Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 14, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FlexShopper, Inc. | |
Entity Central Index Key | 1,397,047 | |
Amendment Flag | false | |
Trading Symbol | FPAY | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,292,281 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash | $ 3,825,835 | $ 5,412,495 |
Accounts receivable, net | 3,394,726 | 2,181,787 |
Prepaid expenses | 348,522 | 361,777 |
Lease merchandise, net | 11,151,635 | 18,570,460 |
Total current assets | 18,720,718 | 26,526,519 |
PROPERTY AND EQUIPMENT, net | 2,848,983 | 2,540,514 |
OTHER ASSETS: | ||
Intangible assets, net | 18,033 | 20,340 |
Security deposits | 78,458 | 68,251 |
Total other assets | 96,491 | 88,591 |
Total assets | 21,666,192 | 29,155,624 |
CURRENT LIABILITIES: | ||
Current portion of loan payable under credit agreement to beneficial shareholder net of $138,138 of unamortized issuance costs | 4,111,862 | |
Accounts payable | 2,729,547 | 3,917,747 |
Accrued payroll and related taxes | 148,945 | 296,333 |
Accrued expenses | 303,490 | 259,104 |
Total current liabilities | 7,293,844 | 4,473,184 |
Loan payable under credit agreement to beneficial shareholder, net of $138,138 in 2017 and $631,488 in 2016 of unamortized issuance costs | 4,111,862 | 10,156,719 |
Total liabilities | 11,405,706 | 14,629,903 |
STOCKHOLDERS' EQUITY | ||
Series 1 Convertible Preferred stock, $0.001 par value- authorized 250,000 shares, issued and outstanding 243,065 shares in 2017 and 2016 at $5.00 stated value | 1,215,325 | 1,215,325 |
Series 2 Convertible Preferred stock, $0.001 par value- authorized 25,000 shares, issued and outstanding 21,952 shares in 2017 and 2016 at $1,000 stated value | 21,952,000 | 21,952,000 |
Common stock, $0.0001 par value- authorized 15,000,000 shares, issued and outstanding 5,292,281 shares in 2017 and 5,287,281 in 2016 | 529 | 529 |
Additional paid in capital | 22,378,335 | 22,298,439 |
Accumulated deficit | (35,285,703) | (30,940,572) |
Total stockholders' equity | 10,260,486 | 14,525,721 |
Total liabilities and stockholder's equity | $ 21,666,192 | $ 29,155,624 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Loan payable unamortized issuance costs | $ 138,138 | |
Unamortized issuance costs | $ 138,138 | $ 631,488 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 5,292,281 | 5,287,281 |
Common stock, shares outstanding | 5,292,281 | 5,287,281 |
Series 1 Convertible Preferred Stock | ||
Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Convertible preferred stock, shares authorized | 250,000 | 250,000 |
Convertible preferred stock, shares issued | 243,065 | 243,065 |
Convertible preferred stock, shares outstanding | 243,065 | 243,065 |
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 (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Lease revenues and fees | $ 16,144,184 | $ 12,072,493 | $ 49,458,109 | $ 32,505,343 |
Lease merchandise sold | 359,656 | 255,431 | 1,174,608 | 747,747 |
Total revenues | 16,503,840 | 12,327,924 | 50,632,717 | 33,253,090 |
Costs and expenses: | ||||
Cost of lease revenues, consisting of depreciation and impairment of lease merchandise | 8,146,293 | 5,525,701 | 24,733,915 | 16,817,016 |
Cost of lease merchandise sold | 280,130 | 182,879 | 816,058 | 498,594 |
Provision for doubtful accounts | 4,681,832 | 3,501,023 | 14,357,461 | 9,260,469 |
Marketing | 994,576 | 2,442,243 | 2,625,367 | 6,186,417 |
Salaries and benefits | 1,900,925 | 1,522,792 | 5,567,082 | 4,258,753 |
Operating expenses | 1,723,309 | 1,307,418 | 5,266,278 | 3,546,215 |
Total costs and expenses | 17,727,065 | 14,482,056 | 53,366,161 | 40,567,464 |
Operating loss | (1,223,225) | (2,154,132) | (2,733,444) | (7,314,374) |
Interest expense including amortization of debt issuance costs | 504,392 | 459,360 | 1,611,687 | 1,445,542 |
Net loss | (1,727,617) | (2,613,492) | (4,345,131) | (8,759,916) |
Dividends on Series 2 Convertible Preferred Shares | 603,680 | 548,747 | 1,712,716 | 663,111 |
Net loss attributable to common shareholders | $ (2,331,297) | $ (3,162,239) | $ (6,057,847) | $ (9,423,027) |
Basic and diluted (loss) per common share: | ||||
Net loss | $ (0.44) | $ (0.60) | $ (1.14) | $ (1.80) |
WEIGHTED AVERAGE COMMON SHARES: | ||||
Basic and diluted | 5,292,281 | 5,276,714 | 5,290,077 | 5,236,954 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) | Total | Series 1 Convertible Preferred Stock | Series 2 Convertible Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Deficit |
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 | 5,287,281 | |||
Provision for compensation expense related to stock options | 64,896 | 64,896 | ||||
Exercise of stock options | 15,000 | 15,000 | ||||
Exercise of stock options, shares | 5,000 | |||||
Net loss | (4,345,131) | (4,345,131) | ||||
Balance at Sep. 30, 2017 | $ 10,260,486 | $ 1,215,325 | $ 21,952,000 | $ 529 | $ 22,378,335 | $ (35,285,703) |
Balance, shares at Sep. 30, 2017 | 243,065 | 21,952 | 5,292,281 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (4,345,131) | $ (8,759,916) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||
Depreciation and impairment of lease merchandise | 24,733,916 | 16,817,016 |
Other depreciation and amortization | 1,536,491 | 1,111,026 |
Compensation expense related to issuance of stock options | 64,896 | 124,244 |
Provision for doubtful accounts | 14,357,461 | 9,260,469 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (15,570,400) | (9,890,775) |
Prepaid expenses and other | 13,255 | (92,188) |
Lease merchandise | (17,315,091) | (16,414,758) |
Security deposits | (10,207) | (143) |
Accounts payable | (1,188,200) | 801,278 |
Accrued payroll and related taxes | (147,388) | (126,617) |
Accrued expenses | 44,386 | 60,386 |
Net cash provided by (used in) operating activities | 2,173,988 | (7,109,978) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment, including capitalized software costs | (1,487,441) | (1,436,701) |
Net cash (used in) investing activities | (1,487,441) | (1,436,701) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds of loans from shareholder | 1,000,000 | |
Repayment of loans from shareholder | (1,000,000) | |
Proceeds from loan payable under credit agreement | 1,941,359 | |
Repayment of loan payable under credit agreement | (2,288,207) | (4,172,714) |
Proceeds from exercise of stock options | 15,000 | 42,500 |
Proceeds from sale of Series 2 Convertible Preferred Stock, net of related costs of $1,519,339 | 20,432,661 | |
Net cash (used in) provided by financing activities | (2,273,207) | 18,243,806 |
(DECREASE) INCREASE IN CASH | (1,586,660) | 9,697,127 |
CASH, beginning of period | 5,412,495 | 3,396,206 |
CASH, end of period | 3,825,835 | 13,093,333 |
Supplemental cash flow information: | ||
Interest paid | 1,179,826 | 1,124,342 |
Non-cash financing activities: | ||
Conversion of preferred stock to common stock | 425,660 | |
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) (Unaudited) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Statement of Cash Flows [Abstract] | |
Payments from sale of series 2 convertible preferred stock | $ 1,519,339 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Basis of Presentation [Abstract] | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION Our interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim financial information. Accordingly, the information presented in our interim financial statements does not include all information and disclosures necessary for a fair presentation of our financial position, results of operations and cash flows in conformity with GAAP for annual financial statements. In the opinion of management, these financial statements reflect all adjustments consisting of normal recurring accruals, necessary for a fair statement of our financial position, results of operations and cash flows for such periods. The results of operations for any interim period are not necessarily indicative of the results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The Company has experienced significant historical operating losses and negative operating cash flows to date. For the nine months ended September 30, 2017, the Company incurred a net loss of approximately $4.3 million. For the year ended December 31, 2016, the Company incurred a net loss of approximately $12.3 million and used approximately $17.4 million in cash flows for operations. Despite such events, management believes that the Company will be able to meet its obligations as they become due through November 14, 2018 based on (1) positive working capital of approximately $11.4 million at September 30, 2017, (2) the ability, to the extent required, to limit or eliminate discretionary spending related to marketing and advertising, (3) borrowing availability under its existing credit agreement to finance the purchase of new leased merchandise through April 1, 2018 (see Note 7), (4) the possibility of amending or extending the existing credit agreement, and (5) refinancing the existing credit agreement with a new credit facility prior to April 1, 2018, the date after which periodic payments are due to the lender in the current credit facility. There can be no assurance that the Company will be successful in renegotiating or replacing its existing credit agreement on terms acceptable to the Company. If the Company is unable to complete these plans it could have a material adverse effect on the Company. The consolidated balance sheet as of December 31, 2016 contained herein has been derived from audited financial statements. |
Business
Business | 9 Months Ended |
Sep. 30, 2017 | |
Business [Abstract] | |
BUSINESS | 2. 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. 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.” |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
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 – September 30, December 31, 2016 Accounts receivable $ 6,506,104 $ 11,690,495 Allowance for doubtful accounts 3,111,378 9,508,708 Accounts receivable, net $ 3,394,726 $ 2,181,787 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, with such charges being fully reserved for. Accounts receivable balances charged off against the allowance were $7,133,260 and $20,713,314 for the three and nine months ended September 30, 2017, respectively, and $1,043,762 and $2,786,979 for the three and nine months ended September 30, 2016, respectively. Lease Merchandise – September 30, December 31, 2016 Lease merchandise at cost $ 25,837,079 $ 33,264,810 Accumulated depreciation (13,172,776 ) (11,578,267 ) Impairment reserve (1,512,668 ) (3,116,083 ) Lease merchandise, net $ 11,151,635 $ 18,570,460 Cost of lease merchandise sold represents the undepreciated cost of rental merchandise at the time of sale. Deferred Debt Issuance Costs – Intangible Assets – Software Costs – Operating Expenses – Marketing 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: Nine Months ended September 30, 2017 2016 Series 1 Convertible Preferred Stock 147,417 147,417 Series 2 Convertible Preferred Stock 2,710,124 2,711,124 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 54,217 54,217 Common Stock Options 302,900 416,400 Common Stock Warrants 511,553 511,553 3,726,211 3,840,711 Amounts of common stock set forth in the above table have been adjusted for the Reverse Split (see Note 4). 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 September 30, 2017 and December 31, 2016, the Company has not recorded any unrecognized tax benefits. Interest and penalties related to liabilities for uncertain tax positions, if any will be charged to interest and operating expenses, respectively. 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 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. |
Reverse Stock Split
Reverse Stock Split | 9 Months Ended |
Sep. 30, 2017 | |
Reverse Stock Split [Abstract] | |
REVERSE STOCK SPLIT | 4. 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 converted into 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. 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. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT Property and equipment consist of the following: Estimated Useful Lives September 30, December 31, 2016 Furniture and fixtures 2-5 years $ 106,139 $ 98,564 Website and internal use software 3 years 5,352,872 3,933,600 Computers and software 3-7 years 680,071 619,477 6,139,082 4,651,641 Less: accumulated depreciation and amortization (3,290,099 ) (2,111,127 ) $ 2,848,983 $ 2,540,514 Depreciation and amortization expense was $414,674 and $294,616 for the three months ended September 30, 2017 and 2016, respectively, and $1,178,972 and $775,818 for the nine months ended September 30, 2017 and 2016, respectively. |
Loans Payable to Shareholder
Loans Payable to Shareholder | 9 Months Ended |
Sep. 30, 2017 | |
Loans Payable to Shareholder and Loan Payable Under Credit Agreement [Abstract] | |
LOANS PAYABLE TO SHAREHOLDER | 6. LOANS PAYABLE TO SHAREHOLDER On February 11, 2016, the Company entered into a secured Promissory Note with a principal stockholder for $1,000,000 at an interest rate of 15% per annum, payable upon demand, secured by substantially all of the Company’s assets. The Promissory Note was paid in full with interest amounting to $51,250 on June 13, 2016. |
Loan Payable Under Credit Agree
Loan Payable Under Credit Agreement | 9 Months Ended |
Sep. 30, 2017 | |
Loans Payable to Shareholder 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 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 (which term has since been extended, as described below). 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. Prior to the January 2017 amendment described below, amounts borrowed bore interest at the rate of LIBOR plus 15% per annum and a small non-usage fee was assessed on any undrawn amount if the facility is less than 80% drawn on average in any given measurement period. 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, as such date may have been extended in accordance with the Credit Agreement. In January 2017, the Credit Agreement was amended to reduce the interest being charged on amounts borrowed to be LIBOR plus 14% per annum and reduce the non-usage fee on undrawn amounts if the facility is less than 75% drawn on average. Additionally, the Commitment Termination Date (as defined in the Credit Agreement) was extended from May 6, 2017 to April 1, 2018. 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, as such date may be extended in accordance with the Credit Agreement. Principal payable within twelve months of the balance sheet date based on the outstanding loan balance at such date is reflected as a current liability in the accompanying balance sheets. Interest expense incurred under the Credit Agreement amounted to $385,989 and $1,256,475 for the three and nine months ended September 30, 2017, respectively, and $340,955 and $1,061,392 for the three and nine months ended September 30, 2016, respectively. As of September 30, 2017, the outstanding balance under the Credit Agreement was $8,500,000. The Company repaid $788,207 in the second quarter of 2017 as a result of a pay down of the seasonal over advance from 2016. The Company repaid $2,288,207 in the third quarter of 2017 as a result of lower quarter over quarter lease origination, and $4,172,174 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. Prior to the amendment described below, the Credit Agreement contained 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, the Lender waived this violation. The covenant also required the Company and its subsidiaries to maintain an Equity Book Value of at least $7 million at each of June 30, March 31 and December 31, 2016, increasing to $10 million at the end of each quarter from March 31 through December 31, 2017. On January 27, 2017, the Equity Book Value covenant was amended as discussed below. On January 27, 2017, FlexShopper entered into a fifth amendment to the Credit Agreement (the “Omnibus Amendment”). The Omnibus Amendment amended the Credit Agreement to, among other things, (1) extend the Commitment Termination Date 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, (3) reduce the interest rate charged on amounts borrowed to be LIBOR plus 14% per annum and reduce the non-usage fee on undrawn amounts if the facility is less than 75% drawn on average, and (4) modify certain permitted debt and financial covenants. |
Capital Structure
Capital Structure | 9 Months Ended |
Sep. 30, 2017 | |
Capital Structure [Abstract] | |
CAPITAL STRUCTURE | 8. CAPITAL STRUCTURE The Company’s capital structure consists of preferred and common stock as described below: The Company was authorized to issue 10,000,000 shares of $0.001 par value preferred stock. On May 10, 2017, the Company’s stockholders approved an amendment to its Certificate of Incorporation to reduce the number of authorized shares of preferred stock to 500,000 shares. The Company’s Board of Directors determines the rights and preferences of the Company’s preferred stock. Series 1 Convertible Preferred Stock – As of September 30, 2017, each share of Series 1 Convertible Preferred Stock was convertible into 0.60649 shares of the Company’s common stock, subject to certain anti-dilution rights. The holders of the Series 1 Convertible Preferred Stock have 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, 2016, 85,132 shares of Series 1 Convertible Preferred Stock were converted into 51,983 shares of common stock. As of September 30, 2017, 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 Secretary of State (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. Cumulative dividends in arrears totaled $2,924,681 at September 30, 2017. 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. 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 Reverse Split by a ratio of one-for-10 (see Note 4). All share and per share data in these financial statements and footnotes have been retrospectively adjusted to account for the Reverse Split. |
Stock Options
Stock Options | 9 Months Ended |
Sep. 30, 2017 | |
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 2007 Plan. In October 2009, the Company’s stockholders approved an increase in the number of shares covered by the 2007 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 March 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. Activity in stock options for the nine months ended September 30, 2017 follows: Number of shares Weighted average exercise Weighted average contractual term (years) Aggregate intrinsic Outstanding at January 1, 2017 411,600 $ 8.63 Granted 73,000 4.31 Forfeited (16,700 ) 6.01 Expired (160,000 ) 12.50 Exercised (5,000 ) 3.00 Outstanding at September 30, 2017 302,900 $ 5.78 7.15 $ 188,859 Vested and exercisable at September 30, 2017 203,000 $ 6.32 6.17 $ 103,659 Vested and exercisable at September 30, 2017 and expected to vest thereafter 298,000 $ 6.32 7.15 $ 188,859 The weighted average grant date fair value of options granted during the nine month period ending September 30, 2017 was $1.69 per share. The Company measured the fair value of each option award on the date of grant using the Black-Scholes-Merton (BSM) pricing model with the following assumptions: 2017 Exercise price $4.02 to $5.25 Expected life 6 years Expected volatility 38% Dividend yield 0% Risk-free interest rate 1.98% to 2.06% 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 Securities and Exchange Commission (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 $22,685 and $64,896, for the three and nine months ended September 30, 2017, respectively and $45,863 and $124,244 for the three and nine months ended September 30, 2016, respectively. Unrecognized compensation cost related to non-vested options at September 30, 2017 amounted to approximately $126,000, which is expected to be recognized over a weighted average period of 2.1 years. |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2017 | |
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 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 September 30, 2017, 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 | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes [Abstract] | |
INCOME TAXES | 11. INCOME TAXES As of December 31, 2016, the Company has federal net operating loss carryforwards of approximately $15,075,000 and state net operating loss carryforwards of approximately $10,109,000 available to offset future taxable income, which expire from 2023 to 2036. The Company expects its effective tax rate for the year ending December 31, 2017 to be zero due to its history of net operating losses and recording a full valuation allowance on deferred tax assets. As a result the Company estimated its effective tax rate for the three and nine months ended September 30, 2017 to be zero. The Company’s use of net operating loss carryforwards may be subject to limitations imposed by the Internal Revenue Code. Management believes that the deferred tax asset as of September 30, 2017 does not satisfy the realization criteria and has recorded a valuation allowance to offset the tax asset. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
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 – September 30, December 31, 2016 Accounts receivable $ 6,506,104 $ 11,690,495 Allowance for doubtful accounts 3,111,378 9,508,708 Accounts receivable, net $ 3,394,726 $ 2,181,787 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, with such charges being fully reserved for. Accounts receivable balances charged off against the allowance were $7,133,260 and $20,713,314 for the three and nine months ended September 30, 2017, respectively, and $1,043,762 and $2,786,979 for the three and nine months ended September 30, 2016, respectively. |
Lease Merchandise | Lease Merchandise – September 30, December 31, 2016 Lease merchandise at cost $ 25,837,079 $ 33,264,810 Accumulated depreciation (13,172,776 ) (11,578,267 ) Impairment reserve (1,512,668 ) (3,116,083 ) Lease merchandise, net $ 11,151,635 $ 18,570,460 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 – |
Software Costs | Software Costs – |
Operating Expenses | Operating Expenses – Marketing |
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: Nine Months ended September 30, 2017 2016 Series 1 Convertible Preferred Stock 147,417 147,417 Series 2 Convertible Preferred Stock 2,710,124 2,711,124 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 54,217 54,217 Common Stock Options 302,900 416,400 Common Stock Warrants 511,553 511,553 3,726,211 3,840,711 Amounts of common stock set forth in the above table have been adjusted for the Reverse Split (see Note 4). |
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 September 30, 2017 and December 31, 2016, the Company has not recorded any unrecognized tax benefits. Interest and penalties related to liabilities for uncertain tax positions, if any will be charged to interest and operating expenses, respectively. |
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 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. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of accounts receivable | September 30, December 31, 2016 Accounts receivable $ 6,506,104 $ 11,690,495 Allowance for doubtful accounts 3,111,378 9,508,708 Accounts receivable, net $ 3,394,726 $ 2,181,787 |
Schedule of net leased merchandise | September 30, December 31, 2016 Lease merchandise at cost $ 25,837,079 $ 33,264,810 Accumulated depreciation (13,172,776 ) (11,578,267 ) Impairment reserve (1,512,668 ) (3,116,083 ) Lease merchandise, net $ 11,151,635 $ 18,570,460 |
Schedule of antidilutive securities excluded from computation of earnings per share | Nine Months ended September 30, 2017 2016 Series 1 Convertible Preferred Stock 147,417 147,417 Series 2 Convertible Preferred Stock 2,710,124 2,711,124 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 54,217 54,217 Common Stock Options 302,900 416,400 Common Stock Warrants 511,553 511,553 3,726,211 3,840,711 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment [Abstract] | |
Schedule of property and equipment | Estimated Useful Lives September 30, December 31, 2016 Furniture and fixtures 2-5 years $ 106,139 $ 98,564 Website and internal use software 3 years 5,352,872 3,933,600 Computers and software 3-7 years 680,071 619,477 6,139,082 4,651,641 Less: accumulated depreciation and amortization (3,290,099 ) (2,111,127 ) $ 2,848,983 $ 2,540,514 |
Stock Options (Tables)
Stock Options (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stock Options [Abstract] | |
Schedule of information about stock options | Number of shares Weighted average exercise Weighted average contractual term (years) Aggregate intrinsic Outstanding at January 1, 2017 411,600 $ 8.63 Granted 73,000 4.31 Forfeited (16,700 ) 6.01 Expired (160,000 ) 12.50 Exercised (5,000 ) 3.00 Outstanding at September 30, 2017 302,900 $ 5.78 7.15 $ 188,859 Vested and exercisable at September 30, 2017 203,000 $ 6.32 6.17 $ 103,659 Vested and exercisable at September 30, 2017 and expected to vest thereafter 298,000 $ 6.32 7.15 $ 188,859 |
Schedule of option input into a Black Scholes option pricing model | 2017 Exercise price $4.02 to $5.25 Expected life 6 years Expected volatility 38% Dividend yield 0% Risk-free interest rate 1.98% to 2.06% |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Basis of Presentation [Abstract] | |||||
Net loss | $ (1,727,617) | $ (2,613,492) | $ (4,345,131) | $ (8,759,916) | $ 12,300,000 |
Cash flows for operations | $ 2,173,988 | $ (7,109,978) | |||
Agreement, description | (1) Positive working capital of approximately $11.4 million at September 30, 2017, (2) the ability, to the extent required, to limit or eliminate discretionary spending related to marketing and advertising, (3) borrowing availability under its existing credit agreement to finance the purchase of new leased merchandise through April 1, 2018 (see Note 7), (4) the possibility of amending or extending the existing credit agreement, and (5) refinancing the existing credit agreement with a new credit facility prior to April 1, 2018, the date after which periodic payments are due to the lender in the current credit facility. |
Business (Details)
Business (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Business (Textual) | |
Limited liability percentage of FlexShopper, LLC | 100.00% |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Summary of Significant Accounting Policies [Abstract] | ||
Accounts receivable | $ 6,506,104 | $ 11,690,495 |
Allowance for doubtful accounts | 3,111,378 | 9,508,708 |
Accounts receivable, net | $ 3,394,726 | $ 2,181,787 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Summary of Significant Accounting Policies [Abstract] | ||
Lease merchandise at cost | $ 25,837,079 | $ 33,264,810 |
Accumulated depreciation | (13,172,776) | (11,578,267) |
Impairment reserve | (1,512,668) | (3,116,083) |
Lease merchandise, net | $ 11,151,635 | $ 18,570,460 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details 2) - shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 3,726,211 | 3,840,711 |
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 | 147,417 |
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 | 2,710,124 | 2,711,124 |
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 | 54,217 |
Common Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 302,900 | 416,400 |
Common Stock 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 Accoun29
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Summary of Significant Accounting Policies (Textual) | ||||
Amortization method | Straight line method | |||
Accounts receivable charged off against allowance | $ 7,133,260 | $ 1,043,762 | $ 20,713,314 | $ 2,786,979 |
Impairment charge | 664,000 | 603,000 | 3,948,000 | 1,615,000 |
Capitalized software costs | 481,306 | 507,738 | 1,419,273 | 1,355,187 |
Amortization | $ 118,404 | $ 118,405 | $ 355,212 | $ 332,900 |
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. | |||
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. |
Reverse Stock Split (Details)
Reverse Stock Split (Details) - shares | 1 Months Ended | ||
Oct. 24, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | |
Reverse Stock Split (Textual) | |||
Reverse stock split, description | One-for-10 | ||
Common stock, shares outstanding | 52,870,040 | 5,292,281 | 5,287,281 |
Outstanding shares | 52,870,398 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 6,139,082 | $ 4,651,641 |
Less: accumulated depreciation and amortization | (3,290,099) | (2,111,127) |
Property and equipment, net | 2,848,983 | 2,540,514 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 106,139 | 98,564 |
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 | $ 5,352,872 | 3,933,600 |
Estimated Useful Lives | 3 years | |
Computers and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 680,071 | $ 619,477 |
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 (Detai32
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property and Equipment (Textual) | ||||
Depreciation and amortization expense | $ 414,674 | $ 294,616 | $ 1,178,972 | $ 775,818 |
Loans Payable to Shareholder (D
Loans Payable to Shareholder (Details) - USD ($) | Jun. 13, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Feb. 11, 2016 |
Loans Payable Shareholder (Textual) | ||||
Interest paid | $ 1,179,826 | $ 1,124,342 | ||
Promissory Note [Member] | ||||
Loans Payable Shareholder (Textual) | ||||
Promissory note, face amount | $ 1,000,000 | |||
Interest rate of promissory note | 15.00% | |||
Interest paid | $ 51,250 |
Loan Payable Under Credit Agr34
Loan Payable Under Credit Agreement (Details) - USD ($) | Mar. 06, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2015 |
Loan Payable Under Credit Agreement (Textual) | ||||||
Interest expense | $ 504,392 | $ 459,360 | $ 1,611,687 | $ 1,445,542 | ||
Repayment of loans payable | $ 2,288,207 | 4,172,714 | ||||
Commitment termination, description | In January 2017, the Credit Agreement was amended to reduce the interest being charged on amounts borrowed to be LIBOR plus 14% per annum and reduce the non-usage fee on undrawn amounts if the facility is less than 75% drawn on average. Additionally, the Commitment Termination Date (as defined in the Credit Agreement) was extended from May 6, 2017 to April 1, 2018. 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, as such date may be extended in accordance with the Credit Agreement. | |||||
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 | 385,989 | 340,955 | $ 1,256,475 | $ 1,061,392 | ||
Funded amount | 8,500,000 | $ 8,500,000 | ||||
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, the Lender waived this violation. The covenant also required the Company and its subsidiaries to maintain an Equity Book Value of at least $7 million at each of June 30, March 31 and December 31, 2016, increasing to $10 million at the end of each quarter from March 31 through December 31, 2017. | |||||
Fifth amendment to credit agreement, description | On January 27, 2017, FlexShopper entered into a fifth amendment to the Credit Agreement (the "Omnibus Amendment"). The Omnibus Amendment amended the Credit Agreement to, among other things, (1) extend the Commitment Termination Date 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, (3) reduce the interest rate charged on amounts borrowed to be LIBOR plus 14% per annum and reduce the non-usage fee on undrawn amounts if the facility is less than 75% drawn on average, and (4) 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 the ratio of Consolidated Total Debt to Equity Book Value not exceeding 4.75:1. The Company was in compliance with its covenants as of September 30, 2017. | |||||
Repayment of loans payable | 788,207 | $ 4,172,174 | $ 2,288,207 | |||
Fifth amendment to credit agreement value | $ 16,500,000 | $ 16,500,000 |
Capital Structure (Details)
Capital Structure (Details) - USD ($) | Jun. 10, 2016 | Mar. 06, 2015 | Oct. 24, 2016 | Jan. 31, 2007 | Sep. 30, 2017 | Dec. 31, 2016 | May 10, 2017 |
Capital Structure (Textual) | |||||||
Preferred stock conversion into common stock, shares | 52,870,398 | ||||||
Common stock, shares authorized (in shares) | 15,000,000 | 15,000,000 | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||||
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 | 500,000 | |||||
Common Stock [Member] | |||||||
Capital Structure (Textual) | |||||||
Common stock, shares authorized (in shares) | 15,000,000 | ||||||
Common stock shares, description | The Company was authorized to issue 100,000,000 shares of $0.0001 par value common stock. | ||||||
Conversion of preferred stock to common stock, shares | 51,983 | ||||||
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 conversion into common stock, shares | 250,000 | ||||||
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. | ||||||
Convertible, conversion price per share | $ 0.60649 | ||||||
Conversion of preferred stock to common stock, shares | 85,132 | ||||||
Series 2 Convertible Preferred Stock [Member] | |||||||
Capital Structure (Textual) | |||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||||
Preferred stock, shares authorized (in shares) | 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. 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 | |||||
Additional gross proceeds from sale of stock | $ 1,950,000 | ||||||
Additional sale of shares | 1,952 | ||||||
Cumulative dividends | $ 2,924,681 |
Stock Options (Details)
Stock Options (Details) - Stock option [Member] | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares, Outstanding | shares | 411,600 |
Number of shares, Granted | shares | 73,000 |
Number of shares, Forfeited | shares | (16,700) |
Number of shares, Expired | shares | (160,000) |
Number of shares, Exercised | shares | (5,000) |
Number of shares, Outstanding | shares | 302,900 |
Number of shares, vested and exercisable | shares | 203,000 |
Number of shares, vested and exercisable expected to vest thereafter | shares | 298,000 |
Weighted average exercise price, Balance | $ / shares | $ 8.63 |
Weighted average exercise price, Granted | $ / shares | 4.31 |
Weighted average exercise price, Forfeited | $ / shares | 6.01 |
Weighted average exercise price, Expired | $ / shares | 12.50 |
Weighted average exercise price, Exercised | $ / shares | 3 |
Weighted average exercise price, Balance | $ / shares | 5.78 |
Weighted average exercise price vested and exercisable | $ / shares | 6.32 |
Weighted average exercise price, vested and exercisable expected to vest thereafter | $ / shares | $ 6.32 |
Weighted average contractual term (years) | 7 years 1 month 24 days |
Weighted average contractual term, vested and exercisable (years) | 6 years 2 months 1 day |
Weighted average contractual term, vested and exercisable expected to vest thereafter (years) | 7 years 1 month 24 days |
Aggregate intrinsic value, Outstanding | $ | $ 188,859 |
Aggregate intrinsic value, vested and exercisable | $ | 103,659 |
Aggregate intrinsic value, vested and exercisable expected to vest thereafter | $ | $ 188,859 |
Stock Options (Details 1)
Stock Options (Details 1) - Stock option [Member] | 9 Months Ended |
Sep. 30, 2017$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected life | 6 years |
Expected volatility | 38.00% |
Dividend yield | 0.00% |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price | $ 4.02 |
Risk-free interest rate | 1.98% |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price | $ 5.25 |
Risk-free interest rate | 2.06% |
Stock Options (Details Textual)
Stock Options (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Mar. 15, 2015 | Oct. 31, 2009 | Jan. 31, 2007 | |
Stock Options (Textual) | |||||||
Weighted average grant date fair value of options granted | $ 1.69 | ||||||
Unrecognized compensation cost related to non vested options | $ 126,000 | ||||||
Remaining Contractual Life | 2 years 1 month 6 days | ||||||
Compensation expense | $ 22,685 | $ 45,863 | $ 64,896 | $ 124,244 | |||
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. | ||||||
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] | 9 Months Ended |
Sep. 30, 2017$ / 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) - Common Stock Warrants [Member] | 9 Months Ended |
Sep. 30, 2017$ / 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 |
Series 2 Preferred Stock Warrants Outstanding | |
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 |
Series 2 Preferred Stock Warrants Outstanding | |
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 |
Series 2 Preferred Stock Warrants Outstanding | |
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 | Sep. 30, 2017 |
Warrants (Textual) | ||
Warrant total fair value | $ 150,451 | |
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) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Income Taxes (Textual) | |
Operating loss carryforwards expiration period | 2023 to 2036 |
Federal [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | $ 15,075,000 |
State [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | $ 10,109,000 |