Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 18, 2017 | Jun. 30, 2016 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | FlexShopper, Inc. | ||
Entity Central Index Key | 1,397,047 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 31,412,000 | ||
Entity Common Stock, Shares Outstanding | 5,287,391 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash | $ 5,412,495 | $ 3,396,206 |
Accounts receivable, net | 2,181,787 | 752,159 |
Prepaid expenses | 361,777 | 237,069 |
Lease merchandise, net | 18,570,460 | 11,204,136 |
Total current assets | 26,526,519 | 15,589,570 |
PROPERTY AND EQUIPMENT, net | 2,540,514 | 1,797,553 |
OTHER ASSETS: | ||
Intangible assets, net | 20,340 | 23,416 |
Security deposits | 68,251 | 66,758 |
Total other assets | 88,591 | 90,174 |
Total assets | 29,155,624 | 17,477,297 |
CURRENT LIABILITIES: | ||
Accounts payable | 3,917,747 | 1,783,929 |
Accrued payroll and related taxes | 296,333 | 251,519 |
Accrued expenses | 259,104 | 487,120 |
Total current liabilities | 4,473,184 | 2,522,568 |
Loan payable under credit agreement to beneficial shareholder net of $631,488 in 2016 and $832,792 in 2015 of unamortized issuance costs | 10,156,719 | 8,786,770 |
Total liabilities | 14,629,903 | 11,309,338 |
COMMITMENTS (Note 12) | ||
STOCKHOLDERS' EQUITY | ||
Series 1 Convertible Preferred stock, $0.001 par value- authorized 2,000,000 shares, issued and outstanding 243,065 shares in 2016 and 328,197 in 2015 at $5.00 stated value | 1,215,325 | 1,640,985 |
Series 2 Convertible Preferred stock, $0.001 par value- authorized 25,000 shares, issued and outstanding 21,952 shares at $1,000 stated value | 21,952,000 | |
Common stock, $0.0001 par value- authorized 100,000,000 shares, issued and Outstanding 5,287,391 shares in 2016 and 5,210,408 in 2015 | 529 | 521 |
Additional paid in capital | 22,298,439 | 23,213,318 |
Accumulated deficit | (30,940,572) | (18,686,865) |
Total stockholders' equity | 14,525,721 | 6,167,959 |
Total liabilities and stockholder's equity | $ 29,155,624 | $ 17,477,297 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Unamortized issuance costs | $ 631,488 | $ 832,792 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 5,287,391 | 5,210,408 |
Common stock, shares outstanding | 5,287,391 | 5,210,408 |
Series 1 Convertible Preferred Stock | ||
Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Convertible preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Convertible preferred stock, shares issued | 243,065 | 328,197 |
Convertible preferred stock, shares outstanding | 243,065 | 328,197 |
Convertible preferred stock stated value | $ 5 | $ 5 |
Series 2 Convertible Preferred Stock | ||
Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Convertible preferred stock, shares authorized | 25,000 | 25,000 |
Convertible preferred stock, shares issued | 21,952 | 21,952 |
Convertible preferred stock, shares outstanding | 21,952 | 21,952 |
Convertible preferred stock stated value | $ 1,000 | $ 1,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | ||
Lease revenues and fees | $ 46,513,235 | $ 20,131,063 |
Lease merchandise sold | 1,066,350 | 548,999 |
Total revenues | 47,579,585 | 20,680,062 |
Costs and expenses: | ||
Cost of lease revenues, consisting of depreciation and impairment of lease merchandise | 22,734,553 | 10,752,733 |
Cost of lease merchandise sold | 687,991 | 314,751 |
Provision for doubtful accounts | 13,281,242 | 5,647,084 |
Marketing | 10,193,052 | 4,606,874 |
Salaries and benefits | 5,946,401 | 4,190,606 |
Other operating expenses | 5,064,869 | 3,171,180 |
Total costs and expenses | 57,908,108 | 28,683,228 |
Operating loss | (10,328,523) | (8,003,166) |
Interest expense including amortization of debt issuance costs | 1,925,184 | 994,115 |
Loss from continuing operations, before income tax benefit | (12,253,707) | (8,997,281) |
Income tax benefit | 78,388 | |
Loss from continuing operations | (12,253,707) | (8,918,893) |
Income from discontinued operations consisting of gain from sale of discontinued operations, net of income taxes | 127,789 | |
Net loss | (12,253,707) | (8,791,104) |
Cumulative dividends on Series 2 Convertible Preferred Shares | 1,211,964 | |
Net loss attributable to common shareholders | $ (13,465,671) | $ (8,791,104) |
Basic and diluted (loss) income per common share: | ||
Loss from continuing operations | $ (2.57) | $ (1.80) |
Income from discontinued operations | 0 | |
Net loss | $ (2.57) | $ (1.80) |
Weighted average common shares outstanding: | ||
Basic and diluted | 5,249,476 | 4,868,778 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Total | Series 1 Convertible Preferred Stock | Series 2 Convertible Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Deficit |
Balance at Dec. 31, 2014 | $ 6,332,269 | $ 1,711,095 | $ 350 | $ 14,516,585 | $ (9,895,761) | |
Balance, shares at Dec. 31, 2014 | 342,219 | 3,501,532 | ||||
Provision for compensation expense related to issued stock options | 78,600 | 78,600 | ||||
Sale of common stock | 9,350,000 | $ 170 | 9,349,830 | |||
Sale of common stock, shares | 1,700,000 | |||||
Costs related to sale of common stock | (801,806) | (801,806) | ||||
Conversion of preferred stock to common stock | $ (70,110) | $ 1 | 70,109 | |||
Conversion of preferred stock to common stock, shares | (14,022) | 8,876 | ||||
Net loss | (8,791,104) | (8,791,104) | ||||
Balance at Dec. 31, 2015 | 6,167,959 | $ 1,640,985 | $ 521 | 23,213,318 | (18,686,865) | |
Balance, shares at Dec. 31, 2015 | 328,197 | 5,210,408 | ||||
Sale of Series 2 Preferred Stock | 21,952,000 | $ 21,952,000 | ||||
Sale of Series 2 Preferred Stock, shares | 21,952 | |||||
Fair value of warrants issued to placement agent in conjunction with sale of Series 2 Preferred Stock | 150,451 | 150,451 | ||||
Costs related to sale of Series 2 Preferred Stock | (1,669,790) | (1,669,790) | ||||
Provision for compensation expense related to issued stock options | 136,308 | 136,308 | ||||
Conversion of preferred stock to common stock | $ (425,660) | $ 5 | 425,655 | |||
Conversion of preferred stock to common stock, shares | (85,132) | 51,983 | ||||
Exercise of stock options | 42,500 | $ 3 | 42,497 | |||
Exercise of stock options, shares | 25,000 | |||||
Net loss | (12,253,707) | (12,253,707) | ||||
Balance at Dec. 31, 2016 | $ 14,525,721 | $ 1,215,325 | $ 21,952,000 | $ 529 | $ 22,298,439 | $ (30,940,572) |
Balance, shares at Dec. 31, 2016 | 243,065 | 21,952 | 5,287,391 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (12,253,707) | $ (8,791,104) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
(Income) from discontinued operation before income taxes | (206,176) | |
Depreciation and impairment of lease merchandise | 22,734,553 | 10,752,733 |
Other depreciation and amortization | 1,566,507 | 1,073,041 |
Compensation expense related to issuance of stock options and warrants | 136,308 | 78,600 |
Provision for uncollectible accounts | 13,281,242 | 5,647,084 |
Changes in operating assets and liabilities: | ||
(Increase) in accounts receivable | (14,710,870) | (6,270,409) |
(Increase) in prepaid expenses and other | (124,707) | (124,995) |
(Increase) in lease merchandise | (30,100,878) | (17,714,951) |
(Increase) in security deposits | (1,493) | (11,755) |
Increase in accounts payable | 2,133,818 | 947,138 |
Increase in accrued payroll and related taxes | 44,814 | 119,923 |
Increase in accrued expenses | (78,016) | 139,536 |
Net cash used in operating activities - continuing operations | (17,372,429) | (14,361,335) |
Net cash provided by operating activities - discontinued operations | 205,049 | |
Net cash (used in) operating activities | (17,372,429) | (14,156,286) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment, including capitalized software costs | (1,855,088) | (1,328,113) |
Net cash (used in) investing activities | (1,855,088) | (1,328,113) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds of loans from shareholder | 1,000,000 | (1,000,000) |
Repayment of loans from shareholder | (1,000,000) | |
Proceeds from loan payable under credit agreement, net of $400,000 and $1,170,501 of related costs in 2016 and 2015 respectively | 4,941,359 | 8,449,062 |
Repayment of loan payable under credit agreement | (4,172,714) | |
Proceeds from sale of common stock, net of related costs of $801,806 | 8,548,194 | |
Proceeds from exercise of stock options | 42,500 | |
Proceeds from sale of Series 2 Convertible Preferred Stock, net of related costs of $1,519,339 | 20,432,661 | |
Net cash provided by financing operations | 21,243,806 | 15,997,256 |
INCREASE IN CASH | 2,016,289 | 512,857 |
CASH, beginning of year | 3,396,206 | 2,883,349 |
CASH, end of year | 5,412,495 | 3,396,206 |
Supplemental cash flow information: | ||
Interest paid | 1,459,756 | 443,360 |
Non-cash financing activities: | ||
Conversion of preferred stock to common stock | 425,660 | 70,110 |
Fees payable to lender in connection with modification of credit agreement | 150,000 | |
Warrants issued to placement agent in conjunction with sale of Series 2 Preferred Stock | $ 150,451 |
Consolidated Statements of Cas7
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Cash Flows [Abstract] | ||
Proceeds from loans payable, net of related costs | $ 400,000 | $ 1,170,501 |
Proceeds from sale of common stock, net of related costs | 801,806 | |
Payments from sale of series 2 convertible preferred stock | $ 1,519,339 |
Business
Business | 12 Months Ended |
Dec. 31, 2016 | |
Business [Abstract] | |
BUSINESS | 1. BUSINESS: FlexShopper, Inc. (the “Company”) is a corporation organized under the laws of the State of Delaware on August 16, 2006. The Company owns 100% of FlexShopper, LLC, a limited liability company incorporated under the laws of North Carolina on June 24, 2013. Since the sale of the assets of Anchor Funding Services LLC (“Anchor”), which sale was completed in a series of transactions between April and June 2014, the Company is a holding corporation with no operations except for those conducted by FlexShopper LLC. FlexShopper LLC provides through e-commerce sites, certain types of durable goods to consumers on a lease-to-own basis (“LTO”) including consumers of third party retailers and e-tailers. In January 2015, in connection with the credit agreement entered into in March 2015, (see Note 7) FlexShopper 1 LLC and FlexShopper 2 LLC were organized as wholly owned Delaware subsidiaries of FlexShopper LLC to conduct operations. FlexShopper LLC together with its subsidiaries is hereafter referred to as “FlexShopper.” During 2013, the Company decided to concentrate its efforts on the operations of FlexShopper and subsequently, an agreement was entered into with a financial institution to sell substantially all of the operating assets of Anchor which provided accounts receivable funding to businesses located throughout the United States. The sale was finalized in June 2014 (see Note 3). The consolidated statements of operations and cash flows reflect the historical operations of Anchor as discontinued operations. We have generally presented the notes to our consolidated financial statements on the basis of continuing operations. |
Reverse Stock Split
Reverse Stock Split | 12 Months Ended |
Dec. 31, 2016 | |
Reverse Stock Split [Abstract] | |
REVERSE STOCK SPLIT | 2. REVERSE STOCK SPLIT On October 14, 2016, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment (the “Certificate of Amendment”) to its certificate of incorporation, which Certificate of Amendment effectuated as of October 24, 2016 at 11:59 p.m. Eastern Time (the “Effective Time”) a reverse split of the Company’s common stock by a ratio of one-for-10 (the “Reverse Split”). At the Effective Time, 52,870,398 outstanding shares of the Company’s common stock were exchanged for 5,287,040 shares of the Company’s common stock. All per share amounts and number of shares in the consolidated financial statements and related notes have been retroactively restated to reflect the Reverse Split resulting in the transfer of $3,152 from common stock to additional paid in capital at January 1, 2015. No fractional shares were, or shall be, issued in connection with the Reverse Split. A stockholder who would otherwise be entitled to receive a fractional share of common stock is entitled to receive the fractional share rounded up to the next whole share. The Reverse Split did not change the number of shares of common or preferred stock that the Company is authorized to issue, or the par value of the Company’s common or preferred stock. The Reverse Split resulted in a proportionate adjustment to the per share conversion or exercise price and the number of shares of common stock issuable upon the conversion or exercise of outstanding preferred stock, stock options and warrants, as well as the number of shares of common stock eligible for issuance under the Company’s 2007 Omnibus Equity Compensation Plan and 2015 Omnibus Equity Compensation Plan. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation - Estimates – Revenue Recognition Accounts Receivable and Allowance for Doubtful Accounts – December 31, 2016 December 31, 2015 Accounts receivable $ 11,690,495 $ 5,479,437 Allowance for doubtful accounts 9,508,708 4,727,278 Accounts receivable, net $ 2,181,787 $ 752,159 The allowance is a significant percentage of the balance because FlexShopper does not charge off any customer account until it has exhausted all collection efforts with respect to each account including attempts to repossess items. In addition, while collections are pursued, the same delinquent customers will continue to accrue weekly charges until they are charged off. During the years ended December 31, 2016 and 2015, $8,541,289 and $2,300,708 of accounts receivable balances respectively were charged off against the allowance. Lease Merchandise – December 31, 2016 December 31, 2015 Lease merchandise at cost $ 33,264,810 $ 19,504,645 Accumulated depreciation 11,578,267 7,473,363 Impairment reserve 3,116,083 827,146 Lease merchandise, net $ 18,570,460 $ 11,204,136 Cost of lease merchandise sold represents the undepreciated cost of rental merchandise at the time of sale. Deferred Debt Issuance Costs Intangible Assets December 31, 2016 December 31, 2015 Patent costs $ 30,760 $ 30,760 Accumulated amortization 10,420 7,344 Patent costs, net $ 20,340 $ 23,416 Software Costs - Operating Expenses – include corporate Marketing costs which primarily consist of advertising are charged to expense as incurred. Per Share Data – Diluted earnings per share is based on the more dilutive of the if-converted method (which assumes conversion of the participating preferred stock as of the beginning of the period) or the two-class method (which assumes that the participating preferred stock is not converted) plus the potential impact of dilutive non-participating Series 2 Convertible Preferred Stock, options and 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 during the period. 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. 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: Year ended December 31, 2016 2015 Series 1 Convertible Preferred Stock 147,417 207,749 Series 2 Convertible Preferred Stock 2,711,072 - Series 2 Convertible Preferred Stock issuable upon exercise of warrants 54,217 - Options 411,600 406,700 Warrants 511,553 511,553 3,835,859 1,126,002 Stock Based Compensation - 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 9. Fair Value of Financial Instruments – Income Taxes The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of December 31, 2016 and 2015, the Company has not recorded any unrecognized tax benefits. Interest and penalties related to liabilities for uncertain tax positions will be charged to interest and operating expenses, respectively. Reclassifications Recent Accounting Pronouncements – In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, on revenue recognition. The new standard provides for a single five-step model to be applied to all revenue contracts with customers as well as requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, but not before the original effective date of the standard. The Company is currently evaluating the impact of the new guidance including method of adoption and related financial statement disclosures, but preliminarily does not anticipate a material impact on its financial statements as a majority of the Company’s revenue generating activities are leasing arrangements which are outside the scope of the guidance. In June 2014, the 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 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 adopted this guidance in 2016 which had no effect on the financial statements. In August 2014 the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 2015-40): 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 any 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. This guidance which was adopted in 2016, had no effect on the financial statements. In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU is effective for fiscal years beginning after December 15, 2015 and for interim periods within those fiscal years with early adoption permitted. The Company early adopted ASU 2015-03 during the quarter ended March 31, 2015. In the accompanying balance sheet at December 31, 2016 and 2015, the Company offset $631,488 and $832,792 respectively, of unamortized debt issuance costs related to debt issued under the Credit Agreement in March 2015 against the outstanding balance of loans payable under the Credit Agreement. In April 2015, the FASB issued ASU 2015-05, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in this Update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change GAAP for a customer’s accounting for service contracts. In addition, the guidance in this update supersedes paragraph 350-40-25-16. Consequently, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets. The amendments in this guidance which are effective for the annual periods beginning after December 15, 2015, and for interim periods therein, were adopted by the Company in the quarter ended March 31, 2016 and had no effect on the financial statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes- Balance Sheet Classification of Deferred Taxes. To simplify the presentation of deferred income taxes, the amendments in this ASU require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this update apply to all entities that present a classified statement of financial position. The amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. In February 2016, the FASB issued ASU No. 2016-02, Leases, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. Under ASU 2016-02, lessees will be required to recognize for all leases at the commencement date a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. Lessor guidance is largely unchanged. The Company is currently evaluating the effect that the new guidance will have on its financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies certain aspects of the accounting for share-based payment transactions, including tax consequences, classification of awards, the option to recognize stock compensation expense with actual forfeitures as they occur, and the classifications on the statement of cash flows. ASU 2016-09 is effective for annual reporting beginning after December 15, 2016, including interim periods within that reporting period, with early adoption permitted. The Company is currently evaluating the effect that the new guidance will have on its financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations [Abstract] | |
DISCONTINUED OPERATIONS | 4. DISCONTINUED OPERATIONS: In June 2014, Anchor sold to a bank substantially all of its assets (the “Anchor Assets”), consisting primarily of its factoring portfolio. The purchase price for the Anchor Assets included an amount equal to 50% of the factoring fee and interest income earned by Anchor’s factoring portfolio during the 12 month period following acquisition (“Earnout Payments”). The Earnout Payments totaled $206,177 for the year ended December 31, 2015. In the year ended December 31, 2015, Anchor recorded a gain of $127,789 net of an income tax provision of $78,388, for the Earnout Payments received during such period, which is included in income from discontinued operations. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT: Property and equipment consist of the following: Estimated Useful Lives December 31, 2016 December 31, 2015 Furniture and fixtures 2-5 years $ 98,564 $ 85,513 Website and internal use software 3 years 3,933,600 2,160,025 Computers and software 3-7 years 619,477 551,015 4,651,641 2,796,553 Less: accumulated depreciation and amortization (2,111,127 ) (999,000 ) $ 2,540,514 $ 1,797,553 Depreciation and amortization expense was $1,112,127 and $582,257 for the years ended December 31, 2016 and 2015, respectively. |
Loans Payable Shareholders
Loans Payable Shareholders | 12 Months Ended |
Dec. 31, 2016 | |
Loans Payable Shareholders and Loan Payable Under Credit Agreement [Abstract] | |
LOANS PAYABLE SHAREHOLDERS | 6. LOANS PAYABLE SHAREHOLDERS: On December 8, 2014, upon approval of the Board of Directors, FlexShopper entered into a promissory note for $1,000,000, with a shareholder and executive of the Company. The note is payable on demand. The note was funded in increments of $500,000 on December 8 th th |
Loan Payable Under Credit Agree
Loan Payable Under Credit Agreement | 12 Months Ended |
Dec. 31, 2016 | |
Loans Payable Shareholders and Loan Payable Under Credit Agreement [Abstract] | |
LOAN PAYABLE UNDER CREDIT AGREEMENT | 7. LOAN PAYABLE UNDER CREDIT AGREEMENT On March 6, 2015, FlexShopper entered into a credit agreement (as amended from time to time, and including the Fee Letter (as defined therein), the “Credit Agreement”) with Wells Fargo Bank, National Association as paying agent, various lenders from time to time party thereto and WE 2014-1, LLC as administrative agent and lender (the “Lender”). FlexShopper is permitted to borrow, repay and reborrow funds under the Credit Agreement based on FlexShopper’s cash on hand and the Amortized Order Value of its Eligible Leases (as such terms are defined in the Credit Agreement) less certain deductions described in the Credit Agreement. Under the terms of the Credit Agreement, subject to the satisfaction of certain conditions, FlexShopper may borrow up to $25,000,000 from the Lender for a term of two years from the date of the Credit Agreement. The borrowing term may be extended in the sole discretion of the Lender. The Credit Agreement contemplates that the Lender may provide additional debt financing to FlexShopper, up to $100 million in total, under two uncommitted accordions following satisfaction of certain covenants and other terms and conditions. The Lender receives security interests in certain leases as collateral under the Credit Agreement. Amounts borrowed bear interest at the rate of LIBOR plus 15% per annum and a small non-usage fee is assessed on any undrawn amount if the facility is less than 80% drawn on average in any given measurement period commencing three months after closing of the facility. Interest is payable monthly on the outstanding balance of amounts borrowed and, prior to the amendment referred to below, commencing on and after May 6, 2017, principal together with interest thereon was payable periodically through May 6, 2018, the maturity date of the loan. In January 2017 the Credit Agreement was amended to extend the Commitment Termination Date from May 6, 2017 to April 1, 2018 (See Note 13). Accordingly, commencing on or after April 1, 2018 principal together with the interest thereon is payable periodically through April 1, 2019, the amended maturity date of the loan. The accompanying consolidated balance sheet at December 31, 2016 has been adjusted to reflect the revised payment terms. As the Company anticipates that it will maintain through December 31, 2017 no less than the Amortized Order Value of its Eligible Leases and cash on hand attained at December 31, 2016, and thereby not require any repayment of principal through December 31, 2017, amounts payable under the credit Agreement are classified as non-current in the accompanying consolidated balance sheet at December 31, 2016. Interest expense incurred under the Credit Agreement for the years ended December 31, 2016 and 2015 was $1,422,630 and $407,110 respectively. As of December 31, 2016, the outstanding balance under the Credit Agreement was $10,788,208. The Company repaid $4,172,174 to the Lender in 2016 resulting primarily from the repayment of the Bridge Loan Amount upon the Equity Raise as described in the fourth amendment to the Credit Agreement. The Credit Agreement provides that FlexShopper may not incur additional indebtedness (other than expressly permitted indebtedness) without the permission of the Lender and also prohibits dividends on common stock. The Credit Agreement includes customary events of default, including, among others, failures to make payment of principal and interest, breaches or defaults under the terms of the Credit Agreement and related agreements entered into with the Lender, breaches of representations, warranties or certifications made by or on behalf of FlexShopper in the Credit Agreement and related documents (including certain financial and expense covenants), deficiencies in the borrowing base, certain judgments against FlexShopper and bankruptcy events. The Credit Agreement contains financial covenants requiring the Company and its subsidiaries to maintain as of the last day of each fiscal quarter during the term of the agreement minimum amounts of Unrestricted Cash and Equity Book Value and to achieve Adjusted Operating Cash Flow of not less than certain amounts during such quarters (all such terms as defined in the Credit Agreement). As of December 31, 2015, the Company was in violation of the covenant requiring an Equity Book Value of at least $7.0 million as of such date. Under the fourth amendment to the Credit Agreement described below, the Lender waived this violation. The covenant also requires the Company and its subsidiaries to maintain an Equity Book Value of at least $7 million at each of June 30, September 30 and December 31, 2016 increasing to $10 million at the end of each quarter from March 31 through December 31, 2017 (see Note 13). On February 11, 2016, FlexShopper entered into a third amendment, (the “Third Amendment”) to the Credit Agreement which amended the Credit Agreement to, among other things, add a new financial covenant requiring FlexShopper to maintain at least $1,500,000 in Unrestricted Cash at all times. The Third Amendment also includes a consent by the Lender to a $1,000,000 promissory note (the “Promissory Note”) in favor of Marc Malaga, FlexShopper’s Executive Vice President of Operations. Interest on the Promissory Note accrued at the rate of 15.0% per annum and all outstanding principal and accrued interest was payable on demand by Mr. Malaga. The Promissory Note which was issued in February 2016, was secured by substantially all of FlexShopper’s assets. The Promissory Note was paid in full with interest amounting to $51,250 on June 13, 2016. On March 29, 2016, FlexShopper entered into a fourth amendment (the “Fourth Amendment”) to the Credit Agreement whereby the Lender waived the violation of the Equity Book Value covenant at December 31, 2015, as well as compliance with financial covenants (other than the unrestricted cash covenant) through the earlier of April 1, 2017 or the completion of the raising of at least $10,000,000 in equity funding (the “Equity Raise”), which occurred upon the issuance of Series 2 Convertible Preferred Stock on June 10, 2016 described in Note 9. In addition, the Fourth Amendment, among other things, provided that FlexShopper maintain Unrestricted Cash of at least $500,000 on each day and $1,000,000 at the end of each calendar month. As of December 31, 2016, FlexShopper was in compliance with the financial covenants of the Credit Agreement. In consideration of the Fourth Amendment, FlexShopper was required to pay to the administrative agent a bridge fee of $20,000 per week until (i) the current amount of such bridge fee equals $400,000 or (ii) the completion of the Equity Raise, whichever event occurred sooner, provided that such bridge fee amounted to at least $250,000. Accordingly, the Company recorded $250,000 of deferred debt issuance costs with a corresponding amount of accrued expenses. On June 10, 2016, the Company completed an equity raise in excess of $20 million providing for the issuance and sale of shares of Series 2 Convertible Preferred Stock. During the year ended December 31, 2016, the total of the Bridge Fee and second amendment fee totaling $400,000 was paid by the Company. |
Capital Structure
Capital Structure | 12 Months Ended |
Dec. 31, 2016 | |
Capital Structure [Abstract] | |
CAPITAL STRUCTURE | 8. CAPITAL STRUCTURE: The Company’s capital structure consists of preferred and common stock as described below: 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 the Company’s preferred stock. Series 1 Convertible Preferred Stock – As of December 31, 2015, each share of Series 1 Convertible Preferred Stock was convertible into 0.633 shares of the Company’s common stock, subject to certain anti-dilution rights. As a result of the Company entering into the Subscription Agreement referred to below, each share of Series 1 Convertible Preferred Stock became convertible into approximately 0.606 shares of the Company’s common stock. The holders 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, if any, will be paid as additional shares of common stock. 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 year ended December 31, 2015, 14,022 shares of Series 1 Convertible Preferred Stock were converted into 8,876 shares of common stock. During the year ended December 31, 2016, 85,132 shares of Series 1 Convertible Preferred Stock were converted into 51,632 shares of common stock. As of December 31, 2016, there were 243,065 shares of Series 1 Convertible Preferred Stock outstanding which are convertible into 147,417 shares of common stock. Series 2 Convertible Preferred Stock – Pursuant to the authority expressly granted to the Board of Directors by the provisions of the Company’s Certificate of Incorporation, the Board of Directors of the Company created and designated 25,000 shares of Series 2 Convertible Preferred Stock, par value $.001 per share (“Series 2 Preferred Shares”), by filing a Certificate of Designations with the Delaware Division of Corporations (the “Series 2 Certificate of Designations”). The Series 2 Preferred Shares were sold for $1,000 per share (the “Stated Value”) and accrue dividends on the Stated Value at an annual rate of 10% compounded annually. Each Series 2 Preferred Share is convertible at a conversion price of $8.10 into approximately 124 shares of common stock; provided, the conversion price is subject to reduction pursuant to a weighted average anti-dilution provision contained in the Series 2 Certificate of Designations. Beginning 45 days following the date of issuance of the Series 2 Preferred Shares (the “Initial Period”), the holders of the Series 2 Preferred Shares have the option to convert such shares into shares of common stock and have the right to vote with holders of common stock on an as-converted basis. If, during the two year period commencing on the date of issuance, the average closing price during any 45 consecutive trading day period equals or exceeds $17.50 per common share, or a change of control transaction (as defined in the Series 2 Certificate of Designations) values the Company’s common stock at $17.50 per share or greater; or after this two year period the average closing price during any 45 day consecutive trading day period or change of control transaction values the common stock at a price equal to or greater than $23.00 per share, then conversion shall be automatic. Upon a Liquidation Event or Deemed Liquidation Event (each as defined in the Series 2 Certificate of Designations), holders of Series 2 Preferred Shares shall be entitled to receive out of the assets of the Company prior to and in preference to the common stock and Series 1 Convertible Preferred Stock an amount equal to the greater of (1) the Stated Value, plus any accrued and unpaid dividends thereon, and (2) the amount per share as would have been payable had all Series 2 Preferred Shares been converted to common stock immediately before the Liquidation Event or Deemed Liquidation Event. Common Stock – In connection with entering into the Credit Agreement on March 6, 2015, the Company raised approximately $8.6 million in net proceeds through direct sales of 1.7 million shares of its common stock to certain affiliates of the Lender and other accredited investors for a purchase price of $5.50 per share. As a result of the sale to certain affiliates, the Lender is considered a beneficial shareholder of the Company. On March 17, 2016, the Company’s stockholders, acting by written consent, approved an amendment to the Certificate of Incorporation to effect a reverse stock split of the Company’s common stock. On October 14, 2016, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment (the “Certificate of Amendment”) to its certificate of incorporation, which Certificate of Amendment effectuated as of October 24, 2016 at 11:59 p.m. Eastern Time (the “Effective Time”) the Reverse Split by a ratio of one-for-10 (see Note 4). |
Stock Options
Stock Options | 12 Months Ended |
Dec. 31, 2016 | |
Stock Options [Abstract] | |
STOCK OPTIONS | 9. STOCK OPTIONS On January 31, 2007, the Board of Directors adopted our 2007 Omnibus Equity Compensation Plan (the “2007 Plan”), with 210,000 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 420,000 shares. On March 26, 2015, the Board adopted our 2015 Omnibus Equity Compensation Plan (the “2015 Plan”), with 400,000 common shares authorized for issuance under the 2015 Plan, which was ratified by the Company’s stockholders on September 15, 2015. The 2007 Plan and 2015 Plan are collectively referred to as the “Plans.” Grants under the Plans may consist of incentive stock options, non-qualified stock options, stock appreciation rights, stock awards, stock unit awards, dividend equivalents and other stock based awards. Employees, directors and consultants and other service providers are eligible to participate in the Plans. Options granted under the Plans vest over periods ranging from immediately upon grant to a three year period and expire ten years from date of grant. Employees, directors and consultants and other service providers are eligible to participate in the Plan. Options granted under the plan vest over periods ranging from immediately upon grant to a three year period and expire ten years from date of grant. Activity in stock options for the year ended December 31, 2016 follows: Number of shares Weighted average exercise price Weighted average contractual term (years) Aggregate intrinsic value Outstanding at January 1, 2016 406,700 $ 8.50 Granted 70,700 5.70 Canceled (40,800 ) 6.70 Exercised (25,000 ) 1.70 Outstanding at December 31, 2016 411,600 $ 8.63 3.64 $ 171,860 Vested and exercisable at December 31, 2016 348,101 $ 9.16 3.64 $ 146,203 Vested and exercisable at December 31, 2016 and expected to vest thereafter 406,300 $ 8.63 4.48 $ 171,860 The weighted average grant date fair value of options granted during 2015 and 2016 was $1.49 and $1.66 per share respectively. 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: 2015 2016 Exercise price $ 6.00 to $9.00 $ 4.90 to $6.60 Expected life 6 years 5.5 years Expected volatility 35 % 38 % Dividend yield 0 % 0 % Risk-free interest rate 1.35% to 2.70 % 1.13% to 1.73 % The expected dividend yield is based on the Company’s historical dividend yield. The expected volatility was based on the average of historical volatilities for a period comparable to the expected life of the options of certain entities considered to be similar to the Company. The expected life is based on the simplified expected term calculation permitted by the SEC which defines the expected life as the average of the contractual term of the options and the weighted-average vesting period for all option tranches. The risk-free interest rate is based on the annual yield on the grant date of a zero-coupon U.S. Treasury bond the maturity of which equals the option’s expected life. The value of stock options is recognized as compensation expense by the straight line method over the vesting period. Compensation expense recorded for options in the statements of operations was $136,308 and $78,600 for the years ended December 31, 2016 and 2015, respectively. Unrecognized compensation cost related to non-vested options at December 31, 2016 amounted to $90,122 which is expected to be recognized over a weighted average period of 1.57 years. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2016 | |
Warrants [Abstract] | |
WARRANTS | 10. WARRANTS: On June 24, 2016, the Company granted warrants to one of the Company’s placement agents to purchase 439 shares of the Company’s Series 2 Convertible Preferred Stock at an initial exercise price of $1,250 per share. The exercise price and aggregate number of shares are subject to adjustment as set forth in the agreement. The following information was input into the Black Scholes pricing model to compute a fair value of $342.71 for each warrant for a total fair value of $150,451. Exercise price $ 1,250 Expected life 7 years Expected volatility 38 % Dividend yield 0 % Risk-free interest rate 1.35 % The following table summarizes information about outstanding stock warrants as of December 31, 2016, all of which are exercisable: Series 2 Preferred Weighted Average Exercise Common Stock Warrants Stock Warrants Remaining Price Outstanding Outstanding Contractual Life $ 11.00 134,250 2 years $ 10.00 200,000 4 years $ 5.50 177,303 5 years $ 1,250 - 439 7 years 511,553 439 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes [Abstract] | |
INCOME TAXES | 11. INCOME TAXES: For the year ended December 31, 2015, the income tax benefit allocated to continuing operations represents the tax benefit from utilizing the loss from continuing operations to offset income from discontinued operations. A corresponding tax provision was charged to discontinued operations. Reconciliation of the benefit for income taxes from continuing operations recorded in the consolidated statement of operations with the amounts computed at the statutory federal tax rate of 34% as follows: 2016 2015 Federal tax benefit at statutory rate $ (4,167,000 ) $ (3,059,000 ) State tax benefit, net of federal tax (293,000 ) (436,000 ) Permanent differences 43,000 (14,000 Change in statutory rate 216,000 (133,000 Increase in valuation allowance 4,075,000 3,564,000 Other 126,000 - Benefit for income taxes $ - $ (78,000 ) Tax affected components of deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 were as follows: 2016 2015 Deferred tax assets: Equity based compensation $ 254,000 $ 266,000 Allowance for doubtful accounts 3,462,000 1,844,000 Lease merchandise 813,000 1,139,000 Fixed assets 11,000 - Lease Impairment 1,135,000 12,000 Net operating loss carry-forwards 4,668,000 3,354,000 State loss carry forward 338,000 Gross deferred tax assets 10,681,000 6,615,000 Valuation allowance (10,681,000 ) (6,606,000 ) Net deferred tax assets - 9,000 Deferred tax liabilities: Fixed assets - (9,000 ) $ - $ - Based on consideration of the available evidence including historical losses a valuation allowance has been recognized to offset deferred tax assets, as management was unable to conclude that realization of deferred tax assets were more likely than not. As of December 31, 2016, the Company has federal net operating loss carryforwards of approximately $13,731,000 and state net operating loss carryforwards of approximately $9,275,000 available to offset future taxable income which expire from 2023 to 2036. Section 382 of the Internal Revenue Code imposes a limitation on a corporation's ability to utilize net operating loss carryforwards (“NOLs”) if it experiences an “ownership change.” In general, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. The Company has performed a formal Section 382 study and determined an ownership change has occurred. The Company files tax returns in the U.S. federal jurisdiction and various states. At December 31, 2016, federal tax returns remained open for Internal Revenue Service review for tax years after 2013, while state tax returns remain open for review by state taxing authorities for tax years after 2012. There were no federal or state income tax audits being conducted as of December 31, 2016. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2016 | |
Commitments [Abstract] | |
COMMITMENTS | 12. COMMITMENTS: Lease Commitments On August 1, 2013, FlexShopper entered into a 39 month lease of office space providing for monthly rent of 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 for the first year approximated $9,600 with annual three percent increases throughout the lease term. On September 1, 2015, FlexShopper entered into a 48 month lease for additional office space in Fort Lauderdale, Florida to accommodate our call and customer service center. The monthly base rent including operating expenses is approximately $5,200 with annual three percent increases throughout the lease term. The rental expense for the years ended December 31, 2016 and 2015 was approximately $274,300 and $222,600, respectively. At December 31, 2016, the future minimum annual lease payments are approximately as follows: 2017 $ 190,200 2018 195,900 2019 122,400 $ 508,500 |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Event [Abstract] | |
SUBSEQUENT EVENT | 13. SUBSEQUENT EVENT: On January 27, 2017, FlexShopper, Inc. through a wholly-owned indirect subsidiary, entered into the fifth amendment (the Omnibus Amendment) to the Credit Agreement originally entered into on March 6, 2015 by and among the Borrower and WE 2014-1, LLC, an affiliate of Waterfall Asset Management, LLC, and certain other lenders thereunder from time to time. The Omnibus Amendment amended the Credit Agreement to, among other things, (1) extend the Commitment Termination Date (as defined in the Credit Agreement) from May 6, 2017 to April 1, 2018 (with a one-time right of extension by the lenders up to August 31, 2018), (2) require the Borrower to refinance the debt under the Credit Agreement upon a Permitted Change of Control (as defined in the Credit Agreement), subject to the payment of an early termination fee, and (3) modify certain permitted debt and financial covenants. These modified covenants consist of a reduction of Equity Book Value to not be less than the sum |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation - |
Estimates | Estimates – |
Revenue Recognition | Revenue Recognition |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts – December 31, 2016 December 31, 2015 Accounts receivable $ 11,690,495 $ 5,479,437 Allowance for doubtful accounts 9,508,708 4,727,278 Accounts receivable, net $ 2,181,787 $ 752,159 The allowance is a significant percentage of the balance because FlexShopper does not charge off any customer account until it has exhausted all collection efforts with respect to each account including attempts to repossess items. In addition, while collections are pursued, the same delinquent customers will continue to accrue weekly charges until they are charged off. During the years ended December 31, 2016 and 2015, $8,541,289 and $2,300,708 of accounts receivable balances respectively were charged off against the allowance. |
Lease Merchandise | Lease Merchandise – December 31, 2016 December 31, 2015 Lease merchandise at cost $ 33,264,810 $ 19,504,645 Accumulated depreciation 11,578,267 7,473,363 Impairment reserve 3,116,083 827,146 Lease merchandise, net $ 18,570,460 $ 11,204,136 Cost of lease merchandise sold represents the undepreciated cost of rental merchandise at the time of sale. |
Deferred Debt Issuance Costs | Deferred Debt Issuance Costs |
Intangible Assets | Intangible Assets December 31, 2016 December 31, 2015 Patent costs $ 30,760 $ 30,760 Accumulated amortization 10,420 7,344 Patent costs, net $ 20,340 $ 23,416 |
Software Costs | Software Costs - |
Operating Expenses | Operating Expenses – include corporate Marketing costs which primarily consist of advertising are charged to expense as incurred. |
Per Share Data | Per Share Data – Diluted earnings per share is based on the more dilutive of the if-converted method (which assumes conversion of the participating preferred stock as of the beginning of the period) or the two-class method (which assumes that the participating preferred stock is not converted) plus the potential impact of dilutive non-participating Series 2 Convertible Preferred Stock, options and 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 during the period. 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. 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: Year ended December 31, 2016 2015 Series 1 Convertible Preferred Stock 147,417 207,749 Series 2 Convertible Preferred Stock 2,711,072 - Series 2 Convertible Preferred Stock issuable upon exercise of warrants 54,217 - Options 411,600 406,700 Warrants 511,553 511,553 3,835,859 1,126,002 |
Stock Based Compensation | Stock Based Compensation - 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 9. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments – |
Income Taxes | Income Taxes The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of December 31, 2016 and 2015, the Company has not recorded any unrecognized tax benefits. Interest and penalties related to liabilities for uncertain tax positions will be charged to interest and operating expenses, respectively. |
Reclassifications | Reclassifications |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, on revenue recognition. The new standard provides for a single five-step model to be applied to all revenue contracts with customers as well as requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, but not before the original effective date of the standard. The Company is currently evaluating the impact of the new guidance including method of adoption and related financial statement disclosures, but preliminarily does not anticipate a material impact on its financial statements as a majority of the Company’s revenue generating activities are leasing arrangements which are outside the scope of the guidance. In June 2014, the 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 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 adopted this guidance in 2016 which had no effect on the financial statements. In August 2014 the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 2015-40): 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 any 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. This guidance which was adopted in 2016, had no effect on the financial statements. In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU is effective for fiscal years beginning after December 15, 2015 and for interim periods within those fiscal years with early adoption permitted. The Company early adopted ASU 2015-03 during the quarter ended March 31, 2015. In the accompanying balance sheet at December 31, 2016 and 2015, the Company offset $631,488 and $832,792 respectively, of unamortized debt issuance costs related to debt issued under the Credit Agreement in March 2015 against the outstanding balance of loans payable under the Credit Agreement. In April 2015, the FASB issued ASU 2015-05, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in this Update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change GAAP for a customer’s accounting for service contracts. In addition, the guidance in this update supersedes paragraph 350-40-25-16. Consequently, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets. The amendments in this guidance which are effective for the annual periods beginning after December 15, 2015, and for interim periods therein, were adopted by the Company in the quarter ended March 31, 2016 and had no effect on the financial statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes- Balance Sheet Classification of Deferred Taxes. To simplify the presentation of deferred income taxes, the amendments in this ASU require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this update apply to all entities that present a classified statement of financial position. The amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. In February 2016, the FASB issued ASU No. 2016-02, Leases, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. Under ASU 2016-02, lessees will be required to recognize for all leases at the commencement date a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. Lessor guidance is largely unchanged. The Company is currently evaluating the effect that the new guidance will have on its financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies certain aspects of the accounting for share-based payment transactions, including tax consequences, classification of awards, the option to recognize stock compensation expense with actual forfeitures as they occur, and the classifications on the statement of cash flows. ASU 2016-09 is effective for annual reporting beginning after December 15, 2016, including interim periods within that reporting period, with early adoption permitted. The Company is currently evaluating the effect that the new guidance will have on its financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of accounts receivable | December 31, 2016 December 31, 2015 Accounts receivable $ 11,690,495 $ 5,479,437 Allowance for doubtful accounts 9,508,708 4,727,278 Accounts receivable, net $ 2,181,787 $ 752,159 |
Schedule of lease merchandise | December 31, 2016 December 31, 2015 Lease merchandise at cost $ 33,264,810 $ 19,504,645 Accumulated depreciation 11,578,267 7,473,363 Impairment reserve 3,116,083 827,146 Lease merchandise, net $ 18,570,460 $ 11,204,136 |
Schedule of intangible assets net patent cost balances | December 31, 2016 December 31, 2015 Patent costs $ 30,760 $ 30,760 Accumulated amortization 10,420 7,344 Patent costs, net $ 20,340 $ 23,416 |
Schedule of antidilutive securities excluded from computation of earnings per share | Year ended December 31, 2016 2015 Series 1 Convertible Preferred Stock 147,417 207,749 Series 2 Convertible Preferred Stock 2,711,072 - Series 2 Convertible Preferred Stock issuable upon exercise of warrants 54,217 - Options 411,600 406,700 Warrants 511,553 511,553 3,835,859 1,126,002 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment [Abstract] | |
Schedule of property and equipment | Estimated Useful Lives December 31, 2016 December 31, 2015 Furniture and fixtures 2-5 years $ 98,564 $ 85,513 Website and internal use software 3 years 3,933,600 2,160,025 Computers and software 3-7 years 619,477 551,015 4,651,641 2,796,553 Less: accumulated depreciation and amortization (2,111,127 ) (999,000 ) $ 2,540,514 $ 1,797,553 |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stock Options [Abstract] | |
Schedule of information about stock options | Number of shares Weighted average exercise price Weighted average contractual term (years) Aggregate intrinsic value Outstanding at January 1, 2016 406,700 $ 8.50 Granted 70,700 5.70 Canceled (40,800 ) 6.70 Exercised (25,000 ) 1.70 Outstanding at December 31, 2016 411,600 $ 8.63 3.64 $ 171,860 Vested and exercisable at December 31, 2016 348,101 $ 9.16 3.64 $ 146,203 Vested and exercisable at December 31, 2016 and expected to vest thereafter 406,300 $ 8.63 4.48 $ 171,860 |
Schedule of option input into a Black Scholes option pricing model | 2015 2016 Exercise price $ 6.00 to $9.00 $ 4.90 to $6.60 Expected life 6 years 5.5 years Expected volatility 35 % 38 % Dividend yield 0 % 0 % Risk-free interest rate 1.35% to 2.70 % 1.13% to 1.73 % |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Warrants [Abstract] | |
Schedule of warrants, valuation assumptions | Exercise price $ 1,250 Expected life 7 years Expected volatility 38 % Dividend yield 0 % Risk-free interest rate 1.35 % |
Summary of outstanding stock warrants | Series 2 Preferred Weighted Average Exercise Common Stock Warrants Stock Warrants Remaining Price Outstanding Outstanding Contractual Life $ 11.00 134,250 2 years $ 10.00 200,000 4 years $ 5.50 177,303 5 years $ 1,250 - 439 7 years 511,553 439 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes [Abstract] | |
Schedule of reconciliation of the benefit for income taxes from continuing operations | 2016 2015 Federal tax benefit at statutory rate $ (4,167,000 ) $ (3,059,000 ) State tax benefit, net of federal tax (293,000 ) (436,000 ) Permanent differences 43,000 (14,000 Change in statutory rate 216,000 (133,000 Increase in valuation allowance 4,075,000 3,564,000 Other 126,000 - Benefit for income taxes $ - $ (78,000 ) |
Schedule of deferred tax assets and liabilities | 2016 2015 Deferred tax assets: Equity based compensation $ 254,000 $ 266,000 Allowance for doubtful accounts 3,462,000 1,844,000 Lease merchandise 813,000 1,139,000 Fixed assets 11,000 - Lease Impairment 1,135,000 12,000 Net operating loss carry-forwards 4,668,000 3,354,000 State loss carry forward 338,000 Gross deferred tax assets 10,681,000 6,615,000 Valuation allowance (10,681,000 ) (6,606,000 ) Net deferred tax assets - 9,000 Deferred tax liabilities: Fixed assets - (9,000 ) $ - $ - |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments [Abstract] | |
Schedule of future minimum annual lease payments | 2017 $ 190,200 2018 195,900 2019 122,400 $ 508,500 |
Business (Details)
Business (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Business (Textual) | |
Limited liability percentage of FlexShopper, LLC | 100.00% |
Reverse Stock Split (Details)
Reverse Stock Split (Details) - USD ($) | 1 Months Ended | ||
Oct. 24, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reverse Stock Split (Textual) | |||
Reverse stock split, Description | One-for-10 | ||
Common stock, shares outstanding | 5,287,391 | 5,210,408 | |
Outstanding shares | 52,870,398 | ||
Reverse split, transfer | $ 3,152 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Summary of Significant Accounting Policies [Abstract] | ||
Accounts receivable | $ 11,690,495 | $ 5,479,437 |
Allowance for doubtful accounts | 9,508,708 | 4,727,278 |
Accounts receivable, net | $ 2,181,787 | $ 752,159 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details 1) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Summary of Significant Accounting Policies [Abstract] | ||
Lease merchandise at cost | $ 33,264,810 | $ 19,504,645 |
Accumulated depreciation | 11,578,267 | 7,473,363 |
Impairment reserve | 3,116,083 | 827,146 |
Lease merchandise, net | $ 18,570,460 | $ 11,204,136 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details 2) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Summary of Significant Accounting Policies [Abstract] | ||
Patent costs | $ 30,760 | $ 30,760 |
Accumulated amortization | 10,420 | 7,344 |
Patent costs, net | $ 20,340 | $ 23,416 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Details 3) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 3,835,859 | 1,126,002 |
Series 1 Convertible Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 147,417 | 207,749 |
Series 2 Convertible Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 2,711,072 | |
Series 2 Convertible Preferred Stock issuable upon exercise of warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 54,217 | |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 411,600 | 406,700 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 511,553 | 511,553 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies (Textual) | ||
Amortization method | Straight line method | |
Accounts receivable charged off against allowance | $ 8,541,289 | $ 2,300,708 |
Impairment charge | 5,021,000 | 1,500,000 |
Capitalized software costs | 1,773,574 | 1,142,922 |
Amortization | $ 451,304 | 487,709 |
Useful life of patent | 10 years | |
Concentration risk, percentage | 50.00% | |
Flexible options to obtain ownership description | Customers have the option to cancel the agreement in accordance with lease terms and return the merchandise. Accordingly, customer agreements are accounted for as operating leases with lease revenues 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. | |
Unamortized debt issuance costs | $ 631,488 | $ 832,792 |
Revenue recognition description | Through a 90 day same as cash option, an early purchase option, or through payments of all required lease payments, generally 52 weeks, for ownership. |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jun. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Discontinued Operations (Textual) | |||
Asset purchase and sale agreement description | The purchase price for the Anchor Assets included an amount equal to 50% of the factoring fee and interest income earned by Anchor's factoring portfolio during the 12 month period following acquisition ("Earnout Payments"). | ||
Gain on sale of discontinued assets | $ 127,789 | ||
Earnout Payments | 206,177 | ||
Income tax benefit | $ 78,388 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,651,641 | $ 2,796,553 |
Less: accumulated depreciation and amortization | (2,111,127) | (999,000) |
Property and equipment, net | 2,540,514 | 1,797,553 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 98,564 | 85,513 |
Furniture and fixtures [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Furniture and fixtures [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 2 years | |
Website and internal use software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 3,933,600 | 2,160,025 |
Estimated Useful Lives | 3 years | |
Computers and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 619,477 | $ 551,015 |
Computers and software [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 7 years | |
Computers and software [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years |
Property and Equipment (Detai37
Property and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property and Equipment (Textual) | ||
Depreciation and amortization expense | $ 1,112,127 | $ 582,257 |
Loans Payable Shareholders (Det
Loans Payable Shareholders (Details) - USD ($) | Mar. 11, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 18, 2014 | Dec. 08, 2014 |
Loans Payable Shareholders (Textual) | |||||
Interest paid | $ 1,459,756 | $ 443,360 | |||
Promissory Note [Member] | |||||
Loans Payable Shareholders (Textual) | |||||
Promissory note, face amount | $ 1,000,000 | ||||
Note payable, increments | $ 500,000 | $ 500,000 | |||
Interest rate of promissory note | 15.00% | 15.00% | |||
Interest paid | $ 36,250 |
Loan Payable Under Credit Agr39
Loan Payable Under Credit Agreement (Details) - USD ($) | Jun. 13, 2016 | Mar. 06, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Feb. 11, 2016 |
Loan Payable Under Credit Agreement (Textual) | |||||
Interest expense | $ 1,925,184 | $ 994,115 | |||
Fourth amendment to Credit Agreement, Description | In consideration of the Fourth Amendment, FlexShopper was required to pay to the administrative agent a bridge fee of $20,000 per week until (i) the current amount of such bridge fee equals $400,000 or (ii) the completion of the Equity Raise, whichever event occurred sooner, provided that such bridge fee amounted to at least $250,000. Accordingly, the Company recorded $250,000 of deferred debt issuance costs with a corresponding amount of accrued expenses. On June 10, 2016, the Company completed an equity raise in excess of $20 million providing for the issuance and sale of shares of Series 2 Convertible Preferred Stock. During the year ended December 31, 2016, the total of the Bridge Fee and second amendment fee totaling $400,000 was paid by the Company. | ||||
Bridge fee and second amendment fee | $ 400,000 | ||||
Repayment of loans payable | $ 4,172,714 | ||||
Commitment termination, description | In January 2017 the Credit Agreement was amended to extend the Commitment Termination Date from May 6, 2017 to April 1, 2018 (See Note 13). Accordingly, commencing on or after April 1, 2018 principal together with the interest thereon is payable periodically through April 1, 2019, the amended maturity date of the loan. | ||||
Credit Agreement [Member] | |||||
Loan Payable Under Credit Agreement (Textual) | |||||
Borrowed from lender | $ 25,000,000 | ||||
Term of debt | 2 years | ||||
Additional debt financing to FlexShopper | $ 100,000,000 | ||||
Percentage of average undrawn amount | Less than 80 | ||||
Percentage of interest rate | 15.00% | ||||
Maturity date of loan | May 6, 2018 | ||||
Interest expense | $ 1,422,630 | $ 407,110 | |||
Funded amount | $ 10,788,208 | ||||
Description of Violation or event of debt default | Company was in violation of the covenant requiring an Equity Book Value of at least $7.0 million as of such date. Under the fourth amendment to the Credit Agreement described below, the Lender waived this violation. The covenant also requires the Company and its subsidiaries to maintain an Equity Book Value of at least $7 million at each of June 30, September 30 and December 31, 2016 increasing to $10 million at the end of each quarter from March 31 through December 31, 2017. | ||||
Unrestricted cash | $ 1,500,000 | ||||
Fourth amendment to Credit Agreement, Description | On March 29, 2016, FlexShopper entered into a fourth amendment (the “Fourth Amendment”) to the Credit Agreement whereby the Lender waived the violation of the Equity Book Value covenant at December 31, 2015, as well as compliance with financial covenants (other than the unrestricted cash covenant) through the earlier of April 1, 2017 or the completion of the raising of at least $10,000,000 in equity funding (the “Equity Raise”), which occurred upon the issuance of Series 2 Convertible Preferred Stock on June 10, 2016 described in Note 9. In addition, the Fourth Amendment, among other things, provided that FlexShopper maintain Unrestricted Cash of at least $500,000 on each day and $1,000,000 at the end of each calendar month. As of December 31, 2016, FlexShopper was in compliance with the financial covenants of the Credit Agreement. | ||||
Debt issuance costs | $ 250,000 | ||||
Credit Agreement [Member] | Marc Malaga [Member] | |||||
Loan Payable Under Credit Agreement (Textual) | |||||
Percentage of interest rate | 15.00% | ||||
Lender to promissory note | $ 1,000,000 | ||||
Payment of Promissory Note with interest | $ 51,250 |
Capital Structure (Details)
Capital Structure (Details) - USD ($) | Jun. 10, 2016 | Mar. 06, 2015 | Oct. 24, 2016 | Jan. 31, 2007 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Capital Structure (Textual) | |||||||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||||
Proceeds from sale of stock | $ 8,548,194 | ||||||
Common stock voting rights, Description | Each share of Common Stock entitles the holder to one vote at all stockholder meetings. | ||||||
Reverse stock split, Description | One-for-10 | ||||||
Director [Member] | |||||||
Capital Structure (Textual) | |||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | ||||||
Preferred stock, shares authorized (in shares) | 10,000,000 | ||||||
Common Stock [Member] | |||||||
Capital Structure (Textual) | |||||||
Common stock, shares authorized (in shares) | 100,000,000 | ||||||
Common stock shares, Description | The Company, which was authorized to issue 65,000,000 shares of $.0001 par value common stock, after obtaining stockholder approval and filing an amendment. | ||||||
Conversion of preferred stock to common stock, shares | 51,983 | 8,876 | |||||
Credit Agreement [Member] | |||||||
Capital Structure (Textual) | |||||||
Proceeds from sale of stock | $ 8,600,000 | ||||||
Sale of common stock shares | 1,700,000 | ||||||
Purchase price per share | $ 5.50 | ||||||
Series 1 Convertible Preferred Stock [Member] | |||||||
Capital Structure (Textual) | |||||||
Preferred stock, shares outstanding | 328,197 | ||||||
Preferred stock conversion into common stock, shares | 2,000,000 | 147,417 | |||||
Convertible preferred stock, terms of conversion, Description | 243,065 shares of Series 1 Convertible Preferred Stock outstanding which are convertible into 147,417 shares of common stock. | 14,022 shares of Series 1 Convertible Preferred Stock were converted into 8,876 shares of common stock. | |||||
Convertible preferred stock, shares issued upon conversion | 14,022 | ||||||
Convertible, conversion price per share | $ 0.633 | ||||||
Conversion of preferred stock to common stock, shares | 85,132 | ||||||
Series 1 Convertible Preferred Stock [Member] | Preferred Stock Subscription Agreement [Member] | |||||||
Capital Structure (Textual) | |||||||
Convertible, conversion price per share | 0.606 | ||||||
Series 2 Convertible Preferred Stock [Member] | |||||||
Capital Structure (Textual) | |||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Preferred stock, shares authorized (in shares) | 25,000 | 25,000 | 25,000 | ||||
Preferred stock, shares outstanding | 21,952 | 21,952 | |||||
Proceeds from sale of stock | $ 20,000,000 | ||||||
Convertible preferred stock, terms of conversion, Description | Each Series 2 Preferred Share is convertible at a conversion price of $8.10 into approximately 124 shares of common stock; provided, the conversion price is subject to reduction pursuant to a weighted average anti-dilution provision contained in the Series 2 Certificate of Designations. Beginning 45 days following the date of issuance of the Series 2 Preferred Shares (the "Initial Period"), the holders of the Series 2 Preferred Shares have the option to convert such shares into shares of common stock and have the right to vote with holders of common stock on an as-converted basis. If, during the two year period commencing on the date of issuance, the average closing price during any 45 consecutive trading day period equals or exceeds $17.50 per common share, or a change of control transaction (as defined in the Series 2 Certificate of Designations) values the Company's common stock at $17.50 per share or greater; or after this two year period the average closing price during any 45 day consecutive trading day period or change of control transaction values the common stock at a price equal to or greater than $23.00 per share, then conversion shall be automatic. | ||||||
Convertible preferred stock, shares issued upon conversion | 20,000 | ||||||
Convertible preferred stock stated value | $ 1,000 | $ 1,000 | $ 1,000 | ||||
Additional gross proceeds from sale of stock | $ 1,950,000 | ||||||
Additional sale of shares | 1,952 |
Stock Options (Details)
Stock Options (Details) - Stock option [Member] | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares, Outstanding | shares | 406,700 |
Number of shares, Granted | shares | 70,700 |
Number of shares, Canceled | shares | (40,800) |
Number of shares, Exercised | shares | (25,000) |
Number of shares, Outstanding | shares | 411,600 |
Number of shares, vested and exercisable | shares | 348,101 |
Number of shares, vested and exercisable expected to vest thereafter | shares | 406,300 |
Weighted average exercise price, Balance | $ / shares | $ 8.50 |
Weighted average exercise price, Granted | $ / shares | 5.70 |
Weighted average exercise price, Canceled | $ / shares | 6.70 |
Weighted average exercise price, Exercised | $ / shares | 1.70 |
Weighted average exercise price, Balance | $ / shares | 8.63 |
Weighted average exercise price vested and exercisable | $ / shares | 9.16 |
Weighted average exercise price, vested and exercisable expected to vest thereafter | $ / shares | $ 8.63 |
Weighted average contractual term (years) | 3 years 7 months 21 days |
Weighted average contractual term, vested and exercisable (years) | 3 years 7 months 21 days |
Weighted average contractual term, vested and exercisable expected to vest thereafter (years) | 4 years 5 months 23 days |
Aggregate intrinsic value, Outstanding | $ | $ 171,860 |
Aggregate intrinsic value, vested and exercisable | $ | 146,203 |
Aggregate intrinsic value, vested and exercisable expected to vest thereafter | $ | $ 171,860 |
Stock Options (Details 1)
Stock Options (Details 1) - Stock option [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life | 5 years 6 months | 6 years |
Expected volatility | 38.00% | 35.00% |
Dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 4.90 | $ 6 |
Risk-free interest rate | 1.13% | 1.35% |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 6.60 | $ 9 |
Risk-free interest rate | 1.73% | 2.70% |
Stock Options (Details Textual)
Stock Options (Details Textual) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Oct. 31, 2009 | Jan. 31, 2007 | |
Stock Options (Textual) | |||||
Weighted average grant date fair value of options granted | $ 1.66 | $ 1.49 | |||
Unrecognized compensation cost related to non vested options | $ 90,122 | ||||
Remaining Contractual Life | 1 year 6 months 26 days | ||||
Compensation expense | $ 136,308 | $ 78,600 | |||
Stock options granted period, Description | Options granted under the Plans vest over periods ranging from immediately upon grant to a three year period and expire ten years from date of grant. Employees, directors and consultants and other service providers are eligible to participate in the Plan. Options granted under the plan vest over periods ranging from immediately upon grant to a three year period and expire ten years from date of grant. | ||||
2015 Stock Option Plan [Member] | |||||
Stock Options (Textual) | |||||
Common shares authorized for issuance (in shares) | 400,000 | ||||
2007 Omnibus Equity Compensation Plan [Member] | |||||
Stock Options (Textual) | |||||
Common shares authorized for issuance (in shares) | 420,000 | 210,000 |
Warrants (Details)
Warrants (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2016$ / shares | |
Class of Warrant or Right [Line Items] | |
Exercise price | $ 1,250 |
Expected life | 7 years |
Expected volatility | 38.00% |
Dividend yield | 0.00% |
Risk-free interest rate | 1.35% |
Warrants (Details 1)
Warrants (Details 1) - Warrants [Member] | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Common Stock Warrants Outstanding | 511,553 |
Series 2 Preferred Stock Warrants Outstanding | 439 |
Exercise Price $ 11.00 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 11 |
Common Stock Warrants Outstanding | 134,250 |
Weighted Average Remaining Contractual Life | 2 years |
Exercise Price $ 10.00 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 10 |
Common Stock Warrants Outstanding | 200,000 |
Weighted Average Remaining Contractual Life | 4 years |
Exercise price $ 5.50 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 5.50 |
Common Stock Warrants Outstanding | 177,303 |
Weighted Average Remaining Contractual Life | 5 years |
Exercise price 1,250 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1,250 |
Common Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 7 years |
Series 2 Preferred Stock Warrants Outstanding | 439 |
Warrants (Details Textual)
Warrants (Details Textual) - Warrant [Member] - USD ($) | Jun. 24, 2016 | Dec. 31, 2016 |
Warrants (Textual) | ||
Warrant total fair value | $ 150,451 | |
Fair value of each warrant | $ 342.71 | |
Series 2 preferred stock warrants outstanding | 439 | |
Series 2 Convertible Preferred Stock [Member] | ||
Warrants (Textual) | ||
Exercise price | $ 1,250 | |
Series 2 preferred stock warrants outstanding | 439 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes [Abstract] | ||
Federal tax benefit at statutory rate | $ (4,167,000) | $ (3,059,000) |
State tax benefit, net of federal tax | (293,000) | (436,000) |
Permanent differences | 43,000 | (14,000) |
Change in statutory rate | 216,000 | (133,000) |
Increase in valuation allowance | 4,075,000 | 3,564,000 |
Other | 126,000 | |
Benefit for income taxes | $ (78,388) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Equity based compensation | $ 254,000 | $ 266,000 |
Allowance for doubtful accounts | 3,462,000 | 1,844,000 |
Lease merchandise | 813,000 | 1,139,000 |
Fixed assets | 11,000 | |
Lease Impairment | 1,135,000 | 12,000 |
Net operating loss carry-forwards | 4,668,000 | 3,354,000 |
State loss carry forward | 338,000 | |
Gross deferred tax assets | 10,681,000 | 6,615,000 |
Valuation allowance | (10,681,000) | (6,606,000) |
Net deferred tax assets | 9,000 | |
Deferred tax liabilities: | ||
Fixed assets | (9,000) | |
Net deferred tax liabilities |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Income Taxes (Textual) | |
Statutory federal tax rate percentage | 34.00% |
Operating loss carryforwards expiration period | 2023 to 2036 |
Stockholders ownership description | More than 50 percentage points over a three-year period. |
Federal [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | $ 13,731,000 |
State [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | $ 9,275,000 |
Commitments (Details)
Commitments (Details) | Dec. 31, 2016USD ($) |
Commitments [Abstract] | |
2,017 | $ 190,200 |
2,018 | 195,900 |
2,019 | 122,400 |
Total | $ 508,500 |
Commitments (Details Textual)
Commitments (Details Textual) - USD ($) | Sep. 01, 2015 | Aug. 01, 2013 | Dec. 31, 2016 | Dec. 31, 2015 |
Commitments (Textual) | ||||
Rental expense | $ 6,800 | $ 274,300 | $ 222,600 | |
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. | |||
Monthly rent | $ 5,200 | $ 9,600 | ||
Term of lease | 48 months | 39 months |
Subsequent Event (Details)
Subsequent Event (Details) | 1 Months Ended |
Jan. 27, 2017 | |
Subsequent Event [Member] | FlexShopper, Inc. [Member] | |
Subsequent Event (Textual) | |
Credit agreement amendment description | FlexShopper, Inc. through a wholly-owned indirect subsidiary, entered into the fifth amendment (the Omnibus Amendment) to the Credit Agreement originally entered into on March 6, 2015 by and among the Borrower and WE 2014-1, LLC, an affiliate of Waterfall Asset Management, LLC, and certain other lenders thereunder from time to time. The Omnibus Amendment amended the Credit Agreement to, among other things, (1) extend the Commitment Termination Date (as defined in the Credit Agreement) from May 6, 2017 to April 1, 2018 (with a one-time right of extension by the lenders up to August 31, 2018), (2) require the Borrower to refinance the debt under the Credit Agreement upon a Permitted Change of Control (as defined in the Credit Agreement), subject to the payment of an early termination fee, and (3) modify certain permitted debt and financial covenants. These modified covenants consist of a reduction of Equity Book Value to not be less than the sum of $6 million and 20% of any additional equity capital invested into the Company after December 31, 2016; maintaining at least $1.5 million in Unrestricted cash; and to have the ratio of Consolidated Total Debt to Equity Book Value not exceed 4.75:1. |