Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 02, 2018 | |
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, 2018 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Ex Transition Period | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 17,579,870 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 7,282,103 | $ 4,968,915 |
Accounts receivable, net | 4,815,676 | 4,259,468 |
Prepaid expenses | 182,189 | 321,035 |
Lease merchandise, net | 18,326,430 | 21,415,322 |
Total current assets | 30,606,398 | 30,964,740 |
PROPERTY AND EQUIPMENT, net | 3,313,109 | 2,948,164 |
OTHER ASSETS, net | 91,390 | 95,722 |
Total assets | 34,010,897 | 34,008,626 |
CURRENT LIABILITIES: | ||
Current portion of loan payable under credit agreement to beneficial shareholder net of $202,179 at 2018 and $118,404 at 2017 of unamortized issuance costs | 8,116,897 | 14,094,096 |
Accounts payable | 5,928,868 | 7,702,145 |
Accrued payroll and related taxes | 225,081 | 404,346 |
Promissory notes | 1,750,000 | |
Accrued expenses | 858,863 | 786,095 |
Total current liabilities | 16,879,709 | 22,986,682 |
Loan payable under credit agreement to beneficial shareholder net of $151,634 at September 30, 2018 and $39,468 at Dec 31, 2017 of unamortized issuance costs and current portion | 6,087,673 | 4,698,032 |
Total liabilities | 22,967,382 | 27,684,714 |
STOCKHOLDERS' EQUITY | ||
Series 1 Convertible Preferred Stock, $0.001 par value- authorized 250,000 shares, issued and outstanding 239,405 shares at $5.00 stated value | 1,197,025 | 1,197,025 |
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 40,000,000 shares, issued and outstanding 17,579,870 shares as of 2018 and 5,294,501 as of 2017 | 1,758 | 529 |
Additional paid in capital | 34,142,693 | 22,445,691 |
Accumulated deficit | (46,249,961) | (39,271,333) |
Total stockholders' equity | 11,043,515 | 6,323,912 |
Total liabilities and stockholder's equity | $ 34,010,897 | $ 34,008,626 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Loan payable unamortized issuance costs | $ 202,179 | $ 118,404 |
Unamortized issuance costs | $ 151,634 | $ 39,468 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 17,579,870 | 5,294,501 |
Common stock, shares outstanding | 17,579,870 | 5,294,501 |
Series 1 Convertible Preferred Stock | ||
Convertible preferred stock, stated value | $ 5 | $ 5 |
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 | 239,405 |
Convertible preferred stock, shares outstanding | 239,405 | 239,405 |
Series 2 Convertible Preferred Stock | ||
Convertible preferred stock, stated value | $ 1,000 | $ 1,000 |
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 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Lease revenues and fees | $ 20,514,492 | $ 16,144,184 | $ 58,439,865 | $ 49,458,109 |
Lease merchandise sold | 490,208 | 359,656 | 1,592,556 | 1,174,608 |
Total revenues | 21,004,700 | 16,503,840 | 60,032,421 | 50,632,717 |
Costs and expenses: | ||||
Cost of lease revenues, consisting of depreciation and impairment of lease merchandise | 10,289,709 | 8,146,293 | 29,684,867 | 24,733,915 |
Cost of lease merchandise sold | 349,209 | 280,130 | 1,007,677 | 816,058 |
Provision for doubtful accounts | 5,905,083 | 4,681,832 | 16,563,888 | 14,357,461 |
Marketing | 1,596,322 | 994,576 | 4,025,509 | 2,625,367 |
Salaries and benefits | 2,186,835 | 1,900,925 | 6,397,999 | 5,567,082 |
Operating expenses | 2,206,496 | 1,723,309 | 6,163,680 | 5,266,278 |
Total costs and expenses | 22,533,654 | 17,727,065 | 63,843,620 | 53,366,161 |
Operating loss | (1,528,954) | (1,223,225) | (3,811,199) | (2,733,444) |
Loss on debt extinguishment | 126,597 | 126,597 | ||
Interest expense including amortization of debt issuance costs | 1,061,827 | 504,392 | 3,040,832 | 1,611,687 |
Net loss | (2,717,378) | (1,727,617) | (6,978,628) | (4,345,131) |
Dividends on Series 2 Convertible Preferred Shares | 609,168 | 603,680 | 1,817,672 | 1,712,716 |
Net loss attributable to common shareholders | $ (3,326,546) | $ (2,331,297) | $ (8,796,300) | $ (6,057,847) |
Basic and diluted (loss) per common share: | ||||
Net loss | $ (0.56) | $ (0.44) | $ (1.59) | $ (1.14) |
WEIGHTED AVERAGE COMMON SHARES: | ||||
Basic and diluted | 5,950,161 | 5,292,281 | 5,539,815 | 5,290,077 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($) | Total | Series 1 Convertible Preferred Stock | Series 2 Convertible Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Deficit |
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 | |||
Provision for compensation expense related to stock options | 101,025 | 101,025 | ||||
Warrants issued in connection with amended credit agreement and subsequent issuance of common stock upon exercise of the warrants | 523,250 | $ 18 | 523,232 | |||
Warrants issued in connection with amended credit agreement and subsequent issuance of common stock upon exercise of the warrants, shares | 175,000 | |||||
Issuance of shares and warrants in connection with equity raise | 10,007,500 | $ 1,000 | 10,006,500 | |||
Issuance of shares and warrants in connection with equity raise, shares | 10,000,000 | |||||
Conversion of debt to common shares | 1,962,668 | $ 211 | 1,962,457 | |||
Conversion of debt to common shares, shares | 2,110,369 | |||||
Issuance of warrants in connection with conversion of debt | 126,598 | 126,598 | ||||
Offering costs related to equity raise | (1,022,810) | (1,022,810) | ||||
Net loss | (6,978,628) | (6,978,628) | ||||
Balance at Sep. 30, 2018 | $ 11,043,515 | $ 1,197,025 | $ 21,952,000 | $ 1,758 | $ 34,142,693 | $ (46,249,961) |
Balance, shares at Sep. 30, 2018 | 239,405 | 21,952 | 17,579,870 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (6,978,628) | $ (4,345,131) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and impairment of lease merchandise | 29,684,866 | 24,733,916 |
Other depreciation and amortization | 1,850,453 | 1,536,491 |
Compensation expense related to issuance of stock options | 101,025 | 64,896 |
Provision for doubtful accounts | 16,563,888 | 14,357,461 |
Loss on debt extinguishment | 126,597 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (17,120,096) | (15,570,400) |
Prepaid expenses and other | 141,126 | 13,255 |
Lease merchandise | (26,595,974) | (17,315,091) |
Security deposits | 2,025 | (10,207) |
Accounts payable | (1,560,609) | (1,188,200) |
Accrued payroll and related taxes | (179,265) | (147,388) |
Accrued expenses | 128,765 | 44,386 |
Net cash (used in) provided by operating activities | (3,835,827) | 2,173,988 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment, including capitalized software costs | (1,752,095) | (1,487,441) |
Net cash (used in) investing activities | (1,752,095) | (1,487,441) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from exercise of stock options | 15,000 | |
Proceeds from exercise of warrants | 1,750 | |
Proceeds from public offering | 10,007,500 | |
Equity issuance related costs | (862,810) | |
Proceeds from promissory notes | 3,465,000 | |
Proceeds from loan payable under credit agreement | 5,185,000 | |
Repayment of loan payable under credit agreement | (9,786,487) | (2,288,207) |
Repayment of installment loan | (8,405) | |
Debt issuance related costs | (100,438) | |
Net cash provided by (used in) financing activities | 7,901,110 | (2,273,207) |
INCREASE/(DECREASE) IN CASH | 2,313,188 | (1,586,660) |
CASH, beginning of period | 4,968,915 | 5,412,495 |
CASH, end of period | 7,282,103 | 3,825,835 |
Supplemental cash flow information: | ||
Interest paid | 2,104,110 | 1,179,826 |
Non-cash Conversion of debt into common stock | $ 1,962,668 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
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, 2017. The consolidated balance sheet as of December 31, 2017 contained herein has been derived from audited financial statements. |
Business
Business | 9 Months Ended |
Sep. 30, 2018 | |
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, including customers of third-party retailers and e-tailers, on a lease-to-own basis (“LTO”). In January 2015, in connection with the credit agreement entered into in March 2015 (see Note 6), 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.” To date, funds derived from the sale of FlexShopper’s common stock and Series 2 Convertible Preferred Stock and the Company’s ability to borrow funds against the lease portfolio have provided the liquidity and capital resources necessary to fund its operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
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, Accounts receivable $ 9,393,310 $ 6,399,233 Allowance for doubtful accounts (4,577,634 ) (2,139,765 ) Accounts receivable, net $ 4,815,676 $ 4,259,468 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 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 $6,766,876 and $14,209,066 for the three and nine months ended September 30, 2018, respectively, and $7,133,260 and $20,713,314 for the three and nine months ended September 30, 2017, respectively. Lease Merchandise - The net leased merchandise balances consisted of the following as of September 30, 2018 and December 31, 2017: September 30, December 31, Lease merchandise at cost $ 35,707,612 $ 34,501,555 Accumulated depreciation (15,710,483 ) (11,974,953 ) Impairment reserve (1,670,699 ) (1,111,280 ) Lease merchandise, net $ 18,326,430 $ 21,415,322 Lease merchandise at cost represents the undepreciated cost of rental merchandise at the time of sale. Deferred Debt Issuance Costs - Debt issuance costs of $35,000 incurred in conjunction with the subordinated Promissory Notes entered into on January 29, 2018 and January 30, 2018 (see Note 5) are offset against the outstanding balance of the loan payable and are amortized using the straight-line method over the remaining term of the related debt, which approximates the effective interest method. Amortization, which is included in interest expense, was $35,000 for the nine months ended September 30, 2018. Intangible Assets - Software Costs - Operating Expenses - Marketing Costs - Per Share Data - Diluted earnings per share is based on the more dilutive of the if-converted method (which assumes conversion of the participating Series 1 Convertible Preferred Stock as of the beginning of the period) or the two-class method (which assumes that the participating Series 1 Convertible 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, 2018 2017 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 Common Stock Options 445,400 302,900 Common Stock Warrants 7,182,488 511,553 10,537,426 3,726,211 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 8). 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, 2018 and 2017, the Company had 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. The Company has preliminarily determined that the new standard will not materially impact the timing of revenue recognition. The new standard will result in the Company continuing to classify bad debt expense incurred as a reduction of lease revenue and fees within the consolidated statements of earnings. The new standard will also impact the Company as a lessee by requiring all of its operating leases to be recognized on the balance sheet as a right-to-use asset and lease liability. The Company plans to elect a package of optional practical expedients which includes the option to retain the current classification of leases entered into prior to January 1, 2019, and thus does not anticipate a material impact to the consolidated statements of earnings or consolidated statements of cash flows. The Company intends to adopt the new standard in the first quarter of 2019. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 4. PROPERTY AND EQUIPMENT Property and equipment consist of the following: Estimated Useful Lives September 30, December 31, Furniture, fixtures and vehicle 2-5 years $ 155,165 $ 153,909 Website and internal use software 3 years 7,565,702 5,827,771 Computers and software 3-7 years 704,407 691,499 8,425,274 6,673,179 Less: accumulated depreciation and amortization (5,112,165 ) (3,725,015 ) $ 3,313,109 $ 2,948,164 Depreciation and amortization expense were $490,483 and $414,674 for the three months ended September 30, 2018 and 2017, respectively, and $1,387,149 and $1,178,972 for the nine months ended September 30, 2018 and 2017, respectively. |
Promissory Notes
Promissory Notes | 9 Months Ended |
Sep. 30, 2018 | |
Promissory Notes [Abstract] | |
PROMISSORY NOTES | 5. PROMISSORY NOTES 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”), for consideration of a one-time commitment fee of 1% of the lenders’ aggregate commitment, totaling $35,000, 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. 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. However, repayment is not permitted without the consent of the Credit Agreement Lender. Upon issuance of the Notes, the Company drew $500,000 and a subsequent $500,000 on February 20, 2018 on the Note held by Mr. Heiser and $2,500,000 on the Note held by NRNS. The Notes bear interest at a rate equal to five (5%) per annum in excess of the non-default rate of interest from time to time in effect under the Credit Agreement entered into on March 6, 2015 (see Note 6) computed on the basis of a 360-day year, which equaled 21.16% at September 30, 2018. Interest expense incurred under the Notes amounted to $58,214 for Mr. Heiser’s Note and $145,514 for NRNS’ Note, totaling $203,728 for the three months ended September 30, 2018, and $132,202 for Mr. Heiser’s Note and $341,445 for NRNS’ Note, totaling $473,647 for the nine months ended September 30, 2018. On August 29, 2018, the Company amended and restated the Notes such that (1) the maturity date for the Notes was set at June 30, 2019 and (2) in connection with the completion of the offering described in the Registration Statement on Form S-1 initially filed by the Company with the SEC on August 13, 2018, holders of the Notes may elect to convert up to 50% of the outstanding principal of the Notes plus accrued and unpaid interest thereon into shares of the Company’s common stock at a conversion price equal to the price paid to the Company by the underwriters for shares of common stock sold in such offering, net of the underwriting discount. On September 28, 2018, each of Mr, Heiser and NRNS exercised its option to convert 50% of the outstanding principal and accrued interest to equity. Mr. Heiser elected to convert $500,000 of outstanding principal and $60,765.82 of accrued interest into 602,974 shares of common stock and warrants exercisable for 301,487 shares of common stock based on a $0.93 conversion price. NRNS converted $1,250,000 of outstanding principal and $151,877.50 of accrued interest into 1,507,395 shares of common stock and warrants exercisable for 753,698 shares of common stock based on a $0.93 conversion price. As a result of this conversion, the Company recorded a loss on extinguishment of debt of $126,622 in the three and nine months ended September 30, 2018 related to the difference between the conversion price and the price per common share offered in the September 2018 equity raise. |
Loan Payable Under Credit Agree
Loan Payable Under Credit Agreement | 9 Months Ended |
Sep. 30, 2018 | |
Loan Payable Under Credit Agreement [Abstract] | |
LOAN PAYABLE UNDER CREDIT AGREEMENT | 6. LOAN PAYABLE UNDER CREDIT AGREEMENT On March 6, 2015, FlexShopper, through a wholly-owned subsidiary (the “Borrower”), 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, an affiliate of Waterfall Asset Management, LLC, as administrative agent and lender (the “Lender”). The Borrower 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, the Borrower may borrow up to $25,000,000 from the Lender until the Commitment Termination Date and must repay all borrowed amounts one year thereafter, on the Commitment Maturity Date (unless such amounts become due or payable on an earlier date pursuant to the terms of the Credit Agreement). Upon consummation of an Equity Raise (as defined in the Credit Agreement) on September 28, 2018, the Commitment Termination Date was extended to June 30, 2019, which date may extended to a later date determined by the Lender in its sole discretion (but no later than February 28, 2021) with notice to the Borrower by April 1, 2019. The Lender receives security interests in certain leases as collateral under 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. Additionally, the Credit Agreement includes covenants requiring the FlexShopper to maintain a minimum amount of Equity Book Value, maintain a minimum amount of Unrestricted Cash (including a reserve upon which the Lender may draw to satisfy unpaid amounts under the Credit Agreement) and maintain a certain ratio of Consolidated Total Debt to Equity Book Value 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 July 31, 2018, August 29, 2018, September 22, 2018 and September 25, 2018, the Borrower entered into Amendments Nos. 7, 8, 9 and 10 (the “Series of Amendments”) to the Credit Agreement, respectively. The Series of Amendments amended the definitions of Equity Raise and Scheduled Commitment Termination Date in the Credit Agreement such that, upon consummation of the Company’s offering of units on September 28, 2018, the Commitment Termination Date was extended to June 30, 2019, as described above.. 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 $689,667 and $2,103,891 for the three and nine months ended September 30, 2018, respectively, and $385,989 and $1,256,475 for the three and nine months ended September 30, 2017, respectively. As of September 30, 2018, the outstanding balance under the Credit Agreement was $14,558,383. Such amount is presented in the consolidated balance sheet net of unamortized issuance costs of $353,813. The Company repaid $3,365,635 in the third quarter of 2018. Interest is payable monthly on the outstanding balance of the amounts borrowed. |
Capital Structure
Capital Structure | 9 Months Ended |
Sep. 30, 2018 | |
Capital Structure [Abstract] | |
CAPITAL STRUCTURE | 7. CAPITAL STRUCTURE The Company’s capital structure consists of preferred and common stock as described below: Preferred Stock The Company is authorized to issue 500,000 shares of $0.001 par value preferred stock. Of this amount, 250,000 shares has been designated as Series 1 Convertible Preferred Stock and 25,000 shares have been designated as Series 2 Convertible Preferred Stock. The Company’s Board of Directors determines the rights and preferences of the Company’s preferred stock. Series 1 Convertible Preferred Stock - As of September 30, 2018, each share of Series 1 Convertible Preferred Stock was convertible into .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, 2017, 3,660 shares of Series 1 Convertible Preferred Stock were converted into 2,220 shares of common stock. [No shares of Series 1 Convertible Preferred Stock were converted into shares of common stock in the nine months ended September 30, 2018.] As of September 30, 2018, 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 $0.001 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 accrued dividends as of September 30, 2018 totaled approximately $5,346,033. Each Series 2 Preferred Share is convertible at a conversion price of $2.92 into approximately 342 Common Stock The Company is authorized to issue 40,000,000 shares of $0.0001 par value common stock. On September 18, 2018, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation that increased the authorized shares of common stock of the Company from 15,000,000 shares to 25,000,000 shares and, on [October] [__] 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. In September 2018, the Company completed an offering of 10,000,000 units (the “Offering”) issued at a price of $1.00 per unit, each unit consisting of one share of the Company’s common stock and one-half (1/2) of one warrant, each whole warrant exercisable for one share of common stock at an exercise price $1.25 per warrant. The common stock and warrants included in the units sold in the Offering were immediately separable and issued separately. In connection with the Offering, both Mr. Heiser and NRNS elected to convert 50% of the outstanding principal and accrued interest on their promissory notes into equity interests issued in the Offering. As a result, the Company issuing 602,974 shares of common stock and 301487 warrants to Mr. Heiser and 1,507,395 shares of common stock and 753,698 warrants to NRNS.. Warrants As part of the Offering in September 2018, the Company issued warrants exercisable for 5,750,000 shares of common stock at an exercise price of $1.25 per share. The warrants are immediately exercisable and expire five years from the date of issuance. The warrants are listed on the Nasdaq Capital Market under the symbol “FPAYW.” The Company also issued an additional warrants exercisable for an aggregate 1,055,185 shares of common stock at an exercise price of $1.25 per warrant to Mr. Heiser and NRNS in connection with partial conversions of their promissory notes. The warrants are immediately exercisable at $1.25 per share of common stock and expire on September 28, 2023. In connection with the issuance of Series 2 Convertible Preferred Stock in June 2016, the Company issued to the placement agent in such offering warrants exercisable for 439 shares of Series 2 Convertible Preferred Stock at an initial exercise price of $1,250 per share, which expire seven years after the date of issuance. As of September 30, 2018, FlexShopper had outstanding warrants exercisable for (i) 7,182,488 shares of common stock and (ii) 439 shares of Series 2 Convertible Preferred Stock . See Note 9. |
Stock Options
Stock Options | 9 Months Ended |
Sep. 30, 2018 | |
Stock Options [Abstract] | |
STOCK OPTIONS | 8. STOCK OPTIONS On April 26, 2018 at the Company’s annual meeting, the Company’s stockholders approved the FlexShopper, Inc. 2018 Omnibus Equity Compensation Plan (the “2018 Plan”). Upon the 2018 Plan’s approval, approximately 1,057,000 shares of Company common stock were available for issuance, consisting of 750,000 shares authorized for issuance under the 2018 Plan and an aggregate 307,000 shares then remaining available for issuance under the Company’s 2007 Omnibus Equity Compensation Plan (the “2007 Plan”) and 2015 Omnibus Equity Compensation Plan (the “2015 Plan, and together with the 2007 Plan, the “Prior Plans”). The 2018 Plan replaced the Prior Plans. No new awards will be granted under the Prior Plans; however, awards outstanding under the Prior Plans upon approval of the 2018 Plan remain subject to and will be paid under the applicable Prior Plan. Grants under the 2018 Plan and the Prior Plans 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 2018 Plan and the Prior Plans. Options granted under the 2018 Plan and the Prior 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, 2018 follows: Number of options Weighted average exercise price Weighted average contractual term (years) Aggregate intrinsic value Outstanding at January 1, 2018 335,900 $ 5.61 Granted 129,000 3.21 Canceled/Forfeited (19,500 ) 4.57 Outstanding at September 30, 2018 445,400 $ 4.96 7.23 $ - Vested and exercisable at September 30, 2018 278,567 $ 5.85 6.03 $ - Vested and exercisable at September 30, 2018 and expected to vest thereafter 445,400 $ 4.96 7.23 $ - The weighted average grant date fair value of options granted during the nine-month period ending September 30, 2018 was $1.30 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: Exercise price $ 2.95 to $ 4.35 Expected life 6 years Expected volatility 38 % Dividend yield 0 % Risk-free interest rate 2.27% to 2.88 % 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 $28,544 and $101,025, for the three and nine months ended September 30, 2018, respectively, and $22,685 and $64,896 for the three and nine months ended September 30, 2017, respectively. Unrecognized compensation cost related to non-vested options at September 30, 2018 amounted to approximately $169,867, which is expected to be recognized over a weighted average period of 2.12 years. On October 2, 2018, FlexShopper’s Board of Directors approved issuance of 169,000 option awards under the 2018 Plan to the Company’s employees at an exercise price of $0.79 per option that vests in three (3) equal annual installments beginning on the first anniversary of the date of grant and to have a term of three (3) years. |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2018 | |
Warrants [Abstract] | |
WARRANTS | 9. WARRANTS The following table summarizes information about outstanding stock warrants as of September 30, 2018, all of which are exercisable: Series 2 Preferred Weighted Average Exercise Common Stock Warrants Stock Warrants Remaining Price Outstanding Outstanding Contractual Life $ 10.00 200,000 1 years $ 5.50 177,303 3 years $ 1.25 6,805,185 5 years $ 1,250 - 439 5 years 7,182,488 439 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes [Abstract] | |
INCOME TAXES | 10. INCOME TAXES 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 2024 to 2037. Management believes that the federal and state deferred tax asset as of December 31, 2017 does not satisfy the realization criteria and has recorded a full valuation allowance to offset the tax asset. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 11. SUBSEQUENT EVENTS On October 2, 2018, the Company’s Board of Directors approved issuance of 169,000 option awards under the 2018 Plan to the Company’s employees at an exercise price of $0.79 per option that vests in three (3) equal annual installments beginning on the first anniversary of the date of grant and to have a term of three (3) years. On October 10, 2018, the Company filed with the SEC and mailed to stockholders a Definitive Schedule 14A Consent Solicitation Statement (the “Consent Solicitation”). The Consent Solicitation solicited written consents of the Company’s stockholders approving and authorizing a Certificate of Amendment to its Certificate of Incorporation for the purpose of increasing the number of authorized shares of the Company’s common stock from 25,000,000 shares to 40,000,000 shares (the “Charter Amendment”). Upon receiving the necessary shareholder consent, the Company filed the Charter Amendment with the Secretary of State of the State of Delaware on [October] [●] |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
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, Accounts receivable $ 9,393,310 $ 6,399,233 Allowance for doubtful accounts (4,577,634 ) (2,139,765 ) Accounts receivable, net $ 4,815,676 $ 4,259,468 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 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 $6,766,876 and $14,209,066 for the three and nine months ended September 30, 2018, respectively, and $7,133,260 and $20,713,314 for the three and nine months ended September 30, 2017, respectively. |
Lease Merchandise | Lease Merchandise - The net leased merchandise balances consisted of the following as of September 30, 2018 and December 31, 2017: September 30, December 31, Lease merchandise at cost $ 35,707,612 $ 34,501,555 Accumulated depreciation (15,710,483 ) (11,974,953 ) Impairment reserve (1,670,699 ) (1,111,280 ) Lease merchandise, net $ 18,326,430 $ 21,415,322 Lease merchandise at cost represents the undepreciated cost of rental merchandise at the time of sale. |
Deferred Debt Issuance Costs | Deferred Debt Issuance Costs - Debt issuance costs of $35,000 incurred in conjunction with the subordinated Promissory Notes entered into on January 29, 2018 and January 30, 2018 (see Note 5) are offset against the outstanding balance of the loan payable and are amortized using the straight-line method over the remaining term of the related debt, which approximates the effective interest method. Amortization, which is included in interest expense, was $35,000 for the nine months ended September 30, 2018. |
Intangible Assets | Intangible Assets - |
Software Costs | Software Costs - |
Operating Expenses | Operating Expenses - |
Marketing Costs | Marketing Costs - |
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 Series 1 Convertible Preferred Stock as of the beginning of the period) or the two-class method (which assumes that the participating Series 1 Convertible 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, 2018 2017 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 Common Stock Options 445,400 302,900 Common Stock Warrants 7,182,488 511,553 10,537,426 3,726,211 |
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 8). |
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, 2018 and 2017, the Company had 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. The Company has preliminarily determined that the new standard will not materially impact the timing of revenue recognition. The new standard will result in the Company continuing to classify bad debt expense incurred as a reduction of lease revenue and fees within the consolidated statements of earnings. The new standard will also impact the Company as a lessee by requiring all of its operating leases to be recognized on the balance sheet as a right-to-use asset and lease liability. The Company plans to elect a package of optional practical expedients which includes the option to retain the current classification of leases entered into prior to January 1, 2019, and thus does not anticipate a material impact to the consolidated statements of earnings or consolidated statements of cash flows. The Company intends to adopt the new standard in the first quarter of 2019. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of accounts receivable | September 30, December 31, Accounts receivable $ 9,393,310 $ 6,399,233 Allowance for doubtful accounts (4,577,634 ) (2,139,765 ) Accounts receivable, net $ 4,815,676 $ 4,259,468 |
Schedule of net leased merchandise | September 30, December 31, Lease merchandise at cost $ 35,707,612 $ 34,501,555 Accumulated depreciation (15,710,483 ) (11,974,953 ) Impairment reserve (1,670,699 ) (1,111,280 ) Lease merchandise, net $ 18,326,430 $ 21,415,322 |
Schedule of anti-dilutive securities excluded from computation of earnings per share | Nine Months ended September 30, 2018 2017 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 Common Stock Options 445,400 302,900 Common Stock Warrants 7,182,488 511,553 10,537,426 3,726,211 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment [Abstract] | |
Schedule of property and equipment | Estimated Useful Lives September 30, December 31, Furniture, fixtures and vehicle 2-5 years $ 155,165 $ 153,909 Website and internal use software 3 years 7,565,702 5,827,771 Computers and software 3-7 years 704,407 691,499 8,425,274 6,673,179 Less: accumulated depreciation and amortization (5,112,165 ) (3,725,015 ) $ 3,313,109 $ 2,948,164 |
Stock Options (Tables)
Stock Options (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stock Options [Abstract] | |
Schedule of information about stock options | Number of options Weighted average exercise price Weighted average contractual term (years) Aggregate intrinsic value Outstanding at January 1, 2018 335,900 $ 5.61 Granted 129,000 3.21 Canceled/Forfeited (19,500 ) 4.57 Outstanding at September 30, 2018 445,400 $ 4.96 7.23 $ - Vested and exercisable at September 30, 2018 278,567 $ 5.85 6.03 $ - Vested and exercisable at September 30, 2018 and expected to vest thereafter 445,400 $ 4.96 7.23 $ - |
Schedule of option input into a Black Scholes option pricing model | Exercise price $ 2.95 to $ 4.35 Expected life 6 years Expected volatility 38 % Dividend yield 0 % Risk-free interest rate 2.27% to 2.88 % |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Warrants [Abstract] | |
Schedule of outstanding stock warrants | Series 2 Preferred Weighted Average Exercise Common Stock Warrants Stock Warrants Remaining Price Outstanding Outstanding Contractual Life $ 10.00 200,000 1 years $ 5.50 177,303 3 years $ 1.25 6,805,185 5 years $ 1,250 - 439 5 years 7,182,488 439 |
Business (Details)
Business (Details) | 9 Months Ended |
Sep. 30, 2018 | |
Business (Textual) | |
Limited liability percentage of FlexShopper, LLC | 100.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies [Abstract] | ||
Accounts receivable | $ 9,393,310 | $ 6,399,233 |
Allowance for doubtful accounts | (4,577,634) | (2,139,765) |
Accounts receivable, net | $ 4,815,676 | $ 4,259,468 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies [Abstract] | ||
Lease merchandise at cost | $ 35,707,612 | $ 34,501,555 |
Accumulated depreciation | (15,710,483) | (11,974,953) |
Impairment reserve | (1,670,699) | (1,111,280) |
Lease merchandise, net | $ 18,326,430 | $ 21,415,322 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 10,537,426 | 3,726,211 |
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 |
Common Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 445,400 | 302,900 |
Common Stock Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 7,182,488 | 511,553 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Textual) - USD ($) | Jan. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Summary of Significant Accounting Policies (Textual) | |||||
Accounts receivable charged off against allowance | $ 6,766,876 | $ 7,133,260 | $ 14,209,066 | $ 20,713,314 | |
Impairment charge | 2,029,000 | 664,000 | 4,148,000 | 3,948,000 | |
Amortization | 167,689 | 118,404 | 425,996 | 355,212 | |
Capitalized software costs | $ 730,554 | $ 481,306 | $ 1,737,931 | $ 1,419,273 | |
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. | ||||
Useful life of patent | 10 years | ||||
Debt issuance costs | $ 35,000 | ||||
Interest expense | $ 35,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 8,425,274 | $ 6,673,179 |
Less: accumulated depreciation and amortization | (5,112,165) | (3,725,015) |
Property and equipment, net | 3,313,109 | 2,948,164 |
Furniture, fixtures and vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 155,165 | 153,909 |
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 | $ 7,565,702 | 5,827,771 |
Estimated Useful Lives | 3 years | |
Computers and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 704,407 | $ 691,499 |
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 (Detai_2
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Property and Equipment (Textual) | ||||
Depreciation and amortization expense | $ 490,483 | $ 414,674 | $ 1,387,149 | $ 1,178,972 |
Promissory Notes (Details)
Promissory Notes (Details) - USD ($) | Jan. 30, 2018 | Sep. 28, 2018 | Aug. 29, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Promissory Notes (Textual) | |||||||
Commitment fee, percentage | 1.00% | ||||||
Aggregate commitment fee amount | $ 35,000 | ||||||
Description of credit facility | 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. | ||||||
Interest expense on promissory notes | $ 203,728 | $ 473,647 | |||||
Description of notes amended and restated | The Company amended and restated the Notes such that (1) the maturity date for the Notes was set at June 30, 2019 and (2) in connection with the completion of the offering described in the Registration Statement on Form S-1 initially filed by the Company with the SEC on August 13, 2018, holders of the Notes may elect to convert up to 50% of the outstanding principal of the Notes plus accrued and unpaid interest thereon into shares of the Company's common stock at a conversion price equal to the price paid to the Company by the underwriters for shares of common stock sold in such offering, net of the underwriting discount. | ||||||
Loss on debt extinguishment | $ (126,597) | $ (126,597) | |||||
Senior Credit Agreement [Member] | |||||||
Promissory Notes (Textual) | |||||||
Interest rate | 21.16% | 21.16% | |||||
Mr. Heiser [Member] | |||||||
Promissory Notes (Textual) | |||||||
Commitment letters aggregate amounts | $ 1,000,000 | ||||||
Interest expense on promissory notes | $ 58,214 | $ 132,202 | |||||
Conversion shares of outstanding principal | $ 500,000 | ||||||
Accrued interest rate of debt conversion | 50.00% | ||||||
Accrued Interest | $ 60,765.82 | ||||||
Common stock and warrants exercisable | 602,974 | ||||||
Conversion price | $ 0.93 | ||||||
Shares of common stock | 301,487 | ||||||
NRNS [Member] | |||||||
Promissory Notes (Textual) | |||||||
Commitment letters aggregate amounts | $ 2,500,000 | ||||||
Interest rate | 5.00% | ||||||
Interest expense on promissory notes | $ 145,514 | $ 341,445 | |||||
Issuance of notes, description | The Company drew $500,000 and a subsequent $500,000 on February 20, 2018 on the Note held by Mr. Heiser and $2,500,000 on the Note held by NRNS. | ||||||
Conversion shares of outstanding principal | $ 1,250,000 | ||||||
Accrued interest rate of debt conversion | 50.00% | ||||||
Accrued Interest | $ 151,877.50 | ||||||
Common stock and warrants exercisable | 1,507,395 | ||||||
Conversion price | $ 0.93 | ||||||
Shares of common stock | 753,698 |
Loan Payable Under Credit Agr_2
Loan Payable Under Credit Agreement (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Mar. 06, 2015 | |
Loan Payable Under Credit Agreement (Textual) | ||||||
Interest expense | $ 1,061,827 | $ 504,392 | $ 3,040,832 | $ 1,611,687 | ||
Repayment of loans payable | 9,786,487 | 2,288,207 | ||||
Unamortized issuance costs | 151,634 | 151,634 | $ 39,468 | |||
Credit Agreement [Member] | ||||||
Loan Payable Under Credit Agreement (Textual) | ||||||
Borrowed from lender | $ 25,000,000 | |||||
Interest expense | 689,667 | $ 385,989 | 2,103,891 | $ 1,256,475 | ||
Funded amount | 14,558,383 | 14,558,383 | ||||
Repayment of loans payable | 3,365,635 | |||||
Unamortized issuance costs | $ 353,813 | $ 353,813 |
Capital Structure (Details)
Capital Structure (Details) - USD ($) | Oct. 10, 2018 | Nov. 09, 2017 | Jun. 10, 2016 | Mar. 06, 2015 | Jun. 30, 2016 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 28, 2018 | Sep. 18, 2018 |
Capital Structure (Textual) | |||||||||
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 | |||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||||||
Purchase price per share | $ 5.50 | ||||||||
Gross proceeds | $ 8,600,000 | ||||||||
Additional sale of shares | 1,700,000,000 | ||||||||
Exercise price of warrants | $ 1.25 | ||||||||
Description of common stock offering | The Company completed an offering of 10,000,000 units (the "Offering") issued at a price of $1.00 per unit, each unit consisting of one share of the Company's common stock and one-half (1/2) of one warrant, each whole warrant exercisable for one share of common stock at an exercise price $1.25 per warrant. | ||||||||
Warrants exercisable for shares of common stock | 5,750,000 | ||||||||
Mr. Heiser [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Convertible, conversion price per share | $ 0.93 | ||||||||
Outstanding principal percentage | 50.00% | ||||||||
NRNS [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Convertible, conversion price per share | $ 0.93 | ||||||||
Outstanding principal percentage | 50.00% | ||||||||
Warrants [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Common stock warrants outstanding | 7,182,488 | ||||||||
Series 2 preferred stock warrants outstanding | 439 | ||||||||
Warrants [Member] | Mr. Heiser [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Issuance of shares | 301,487 | ||||||||
Warrants [Member] | NRNS [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Issuance of shares | 753,698 | ||||||||
Common Stock [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Common stock, shares authorized (in shares) | 40,000,000 | ||||||||
Common stock, par value | $ 0.0001 | ||||||||
Common stock voting rights, description | Each share of common stock entitles the holder to one vote at all stockholder meetings. | ||||||||
Description of warrants expiration | Expire on September 28, 2023. | ||||||||
Common Stock [Member] | Mr. Heiser [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Exercise price of warrants | $ 1.25 | ||||||||
Issuance of shares | 602,974 | ||||||||
Warrants exercisable for shares of common stock | 1,055,185 | ||||||||
Common Stock [Member] | NRNS [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Exercise price of warrants | $ 1.25 | ||||||||
Issuance of shares | 1,507,395 | ||||||||
Warrants exercisable for shares of common stock | 1,055,185 | ||||||||
Common Stock [Member] | Maximum [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Common stock, shares authorized (in shares) | 40,000,000 | 25,000,000 | |||||||
Common Stock [Member] | Minimum [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Common stock, shares authorized (in shares) | 25,000,000 | 15,000,000 | |||||||
Common Stock [Member] | Subsequent Events [Member] | Maximum [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Common stock, shares authorized for issuance | 40,000,000 | ||||||||
Common Stock [Member] | Subsequent Events [Member] | Minimum [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Common stock, shares authorized for issuance | 25,000,000 | ||||||||
Preferred Stock [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | ||||||||
Preferred stock, shares authorized (in shares) | 500,000 | ||||||||
Series 1 Convertible Preferred Stock [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Preferred stock, shares authorized (in shares) | 250,000 | ||||||||
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 | $ 60,649 | ||||||||
Conversion of preferred stock to common stock, shares | 3,660 | ||||||||
Series 1 Convertible Preferred Stock [Member] | Common Stock [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Conversion of preferred stock to common stock, shares | 2,220 | ||||||||
Series 1 Convertible Preferred Stock [Member] | Preferred Stock [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Preferred stock, shares authorized (in shares) | 250,000 | ||||||||
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 | |||||||
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 $2.92 into approximately 342 shares of common stock; provided, the conversion price is subject to further 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 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. | ||||||||
Convertible preferred stock, shares issued upon conversion | 20,000 | ||||||||
Convertible preferred stock, stated value | $ 1,000 | $ 1,000 | |||||||
Gross proceeds | $ 1,950,000 | ||||||||
Additional sale of shares | 1,952 | ||||||||
Cumulative accrued dividends | $ 5,346,033 | ||||||||
Exercise price of warrants | $ 1,250 | ||||||||
Warrants exercisable for shares of common stock | 439 | ||||||||
Description of warrants expiration | Expire seven years after the date of issuance. | ||||||||
Series 2 Convertible Preferred Stock [Member] | Preferred Stock [Member] | |||||||||
Capital Structure (Textual) | |||||||||
Preferred stock, shares authorized (in shares) | 25,000 |
Stock Options (Details)
Stock Options (Details) - Stock option [Member] | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Number of options | |
Outstanding at January 1, 2018 | shares | 335,900 |
Number of options, Granted | shares | 129,000 |
Canceled/Forfeited | shares | (19,500) |
Outstanding at September 30, 2018 | shares | 445,400 |
Vested and exercisable at September 30, 2018 | shares | 278,567 |
Vested and exercisable at September 30, 2018 and expected to vest thereafter | shares | 445,400 |
Weighted average exercise price | |
Outstanding at January 1, 2018 | $ / shares | $ 5.61 |
Granted | $ / shares | 3.21 |
Canceled/Forfeited | $ / shares | 4.57 |
Outstanding at September 30, 2018 | $ / shares | 4.96 |
Vested and exercisable at September 30, 2018 | $ / shares | 5.85 |
Vested and exercisable at September 30, 2018 and expected to vest thereafter | $ / shares | $ 4.96 |
Weighted average contractual term (years) | |
Outstanding at September 30, 2018 | 7 years 2 months 23 days |
Vested and exercisable at September 30, 2018 | 6 years 11 days |
Vested and exercisable at September 30, 2018 and expected to vest thereafter | 7 years 2 months 23 days |
Aggregate intrinsic value | |
Outstanding at September 30, 2018 | $ | |
Vested and exercisable at September 30, 2018 | $ | |
Vested and exercisable at September 30, 2018 and expected to vest thereafter | $ |
Stock Options (Details 1)
Stock Options (Details 1) - Stock option [Member] | 9 Months Ended |
Sep. 30, 2018$ / 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 | $ 2.95 |
Risk-free interest rate | 2.27% |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price | $ 4.35 |
Risk-free interest rate | 2.88% |
Stock Options (Details Textual)
Stock Options (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 02, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Apr. 26, 2018 | |
Stock Options (Textual) | ||||||
Weighted average grant date fair value of options granted | $ 1.30 | |||||
Unrecognized compensation cost related to non vested options | $ 169,867 | |||||
Remaining contractual life | 2 years 1 month 13 days | |||||
Compensation expense | $ 28,544 | $ 22,685 | $ 101,025 | $ 64,896 | ||
Common Stock Options [Member] | ||||||
Stock Options (Textual) | ||||||
Stock options granted period, description | Options granted under the 2018 Plan and the Prior Plans vest over periods ranging from immediately upon grant to a three-year period and expire ten years from date of grant. | |||||
Board Of Directors [Member] | Subsequent Event [Member] | ||||||
Stock Options (Textual) | ||||||
Stock options granted period, description | Board of Directors approved issuance of 169,000 option awards under the 2018 Plan to the Company's employees at an exercise price of $0.79 per option that vests in three (3) equal annual installments beginning on the first anniversary of the date of grant and to have a term of three (3) years. | |||||
2018 Omnibus Equity Compensation Plan [Member] | ||||||
Stock Options (Textual) | ||||||
Issuance of shares | 1,057,000 | |||||
Common shares authorized for issuance (in shares) | 750,000 | |||||
2007 Omnibus Equity Compensation Plan [Member] | ||||||
Stock Options (Textual) | ||||||
Common shares authorized for issuance (in shares) | 307,000 |
Warrants (Details)
Warrants (Details) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1.25 |
Warrants [Member] | |
Class of Warrant or Right [Line Items] | |
Common Stock Warrants Outstanding | 7,182,488 |
Series 2 Preferred Stock Warrants Outstanding | 439 |
Warrants [Member] | $ 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 | 1 year |
Warrants [Member] | $ 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 | 3 years |
Warrants [Member] | 1.25 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1.25 |
Common Stock Warrants Outstanding | 6,805,185 |
Series 2 Preferred Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 5 years |
Warrants [Member] | $ 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 | 5 years |
Income Taxes (Details)
Income Taxes (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Taxes (Textual) | |
Operating loss carryforwards expiration period, description | Offset future taxable income which expire from 2024 to 2037. |
Federal [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | $ 30,008,000 |
State [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | $ 16,011,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events [Member] - shares | Oct. 10, 2018 | Oct. 02, 2018 |
Board of Directors [Member] | ||
Subsequent Events (Textual) | ||
Stock options granted period, description | Board of Directors approved issuance of 169,000 option awards under the 2018 Plan to the Company's employees at an exercise price of $0.79 per option that vests in three (3) equal annual installments beginning on the first anniversary of the date of grant and to have a term of three (3) years. | |
Common Stock [Member] | Maximum [Member] | ||
Subsequent Events (Textual) | ||
Common stock, shares authorized for issuance | 40,000,000 | |
Common Stock [Member] | Minimum [Member] | ||
Subsequent Events (Textual) | ||
Common stock, shares authorized for issuance | 25,000,000 |