Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Sep. 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-Sep-14 |
Document Fiscal Period Focus | 'Q3 |
Document Fiscal Year Focus | '2014 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 34,769,866 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
CURRENT ASSETS: | ' | ' |
Cash | $4,499,914 | $960,032 |
Accounts receivable, net of allowance for doubtful accounts of $593,180 in 2014 | 25,641 | 119 |
Prepaid expenses | 156,929 | 50,188 |
Lease merchandise, net | 2,572,850 | 8,004 |
Assets of discontinued operations | 30,448 | 5,363,728 |
Total current assets | 7,285,782 | 6,382,071 |
PROPERTY AND EQUIPMENT, net | 164,828 | 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 | 7,538,623 | 6,480,395 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable | 164,938 | 20,349 |
Accrued payroll and related taxes | 169,194 | 68,140 |
Accrued expenses | 127,481 | 3,693 |
Liabilities of discontinued operations | 140,508 | 3,331,955 |
Total current liabilities | 602,121 | 3,424,137 |
COMMITMENTS AND CONTINGENCIES | ' | ' |
STOCKHOLDERS' EQUITY | ' | ' |
PREFERRED STOCK, net of issuance costs of $1,209,383 | 610,459 | 671,409 |
COMMON STOCK | 3,477 | 2,115 |
ADDITIONAL PAID IN CAPITAL | 15,335,324 | 8,548,162 |
ACCUMULATED DEFICIT | -9,012,758 | -6,165,428 |
Total Stockholders' Equity | 6,936,502 | 3,056,258 |
Total Liabilities and Stockholder's Equity | $7,538,623 | $6,480,395 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parentheticals) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement Of Financial Position [Abstract] | ' | ' |
Allowance for doubtful accounts | $593,180 | ' |
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 | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
REVENUE: | ' | ' | ' | ' |
LEASE REVENUE AND FEES | $1,346,552 | ' | $2,015,628 | ' |
LEASE MERCHANDISE SOLD | 266,988 | ' | 391,162 | ' |
Total revenue | 1,613,540 | ' | 2,406,790 | ' |
COST OF REVENUE: | ' | ' | ' | ' |
COST OF LEASE REVENUE AND FEES | 874,863 | ' | 1,319,709 | ' |
COST OF LEASE MERCHANDISE SOLD | 222,120 | ' | 332,670 | ' |
Cost of revenue, Total | 1,096,983 | ' | 1,652,379 | ' |
GROSS PROFIT | 516,557 | ' | 754,411 | ' |
GENERAL AND ADMINISTRATIVE EXPENSES | 1,881,180 | ' | 4,564,478 | ' |
INCOME TAXES | ' | ' | ' | ' |
LOSS FROM CONTINUING OPERATIONS | -1,364,623 | ' | -3,810,067 | ' |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS (including income from the sale of discontinued assets of $445,474 in 2014 ) (See note 3) | 137,118 | -265,173 | 962,737 | -227,453 |
NET (LOSS) | ($1,227,505) | ($265,173) | ($2,847,330) | ($227,453) |
BASIC (LOSS) EARNINGS PER COMMON SHARE: | ' | ' | ' | ' |
LOSS FROM CONTINUING OPERATIONS | ($0.04) | ' | ($0.15) | ' |
INCOME FROM DISCOUNTINUED OPERATIONS | $0 | ' | $0.04 | ' |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | ($0.04) | ' | ($0.11) | ' |
DILUTED (LOSS) EARNINGS PER COMMON SHARE: | ' | ' | ' | ' |
LOSS FROM CONTINUING OPERATIONS | ($0.04) | ' | ($0.15) | ' |
INCOME FROM DISCOUNTINUED OPERATIONS | $0 | ' | $0.04 | ' |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | ($0.04) | ' | ($0.11) | ' |
WEIGHTED AVERAGE SHARES | ' | ' | ' | ' |
Basic | 32,128,770 | 18,634,369 | 25,994,442 | 18,634,369 |
Dilutive | 32,128,770 | 18,634,369 | 25,994,442 | 18,634,369 |
Consolidated_Statements_of_Ope1
Consolidated Statements of Operations (Parenthetical) (USD $) | 9 Months Ended |
Sep. 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 beginning period at Dec. 31, 2013 | $3,056,258 | $671,409 | $2,115 | $8,548,162 | ($6,165,428) |
Balance at beginning period, shares at Dec. 31, 2013 | ' | 376,387 | 21,148,862 | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Provision for compensation expense related to issued stock options | 271,700 | ' | ' | 271,700 | ' |
Provision for compensation expense related to issued warrants | 11,200 | ' | ' | 11,200 | ' |
Exercise of stock options | 11,664 | ' | 3 | 11,664 | ' |
Exercise of stock options, shares | -33,333 | ' | 33,333 | ' | ' |
Sale of common stock, net of issuance costs of $39,000 | 5,433,007 | ' | 1,158 | 5,431,849 | ' |
Sale of common stock, net of issuance costs of $39,000, shares | ' | ' | 11,574,731 | ' | ' |
Conversion of officers loans to common stock | 1,000,000 | ' | 182 | 999,818 | ' |
Conversion of officers loans to common stock, shares | ' | ' | 1,818,182 | ' | ' |
Conversion of preferred shares to common stock | ' | -60,950 | 19 | 60,931 | ' |
Conversion of preferred shares to common stock, shares | 194,758 | -34,168 | 194,758 | ' | ' |
Net loss | -2,847,330 | ' | ' | ' | -2,847,330 |
Balance at Sep. 30, 2014 | $6,936,502 | $610,459 | $3,477 | $15,335,324 | ($9,012,758) |
Balance, shares at Sep. 30, 2014 | ' | 342,219 | 34,769,866 | ' | ' |
Consolidated_Statement_of_Chan1
Consolidated Statement of Changes In Stockholders' Equity (Parenthetical) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Statement of Stockholders' Equity [Abstract] | ' | ' |
Sale of common stock, net of issuance costs | $39,000 | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($2,847,330) | ($227,453) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' |
(Income) loss from discontinued operation | -962,737 | 227,453 |
Depreciation and amortization | 42,124 | ' |
Depreciation of lease merchandise | 1,019,709 | ' |
Impairment of lease merchandise | 300,000 | ' |
Compensation expense related to issuance of stock options | 271,700 | ' |
Compensation expense related to issuance of warrants | 11,200 | ' |
Provision for uncollectible accounts | 593,180 | ' |
Changes in operating assets and liabilities: | ' | ' |
(Increase) in accounts receivable | -618,702 | ' |
(Increase) in prepaid expenses and other | -106,742 | ' |
(Increase) in lease merchandise | -3,884,555 | ' |
(Increase) in security deposits | -47,768 | ' |
Increase in accounts payable | 144,589 | ' |
Increase in accrued payroll and related taxes | 101,053 | ' |
Increase in accrued expenses | 123,788 | ' |
Net cash used in operating activities - continuing operations | -5,860,491 | ' |
Net cash provided by operating activities - discontinued operations | 6,306,171 | 2,018,294 |
Net cash provided by operating activities | 445,680 | 2,018,294 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -148,873 | ' |
Net cash used in investing activities - continuing operations | -148,873 | ' |
Net cash used in investing activities- discontinued operations | ' | -83,393 |
Net cash used in investing activities | -148,873 | -83,393 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Loans from shareholders | 1,000,000 | ' |
Proceeds from exercise of stock options | 11,667 | ' |
Proceeds from sale of common stock | 5,472,008 | ' |
Payment of costs related to issuance of common stock | -39,000 | ' |
Net cash provided by financing operations - continuing operations | 6,444,675 | ' |
Net cash used in financing operations - discontinued operations | -3,201,600 | -1,283,879 |
Net cash provided by (used in) financing activities | 3,243,075 | -1,283,879 |
INCREASE IN CASH | 3,539,882 | 651,022 |
CASH, beginning of period | 960,032 | 610,439 |
CASH, end of period | $4,499,914 | $1,261,461 |
Background_and_Description_of_
Background and Description of Business | 9 Months Ended |
Sep. 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 September 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. | |
During 2013, the Company decided to concentrate its efforts on the operations of FlexShopper and subsequently, the Company entered into an agreement with a financial institution to sell substantially all of the operating assets of its wholly owned subsidiary, Anchor Funding Services, LLC (“Anchor”) which provided accounts receivable funding to business located throughout the United States. The sale was finalized in June 2014 (See Note 3). The consolidated statements of operations for the three and nine months ended September 30, 2014 and the consolidated statements of cash flows for the nine months ended September 30, 2014 and 2013 reflect the historical operations of Anchor as discontinued operations. The 2014 consolidated balance sheet contains amounts attributable to Anchor which 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 | 9 Months Ended | ||||||||||||||||
Sep. 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 nine months ended September 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. After 90 days, the customer may also choose an early payment option to acquire ownership which would be less expensive than making 52 weekly payments. | |||||||||||||||||
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. Merchandise sales revenue is recognized when the customer exercises the purchase option and pays the purchase price. Revenue from processing fees earned upon exercise by the customer of the 90 day purchase option is recorded upon recognition of the related merchandise sales, such fees amounted to approximately $15,000 and $22,000 for the three and nine month period ended September 30, 2014, respectively. Revenue for lease payments received prior to their due date is deferred. Our revenue recognition accounting policy matches the lease revenue with the corresponding costs,mainly depreciation associated with the leased merchandise. | |||||||||||||||||
Lease Merchandise – Until all payment obligations are satisfied under the agreement, the Company maintains ownership of the 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 with a corresponding charge to cost of lease revenue. 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 September 30, 2014. | |||||||||||||||||
Lease merchandise – at cost | $ | 3,892,682 | |||||||||||||||
Accumulated depreciation | (1,019,832 | ) | |||||||||||||||
Impairment reserve | (300,000 | ) | |||||||||||||||
Lease merchandise – net | $ | 2,572,850 | |||||||||||||||
Intangible Assets - 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, provision for doubtful accounts, advertising and other expenses. | |||||||||||||||||
Advertising Costs – The Company charges advertising costs to expense as incurred. Total advertising costs were approximately $228,100 and $416,300 for the three months and nine months ended September 30, 2014. Prior year advertising costs are included in discontinued operations. | |||||||||||||||||
Per Share Data (EPS) – Basic net (loss) income per share is computed by dividing the net (loss) 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 loss from continuing operations, potential common shares are not included in the computation of diluted loss per share, since they have an anti-dilutive effect. | |||||||||||||||||
In computing diluted loss per share, no effect has been given to the issuance of common stock upon conversion or exercise of the following securities as their effect is anti-dilutive: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Convertible preferred stock | 2,090,954 | 1,919,573 | 2,163,623 | 1,919,573 | |||||||||||||
Options | 3,650,121 | 2,992,692 | 3,461,284 | 2,891,783 | |||||||||||||
Warrants | 3,342,504 | 3,342,504 | 3,342,504 | 3,342,504 | |||||||||||||
9,083,579 | 8,254,769 | 8,967,411 | 8,153,860 | ||||||||||||||
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 nine months ended September 30, 2014 and 2013. | |||||||||||||||||
Fair Value of Financial Instruments – The carrying value of cash equivalents, accounts payable and accrued liabilities due to their short term nature approximate fair value. | |||||||||||||||||
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 cannot conclude that it is more likely than not that 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. For the nine months ended September 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 any 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 with early adoption permitted. 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. | |||||||||||||||||
In August 2014, the FASB issued ASU 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The term probable is used consistently with its use in Topic 450, Contingencies. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. |
Discontinued_Operations
Discontinued Operations | 9 Months Ended | ||||||||||||||||
Sep. 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 Earnout Payments totaled $183,443 for the three and nine months ended September 30, 2014. 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 the 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 dated 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 nine months ended September 30, 2014 which is included in income from discontinued operations. Such gain excludes the contingent Earnout Payments which are being recorded as income when earned. | |||||||||||||||||
The assets and liabilities of the discontinued operations are presented separately under the captions “Assets of discontinued operations” and “Liabilities of discontinued operations” in the accompanying Balance Sheets at September 30, 2014 and December 31, 2013 and consist of the following: | |||||||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||||||
Assets of discontinued operations: | |||||||||||||||||
Retained interest in purchased accounts receivable | $ | 8,150 | $ | 4,966,338 | |||||||||||||
Earned but uncollected fees | - | 141,077 | |||||||||||||||
Due from client | 22,298 | 256,313 | |||||||||||||||
$ | 30,448 | $ | 5,363,728 | ||||||||||||||
Liabilities of discontinued operations: | |||||||||||||||||
Accounts payable | $ | 62,015 | $ | 26,966 | |||||||||||||
Accrued expenses | 39,151 | 51,719 | |||||||||||||||
Due to financial institution | 39,342 | 3,240,942 | |||||||||||||||
Deferred revenue | - | 12,328 | |||||||||||||||
$ | 140,508 | $ | 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 | Nine months ended | ||||||||||||||||
September 30, | September 30, | 30-Sep-14 | 30-Sep-13 | ||||||||||||||
2014 | 2013 | ||||||||||||||||
Finance revenues | $ | 25,490 | $ | 546,872 | $ | 735,357 | $ | 1,853,081 | |||||||||
Interest expense-financial institution | (532 | ) | (87,656 | ) | (109,878 | ) | (298,069 | ) | |||||||||
Benefit (Provision) for credit losses | - | 45,675 | 24,904 | (59,325 | ) | ||||||||||||
Net finance revenues | 24,958 | 504,891 | 650,383 | 1,495,687 | |||||||||||||
Operating expenses | (196,056 | ) | (770,064 | ) | (441,336 | ) | (1,723,140 | ) | |||||||||
Commissions on sale and other income | 308,216 | - | 308,216 | - | |||||||||||||
Gain on sale of discontinued assets | - | - | 445,474 | - | |||||||||||||
Net income (loss) from discontinued operations | $ | 137,118 | $ | (265,173 | ) | $ | 962,737 | $ | (227,453 | ) | |||||||
Property_and_Equipment
Property and Equipment | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
Property and Equipment [Abstract] | ' | ||||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||||
4. PROPERTY AND EQUIPMENT: | |||||||||||
Property and equipment consisted of the following: | |||||||||||
Estimated | |||||||||||
Useful Lives | 30-Sep-14 | 31-Dec-13 | |||||||||
Furniture and fixtures | 2-5 years | $ | 99,982 | $ | 64,945 | ||||||
Computers and software | 3-7 years | 365,361 | 251,525 | ||||||||
465,343 | 316,470 | ||||||||||
Less: accumulated depreciation | (300,515 | ) | (258,391 | ) | |||||||
$ | 164,828 | $ | 58,079 | ||||||||
Depreciation expense was $23,717 and $7,023 for the quarters ended September 30, 2014 and 2013, respectively and $42,125 and $19,681 for the nine months ended September 30, 2014 and 2013, respectively. |
Loan_Payable_Shareholders
Loan Payable Shareholders | 9 Months Ended |
Sep. 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 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. In May 2014 these loans were converted into shares of the Company’s Common Stock at a price of $0.55 per share. (See Note 6). |
Capital_Structure
Capital Structure | 9 Months Ended |
Sep. 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 5.8 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. | |
During the nine months ended September 30, 2014, 34,168 preferred shares were converted into 194,758 common shares. As of September 30, 2014 there were 342,219 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. | |
From May through October 2014, the Company received gross proceeds of $6,501,101 from the sale of 11,820,187 shares offered through three co-placement agents in a private placement offering at an offering price of $.55 per share. During the second and third quarters of 2014, the Company received net proceeds from this offering of $5,472,008 from the sale of 11,574,730 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 October 9, 2014 of seven year warrants to purchase 15% of the number of shares sold in the offering, which warrants were issued to the placement agents. As of September 30, 2014, the placement agents have earned warrants to purchase 1,766,209 shares. The forgoing does not include warrants to purchase 6,818 warrants which were earned at the final closing on October 9, 2014, bringing the total number of placement agent warrants to 1,773,027, each at an exercise price of $.55 per share. | |
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 their notes totaling $1,000,000. |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended | ||
Sep. 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 July 25, 2014, a new Director of the Company was granted 10 year options to purchase 180,000 shares of common stock. These options vest one third annually commencing at the date of grant. | |||
See the last paragraph of Note 6. |
Stock_Option
Stock Option | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Stock Options [Abstract] | ' | ||||||||||||
STOCK OPTIONS | ' | ||||||||||||
8. STOCK OPTIONS | |||||||||||||
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. | |||||||||||||
Activity in stock options for the nine months ended September 30, 2014 is: | |||||||||||||
Outstanding at January 1, 2014 | 3,015,000 | ||||||||||||
Granted | 871,000 | ||||||||||||
Canceled | (146,667 | ) | |||||||||||
Exercised | (33,333 | ) | |||||||||||
Outstanding at September 30, 2014 | 3,706,000 | ||||||||||||
The following table summarizes information about outstanding stock options as of September 30, 2014: | |||||||||||||
Exercise | Number | Remaining | Number | ||||||||||
Price | Outstanding | Contractual Life | Exercisable | ||||||||||
$ | 1.25 | 1,605,000 | 4 years | 1,605,000 | |||||||||
$ | 1 | 45,000 | 6 years | 45,000 | |||||||||
$ | 0.62 | 500,000 | 6 years | 500,000 | |||||||||
$ | 0.17 | 500,000 | 9 years | 500,000 | |||||||||
$ | 0.8 | 550,000 | 10 years | 550,000 | |||||||||
$ | 0.25 | 120,000 | 10 years | 120,000 | |||||||||
$ | 0.3 | 50,000 | 10 years | 16,667 | |||||||||
$ | 0.45 | 25,000 | 10 years | 8,333 | |||||||||
$ | 0.75 | 55,000 | 10 years | - | |||||||||
$ | 0.83 | 25,000 | 10 years | - | |||||||||
$ | 0.9 | 30,000 | 10 years | 7,500 | |||||||||
$ | 0.89 | 180,000 | 10 years | 60,000 | |||||||||
$ | 0.79 | 1,000 | 10 years | 333 | |||||||||
$ | 0.55 | 20,000 | 10 years | - | |||||||||
3,706,000 | 3,412,833 | ||||||||||||
· | 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: | ||||||||||||
2014 | |||||||||||||
Exercise price | $0.75 to $0.90 | ||||||||||||
Term | 10 years | ||||||||||||
Volatility | 0.37 | ||||||||||||
Dividends | 0 | % | |||||||||||
Discount rate | 2.43% to 2.70% | ||||||||||||
· | The fair value amounts recorded for these options in the statements of operations was $37,200 and $7,250 for the three months ended September 30, 2014 and 2013, respectively and $271,700 and $54,623 for the nine months ended September 30, 2014 and 2013, respectively. |
Warrants
Warrants | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Warrants [Abstract] | ' | ||||||||||||
WARRANTS | ' | ||||||||||||
9. WARRANTS: | |||||||||||||
The Company has outstanding warrants to one of its placement agents 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 (Black Scholes Model) 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 nine months ended September 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. | |||||||||||||
The following table summarizes information about outstanding stock warrants as of September 30, 2014: | |||||||||||||
Weighted Average | |||||||||||||
Exercise | Number | Remaining | Number | ||||||||||
Price | Outstanding | Contractual Life | Exercisable | ||||||||||
$ | 1.1 | 1,342,500 | 4 years | 1,342,500 | |||||||||
$ | 1 | 2,000,004 | 7 years | 2,000,004 | |||||||||
3,342,504 | |||||||||||||
The foregoing table does not include seven-year warrants to purchase 1,773,027 shares of the Company’s Common Stock at an offering price of $.55 per share issued in October 2014 to the placement agents of the Company’s private placement offering which had a series of closings from May 2014 through October 2014. |
Supplemental_Disclosures_of_Ca
Supplemental Disclosures of Cash Flow | 9 Months Ended |
Sep. 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 nine months ended September 30, 2014 | |
Conversion of shareholders’ loans to common stock - $1,000,000 | |
Conversion of convertible preferred stock to common stock - $ 60,950 | |
For the three and nine months ended September 30, 2013 | |
None |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Taxes [Abstract] | ' |
INCOME TAXES: | ' |
11. INCOME TAXES: | |
As of September 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 September 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 | 9 Months Ended | ||||||
Sep. 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 nine months ended September 30, 2014 and 2013 was approximately $116,000 and $42,000, respectively. At September 30, 2014, The future minimum annual lease payments are approximately as follows: | |||||||
2015 | $ | 135,800 | |||||
2016 | 120,600 | ||||||
2017 | 124,400 | ||||||
2018 | 128,100 | ||||||
2019 | 109,500 | ||||||
$ | 618,400 | ||||||
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. | |||||||
On September 9, 2014 the Company received $124,774 from Harvey as a final settlement, which is included in discontinued operations. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
13. SUBSEQUENT EVENTS | |
In October 2014, the Company received gross proceeds of $135,000 from the sale of 245,456 shares of the Company’s Common Stock. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||||||||||||||||
Sep. 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 nine months ended September 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. After 90 days, the customer may also choose an early payment option to acquire ownership which would be less expensive than making 52 weekly payments. | |||||||||||||||||
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. Merchandise sales revenue is recognized when the customer exercises the purchase option and pays the purchase price. Revenue from processing fees earned upon exercise by the customer of the 90 day purchase option is recorded upon recognition of the related merchandise sales, such fees amounted to approximately $15,000 and $22,000 for the three and nine month period ended September 30, 2014, respectively. Revenue for lease payments received prior to their due date is deferred. Our revenue recognition accounting policy matches the lease revenue with the corresponding costs,mainly depreciation associated with the leased merchandise. | |||||||||||||||||
Lease Merchandise | ' | ||||||||||||||||
Lease Merchandise – Until all payment obligations are satisfied under the agreement, the Company maintains ownership of the 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 with a corresponding charge to cost of lease revenue. 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 September 30, 2014. | |||||||||||||||||
Lease merchandise – at cost | $ | 3,892,682 | |||||||||||||||
Accumulated depreciation | (1,019,832 | ) | |||||||||||||||
Impairment reserve | (300,000 | ) | |||||||||||||||
Lease merchandise – net | $ | 2,572,850 | |||||||||||||||
Intangible Assets | ' | ||||||||||||||||
Intangible Assets - 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, provision for doubtful accounts, advertising and other expenses. | |||||||||||||||||
Advertising Costs | ' | ||||||||||||||||
Advertising Costs – The Company charges advertising costs to expense as incurred. Total advertising costs were approximately $228,100 and $416,300 for the three months and nine months ended September 30, 2014. Prior year advertising costs are included in discontinued operations. | |||||||||||||||||
Per Share Data (EPS) | ' | ||||||||||||||||
Per Share Data (EPS) – Basic net (loss) income per share is computed by dividing the net (loss) 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 loss from continuing operations, potential common shares are not included in the computation of diluted loss per share, since they have an anti-dilutive effect. | |||||||||||||||||
In computing diluted loss per share, no effect has been given to the issuance of common stock upon conversion or exercise of the following securities as their effect is anti-dilutive: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Convertible preferred stock | 2,090,954 | 1,919,573 | 2,163,623 | 1,919,573 | |||||||||||||
Options | 3,650,121 | 2,992,692 | 3,461,284 | 2,891,783 | |||||||||||||
Warrants | 3,342,504 | 3,342,504 | 3,342,504 | 3,342,504 | |||||||||||||
9,083,579 | 8,254,769 | 8,967,411 | 8,153,860 | ||||||||||||||
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 nine months ended September 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 due to their short term nature approximate fair value. | |||||||||||||||||
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 cannot conclude that it is more likely than not that 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. For the nine months ended September 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 any 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 with early adoption permitted. 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. | |||||||||||||||||
In August 2014, the FASB issued ASU 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The term probable is used consistently with its use in Topic 450, Contingencies. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. | |||||||||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Schedule of lease merchandise | ' | ||||||||||||||||
Lease merchandise – at cost | $ | 3,892,682 | |||||||||||||||
Accumulated depreciation | (1,019,832 | ) | |||||||||||||||
Impairment reserve | (300,000 | ) | |||||||||||||||
Lease merchandise – net | $ | 2,572,850 | |||||||||||||||
Schedule of antidilutive securities excluded from computation of earnings per share | ' | ||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Convertible preferred stock | 366,834 | 1,919,573 | 379,583 | 1,919,573 | |||||||||||||
Options | 3,650,121 | 2,992,692 | 3,461,284 | 2,891,783 | |||||||||||||
Warrants | 3,342,504 | 3,342,504 | 3,342,504 | 3,342,504 | |||||||||||||
7,359,459 | 8,254,769 | 7,183,371 | 8,153,860 | ||||||||||||||
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Discontinued Operations [Abstract] | ' | ||||||||||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | ' | ||||||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||||||
Assets of discontinued operations: | |||||||||||||||||
Retained interest in purchased accounts receivable | $ | 8,150 | $ | 4,966,338 | |||||||||||||
Earned but uncollected fees | - | 141,077 | |||||||||||||||
Due from client | 22,298 | 256,313 | |||||||||||||||
$ | 30,448 | $ | 5,363,728 | ||||||||||||||
Liabilities of discontinued operations: | |||||||||||||||||
Accounts payable | $ | 62,015 | $ | 26,966 | |||||||||||||
Accrued expenses | 39,151 | 51,719 | |||||||||||||||
Due to financial institution | 39,342 | 3,240,942 | |||||||||||||||
Deferred revenue | - | 12,328 | |||||||||||||||
$ | 140,508 | $ | 3,331,955 | ||||||||||||||
Schedule Of Disposal Groups Including Discontinued Operations Income Statement | ' | ||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | 30-Sep-14 | 30-Sep-13 | ||||||||||||||
2014 | 2013 | ||||||||||||||||
Finance revenues | $ | 25,490 | $ | 546,872 | $ | 735,357 | $ | 1,853,081 | |||||||||
Interest expense-financial institution | (532 | ) | (87,656 | ) | (109,878 | ) | (298,069 | ) | |||||||||
Benefit (Provision) for credit losses | - | 45,675 | 24,904 | (59,325 | ) | ||||||||||||
Net finance revenues | 24,958 | 504,891 | 650,383 | 1,495,687 | |||||||||||||
Operating expenses | (196,056 | ) | (770,064 | ) | (441,336 | ) | (1,723,140 | ) | |||||||||
Commissions on sale and other income | 308,216 | - | 308,216 | - | |||||||||||||
Gain on sale of discontinued assets | - | - | 445,474 | - | |||||||||||||
Net income (loss) from discontinued operations | $ | 137,118 | $ | (265,173 | ) | $ | 962,737 | $ | (227,453 | ) | |||||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
Property and Equipment [Abstract] | ' | ||||||||||
Schedule of property and equipment | ' | ||||||||||
Estimated | |||||||||||
Useful Lives | 30-Sep-14 | 31-Dec-13 | |||||||||
Furniture and fixtures | 2-5 years | $ | 99,982 | $ | 64,945 | ||||||
Computers and software | 3-7 years | 365,361 | 251,525 | ||||||||
465,343 | 316,470 | ||||||||||
Less: accumulated depreciation | (300,515 | ) | (258,391 | ) | |||||||
$ | 164,828 | $ | 58,079 |
Stock_Options_Tables
Stock Options (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Stock Options [Abstract] | ' | ||||||||||||
Schedule of stock option activity and weighted average exercise price | ' | ||||||||||||
Outstanding at January 1, 2014 | 3,015,000 | ||||||||||||
Granted | 871,000 | ||||||||||||
Canceled | (146,667 | ) | |||||||||||
Exercised | (33,333 | ) | |||||||||||
Outstanding at September 30, 2014 | 3,706,000 | ||||||||||||
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 | 45,000 | 6 years | 45,000 | |||||||||
$ | 0.62 | 500,000 | 6 years | 500,000 | |||||||||
$ | 0.17 | 500,000 | 9 years | 500,000 | |||||||||
$ | 0.8 | 550,000 | 10 years | 550,000 | |||||||||
$ | 0.25 | 120,000 | 10 years | 120,000 | |||||||||
$ | 0.3 | 50,000 | 10 years | 16,667 | |||||||||
$ | 0.45 | 25,000 | 10 years | 8,333 | |||||||||
$ | 0.75 | 55,000 | 10 years | - | |||||||||
$ | 0.83 | 25,000 | 10 years | - | |||||||||
$ | 0.9 | 30,000 | 10 years | 7,500 | |||||||||
$ | 0.89 | 180,000 | 10 years | 60,000 | |||||||||
$ | 0.79 | 1,000 | 10 years | 333 | |||||||||
$ | 0.55 | 20,000 | 10 years | - | |||||||||
3,706,000 | 3,412,833 | ||||||||||||
Schedule of option input into a Black Scholes option pricing model | ' | ||||||||||||
2014 | |||||||||||||
Exercise price | $0.75 to $0.90 | ||||||||||||
Term | 10 years | ||||||||||||
Volatility | 0.37 | ||||||||||||
Dividends | 0 | % | |||||||||||
Discount rate | 2.43% to 2.70% |
Warrants_Tables
Warrants (Tables) | 9 Months Ended | ||||||||||||
Sep. 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 | ||||||||||
$ | 1.1 | 1,342,500 | 4 years | 1,342,500 | |||||||||
$ | 1 | 2,000,004 | 7 years | 2,000,004 | |||||||||
3,342,504 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Commitments and Contingencies [Abstract] | ' | ||||||
Schedule of Future Minimum Lease Payments | ' | ||||||
2015 | $ | 135,800 | |||||
2016 | 120,600 | ||||||
2017 | 124,400 | ||||||
2018 | 128,100 | ||||||
2019 | 109,500 | ||||||
$ | 618,400 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | Sep. 30, 2014 |
Summary of Significant Accounting Policies [Abstract] | ' |
Lease merchandise - at cost | $3,892,682 |
Accumulated depreciation | -1,019,832 |
Impairment reserve | -300,000 |
Leased merchandise - net | $2,572,850 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 1) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share | 9,083,579 | 8,254,769 | 8,967,411 | 8,153,860 |
Convertible preferred stock [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share | 2,090,954 | 1,919,573 | 2,163,623 | 1,919,573 |
Options [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share | 3,650,121 | 2,992,692 | 3,461,284 | 2,891,783 |
Warrants [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share | 3,342,504 | 3,342,504 | 3,342,504 | 3,342,504 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2014 | Sep. 30, 2014 | |
Summary of Significant Accounting Policies [Abstract] | ' | ' |
Total advertising costs | $228,100 | $416,300 |
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 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. After 90 days, the customer may also choose an early payment option to acquire ownership which would be less expensive than making 52 weekly payments. | ||
Revenue Recognition | ' | 'Through a 90 day same as cash option or through payments of all required lease payments for ownership. |
Revenue, Other Financial Services | $15,000 | $22,000 |
Discontinued_Operations_Detail
Discontinued Operations (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Assets of discontinued operations: | ' | ' |
Retained interest in purchased accounts receivable | $8,150 | $4,966,338 |
Earned but uncollected fees | ' | 141,077 |
Due from client | 22,298 | 256,313 |
Assets of discontinued operations, Total | 30,448 | 5,363,728 |
Liabilities of discontinued operations: | ' | ' |
Accounts payable | 62,015 | 26,966 |
Accrued expenses | 39,151 | 51,719 |
Due to financial institution | 39,342 | 3,240,942 |
Deferred revenue | ' | 12,328 |
Liabilities of discontinued operations,Total | $140,508 | $3,331,955 |
Discontinued_Operations_Detail1
Discontinued Operations (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Discontinued Operations [Abstract] | ' | ' | ' | ' |
Finance revenues | $25,490 | $546,872 | $735,357 | $1,853,081 |
Interest expense-financial institution | -532 | -87,656 | -109,878 | -298,069 |
Benefit (Provision) for credit losses | ' | 45,675 | 24,904 | -59,325 |
Net finance revenues | 24,958 | 504,891 | 650,383 | 1,495,687 |
Operating expenses | -196,056 | -770,064 | -441,336 | -1,723,140 |
Commissions on sale and other income | 308,216 | ' | 308,216 | ' |
Gain on sale of discontinued assets | ' | ' | 445,474 | ' |
Net income (loss) from discontinued operations | ($137,118) | $265,173 | ($962,737) | $227,453 |
Discontinued_Operations_Detail2
Discontinued Operations (Detail Textual) (USD $) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2014 | Sep. 30, 2014 | |
Discontinued Operations [Abstract] | ' | ' |
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. |
Income from the sale of discontinued assets | ' | $445,474 |
Earnout Payments | $183,443 | ' |
Property_and_Equipment_Summary
Property and Equipment - Summary of property and equipment (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 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 | $465,343 | $316,470 | $99,982 | $64,945 | ' | ' | $365,361 | $251,525 | ' | ' |
Less: accumulated depreciation | -300,515 | -258,391 | ' | ' | ' | ' | ' | ' | ' | ' |
Property and equipment, net | $164,828 | $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 | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Property and Equipment [Abstract] | ' | ' | ' | ' |
Depreciation expense | $23,717 | $7,023 | $42,125 | $19,681 |
Loan_Payable_to_Shareholders_D
Loan Payable to Shareholders (Details) (USD $) | 1 Months Ended | |
Mar. 19, 2014 | 1-May-14 | |
Promissory_Note | ||
Schedule Of Loan Payable To Officer [Line Items] | ' | ' |
Number of promissory notes | 2 | ' |
Conversion price | ' | $0.55 |
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 | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 6 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | 9 Months Ended | |||||
Dec. 07, 2009 | Dec. 31, 2013 | Oct. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Oct. 31, 2014 | Oct. 09, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Oct. 31, 2014 | Sep. 30, 2014 | Oct. 09, 2014 | Oct. 31, 2014 | Jan. 31, 2007 | Sep. 30, 2014 | Sep. 30, 2014 | |
Subsequent Event [Member] | Subsequent Event [Member] | Private Placement [Member] | Private Placement [Member] | Private Placement [Member] | Private Placement [Member] | Placement Agent [Member] | Placement Agent [Member] | Placement Agent [Member] | Series 1 Convertible Preferred Stock | Series 1 Convertible Preferred Stock | Series 1 Preferred Stock [Member] | ||||||
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |||||||||||||||
Preferred stock, par value (in dollars per share) | ' | ' | ' | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares authorized (in shares) | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 342,219 | ' |
Preferred stock conversion into Series 1 Convertible Preferred Stock (in shares) | ' | ' | ' | 194,758 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,000,000 | ' | ' |
Preferred stock conversion ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5.1 shares | '5.8 shares |
Dividend rate on Series 1 Convertible Preferred Stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.00% | ' |
Common stock, shares authorized (in shares) | ' | ' | ' | 65,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, par value (in dollars per share) | ' | ' | ' | $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 | ' | ' | ' | 5,472,008 | ' | ' | ' | 5,472,008 | 5,472,008 | ' | 6,501,101 | ' | ' | ' | ' | ' | ' |
Number of common stock shares sold | 500,002 | ' | ' | ' | ' | 245,456 | ' | 11,574,730 | 11,574,730 | ' | 11,820,187 | ' | ' | ' | ' | ' | ' |
Warrants to purchase common stock | ' | ' | ' | ' | ' | ' | 6,818 | ' | ' | ' | ' | 1,766,209 | 1,773,027 | ' | ' | ' | ' |
Warrants to purchase common stock description. | ' | ' | ' | 'The foregoing excludes the issuance at the final closing date of October 9, 2014 of seven year warrants to purchase 15% of the number of shares sold in the offering, which warrants were 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 | ' | ' | ' | ' | ' | ' | ' |
Preferred shares were converted | ' | ' | ' | '34,168 preferred shares were converted into 194,758 common shares. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Offering Price | ' | ' | $0.55 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price of warrants (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.55 | ' | ' | ' |
Related_Party_Transactions_Det
Related Party Transactions (Details) | 9 Months Ended | 1 Months Ended | ||||
Sep. 30, 2014 | Mar. 20, 2012 | Mar. 24, 2014 | Mar. 20, 2012 | Jul. 25, 2014 | Mar. 20, 2012 | |
Morry Rubin | B Bernstein | B Bernstein | Officers and Directors | Officers and Directors | ||
Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | ||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' |
Number of option granted | 871,000 | 250,000 | 250,000 | 250,000 | 180,000 | 500,000 |
Remaining Contractual Life | ' | '10 years | '10 years | '10 years | '10 years | '10 years |
Stock_Options_Details
Stock Options (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' |
Outstanding at beginning of year | 3,015,000 |
Granted | 871,000 |
Canceled | -146,667 |
Exercised | -33,333 |
Outstanding at end of year | 3,706,000 |
Stock_Options_Details_1
Stock Options (Details 1) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | |||
Exercise Price $ 1.25 | Exercise Price $ 1.00 | Exercise Price $ 0.62 | Exercise Price $ 0.17 | Exercise Price $ 0.80 | Exercise Price $ 0.25 | Exercise Price $ 0.30 | Exercise Price $ 0.45 | Exercise Price $ 0.75 | Exercise Price $ 0.83 | Exercise Price $ 0.90 | Exercise Price $ 0.89 | Exercise Price $ 0.79 | Exercise Price $ 0.55 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise Price (in dollars per share) | ' | ' | ' | $1.25 | $1 | $0.62 | $0.17 | $0.80 | $0.25 | $0.30 | $0.45 | $0.75 | $0.83 | $0.90 | $0.89 | $0.79 | $0.55 |
Number Outstanding | 3,706,000 | 3,015,000 | 3,706,000 | 1,605,000 | 45,000 | 500,000 | 500,000 | 550,000 | 120,000 | 50,000 | 25,000 | 55,000 | 25,000 | 30,000 | 180,000 | 1,000 | 20,000 |
Remaining Contractual Life | ' | ' | ' | '4 years | '6 years | '6 years | '9 years | '10 years | '10 years | '10 years | '10 years | '10 years | '10 years | '10 years | '10 years | '10 years | '10 years |
Number Exercisable | ' | ' | 3,412,833 | 1,605,000 | 45,000 | 500,000 | 500,000 | 550,000 | 120,000 | 16,667 | 8,333 | ' | ' | 7,500 | 60,000 | 333 | ' |
Stock_Options_Summary_of_fair_
Stock Options - Summary of fair value option award on date of grant (Details 2) (Stock Options, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Term | '10 years |
Volatility | 0.37% |
Dividends | 0.00% |
Minimum | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise price | 0.75 |
Discount rate | 2.43% |
Maximum | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Exercise price | 0.9 |
Discount rate | 2.70% |
Stock_Options_Details_Textual
Stock Options (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 |
Stock_Options_Details_Textual_
Stock Options (Details Textual 1) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stock Options [Abstract] | ' | ' | ' | ' |
Fair value amounts recorded for option | $37,200 | $7,250 | $271,700 | $54,623 |
Warrants_Summary_of_warrants_D
Warrants - Summary of warrants (Details) (Warrant, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Warrant | ' |
Class of Warrant or Right [Line Items] | ' |
Exercise price | $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) (Warrant, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Class of Warrant or Right [Line Items] | ' |
Number Outstanding | 3,342,504 |
Exercise Price $ 1.10 | ' |
Class of Warrant or Right [Line Items] | ' |
Exercise price | $1.10 |
Number Outstanding | 1,342,500 |
Weighted Average Remaining Contractual Life | '4 years |
Number Exercisable | 1,342,500 |
Exercise Price $ 1.00 | ' |
Class of Warrant or Right [Line Items] | ' |
Exercise price | $1 |
Number Outstanding | 2,000,004 |
Weighted Average Remaining Contractual Life | '7 years |
Number Exercisable | 2,000,004 |
Warrants_Details_Textual
Warrants (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Class of Warrant or Right [Line Items] | ' | ' | ' | ' |
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 | $0.10 | ' | $0.10 | ' |
Warrant | Warrants Extended By 31 January 2018 | ' | ' | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' | ' | ' |
Exercise price | $1.10 | ' | $1.10 | ' |
Warrants_Details_Textual_1
Warrants (Details Textual 1) (USD $) | 0 Months Ended | 6 Months Ended | |
Dec. 07, 2009 | Oct. 31, 2014 | Oct. 31, 2014 | |
Subsequent Event [Member] | Subsequent Event [Member] | ||
Placement Agent [Member] | |||
Warrant Textual [Abstract] | ' | ' | ' |
Proceeds from sale of common stock shares | $500,002 | ' | ' |
Number of common stock shares sold | 500,002 | 245,456 | ' |
Term of warrant | '10 years | ' | '7 years |
Number of common stock shares to purchase warrant | ' | ' | 1,773,027 |
Exercise price | ' | ' | $0.55 |
Supplemental_Disclosures_of_Ca1
Supplemental Disclosures of Cash Flow (Details) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Conversion of officers loans to common stock | $1,000,000 |
Conversion of preferred shares to common stock | ' |
Preferred Stock [Member] | ' |
Conversion of officers loans to common stock | ' |
Conversion of preferred shares to common stock | ($60,950) |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 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 $) | Sep. 30, 2014 |
Commitments and Contingencies [Abstract] | ' |
2015 | $135,800 |
2016 | 120,600 |
2017 | 124,400 |
2018 | 128,100 |
2019 | 109,500 |
Total | $618,400 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Textual) (USD $) | 1 Months Ended | 9 Months Ended | 9 Months Ended | 1 Months Ended | |||
Oct. 22, 2010 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 09, 2014 | Sep. 30, 2014 | Aug. 01, 2013 | Aug. 01, 2013 | |
Charlotte | 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 | ' |
Rental expense | ' | 116,000 | 42,000 | ' | ' | ' | 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 | ' | ' | ' | ' | ' | ' |
Discontinued operations | ' | ' | ' | $124,774 | ' | ' | ' |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 0 Months Ended | 9 Months Ended | 0 Months Ended |
Dec. 07, 2009 | Sep. 30, 2014 | Oct. 31, 2014 | |
Subsequent Event [Member] | |||
Subsequent Event (Textual) | ' | ' | ' |
Number of common stock shares sold | 500,002 | ' | 245,456 |
Sale of common stock, net of issuance costs | ' | $5,433,007 | $135,000 |