Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 08, 2018 | Jun. 30, 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-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 12,162,748 | ||
Entity Common Stock, Shares Outstanding | 5,294,501 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash | $ 4,968,915 | $ 5,412,495 |
Accounts receivable, net | 4,259,468 | 2,181,787 |
Prepaid expenses | 321,035 | 361,777 |
Lease merchandise, net | 21,415,322 | 18,570,460 |
Total current assets | 30,964,740 | 26,526,519 |
PROPERTY AND EQUIPMENT, net | 2,948,164 | 2,540,514 |
OTHER ASSETS, net | 95,722 | 88,591 |
Total assets | 34,008,626 | 29,155,624 |
CURRENT LIABILITIES: | ||
Current portion of loan payable under credit agreement to beneficial shareholder net of $118,404 of unamortized issuance costs | 14,094,096 | |
Accounts payable | 7,702,145 | 3,917,747 |
Accrued payroll and related taxes | 404,346 | 296,333 |
Accrued expenses | 786,095 | 259,104 |
Total current liabilities | 22,986,682 | 4,473,184 |
Loan payable under credit agreement to beneficial shareholder net of $39,468 in 2017 and $631,488 in 2016 of unamortized issuance costs and current portion | 4,698,032 | 10,156,719 |
Total liabilities | 27,684,714 | 14,629,903 |
COMMITMENTS | ||
STOCKHOLDERS' EQUITY | ||
Series 1 Convertible Preferred stock, $0.001 par value- authorized 250,000 shares, issued and outstanding 239,405 shares in 2017 and 243,065 in 2016 at $5.00 stated value | 1,197,025 | 1,215,325 |
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 | 21,952,000 |
Common stock, $0.0001 par value- authorized 15,000,000 shares, issued and outstanding 5,294,501 shares in 2017 and 5,287,281 in 2016 | 529 | 529 |
Additional paid in capital | 22,445,691 | 22,298,439 |
Accumulated deficit | (39,271,333) | (30,940,572) |
Total stockholders' equity | 6,323,912 | 14,525,721 |
Total liabilities and stockholder's equity | $ 34,008,626 | $ 29,155,624 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Loan payable unamortized issuance costs | $ 118,404 | |
Unamortized issuance costs | $ 39,468 | $ 631,488 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 5,294,501 | 5,287,281 |
Common stock, shares outstanding | 5,294,501 | 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 | 239,405 | 243,065 |
Convertible preferred stock, shares outstanding | 239,405 | 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 - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | ||
Lease revenues and fees | $ 65,412,131 | $ 46,513,235 |
Lease merchandise sold | 1,634,233 | 1,066,350 |
Total revenues | 67,046,364 | 47,579,585 |
Costs and expenses: | ||
Cost of lease revenues, consisting of depreciation and impairment of lease merchandise | 31,453,246 | 22,734,553 |
Cost of lease merchandise sold | 998,800 | 687,991 |
Provision for doubtful accounts | 19,135,207 | 13,281,242 |
Marketing | 6,094,330 | 10,193,052 |
Salaries and benefits | 7,862,714 | 5,946,401 |
Other operating expenses | 7,664,566 | 5,064,869 |
Total costs and expenses | 73,208,863 | 57,908,108 |
Operating loss | (6,162,499) | (10,328,523) |
Interest expense including amortization of debt issuance costs | 2,168,262 | 1,925,184 |
Net loss | (8,330,761) | (12,253,707) |
Cumulative dividends on Series 2 Convertible Preferred Shares | 2,316,396 | 1,211,964 |
Net loss attributable to common shareholders | $ (10,647,157) | $ (13,465,671) |
Basic and diluted (loss) per common share: | ||
Net loss | $ (2.01) | $ (2.57) |
Weighted average common shares outstanding: | ||
Basic and diluted | 5,290,944 | 5,249,476 |
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, 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) | 51,873 | ||||
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 | 5,287,281 | |||
Provision for compensation expense related to issued stock options | 113,952 | 113,952 | ||||
Conversion of preferred stock to common stock | $ (18,300) | 18,300 | ||||
Conversion of preferred stock to common stock, shares | (3,660) | 2,220 | ||||
Exercise of stock options | 15,000 | 15,000 | ||||
Exercise of stock options, shares | 5,000 | |||||
Net loss | (8,330,761) | (8,330,761) | ||||
Balance at Dec. 31, 2017 | $ 6,323,912 | $ 1,197,025 | $ 21,952,000 | $ 529 | $ 22,445,691 | $ (39,271,333) |
Balance, shares at Dec. 31, 2017 | 239,405 | 21,952 | 5,294,501 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (8,330,761) | $ (12,253,707) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||
Depreciation and impairment of lease merchandise | 31,453,246 | 22,734,553 |
Other depreciation and amortization | 2,090,581 | 1,566,507 |
Compensation expense related to issuance of stock options and warrants | 113,952 | 136,308 |
Provision for uncollectible accounts | 19,135,207 | 13,281,242 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (21,212,888) | (14,710,870) |
Prepaid expenses and other | 32,296 | (124,707) |
Lease merchandise | (34,298,108) | (30,100,878) |
Security deposits | (10,206) | (1,493) |
Accounts payable | 3,784,397 | 2,133,818 |
Accrued payroll and related taxes | 108,013 | 44,814 |
Accrued expenses | 535,437 | (78,016) |
Net cash (used in) operating activities | (6,598,834) | (17,372,429) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment, including capitalized software costs | (2,021,538) | (1,855,088) |
Net cash (used in) investing activities | (2,021,538) | (1,855,088) |
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 | 10,450,000 | 4,941,359 |
Repayment of loan payable under credit agreement | (2,288,208) | (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 in 2016 | 20,432,661 | |
Net cash provided by financing operations | 8,176,792 | 21,243,806 |
(DECREASE)/ INCREASE IN CASH | (443,580) | 2,016,289 |
CASH, beginning of year | 5,412,495 | 3,396,206 |
CASH, end of year | 4,968,915 | 5,412,495 |
Supplemental cash flow information: | ||
Interest paid | 1,649,795 | 1,459,756 |
Non-cash financing activities: | ||
Conversion of preferred stock to common stock | 18,300 | 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) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Statement of Cash Flows [Abstract] | |
Payments from sale of series 2 convertible preferred stock | $ 1,519,339 |
Business
Business | 12 Months Ended |
Dec. 31, 2017 | |
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. 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 5), 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 are hereafter referred to as “FlexShopper.” |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation - Estimates – Revenue Recognition Accounts Receivable and Allowance for Doubtful Accounts – December 31, 2017 December 31, 2016 Accounts receivable $ 6,399,233 $ 11,690,495 Allowance for doubtful accounts (2,139,765 ) (9,508,708 ) Accounts receivable, net $ 4,259,468 $ 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. The allowance for bad debt at January 1, 2016 was $4,727,278. During the years ended December 31, 2017 and 2016, $26,504,150 and $8,499,812 of accounts receivable balances, respectively, were charged off against the allowance. During the years ended December 31, 2017 and 2016, the provision for bad debts was $19,135,207 and $13,281,242, respectively. Lease Merchandise – December 31, 2017 December 31, 2016 Lease merchandise at cost $ 34,501,555 $ 33,264,810 Accumulated depreciation (11,974,953 ) (11,578,267 ) Impairment reserve (1,111,280 ) (3,116,083 ) Lease merchandise, net $ 21,415,322 $ 18,570,460 Cost of lease merchandise sold represents the undepreciated cost of rental merchandise at the time of sale. Deferred Debt Issuance Costs 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: Year ended 2017 2016 Series 1 Convertible Preferred Stock 145,197 147,417 Series 2 Convertible Preferred Stock 2,710,124 2,710,124 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 54,217 54,217 Options 335,900 411,600 Warrants 511,553 511,553 3,756,991 3,834,911 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 7. 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, 2017 and 2016, 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. Recent Accounting Pronouncements – 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. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 3. PROPERTY AND EQUIPMENT: Property and equipment consist of the following: Estimated Useful Lives December 31, 2017 December 31, 2016 Furniture, fixtures and vehicle 2-5 years $ 153,909 $ 98,564 Website and internal use software 3 years 5,827,771 3,933,600 Computers and software 3-7 years 691,499 619,477 6,673,179 4,651,641 Less: accumulated depreciation and amortization (3,725,015 ) (2,111,127 ) $ 2,948,164 $ 2,540,514 Depreciation and amortization expense was $1,613,888 and $1,112,127 for the years ended December 31, 2017 and 2016, respectively. |
Loans Payable to Shareholder
Loans Payable to Shareholder | 12 Months Ended |
Dec. 31, 2017 | |
Loans Payable to Shareholder/Loan Payable Under Credit Agreement [Abstract] | |
LOANS PAYABLE TO SHAREHOLDER | 5. 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 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. 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 Company 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. 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 for the years ended December 31, 2017 and 2016 was $1,694,096 and $1,422,630, respectively. As of December 31, 2017, the outstanding balance under the Credit Agreement was $18,950,000. The Company repaid $788,208 in the second quarter of 2017 as a result of a pay down of the seasonal over advance from 2016. The Company repaid $1,500,000 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. Interest is payable monthly on the outstanding balance of the amounts borrowed. See Note 11 for subsequent events related to the Credit Agreement. |
Loan Payable Under Credit Agree
Loan Payable Under Credit Agreement | 12 Months Ended |
Dec. 31, 2017 | |
Loans Payable to Shareholder/Loan Payable Under Credit Agreement [Abstract] | |
LOAN PAYABLE UNDER CREDIT AGREEMENT | 5. 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 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. On January 27, 2017, FlexShopper entered into a fifth amendment to the Credit Agreement (. 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 Company 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. 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 for the years ended December 31, 2017 and 2016 was $1,694,096 and $1,422,630 respectively. As of December 31, 2017, the outstanding balance under the Credit Agreement was $18,950,000. The Company repaid $788,208 in the second quarter of 2017 as a result of a pay down of the seasonal over advance from 2016. The Company repaid $1,500,000 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. Interest is payable monthly on the outstanding balance of the amounts borrowed. See Note 11 for subsequent events related to the Credit Agreement. |
Capital Structure
Capital Structure | 12 Months Ended |
Dec. 31, 2017 | |
Capital Structure [Abstract] | |
CAPITAL STRUCTURE | 6. 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 December 31, 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. During the year ended December 31, 2017, 3,660 shares of Series 1 Convertible Preferred Stock were converted into 2,220 shares of common stock. As of December 31, 2017, there were 239,405 shares of Series 1 Convertible Preferred Stock outstanding, which are convertible into 145,197 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 $3,528,361 at December 31, 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 the Reverse Split by a ratio of one-for-10. 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 | 12 Months Ended |
Dec. 31, 2017 | |
Stock Options [Abstract] | |
STOCK OPTIONS | 7. 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, 2017 follows: Number of Weighted Weighted Aggregate Outstanding at January 1, 2016 406,700 $ 8.50 Granted 70,700 5.70 Forfeited (40,800 ) 6.70 Exercised (25,000 ) 1.70 Outstanding at December 31, 2016 411,600 8.63 Granted 106,000 4.24 Forfeited (16,700 ) 6.01 Expired (160,000 ) 12.50 Exercised (5,000 ) 3.00 Outstanding at December 31, 2017 335,900 $ 5.61 7.19 $ 52,500 Vested and exercisable at December 31, 2017 212,500 $ 6.27 6.01 $ 52,500 Vested and exercisable at December 31, 2017 and expected to vest thereafter 331,600 $ 5.61 7.19 $ 52.500 The weighted average grant date fair value of options granted during 2016 and 2017 was $2.03 and $1.65 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: 2016 2017 Exercise price $ 4.90 to $6.60 $ 4.02 to$ 5.25 Expected life 5.5 years 5.8 years Expected volatility 38 % 38 % Dividend yield 0 % 0 % Risk-free interest rate 1.13% to 1.73 % 1.89% 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 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 $113,952 and $136,308 for the years ended December 31, 2017 and 2016, respectively. Unrecognized compensation cost related to non-vested options at December 31, 2017 amounted to $128,781 which is expected to be recognized over a weighted average period of 2.12 years. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Warrants [Abstract] | |
WARRANTS | 8. 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, 2017, all of which are exercisable: Exercise Common Stock Warrants Series 2 Preferred Stock Warrants Weighted Average Remaining Price Outstanding Outstanding Contractual Life $ 11.00 134,250 1 years $ 10.00 200,000 3 years $ 5.50 177,303 4 years $ 1,250 - 439 6 years 511,553 439 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes [Abstract] | |
INCOME TAXES | 9. INCOME TAXES: Reconciliation of the benefit for income taxes from continuing operations recorded in the consolidated statements of operations with the amounts computed at the statutory federal tax rates for each year: 2017 2016 Federal tax benefit at statutory rate $ (2,830,000 ) $ (4,167,000 ) State tax benefit, net of federal tax (142,000 ) (293,000 ) Permanent differences 39,000 43,000 Change in statutory rate 86,000 216,000 Change in valuation allowance (1,934,000 ) 4,075,000 Change in federal tax rate 4,747,000 - Other 34,000 126,000 Benefit for income taxes $ - $ - Tax affected components of deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 were as follows: 2017 2016 Deferred tax assets: Equity based compensation $ 170,000 $ 254,000 Allowance for doubtful accounts 493,000 3,462,000 Lease merchandise 779,000 813,000 Fixed assets 4,000 11,000 Lease Impairment 256,000 1,135,000 Deferred rent 2,000 - Accrued expenses 45,000 - Federal loss carry-forwards 6,302,000 4,668,000 State loss carry forward 696,000 338,000 Gross deferred tax assets 8,747,000 10,681,000 Valuation allowance (8,747,000 ) (10,681,000 ) Net deferred tax assets $ - $ - 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, 2017, the Company has federal net operating loss carryforwards of approximately $30,008,000 and state net operating loss carryforwards of approximately $16,011,000 available to offset future taxable income which expire from 2014 to 2037. 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, 2017, 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 2013. There were no federal or state income tax audits being conducted as of December 31, 2017. Under the 2017 tax reform bill signed into law on December 22, 2017, corporations will be taxed at a flat rate of 21%. The 21% rate will be applied for tax years beginning January 1, 2018. For tax years prior to 2018, a tiered tax bracket structure was used with tax rates ranging from 15% to 35% depending on the amount of corporate income subject to tax for the year. Deferred tax assets and deferred tax liabilities were revalued using enacted tax rate(s) expected to apply to taxable income in the period in which the deferred tax asset/liability is expected to be settled or realized. The effects of the change in tax rates on deferred tax balances were recognized through continuing operations in the period in which the new legislation was enacted. As the law was enacted on December 22, 2017, the impact to the net deferred tax assets due to the change in tax rate was recognized in the financial statements period ending December 31, 2017. Consequently, we have recorded a decrease related to the deferred income tax assets and the valuation allowance of $4,747,000 for the year ended December 31, 2017 to reflect these changes. The Company completed its analysis and review of all tax positions taken through December 31, 2017 and does not believe that there are any unrecognized tax benefits related to tax positions taken on its income tax returns. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2017 | |
Commitments [Abstract] | |
COMMITMENTS | 10. COMMITMENTS: Lease Commitments FlexShopper entered into a lease, as amended, for office space through June 2019. On March 14, 2017, FlexShopper amended the lease agreement for an additional suite in an adjoining building. On September 1, 2015, FlexShopper entered into a 48 month lease for additional office space in Fort Lauderdale, Florida to accommodate its call and customer service center. On August 25, 2017, FlexShopper entered into a 12 month lease with two additional three year options for retail store space in West Palm Beach, Florida. The rental expense for the years ended December 31, 2017 and 2016 was approximately $331,900 and $274,300, respectively. At December 31, 2017, the future minimum annual lease payments are approximately as follows: 2018 $ 256,385 2019 144,201 $ 400,586 |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Event [Abstract] | |
SUBSEQUENT EVENT | 11. SUBSEQUENT EVENT: On January 9, 2018, the Credit Agreement was modified to extend the Commitment Termination Date from April 1, 2018 to August 31, 2018. (See Note 5) On January 29, 2018 and January 30, 2018, the Company entered into letter agreements with Russ Heiser, the Company’s Chief Financial Officer, and NRNS Capital Holdings LLC (“NRNS”), respectively (such letter agreements, together, the “Commitment Letters”), pursuant to which the Company issued a subordinated promissory note to each of Mr. Heiser and NRNS (together, the “Notes”). The Commitment Letters provide that Mr. Heiser and NRNS each shall make advances to the Company under the applicable Note in aggregate amounts up to $1,000,000 and $2,500,000, respectively. Such amounts may be drawn by the Company until July 31, 2018 in one or more advances. Upon issuance of the Notes, the Company drew $500,000 on the Note held by Mr. Heiser and $2,500,000 on the Note held by NRNS. Payments of principal and accrued interest are due and payable by the Company upon 30 days’ prior written notice from the applicable noteholder and the Company can prepay principal and interest at any time without penalty. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 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 – December 31, 2017 December 31, 2016 Accounts receivable $ 6,399,233 $ 11,690,495 Allowance for doubtful accounts (2,139,765 ) (9,508,708 ) Accounts receivable, net $ 4,259,468 $ 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. The allowance for bad debt at January 1, 2016 was $4,727,278. During the years ended December 31, 2017 and 2016, $26,504,150 and $8,499,812 of accounts receivable balances, respectively, were charged off against the allowance. During the years ended December 31, 2017 and 2016, the provision for bad debts was $19,135,207 and $13,281,242, respectively. |
Lease Merchandise | Lease Merchandise – December 31, 2017 December 31, 2016 Lease merchandise at cost $ 34,501,555 $ 33,264,810 Accumulated depreciation (11,974,953 ) (11,578,267 ) Impairment reserve (1,111,280 ) (3,116,083 ) Lease merchandise, net $ 21,415,322 $ 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 |
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: Year ended 2017 2016 Series 1 Convertible Preferred Stock 145,197 147,417 Series 2 Convertible Preferred Stock 2,710,124 2,710,124 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 54,217 54,217 Options 335,900 411,600 Warrants 511,553 511,553 3,756,991 3,834,911 |
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 7. |
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, 2017 and 2016, 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – 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) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of accounts receivable | December 31, 2017 December 31, 2016 Accounts receivable $ 6,399,233 $ 11,690,495 Allowance for doubtful accounts (2,139,765 ) (9,508,708 ) Accounts receivable, net $ 4,259,468 $ 2,181,787 |
Schedule of net leased merchandise | December 31, 2017 December 31, 2016 Lease merchandise at cost $ 34,501,555 $ 33,264,810 Accumulated depreciation (11,974,953 ) (11,578,267 ) Impairment reserve (1,111,280 ) (3,116,083 ) Lease merchandise, net $ 21,415,322 $ 18,570,460 |
Schedule of antidilutive securities excluded from computation of earnings per share | Year ended 2017 2016 Series 1 Convertible Preferred Stock 145,197 147,417 Series 2 Convertible Preferred Stock 2,710,124 2,710,124 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 54,217 54,217 Options 335,900 411,600 Warrants 511,553 511,553 3,756,991 3,834,911 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment [Abstract] | |
Schedule of property and equipment | Estimated Useful Lives December 31, 2017 December 31, 2016 Furniture, fixtures and vehicle 2-5 years $ 153,909 $ 98,564 Website and internal use software 3 years 5,827,771 3,933,600 Computers and software 3-7 years 691,499 619,477 6,673,179 4,651,641 Less: accumulated depreciation and amortization (3,725,015 ) (2,111,127 ) $ 2,948,164 $ 2,540,514 |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock Options [Abstract] | |
Schedule of information about stock options | Number of Weighted Weighted Aggregate Outstanding at January 1, 2016 406,700 $ 8.50 Granted 70,700 5.70 Forfeited (40,800 ) 6.70 Exercised (25,000 ) 1.70 Outstanding at December 31, 2016 411,600 8.63 Granted 106,000 4.24 Forfeited (16,700 ) 6.01 Expired (160,000 ) 12.50 Exercised (5,000 ) 3.00 Outstanding at December 31, 2017 335,900 $ 5.61 7.19 $ 52,500 Vested and exercisable at December 31, 2017 212,500 $ 6.27 6.01 $ 52,500 Vested and exercisable at December 31, 2017 and expected to vest thereafter 331,600 $ 5.61 7.19 $ 52.500 |
Schedule of option input into a Black Scholes option pricing model | 2016 2017 Exercise price $ 4.90 to $6.60 $ 4.02 to$ 5.25 Expected life 5.5 years 5.8 years Expected volatility 38 % 38 % Dividend yield 0 % 0 % Risk-free interest rate 1.13% to 1.73 % 1.89% to 2.06 % |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 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 | Exercise Common Stock Warrants Series 2 Preferred Stock Warrants Weighted Average Remaining Price Outstanding Outstanding Contractual Life $ 11.00 134,250 1 years $ 10.00 200,000 3 years $ 5.50 177,303 4 years $ 1,250 - 439 6 years 511,553 439 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes [Abstract] | |
Schedule of reconciliation of the benefit for income taxes from continuing operations | 2017 2016 Federal tax benefit at statutory rate $ (2,830,000 ) $ (4,167,000 ) State tax benefit, net of federal tax (142,000 ) (293,000 ) Permanent differences 39,000 43,000 Change in statutory rate 86,000 216,000 Change in valuation allowance (1,934,000 ) 4,075,000 Change in federal tax rate 4,747,000 - Other 34,000 126,000 Benefit for income taxes $ - $ - |
Schedule of deferred tax assets and liabilities | 2017 2016 Deferred tax assets: Equity based compensation $ 170,000 $ 254,000 Allowance for doubtful accounts 493,000 3,462,000 Lease merchandise 779,000 813,000 Fixed assets 4,000 11,000 Lease Impairment 256,000 1,135,000 Deferred rent 2,000 - Accrued expenses 45,000 - Federal loss carry-forwards 6,302,000 4,668,000 State loss carry forward 696,000 338,000 Gross deferred tax assets 8,747,000 10,681,000 Valuation allowance (8,747,000 ) (10,681,000 ) Net deferred tax assets $ - $ - |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments [Abstract] | |
Schedule of future minimum annual lease payments | 2018 $ 256,385 2019 144,201 $ 400,586 |
Business (Details)
Business (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Business (Textual) | |
Limited liability percentage of FlexShopper, LLC | 100.00% |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Summary of Significant Accounting Policies [Abstract] | ||
Accounts receivable | $ 6,399,233 | $ 11,690,495 |
Allowance for doubtful accounts | (2,139,765) | (9,508,708) |
Accounts receivable, net | $ 4,259,468 | $ 2,181,787 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Summary of Significant Accounting Policies [Abstract] | ||
Lease merchandise at cost | $ 34,501,555 | $ 33,264,810 |
Accumulated depreciation | (11,974,953) | (11,578,267) |
Impairment reserve | (1,111,280) | (3,116,083) |
Lease merchandise, net | $ 21,415,322 | $ 18,570,460 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details 2) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 3,756,991 | 3,834,911 |
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 | 145,197 | 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 | 2,710,124 |
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 |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 335,900 | 411,600 |
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 Accoun30
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of Significant Accounting Policies (Textual) | ||
Amortization method | Straight line method | |
Accounts receivable charged off against allowance | $ 26,504,150 | $ 8,499,812 |
Allowance for bad debt | 4,727,278 | |
Provision for bad debts | 19,135,207 | 13,281,242 |
Impairment charge | 4,575,000 | 5,021,000 |
Amortization | 473,616 | 451,304 |
Capitalized software costs | $ 1,894,172 | $ 1,773,574 |
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, for ownership. |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 6,673,179 | $ 4,651,641 |
Less: accumulated depreciation and amortization | (3,725,015) | (2,111,127) |
Property and equipment, net | 2,948,164 | 2,540,514 |
Furniture, fixtures and vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 153,909 | 98,564 |
Furniture, fixtures and vehicle [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 2 years | |
Furniture, fixtures and vehicle [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Website and internal use software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 5,827,771 | 3,933,600 |
Estimated Useful Lives | 3 years | |
Computers and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 691,499 | $ 619,477 |
Computers and software [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Computers and software [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 7 years |
Property and Equipment (Detai32
Property and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property and Equipment (Textual) | ||
Depreciation and amortization expense | $ 1,613,888 | $ 1,112,127 |
Loans Payable to Shareholder (D
Loans Payable to Shareholder (Details) - USD ($) | Jun. 13, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Feb. 11, 2016 |
Loans Payable to Shareholder (Textual) | ||||
Interest paid | $ 1,649,795 | $ 1,459,756 | ||
Promissory Note [Member] | ||||
Loans Payable to 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 | Jun. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Loan Payable Under Credit Agreement (Textual) | ||||||
Interest expense | $ 2,168,262 | $ 1,925,184 | ||||
Repayment of loans payable | 2,288,208 | 4,172,714 | ||||
Credit Agreement [Member] | ||||||
Loan Payable Under Credit Agreement (Textual) | ||||||
Borrowed from lender | $ 25,000,000 | |||||
Term of debt | 2 years | |||||
Interest expense | 1,694,096 | $ 1,422,630 | ||||
Funded amount | $ 18,950,000 | |||||
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 Company 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 December 31, 2017. The Company had $1,061,000 available under the Credit Agreement as of December 31, 2017. | |||||
Repayment of loans payable | $ 1,500,000 | $ 788,208 | $ 4,172,174 | |||
Fifth amendment to credit agreement value | $ 1,061,000 |
Capital Structure (Details)
Capital Structure (Details) - USD ($) | Jun. 10, 2016 | Mar. 06, 2015 | Oct. 24, 2016 | Jan. 31, 2007 | Dec. 31, 2017 | Dec. 31, 2016 | May 10, 2017 |
Capital Structure (Textual) | |||||||
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 | 2,220 | 51,873 | |||||
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 | 239,405 shares of Series 1 Convertible Preferred Stock outstanding, which are convertible into 145,197 shares of common stock. | ||||||
Convertible, conversion price per share | $ 0.60649 | ||||||
Conversion of preferred stock to common stock, shares | 3,660 | 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 | ||||||
Conversion of preferred stock to common stock, shares | |||||||
Cumulative dividends | $ 3,528,361 |
Stock Options (Details)
Stock Options (Details) - Stock option [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of options, Outstanding | 411,600 | 406,700 |
Number of options, Granted | 106,000 | 70,700 |
Number of options, Forfeited | (16,700) | (40,800) |
Number of options, Expired | (160,000) | |
Number of options, Exercised | (5,000) | (25,000) |
Number of options, Outstanding | 335,900 | 411,600 |
Number of options, vested and exercisable | 212,500 | |
Number of options, vested and exercisable expected to vest thereafter | 331,600 | |
Weighted average exercise price, Balance | $ 8.63 | $ 8.50 |
Weighted average exercise price, Granted | 4.24 | 5.70 |
Weighted average exercise price, Forfeited | 6.01 | 6.70 |
Weighted average exercise price, Expired | 12.50 | |
Weighted average exercise price, Exercised | 3 | 1.70 |
Weighted average exercise price, Balance | 5.61 | $ 8.63 |
Weighted average exercise price vested and exercisable | 6.27 | |
Weighted average exercise price, vested and exercisable expected to vest thereafter | $ 5.61 | |
Weighted average contractual term (years) | 7 years 2 months 8 days | |
Weighted average contractual term, vested and exercisable (years) | 6 years 4 days | |
Weighted average contractual term, vested and exercisable expected to vest thereafter (years) | 7 years 2 months 8 days | |
Aggregate intrinsic value, Outstanding | $ 52,500 | |
Aggregate intrinsic value, vested and exercisable | 52,500 | |
Aggregate intrinsic value, vested and exercisable expected to vest thereafter | $ 52,500 |
Stock Options (Details 1)
Stock Options (Details 1) - Stock option [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life | 5 years 9 months 18 days | 5 years 6 months |
Expected volatility | 38.00% | 38.00% |
Dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 4.02 | $ 4.90 |
Risk-free interest rate | 1.89% | 1.13% |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 5.25 | $ 6.60 |
Risk-free interest rate | 2.06% | 1.73% |
Stock Options (Details Textual)
Stock Options (Details Textual) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Mar. 26, 2015 | Oct. 31, 2009 | Jan. 31, 2007 | |
Stock Options (Textual) | |||||
Weighted average grant date fair value of options granted | $ 1.65 | $ 2.03 | |||
Unrecognized compensation cost related to non vested options | $ 128,781 | ||||
Remaining Contractual Life | 2 years 1 month 13 days | ||||
Compensation expense | $ 113,952 | $ 136,308 | |||
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] | 12 Months Ended |
Dec. 31, 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) - Warrants [Member] | 12 Months Ended |
Dec. 31, 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 |
Series 2 Preferred Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 1 year |
Exercise Price $ 10.00 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 10 |
Common Stock Warrants Outstanding | 200,000 |
Series 2 Preferred Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 3 years |
Exercise price $ 5.50 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 5.50 |
Common Stock Warrants Outstanding | 177,303 |
Series 2 Preferred Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 4 years |
Exercise price 1,250 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1,250 |
Common Stock Warrants Outstanding | |
Series 2 Preferred Stock Warrants Outstanding | 439 |
Weighted Average Remaining Contractual Life | 6 years |
Warrants (Details Textual)
Warrants (Details Textual) - Warrant [Member] - USD ($) | Jun. 24, 2016 | Dec. 31, 2017 |
Warrants (Textual) | ||
Series 2 preferred stock warrants outstanding | 439 | |
Fair value of each warrant | $ 342.71 | |
Warrant total fair value | $ 150,451 | |
Series 2 Convertible Preferred Stock [Member] | ||
Warrants (Textual) | ||
Series 2 preferred stock warrants outstanding | 439 | |
Exercise price | $ 1,250 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes [Abstract] | ||
Federal tax benefit at statutory rate | $ (2,830,000) | $ (4,167,000) |
State tax benefit, net of federal tax | (142,000) | (293,000) |
Permanent differences | 39,000 | 43,000 |
Change in statutory rate | 86,000 | 216,000 |
Change in valuation allowance | (1,934,000) | 4,075,000 |
Change in federal tax rate | 4,747,000 | |
Other | 34,000 | 126,000 |
Benefit for income taxes |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Equity based compensation | $ 170,000 | $ 254,000 |
Allowance for doubtful accounts | 493,000 | 3,462,000 |
Lease merchandise | 779,000 | 813,000 |
Fixed assets | 4,000 | 11,000 |
Lease Impairment | 256,000 | 1,135,000 |
Deferred rent | 2,000 | |
Accrued expenses | 45,000 | |
Federal loss carry-forwards | 6,302,000 | 4,668,000 |
State loss carry forward | 696,000 | 338,000 |
Gross deferred tax assets | 8,747,000 | 10,681,000 |
Valuation allowance | (8,747,000) | (10,681,000) |
Net deferred tax assets |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Taxes (Textual) | |
Operating loss carryforwards expiration period | 2014 to 2037 |
Stockholders ownership description | More than 50 percentage points over a three-year period. |
Tax rate, description | The 21% rate will be applied for tax years beginning January 1, 2018. For tax years prior to 2018, a tiered tax bracket structure was used with tax rates ranging from 15% to 35% depending on the amount of corporate income subject to tax for the year. |
Tax flat rate | 21.00% |
Deferred income tax assets and valuation allowance | $ 4,747,000 |
Federal [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | 30,008,000 |
State [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | $ 16,011,000 |
Commitments (Details)
Commitments (Details) | Dec. 31, 2017USD ($) |
Commitments [Abstract] | |
2,018 | $ 256,385 |
2,019 | 144,201 |
Total | $ 400,586 |
Commitments (Details Textual)
Commitments (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Aug. 25, 2017 | Sep. 01, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments (Textual) | ||||
Rental expense | $ 331,900 | $ 274,300 | ||
Description of leasing arrangements | FlexShopper entered into a lease, as amended, for office space through June 2019. On March 14, 2017, FlexShopper amended the lease agreement for an additional suite in an adjoining building. | |||
Term of lease | 12 months | 48 months |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event [Member] - USD ($) | Jan. 09, 2018 | Jan. 29, 2018 | Jan. 30, 2018 |
Subsequent Event (Textual) | |||
Description of credit agreement | The Credit Agreement was modified to extend the Commitment Termination Date from April 1, 2018 to August 31, 2018. | ||
Mr. Heiser [Member] | |||
Subsequent Event (Textual) | |||
Commitment letters aggregate amounts | $ 1,000,000 | ||
Proceeds from issuance of notes | 500,000 | ||
NRNS [Member] | |||
Subsequent Event (Textual) | |||
Commitment letters aggregate amounts | $ 2,500,000 | ||
Proceeds from issuance of notes | $ 2,500,000 |