the leased merchandise. | |||||||||||||||||||||||||
Lease Merchandise | ' | ||||||||||||||||||||||||
Lease Merchandise – Lease merchandise consists primarily of residential furniture, consumer electronics, computers, appliances and household accessories and is recorded at cost. The Company depreciates leased merchandise using the straight line method over the applicable agreement period for a consumer to acquire ownership generally twelve months with no salvage value. When indicators of impairment exist the Company records an impairment reserve against the carrying value of the leased merchandise. The Company is developing historical charge off information to assess recoverability and estimate of the impairment reserve. The net leased merchandise balances consisted of the following as of June 30, 2014. | |||||||||||||||||||||||||
Leased merchandise – gross | $ | 2,064,037 | |||||||||||||||||||||||
Accumulated depreciation | (341,969 | ) | |||||||||||||||||||||||
Impairment reserve | (103,000 | ) | |||||||||||||||||||||||
Leased merchandise – net | $ | 1,619,068 | |||||||||||||||||||||||
Intangible Assets | ' | ||||||||||||||||||||||||
Intangible Assets - Intangible assets, primarily patent costs, are stated at cost less any accumulated amortization and any provision for impairment. Patent costs are amortized by using the straight line method over the shorter of their legal (20 years) or useful lives from the time they are first available for use. | |||||||||||||||||||||||||
Cost of Lease Merchandise Sold | ' | ||||||||||||||||||||||||
Cost of Lease Merchandise Sold – Cost of merchandise sold represents the net book value of rental merchandise at the time of sale. | |||||||||||||||||||||||||
General and Administrative Expenses | ' | ||||||||||||||||||||||||
General and Administrative Expenses – General and Administrative expenses include all corporate overhead expenses such as salaries, payroll taxes and benefits, stock based compensation, occupancy, administrative, bad debts and other expenses. | |||||||||||||||||||||||||
Advertising Costs | ' | ||||||||||||||||||||||||
Advertising Costs – The Company charges advertising costs to expense as incurred. Total advertising costs were approximately $153,200 and $188,200 for the three months and six months ended June 30, 2014. Prior year advertising costs are included in discontinued operations. | |||||||||||||||||||||||||
Earnings per Share (EPS) | ' | ||||||||||||||||||||||||
Earnings per Share (EPS) – Basic net income per share is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period. Dilutive earnings per share include the potential impact of dilutive securities, such as convertible preferred stock, stock options and stock warrants. The dilutive effect of stock options and warrants is computed using the treasury stock method, which assumes the repurchase of common shares at the average market price. | |||||||||||||||||||||||||
Under the treasury stock method, options and warrants will have a dilutive effect when the average price of common stock during the period exceeds the exercise price of options or warrants. | |||||||||||||||||||||||||
Also when there is a year-to date loss from operations, potential common shares are not included in the computation of diluted earnings per share, since they have an anti-dilutive effect. For the three and six months ending June 30, 2014 there was a net loss. There was a net loss for the three months ended June 30, 2013. | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(Denominator) | (Denominator) | ||||||||||||||||||||||||
Weighted- | Per | Weighted- | Per | ||||||||||||||||||||||
(Numerator) | Average | Share | (Numerator) | Average | Share | ||||||||||||||||||||
Net Loss | Shares | Amount | Net Income | Shares | Amount | ||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||
Basic EPS | $ | (673,096 | ) | 24,676,348 | $ | (0.03 | ) | $ | (15,196 | ) | 18,634,369 | $ | − | ||||||||||||
Effect of Dilutive Securities – Options and | |||||||||||||||||||||||||
Convertible Preferred Stock | - | - | - | - | 2,105,211 | − | |||||||||||||||||||
Diluted EPS | $ | (673,096 | ) | 24,676,348 | $ | (0.03 | ) | $ | (15,196 | ) | 20,739,580 | $ | − | ||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
Basic EPS | $ | (1,619,825 | ) | 22,912,605 | $ | (0.07 | ) | $ | 37,720 | 18,634,369 | $ | − | |||||||||||||
Effect of Dilutive Securities – Options and | |||||||||||||||||||||||||
Convertible Preferred Stock | - | - | - | - | 2,075,837 | − | |||||||||||||||||||
Diluted EPS | $ | (1,619,825 | ) | 22,912,605 | $ | (0.07 | ) | $ | 37,720 | 20,710,206 | $ | − | |||||||||||||
Stock Based Compensation | ' | ||||||||||||||||||||||||
Stock Based Compensation - The fair value of transactions in which the Company exchanges its equity instruments for employee services (share-based payment transactions) is recognized as an expense in the financial statements as services are performed. | |||||||||||||||||||||||||
Compensation expense is determined by reference to the fair value of an award on the date of grant and is amortized on a straight-line basis over the vesting period. We have elected to use the Black-Scholes-Merton (BSM) pricing model to determine the fair value of all stock option awards. | |||||||||||||||||||||||||
See Note 8 to our financial statements for the impact on the operating results for the three and six months ended June 30, 2014 and 2013. | |||||||||||||||||||||||||
Fair Value of Financial Instruments | ' | ||||||||||||||||||||||||
Fair Value of Financial Instruments – The carrying value of cash equivalents, accounts payable and accrued liabilities and loan payable officer due to their short term nature approximate fair value. | |||||||||||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||||||||||
Cash and Cash Equivalents – Cash and cash equivalents consist primarily of highly liquid cash investment funds with original maturities of three months or less when acquired. | |||||||||||||||||||||||||
Income Taxes | ' | ||||||||||||||||||||||||
Income Taxes – The Company is a “C” corporation for income tax purposes. In a “C” corporation income taxes are provided for the tax effects of transactions reported in the financial statements plus deferred income taxes related to the differences between financial statement and taxable income. | |||||||||||||||||||||||||
The primary differences between financial statement and taxable income for the Company are as follows: | |||||||||||||||||||||||||
· Expense related to the issuance of equity instruments | |||||||||||||||||||||||||
· Use of the reserve method of accounting for bad debts | |||||||||||||||||||||||||
· Net operating loss carryforwards. | |||||||||||||||||||||||||
The deferred tax asset represents the future tax return consequences of utilizing these items. Deferred tax assets are reduced by a valuation reserve, when management is uncertain if the net deferred tax assets will ever be realized. | |||||||||||||||||||||||||
The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. The Company applied this guidance to all its tax positions, including tax positions taken and those expected to be taken, under the transition provision of the interpretation. For the six months ended June 30, 2014 and 2013, the Company concluded that it had no material uncertain tax positions. | |||||||||||||||||||||||||
The Company classifies interest accrued on unrecognized tax benefits with interest expense. Penalties accrued on unrecognized tax benefits are classified with operating expenses. | |||||||||||||||||||||||||
Recent Accounting Pronouncements | ' | ||||||||||||||||||||||||
Recent Accounting Pronouncements – | |||||||||||||||||||||||||
The FASB amended the Comprehensive Income topic of the ASC in February 2013 with ASU No. 2013-02. The amendment addresses reporting of amounts reclassified out of accumulated other comprehensive income. Specifically, the amendment does not change the current requirements for reporting net income or other comprehensive income in the financial statements. However, the amendment does require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, in certain circumstances an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. The guidance became effective for the Company in the first quarter of fiscal year 2014. This amendment did not have a material effect on the Company’s financial statements. | |||||||||||||||||||||||||
In July 2013, the FASB issued ASU 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, " which among other things, require an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as denoted within the ASU. The guidance became effective for the Company in the first quarter of fiscal year 2014. The guidance did not have a material effect on the Company’s financial statements. | |||||||||||||||||||||||||
In April 2014, the FASB issued ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. ASU No. 2014-08 changes the definition of a discontinued operation to include only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity's operations and financial results. ASU No. 2014-08 is effective prospectively for fiscal years beginning after December 15, 2014. The Company has early adopted this update in the second quarter of 2014. | |||||||||||||||||||||||||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This new standard provides guidance for the recognition, measurement and disclosure of revenue resulting from contracts with customers and will supersede virtually all of the current revenue recognition guidance under U.S. GAAP. The standard is effective for the first interim period within annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of the provisions of this new standard on its financial position and results of operations. | |||||||||||||||||||||||||
In June 2014, FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. ASU 2014-12 is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. The Company is evaluating the potential impacts of the new standard on its existing stock-based compensation plans. | |||||||||||||||||||||||||
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact in the Company’s financial position, results of operations or cash flows. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 6 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||||||||||
Schedule of lease merchandise | ' | ||||||||||||||||||||||||
Leased merchandise – gross | $ | 2,064,037 | |||||||||||||||||||||||
Accumulated depreciation | (341,969 | ) | |||||||||||||||||||||||
Impairment reserve | (103,000 | ) | |||||||||||||||||||||||
Leased merchandise – net | $ | 1,619,068 | |||||||||||||||||||||||
Schedule of reconciliation of the components used to derive basic and diluted EPS | ' | ||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(Denominator) | (Denominator) | ||||||||||||||||||||||||
Weighted- | Per | Weighted- | Per | ||||||||||||||||||||||
(Numerator) | Average | Share | (Numerator) | Average | Share | ||||||||||||||||||||
Net Loss | Shares | Amount | Net Income | Shares | Amount | ||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||
Basic EPS | $ | (673,096 | ) | 24,676,348 | $ | (0.03 | ) | $ | (15,196 | ) | 18,634,369 | $ | − | ||||||||||||
Effect of Dilutive Securities – Options and | |||||||||||||||||||||||||
Convertible Preferred Stock | - | - | - | - | 2,105,211 | − | |||||||||||||||||||
Diluted EPS | $ | (673,096 | ) | 24,676,348 | $ | (0.03 | ) | $ | (15,196 | ) | 20,739,580 | $ | − | ||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
Basic EPS | $ | (1,619,825 | ) | 22,912,605 | $ | (0.07 | ) | $ | 37,720 | 18,634,369 | $ | − | |||||||||||||
Effect of Dilutive Securities – Options and | |||||||||||||||||||||||||
Convertible Preferred Stock | - | - | - | - | 2,075,837 | − | |||||||||||||||||||
Diluted EPS | $ | (1,619,825 | ) | 22,912,605 | $ | (0.07 | ) | $ | 37,720 | 20,710,206 | $ | − |
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Discontinued Operations [Abstract] | ' | ||||||||||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | ' | ||||||||||||||||
30-Jun-14 | 31-Dec-13 | ||||||||||||||||
Assets of discontinued operations: | |||||||||||||||||
Retained interest in purchased accounts receivable | $ | 38,716 | $ | 4,966,338 | |||||||||||||
Earned but uncollected fees | 1,805 | 141,077 | |||||||||||||||
Due from client | 99,891 | 256,313 | |||||||||||||||
$ | 140,412 | $ | 5,363,728 | ||||||||||||||
Liabilities of discontinued operations: | |||||||||||||||||
Accounts payable | $ | 94,858 | $ | 26,966 | |||||||||||||
Accrued expenses | 3,694 | 51,719 | |||||||||||||||
Due to financial institution | 281,861 | 3,240,942 | |||||||||||||||
Deferred revenue | 15,863 | 12,328 | |||||||||||||||
$ | 396,276 | $ | 3,331,955 | ||||||||||||||
Schedule Of Disposal Groups Including Discontinued Operations Income Statement | ' | ||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||
30-Jun-14 | 30-Jun-13 | 30-Jun-14 | 30-Jun-13 | ||||||||||||||
Finance revenues | $ | 246,025 | $ | 703,602 | $ | 709,867 | $ | 1,306,209 | |||||||||
Interest expense-financial institution | (38,732 | ) | (108,032 | ) | (109,346 | ) | (210,413 | ) | |||||||||
Provision for credit losses | 25,768 | (105,000 | ) | 24,904 | (105,000 | ) | |||||||||||
Net finance revenues | 233,061 | 490,570 | 625,425 | 990,796 | |||||||||||||
Operating expenses | (107,562 | ) | (497,271 | ) | (245,280 | ) | (940,418 | ) | |||||||||
Gain on sale of discontinued assets | 445,474 | - | 445,474 | - | |||||||||||||
Depreciation | - | (8,495 | ) | - | (12,658 | ) | |||||||||||
Net income (loss) from discontinued operations | $ | 570,973 | $ | (15,196 | ) | $ | 825,619 | $ | 37,720 |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 6 Months Ended | |||||||||
Jun. 30, 2014 | ||||||||||
Property and Equipment [Abstract] | ' | |||||||||
Schedule of property and equipment | ' | |||||||||
Estimated | ||||||||||
Useful Lives | 30-Jun-14 | 31-Dec-13 | ||||||||
Furniture and fixtures | 2-5 years | $ | 99,982 | $ | 64,945 | |||||
Computers and software | 3-7 years | 323,881 | 251,525 | |||||||
423,863 | 316,470 | |||||||||
Less: accumulated depreciation | (291,787 | ) | (258,391 | ) | ||||||
$ | 132,076 | $ | 58,079 |
Employment_and_Stock_Option_Ag1
Employment and Stock Option Agreements (Tables) | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Employment and Stock Option Agreements [Abstract] | ' | ||||
Schedule of information about stock options | ' | ||||
Exercise | Number | Remaining | Number | ||
Price | Outstanding | Contractual Life | Exercisable | ||
$1.25 | 1,605,000 | 4 years | 1,605,000 | ||
$1.00 | 45,000 | 6 years | 45,000 | ||
$0.62 | 500,000 | 6 years | 500,000 | ||
$0.17 | 500,000 | 9 years | 500,000 | ||
$0.80 | 550,000 | 10 years | 550,000 | ||
$0.25 | 120,000 | 10 years | 120,000 | ||
$0.35 | 33,333 | 10 years | 33,333 | ||
$0.30 | 50,000 | 10 years | 16,667 | ||
$0.45 | 25,000 | 10 years | 8,333 | ||
$0.75 | 55,000 | 10 years | - | ||
$0.82 | 10,000 | 10 years | - | ||
$0.90 | 30,000 | 10 years | - | ||
$0.55 | 20,000 | 10 years | - | ||
3,543,333 | 3,378,333 | ||||
Schedule of option input into a Black Scholes option pricing model | ' | ||||
Exercise price | $ | .17 to $1.25 | |||
Term | 10 years | ||||
Volatility | 0.37 to 2.50 | ||||
Dividends | 0 | % | |||
Discount rate | 0.02% to 4.75% |
Warrants_Tables
Warrants (Tables) | 6 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Warrants [Abstract] | ' | ||||||
Schedule of warrants, valuation assumptions | ' | ||||||
Exercise price | $ | 1.1 | |||||
Term | 4 years | ||||||
Volatility | 37 | % | |||||
Dividends | 0 | % | |||||
Discount rate | 0.09 | % | |||||
Schedule of stock warrants | ' | ||||||
Weighted Average | |||||||
Exercise | Number | Remaining | Number | ||||
Price | Outstanding | Contractual Life | Exercisable | ||||
$1.10 | 1,342,500 | 4 years | 1,342,500 | ||||
$1.00 | 2,000,004 | 7 years | 2,000,004 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Commitments and Contingencies [Abstract] | ' | ||||
Schedule of Future Minimum Lease Payments | ' | ||||
2015 | $ | 132,300 | |||
2016 | 119,700 | ||||
2017 | 123,400 | ||||
2018 | 127,200 | ||||
2019 | 130,900 | ||||
Thereafter | 11,200 | ||||
$ | 644,700 |
Background_and_Description_of_1
Background and Description of Business (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Background and Description of Business [Abstract] | ' | ' | ' | ' |
Anticipates Additional Expenses | ' | ' | $450,000 | ' |
Net loss | ($1,244,069) | ' | ($2,445,444) | ' |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | Jun. 30, 2014 |
Summary of Significant Accounting Policies [Abstract] | ' |
Leased merchandise - gross | $2,064,037 |
Accumulated depreciation | -341,969 |
Impairment reserve | -103,000 |
Leased merchandise - net | $1,619,068 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies - Reconciliation of components used to derive basic and diluted EPS (Details 1) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Summary of Significant Accounting Policies [Abstract] | ' | ' | ' | ' |
(Numerator) Net Income (Loss), Basic EPS | ($673,096) | ($15,196) | ($1,619,825) | $37,720 |
(Numerator) Net Income (Loss), Effect of Dilutive Securities - Options and Convertible Preferred Stock | ' | ' | ' | ' |
(Numerator) Net Income (Loss), Diluted EPS | ($673,096) | ($15,196) | ($1,619,825) | $37,720 |
(Denominator) Weighted- Average Shares, Basic EPS | 24,676,348 | 18,634,369 | 22,912,605 | 18,634,369 |
(Denominator) Weighted- Average Shares, Effect of Dilutive Securities - Options and Convertible Preferred Stock | ' | 2,105,211 | ' | 2,075,837 |
(Denominator) Weighted- Average Shares, Diluted EPS | 24,676,348 | 20,739,580 | 22,912,605 | 20,710,206 |
Per Share Amount, Basic EPS | ($0.03) | ' | ($0.07) | ' |
Per Share Amount, Effect of Dilutive Securities - Options and Convertible Preferred Stock | ' | ' | ' | ' |
Per Share Amount, Diluted EPS | ($0.03) | ' | ($0.07) | ' |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details Textual) (USD $) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2014 | Jun. 30, 2014 | |
Summary of Significant Accounting Policies [Abstract] | ' | ' |
Total advertising costs | $153,200 | $188,200 |
Legal Useful life | ' | '20 years |
Amortization method | ' | 'Straight line method |
Flexible options to obtain ownership description | ' | 'Customer has completed the payments required in the lease purchase agreement generally 52 weeks or exercises the 90 day same as cash early purchase option. |
Discontinued_Operations_Detail
Discontinued Operations (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Assets of discontinued operations: | ' | ' |
Retained interest in purchased accounts receivable | $38,716 | $4,966,338 |
Earned but uncollected fees | 1,805 | 141,077 |
Due from client | 99,891 | 256,313 |
Assets of discontinued operations, Total | 140,412 | 5,363,728 |
Liabilities of discontinued operations: | ' | ' |
Accounts payable | 94,858 | 26,966 |
Accrued expenses | 3,694 | 51,719 |
Due to financial institution | 281,861 | 3,240,942 |
Deferred revenue | 15,863 | 12,328 |
Liabilities of discontinued operations,Total | $396,276 | $3,331,955 |
Discontinued_Operations_Detail1
Discontinued Operations (Details 1) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Discontinued Operations [Abstract] | ' | ' | ' | ' |
Finance revenues | $246,025 | $703,602 | $709,867 | $1,306,209 |
Interest expense-financial institution | -38,732 | -108,032 | -109,346 | -210,413 |
Provision for credit losses | 25,768 | -105,000 | 24,904 | -105,000 |
Net finance revenues | 233,061 | 490,570 | 625,425 | 990,796 |
Operating expenses | -107,562 | -497,271 | -245,280 | -940,418 |
Gain on sale of discontinued assets | 445,474 | ' | 445,474 | ' |
Depreciation | ' | -8,495 | ' | -12,658 |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS (including income from the sale of discontinued assets of $445,474 in 2014 ) (See note 3) | $570,973 | ($15,196) | $825,619 | $37,720 |
Discontinued_Operations_Detail2
Discontinued Operations (Detail Textual) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Discontinued Operations [Abstract] | ' | ' | ' | ' |
Gain on sale of discontinued assets | $445,474 | ' | $445,474 | ' |
Asset purchase and sale agreement description | ' | ' | 'The purchase price for the Anchor Assets was equal to (1) 110% of the total funds outstanding associated with the Portfolio Accounts plus (2) an amount equal to 50% of the factoring fee and interest income earned by the Portfolio Accounts during the 12 month period following acquisition. | ' |
Property_and_Equipment_Summary
Property and Equipment - Summary of property and equipment (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 |
Furniture and Fixtures | Furniture and Fixtures | Furniture and Fixtures | Furniture and Fixtures | Computers and Software | Computers and Software | Computers and Software | Computers and Software | |||
Maximum | Minimum | Maximum | Minimum | |||||||
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property and equipment, Gross | $423,863 | $316,470 | $99,982 | $64,945 | ' | ' | $323,881 | $251,525 | ' | ' |
Less: accumulated depreciation | -291,787 | -258,391 | ' | ' | ' | ' | ' | ' | ' | ' |
Property and equipment, net | $132,076 | $58,079 | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated useful lives | ' | ' | ' | ' | '5 years | '2 years | ' | ' | '7 years | '3 years |
Property_and_Equipment_Details
Property and Equipment (Details Textual) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Property and Equipment [Abstract] | ' | ' | ' | ' |
Depreciation | $18,408 | $8,495 | $33,396 | $12,658 |
Loan_Payable_to_Shareholders_D
Loan Payable to Shareholders (Details) (USD $) | 1 Months Ended |
Mar. 19, 2014 | |
Promissory_Note | |
Schedule Of Loan Payable To Officer [Line Items] | ' |
Number of promissory notes | 2 |
Morry Rubin | Line Of Credit Promissory Note | ' |
Schedule Of Loan Payable To Officer [Line Items] | ' |
Promissory notes, face amount | 500,000 |
Major Shareholder | Line Of Credit Promissory Note | ' |
Schedule Of Loan Payable To Officer [Line Items] | ' |
Promissory notes, face amount | 500,000 |
Morry Rubin and Major Shareholders | Line Of Credit Promissory Note | ' |
Schedule Of Loan Payable To Officer [Line Items] | ' |
Promissory notes, face amount | 1,000,000 |
Interest rate of promissory note | 10.00% |
Capital_Structure_Details_Text
Capital Structure (Details Textual) (USD $) | 0 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | 6 Months Ended | ||||
Dec. 07, 2009 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jan. 31, 2007 | Jun. 30, 2014 | Jun. 30, 2014 | |
Private Placement [Member] | Series 1 Convertible Preferred Stock | Series 1 Convertible Preferred Stock | Series 1 Preferred Stock [Member] | ||||||
Preferred stock, par value (in dollars per share) | ' | $0.00 | ' | $0.00 | ' | ' | ' | ' | ' |
Preferred stock, shares authorized (in shares) | ' | 10,000,000 | ' | 10,000,000 | ' | ' | ' | ' | ' |
Preferred stock, shares outstanding | ' | ' | ' | ' | ' | ' | ' | 376,387 | ' |
Preferred stock conversion into Series 1 Convertible Preferred Stock (in shares) | ' | ' | ' | ' | ' | ' | 2,000,000 | ' | ' |
Preferred stock conversion ratio | ' | ' | ' | ' | ' | ' | ' | '5.1 shares | '5.7 shares |
Dividend rate on Series 1 Convertible Preferred Stock | ' | ' | ' | ' | ' | ' | ' | 8.00% | ' |
Common stock, shares authorized (in shares) | ' | 65,000,000 | ' | 65,000,000 | ' | ' | ' | ' | ' |
Common stock, par value (in dollars per share) | ' | $0.00 | ' | $0.00 | ' | ' | ' | ' | ' |
Restricted common stock, value | ' | ' | $1,000,000 | ' | ' | ' | ' | ' | ' |
Restricted common stock, shares | ' | ' | 2,500,000 | ' | ' | ' | ' | ' | ' |
Restricted common stock, per share | ' | ' | $0.40 | ' | ' | ' | ' | ' | ' |
Shares issued to consultants for services | ' | ' | 14,493 | ' | ' | ' | ' | ' | ' |
Proceeds from sale of common stock | ' | ' | ' | 3,186,058 | ' | ' | ' | ' | ' |
Number of common stock shares sold | 500,002 | 6,725,589 | ' | ' | ' | ' | ' | ' | ' |
Warrants to purchase common stock | ' | 1,008,846 | ' | ' | ' | ' | ' | ' | ' |
Warrants to purchase common stock description. | ' | 'The foregoing excludes the issuance at the final closing date of seven year warrants to purchase 15% of the number of shares sold in the offering, which warrants are being issued to the placement agents. | ' | ' | ' | ' | ' | ' | ' |
Debt conversion amount | ' | ' | ' | ' | ' | 500,000 | ' | ' | ' |
Common stock issued for conversion of debt, Shares | ' | ' | ' | ' | ' | 1,818,182 | ' | ' | ' |
Common stock issued for conversion of debt | ' | ' | ' | ' | ' | $1,000,000 | ' | ' | ' |
Related_Party_Transactions_Det
Related Party Transactions (Details Textual) (USD $) | 1 Months Ended | 1 Months Ended | 1 Months Ended | |||||
Mar. 19, 2014 | Mar. 19, 2014 | Mar. 20, 2012 | Mar. 19, 2014 | Mar. 19, 2014 | Mar. 24, 2014 | Mar. 20, 2012 | Mar. 20, 2012 | |
Promissory_Note | Morry Rubin | Morry Rubin | Morry Rubin and Major Shareholders | Major Shareholder | B Bernstein | B Bernstein | Officers and Directors | |
Line Of Credit Promissory Note | Stock Options | Line Of Credit Promissory Note | Line Of Credit Promissory Note | Stock Options | Stock Options | Stock Options | ||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Number of option granted | ' | ' | 250,000 | ' | ' | 250,000 | 250,000 | 500,000 |
Remaining Contractual Life | ' | ' | '10 years | ' | ' | '10 years | '10 years | '10 years |
Common stock issued for conversion of debt, Shares | ' | ' | ' | 1,818,182 | ' | ' | ' | ' |
Number of promissory notes | 2 | ' | ' | ' | ' | ' | ' | ' |
Promissory notes, face amount | ' | $500,000 | ' | $1,000,000 | $500,000 | ' | ' | ' |
Interest rate of promissory note | ' | ' | ' | 10.00% | ' | ' | ' | ' |
Employment_and_Stock_Option_Ag2
Employment and Stock Option Agreements - Summary of stock option (Details) (Stock Options, USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Number Outstanding | 3,543,333 |
Number Exercisable | 3,378,333 |
Exercise Price $ 1.25 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $1.25 |
Number Outstanding | 1,605,000 |
Remaining Contractual Life | '4 years |
Number Exercisable | 1,605,000 |
Exercise Price $ 1.00 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $1 |
Number Outstanding | 45,000 |
Remaining Contractual Life | '6 years |
Number Exercisable | 45,000 |
Exercise Price $ 0.62 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.62 |
Number Outstanding | 500,000 |
Remaining Contractual Life | '6 years |
Number Exercisable | 500,000 |
Exercise Price $ 0.17 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.17 |
Number Outstanding | 500,000 |
Remaining Contractual Life | '9 years |
Number Exercisable | 500,000 |
Exercise Price $ 0.80 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.80 |
Number Outstanding | 550,000 |
Remaining Contractual Life | '10 years |
Number Exercisable | 550,000 |
Exercise Price $ 0.25 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.25 |
Number Outstanding | 120,000 |
Remaining Contractual Life | '10 years |
Number Exercisable | 120,000 |
Exercise Price $ 0.35 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.35 |
Number Outstanding | 33,333 |
Remaining Contractual Life | '10 years |
Number Exercisable | 33,333 |
Exercise Price $ 0.30 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.30 |
Number Outstanding | 50,000 |
Remaining Contractual Life | '10 years |
Number Exercisable | 16,667 |
Exercise Price $ 0.45 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.45 |
Number Outstanding | 25,000 |
Remaining Contractual Life | '10 years |
Number Exercisable | 8,333 |
Exercise Price $ 0.75 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.75 |
Number Outstanding | 55,000 |
Remaining Contractual Life | '10 years |
Number Exercisable | ' |
Exercise Price $ 0.82 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.82 |
Number Outstanding | 10,000 |
Remaining Contractual Life | '10 years |
Number Exercisable | ' |
Exercise Price $ 0.90 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.90 |
Number Outstanding | 30,000 |
Remaining Contractual Life | '10 years |
Number Exercisable | ' |
Exercise Price $ 0.55 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise Price (in dollars per share) | $0.55 |
Number Outstanding | 20,000 |
Remaining Contractual Life | '10 years |
Number Exercisable | ' |
Employment_and_Stock_Option_Ag3
Employment and Stock Option Agreements - Summary of fair value option award on date of grant (Details 1) (Stock Options, USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Term | '10 years |
Dividends | 0.00% |
Minimum | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise price (in dollars per share) | 0.17 |
Volatility | 0.37% |
Discount rate | 0.02% |
Maximum | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise price (in dollars per share) | 1.25 |
Volatility | 2.50% |
Discount rate | 4.75% |
Employment_and_Stock_Option_Ag4
Employment and Stock Option Agreements (Details Textual) (2007 Omnibus Equity Compensation Plan) | Oct. 31, 2009 | Jan. 31, 2007 |
2007 Omnibus Equity Compensation Plan | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Common shares authorized for issuance (in shares) | 4,200,000 | 2,100,000 |
Employment_and_Stock_Option_Ag5
Employment and Stock Option Agreements (Details Textual 1) (2007 Omnibus Equity Compensation Plan, Stock Options, USD $) | 0 Months Ended | 6 Months Ended | 12 Months Ended | |||
Aug. 08, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
M Rubins Employment Agreement | M Rubins Employment Agreement | B Bernstein Employment Agreement | B Bernstein Employment Agreement | B Bernstein Employment Agreement | B Bernstein Employment Agreement | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' |
Officers' annual salary | $125,000 | $1 | $240,000 | ' | ' | ' |
Bonus equivalent to annual net income percentage | ' | ' | 5.00% | ' | ' | ' |
Net income before tax threshold limit for salary revision | ' | ' | 200,000 | ' | ' | ' |
Monthly automobile allowance | 1,500 | ' | 1,000 | ' | ' | ' |
Term of options | ' | '10 years | '10 years | ' | ' | ' |
Bonus Received | ' | ' | ' | $0 | $20,021 | $14,486 |
Option to purchase common stock | ' | 650,000 | 950,000 | ' | ' | ' |
Shares exercisable (in dollars per share) | ' | $1.25 | $1.25 | ' | ' | ' |
Option award method used | ' | ' | 'Black Scholes option pricing model | ' | ' | ' |
Employment_and_Stock_Option_Ag6
Employment and Stock Option Agreements (Details Textual 2) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Employment and Stock Option Agreements [Abstract] | ' | ' | ' | ' |
Fair value amounts recorded for option | $3,500 | $2,226 | $234,500 | $47,373 |
Warrants_Summary_of_warrants_D
Warrants - Summary of warrants (Details) (Warrant, USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Warrant | ' |
Class of Warrant or Right [Line Items] | ' |
Exercise price (in dollars per share) | $1.10 |
Term | '4 years |
Volatility | 37.00% |
Dividends | 0.00% |
Discount rate | 0.09% |
Warrants_Summary_of_informatio
Warrants - Summary of information about stock warrants (Details 1) (USD $) | Dec. 07, 2009 | Jun. 30, 2014 | Jun. 30, 2014 |
Warrant | Warrant | ||
Exercise Price $ 1.10 | Exercise Price $ 1.00 | ||
Class of Warrant or Right [Line Items] | ' | ' | ' |
Exercise price (in dollars per share) | $1 | $1.10 | $1 |
Number Outstanding | ' | 1,342,500 | 2,000,004 |
Weighted Average Remaining Contractual Life | ' | '4 years | '7 years |
Number Exercisable | ' | 1,342,500 | 2,000,004 |
Warrants_Details_Textual
Warrants (Details Textual) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 07, 2009 | |
Class of Warrant or Right [Line Items] | ' | ' | ' | ' | ' |
Number of common stock shares to purchase warrant | ' | ' | ' | ' | 2,000,004 |
Exercise price (in dollars per share) | ' | ' | ' | ' | $1 |
Compensation expenses for issuance of warrants | $4,200 | $1,916 | $7,000 | $1,916 | ' |
Warrant | ' | ' | ' | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' | ' | ' | ' |
Number of common stock shares to purchase warrant | 1,342,500 | ' | 1,342,500 | ' | ' |
Exercise price (in dollars per share) | $0.10 | ' | $0.10 | ' | ' |
Warrant | Warrants Extended By 31 January 2018 | ' | ' | ' | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' | ' | ' | ' |
Exercise price (in dollars per share) | $1.10 | ' | $1.10 | ' | ' |
Warrants_Details_Textual_1
Warrants (Details Textual 1) (USD $) | 0 Months Ended | 3 Months Ended |
Dec. 07, 2009 | Jun. 30, 2014 | |
Warrants [Abstract] | ' | ' |
Proceeds from sale of common stock shares | $500,002 | ' |
Number of common stock shares sold | 500,002 | 6,725,589 |
Term of warrant | '10 years | ' |
Number of common stock shares to purchase warrant | 2,000,004 | ' |
Exercise price (in dollars per share) | $1 | ' |
Supplemental_Disclosures_of_Ca1
Supplemental Disclosures of Cash Flow (Details) (USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Supplemental Disclosures Of Cash Flow (Textual) | ' |
Conversion of shareholders loans to common stock | $1,000,000 |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 6 Months Ended |
In Millions, unless otherwise specified | Jun. 30, 2014 |
Income Taxes [Abstract] | ' |
Operating Loss Carryforwards | $4.30 |
Operating loss carry forwards expiration period | '2022 through 2025 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Jun. 30, 2014 |
Commitments and Contingencies [Abstract] | ' |
2015 | $132,300 |
2016 | 119,700 |
2017 | 123,400 |
2018 | 127,200 |
2019 | 130,900 |
Thereafter | 11,200 |
Total | $644,700 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Textual) (USD $) | 1 Months Ended | 6 Months Ended | 1 Months Ended | ||||
Oct. 22, 2010 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Aug. 01, 2013 | Nov. 30, 2012 | Aug. 01, 2013 | |
Charlotte | Boca Raton | Boca Raton | Flexshopper | ||||
Lease | |||||||
Property Subject to or Available for Operating Lease [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Number of leases | ' | ' | ' | 2 | ' | ' | ' |
Monthly rent | ' | ' | ' | $2,340 | $6,800 | ' | ' |
Term of lease | ' | ' | ' | ' | '39 months | ' | ' |
Additional lease renewal term | ' | ' | ' | ' | ' | '2 years | ' |
Rental expense | ' | 84,000 | 29,000 | ' | ' | ' | 15,800 |
Description of leasing arrangements | ' | 'This lease agreement was amended in January 2014 to reflect a 63 month term for a larger suite in an adjoining building. | ' | ' | ' | ' | ' |
Principal amount, sought value | $485,000 | ' | ' | ' | ' | ' | ' |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 0 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | |||
Dec. 07, 2009 | Jun. 30, 2014 | Jun. 30, 2014 | Jul. 31, 2014 | Jul. 31, 2014 | Jul. 31, 2014 | Jul. 31, 2014 | |
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | ||||
Placement agent [Member] | Offering [Member] | Offering [Member] | |||||
Maximum [Member] | Maximum [Member] | ||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Number of common stock shares sold | 500,002 | 6,725,589 | ' | 1,803,182 | ' | ' | ' |
Sale of common stock, net of issuance costs | ' | ' | $3,147,058 | $991,750 | $9,625,000 | $4,690,850 | $8,030,000 |