Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 04, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FlexShopper, Inc. | |
Entity Central Index Key | 0001397047 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 17,666,193 | |
Entity File Number | 001-37945 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State Country Code | DE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash | $ 3,172,362 | $ 6,141,210 |
Accounts receivable, net | 7,976,580 | 6,375,963 |
Prepaid expenses | 609,605 | 317,160 |
Lease merchandise, net | 24,341,616 | 32,364,697 |
Total current assets | 36,100,163 | 45,199,030 |
PROPERTY AND EQUIPMENT, net | 5,271,812 | 3,336,664 |
OTHER ASSETS, net | 86,980 | 90,621 |
Total assets | 41,458,955 | 48,626,315 |
CURRENT LIABILITIES: | ||
Current portion of loan payable under credit agreement to beneficial shareholder net of $0 at 2019 and $167,483 at 2018 of unamortized issuance costs | 14,252,717 | |
Accounts payable | 2,660,561 | 8,317,216 |
Accrued payroll and related taxes | 232,086 | 393,095 |
Promissory notes to related parties net of $9,333 at 2019 and $0 at 2018 of unamortized issuance costs, including accrued interest | 1,062,810 | 1,814,771 |
Accrued expenses | 886,028 | 1,335,505 |
Lease liability - current portion | 121,858 | |
Total current liabilities | 4,963,343 | 26,113,304 |
Loan payable under credit agreement to beneficial shareholder net of $367,346 at 2019 and $164,752 at 2018 of unamortized issuance costs and current portion | 20,233,281 | 14,020,335 |
Promissory notes to related parties net of $28,966 at 2019 and $0 at 2018 of unamortized issuance costs and current portion | 3,721,034 | |
Lease liabilities less current portion | 1,913,171 | |
Total liabilities | 30,830,829 | 40,133,639 |
STOCKHOLDERS' EQUITY | ||
Series 1 Convertible Preferred Stock, $0.001 par value - authorized 250,000 shares, issued and outstanding 171,191 shares at 2019 and 239,405 shares at 2018 at $5.00 stated value | 855,955 | 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 17,666,193 shares at 2019 and 17,579,870 shares at 2018 | 1,767 | 1,758 |
Additional paid in capital | 34,969,420 | 34,074,488 |
Accumulated deficit | (47,151,016) | (48,732,595) |
Total stockholders' equity | 10,628,126 | 8,492,676 |
Total liabilities and stockholders' equity | $ 41,458,955 | $ 48,626,315 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Loan payable unamortized issuance costs | $ 0 | $ 167,483 |
Promissory notes to related parties net of unamortized issuance costs | 9,333 | 0 |
Loan payable unamortized issuance costs and current portion | 367,346 | 164,752 |
Promissory notes to related parties net unamortized issuance costs and current portion | $ 28,966 | $ 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 17,666,193 | 17,579,870 |
Common stock, shares outstanding | 17,666,193 | 17,579,870 |
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 | 171,191 | 239,405 |
Convertible preferred stock, shares outstanding | 171,191 | 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, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues: | ||||
Lease revenues and fees, net | $ 22,267,261 | $ 14,609,409 | $ 63,953,196 | $ 41,875,977 |
Lease merchandise sold | 665,074 | 490,208 | 2,374,876 | 1,592,556 |
Total revenues | 22,932,335 | 15,099,617 | 66,328,072 | 43,468,533 |
Costs and expenses: | ||||
Cost of lease revenues, consisting of depreciation and impairment of lease merchandise | 14,248,969 | 10,289,709 | 43,787,216 | 29,684,867 |
Cost of lease merchandise sold | 457,399 | 349,209 | 1,521,244 | 1,007,677 |
Marketing | 868,452 | 1,596,322 | 2,031,227 | 4,025,509 |
Salaries and benefits | 2,189,629 | 2,186,835 | 5,984,797 | 6,397,999 |
Operating expenses | 2,718,110 | 2,206,496 | 8,156,238 | 6,163,680 |
Total costs and expenses | 20,482,559 | 16,628,571 | 61,480,722 | 47,279,732 |
Operating income/(loss) | 2,449,776 | (1,528,954) | 4,847,350 | (3,811,199) |
Loss on extinguishment of debt | 126,622 | 126,622 | ||
Interest expense including amortization of debt issuance costs | 1,061,794 | 1,061,827 | 3,265,771 | 3,040,832 |
Net income/(loss) | 1,387,982 | (2,717,403) | 1,581,579 | (6,978,653) |
Dividends on Series 2 Convertible Preferred Shares | 609,717 | 609,168 | 1,828,167 | 1,817,672 |
Net income/(loss) attributable to common shareholders | $ 778,265 | $ (3,326,571) | $ (246,588) | $ (8,796,325) |
Basic and diluted (loss) per common share: | ||||
Basic | $ 0.04 | $ (0.56) | $ (0.01) | $ (1.59) |
Diluted | $ 0.04 | $ (0.56) | $ (0.01) | $ (1.59) |
WEIGHTED AVERAGE COMMON SHARES: | ||||
Basic | 17,666,193 | 5,950,161 | 17,661,134 | 5,539,815 |
Diluted | 19,798,386 | 5,950,161 | 20,121,360 | 5,539,815 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) | Series 1 Convertible Preferred Stock | Series 2 Convertible Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2017 | $ 1,197,025 | $ 21,952,000 | $ 529 | $ 22,445,691 | $ (39,271,333) | $ 6,323,912 |
Balance, shares at Dec. 31, 2017 | 239,405 | 21,952 | 5,294,501 | |||
Provision for compensation expense related to stock options | 72,481 | 72,481 | ||||
Warrants issued in connection with amended credit agreement and subsequent issuance of common stock upon exercise of the warrants | $ 18 | 523,232 | 523,250 | |||
Warrants issued in connection with amended credit agreement and subsequent issuance of common stock upon exercise of the warrants, shares | 175,000 | |||||
Net income | (4,261,250) | (4,261,250) | ||||
Balance at Jun. 30, 2018 | $ 1,197,025 | $ 21,952,000 | $ 547 | 23,041,404 | (43,532,583) | 2,658,393 |
Balance, shares at Jun. 30, 2018 | 239,405 | 21,952 | 5,469,501 | |||
Provision for compensation expense related to stock options | 28,544 | 28,544 | ||||
Issuance of shares and warrants in connection with equity raise | $ 1,000 | 10,006,500 | 10,007,500 | |||
Issuance of shares and warrants in connection with equity raise, shares | 10,000,000 | |||||
Offering costs related to equity raise | (1,022,810) | (1,022,810) | ||||
Conversion of debt and accrued interest to common shares, value | $ 211 | 2,089,055 | 2,089,266 | |||
Conversion of debt and accrued interest to common shares, shares | 2,110,369 | |||||
Net income | (2,717,403) | (2,717,403) | ||||
Balance at Sep. 30, 2018 | $ 1,197,025 | $ 21,952,000 | $ 1,758 | 34,142,693 | (46,249,986) | 11,043,490 |
Balance, shares at Sep. 30, 2018 | 239,405 | 21,952 | 17,579,870 | |||
Balance at Dec. 31, 2018 | $ 1,197,025 | $ 21,952,000 | $ 1,758 | 34,074,488 | (48,732,595) | 8,492,676 |
Balance, shares at Dec. 31, 2018 | 239,405 | 21,952 | 17,579,870 | |||
Provision for compensation expense related to stock options | 328,772 | 328,772 | ||||
Refund of costs related to equity raise | 23,147 | 23,147 | ||||
Issuance of warrants in connection with consulting agreement | 43,200 | 43,200 | ||||
Conversion of preferred stock to common stock | $ (341,070) | $ 9 | 341,061 | |||
Conversion of preferred stock to common stock, shares | (68,214) | 86,323 | ||||
Net income | 193,597 | 193,597 | ||||
Balance at Jun. 30, 2019 | $ 855,955 | $ 21,952,000 | $ 1,767 | 34,810,668 | (48,538,998) | 9,081,392 |
Balance, shares at Jun. 30, 2019 | 171,191 | 21,952 | 17,666,193 | |||
Balance at Dec. 31, 2018 | $ 1,197,025 | $ 21,952,000 | $ 1,758 | 34,074,488 | (48,732,595) | 8,492,676 |
Balance, shares at Dec. 31, 2018 | 239,405 | 21,952 | 17,579,870 | |||
Balance at Sep. 30, 2019 | $ 855,955 | $ 21,952,000 | $ 1,767 | 34,969,420 | (47,151,016) | 10,628,126 |
Balance, shares at Sep. 30, 2019 | 171,191 | 21,952 | 17,666,193 | |||
Balance at Jun. 30, 2019 | $ 855,955 | $ 21,952,000 | $ 1,767 | 34,810,668 | (48,538,998) | 9,081,392 |
Balance, shares at Jun. 30, 2019 | 171,191 | 21,952 | 17,666,193 | |||
Provision for compensation expense related to stock options | 117,133 | 117,133 | ||||
Issuance of warrants in connection with consulting agreement | 41,619 | 41,619 | ||||
Offering costs related to equity raise | ||||||
Net income | 1,387,982 | 1,387,982 | ||||
Balance at Sep. 30, 2019 | $ 855,955 | $ 21,952,000 | $ 1,767 | $ 34,969,420 | $ (47,151,016) | $ 10,628,126 |
Balance, shares at Sep. 30, 2019 | 171,191 | 21,952 | 17,666,193 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income/(loss) | $ 1,581,579 | $ (6,978,653) |
Adjustments to reconcile net income/(loss) to net cash provided by (used in) operating activities: | ||
Depreciation and impairment of lease merchandise | 43,787,216 | 29,684,866 |
Other depreciation and amortization | 1,879,935 | 1,850,452 |
Compensation expense related to issuance of stock options and warrants | 530,724 | 101,025 |
Provision for doubtful accounts | 25,075,156 | 16,563,888 |
Loss on debt extinguishment | 126,622 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (26,675,773) | (17,120,096) |
Prepaid expenses and other | (290,556) | 141,126 |
Lease merchandise | (35,764,135) | (26,595,974) |
Security deposits | 1,334 | 2,025 |
Accounts payable | (5,656,655) | (1,560,609) |
Accrued payroll and related taxes | (161,009) | (179,265) |
Accrued expenses | (317,173) | 128,766 |
Net cash provided by (used in) operating activities | 3,990,643 | (3,835,827) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment, including capitalized software costs | (1,664,580) | (1,752,095) |
Net cash used in investing activities | (1,664,580) | (1,752,095) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Principal payment under finance lease obligation | (1,243) | |
Refund of equity issuance related costs | 23,147 | |
Proceeds from exercise of warrants | 1,750 | |
Proceeds from public offering | 10,007,500 | |
Equity issuance related costs | (862,810) | |
Proceeds from promissory notes, net of fees | 3,440,000 | 3,465,000 |
Repayment of promissory note | (500,000) | |
Proceeds from loan payable under credit agreement | 2,523,828 | 5,185,000 |
Repayment of loan payable under credit agreement | (10,528,488) | (9,786,487) |
Repayment of installment loan | (8,405) | (8,405) |
Debt issuance related costs | (243,750) | (100,438) |
Net cash (used in) provided by financing activities | (5,294,911) | 7,901,110 |
(DECREASE)/INCREASE IN CASH | (2,968,848) | 2,313,188 |
CASH, beginning of period | 6,141,210 | 4,968,915 |
CASH, end of period | 3,172,362 | 7,282,103 |
Supplemental cash flow information: | ||
Interest paid | 2,700,709 | 2,104,110 |
Non-cash financing activities: | ||
Issuance of common stock and warrants to extinguishment debt and accrued interest | 2,089,266 | |
Accrued equity issuance costs | 160,000 | |
Warrants issued for debt issuance costs | 523,250 | |
Conversion of preferred stock to common stock | $ 341,070 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Basis Of Presentation [Abstract] | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION The 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 the interim financial statements does not include all information and disclosures necessary for a fair presentation of FlexShopper, Inc's 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 FlexShopper, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The consolidated balance sheet as of December 31, 2018 contained herein has been derived from audited financial statements. |
Business
Business | 9 Months Ended |
Sep. 30, 2019 | |
Business [Abstract] | |
BUSINESS | 2. BUSINESS FlexShopper, Inc. ("FlexShopper" or the "Company") is a corporation organized under the laws of the State of Delaware in 2006. The Company owns 100% of FlexShopper, LLC, a North Carolina limited liability company, which in turns owns 100% of FlexShopper 1, LLC and FlexShopper 2, LLC. The Company is a holding corporation with no operations except for those conducted by FlexShopper, LLC. FlexShopper, LLC provides through e-commerce sites of durable goods to consumers, including customers of third-party retailers and e-tailers, on a lease-to-own ("LTO") basis. To date, funds derived from the sale of FlexShopper's common stock, warrants, Series 1 Convertible Preferred Stock and Series 2 Convertible Preferred Stock and the Company's ability to borrow both funds against the lease portfolio and from promissory notes have provided the liquidity and capital resources necessary to fund its operations. Management believes that liquidity needs for future growth for at least the next 12 months can be met by cash flow from operations generated by the existing portfolio and/or additional borrowings against the Credit Agreement (see Note 7). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
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 $ 17,877,284 $ 10,130,269 Allowance for doubtful accounts (9,900,704 ) (3,754,306 ) Accounts receivable, net $ 7,976,580 $ 6,375,963 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 $9,838,873 and $19,215,275 for the three and nine months ended September 30, 2019, respectively, and $6,766,876 and $14,209,066 for the three and nine months ended September 30, 2018, respectively. September 30, December 31, Beginning balance $ 3,754,306 $ 2,139,765 Provision for write-offs 25,361,673 23,239,189 Accounts written off (19,215,275 ) (21,624,648 ) Ending balance $ 9,900,704 $ 3,754,306 Lease Merchandise - The net leased merchandise balances consisted of the following as of September 30, 2019 and December 31, 2018: September 30, December 31, Lease merchandise at cost $ 45,713,984 $ 48,893,012 Accumulated depreciation (18,931,951 ) (14,338,295 ) Impairment reserve (2,440,417 ) (2,190,020 ) Lease merchandise, net $ 24,341,616 $ 32,364,697 Lease merchandise at cost represents the undepreciated cost of rental merchandise at the time of purchase. 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 6) 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 $0 and $35,000 for the three and nine months ended September 30, 2018. Debt issuance costs of $60,000 incurred in conjunction with the subordinated Promissory Notes entered into on January 25, 2019 and February 19, 2019 (see Note 6) 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 $8,138 and $21,701 for the three and nine months ended September 30, 2019, respectively. 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 for the nine months ended September 30, 2019 and the three and nine months ended September 30, 2018, 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. The following table for 2019 reflects a change in the conversion rates of the Series 1 Convertible Preferred Stock and Series 2 Convertible Preferred Stock due to anti-dilution adjustments as a result of FlexShopper's September 2018 equity offering. Nine Months ended September 30, 2019 2018 Series 1 Convertible Preferred Stock 216,637 145,197 Series 2 Convertible Preferred Stock 5,639,745 7,506,249 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 112,785 150,111 Common Stock Options 1,755,818 445,400 Common Stock Warrants 7,462,489 7,182,488 15,187,474 15,429,445 The following table sets forth the computation of basic and diluted earnings per share for the three months ended September 30, 2019: September 30, Numerator Net income $ 1,387,982 Convertible Series 2 Preferred Share dividends (609,717 ) Convertible Series 2 Preferred Share dividends attributable to Series 1 Convertible Preferred Stock 7,386 Net Income attributable to Series 1 Convertible Preferred Stock (16,814 ) Numerator for diluted EPS – income attributable to common shareholders after assumed conversions $ 768,837 Denominator Denominator for basic EPS – weighted average shares 17,666,193 Effect of dilutive securities Common stock options 576,369 Common stock warrants 1,555,824 Denominator for diluted EPS – adjusted weighted average shares 19,798,386 Basic EPS $ 0.04 Diluted EPS $ 0.04 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. The Company has elected to use the Black-Scholes-Merton (BSM) pricing model to determine the fair value of all stock option awards (see Note 9). Fair Value of Financial Instruments Income Taxes The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of September 30, 2019, and 2018, 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 Nine Months ended September 30, 2019 2018 Lease revenues and fees $ 89,028,352 $ 58,439,865 Provision for doubtful accounts 25,075,156 16,563,888 Lease revenues and fees, net of lessor bad debt expense $ 63,953,196 $ 41,875,977 The new standard also impacted 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 has elected a package of optional practical expedients which includes the option to retain the current classification of leases entered into prior to January 1, 2019. The Company adopted this new guidance on January 1, 2019 (see Note 4 below). |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Notes To Financial Statements [Abstract] | |
LEASES | 4. LEASES Lessor Information - Lessee Information - The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are included in the Company’s consolidated balance sheet beginning January 1, 2019. The breakout of operating lease assets, and current and non-current operating lease liabilities at September 30, 2019, is shown in the table below. Supplemental balance sheet information related to leases is as follows: Balance Sheet Classification September 30, Assets Operating Lease Asset Property and Equipment, net $ 1,884,822 Finance Lease Asset Property and Equipment, net 33,036 Total Lease Assets $ 1,917,858 Liabilities Operating Lease Liability – current portion Current Lease Liabilities $ 116,403 Finance Lease Liability – current portion Current Lease Liabilities 5,455 Operating Lease Liability- net of current portion Long Term Lease Liabilities 1,885,096 Finance Lease Liability – net of current portion Long Term Lease Liabilities 28,075 Total Lease Liabilities $ 2,035,029 Operating lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The Company uses its incremental borrowing rate as the discount rate for its leases, as the implicit rate in the lease is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. Operating lease assets also include any prepaid lease payments and lease incentives. The lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company generally uses the base, non-cancelable, lease term when determining the lease assets and liabilities. Under the short-term lease exception provided within ASC 842, the Company does not record a lease liability or right-of-use asset for any leases that have a lease term of 12 months or less at commencement. Below is a summary of the weighted-average discount rate and weighted-average remaining lease term for the Company’s operating leases: Weighted Average Discount Rate Weighted Average Remaining Lease Term Operating Leases 13.50 % 9 Finance Leases 13.40 % 5 Upon adoption of ASU 2016-02, discount rates for existing operating leases were established as of January 1, 2019. The discount rate for the new operating lease related to 901 Yamato Road, Boca Raton, FL was established as of June 1, 2019. Operating lease expense is recognized on a straight-line basis over the lease term within operating expenses in the Company’s consolidated statements of operations. Finance lease expense is recognized on a straight-line basis over the lease term within interest expense in the Company’s consolidated statements of operations. The Company’s total operating and finance lease expense all relate to lease costs and amounted to $121,314 and $287,170 for the three and nine months ended September 30, 2019, respectively. Supplemental cash flow information related to operating leases is as follows: Nine months ended Cash payments for operating leases $ 157,719 Cash payments for finance leases 2,391 New operating lease asset obtained in exchange for lease liabilities 1,869,287 New finance lease asset obtained in exchange for lease liabilities 34,772 The new operating lease asset obtained in exchange for operating lease liabilities, as shown above, does not include the $14,900 of direct costs associated with the new operating lease capitalized as part of the right-of-use asset. Below is a summary of undiscounted operating lease liabilities as of September 30, 2019. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the operating lease liabilities included in the consolidated balance sheet. Operating Leases 2019 $ 6,864 2020 303,681 2021 416,998 2022 407,450 2023 419,674 2024 and thereafter 2,048,091 Total undiscounted cash flows 3,602,758 Less: interest (1,601,259 ) Present value of lease liabilities $ 2,001,499 The Company entered into an office lease in January 2019. The lease commenced in June 2019, at which time the Company recognized the operating lease asset and liability. The Company pays a base monthly rent of $31,532 with payments increasing by 3% on each yearly anniversary of the commencement date. The initial lease term is for 9 years with the Company having a one-time option to extend for 5 years. Below is a summary of undiscounted finance lease liabilities as of September 30, 2019. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance lease liabilities included in the consolidated balance sheet. Finance Leases 2019 $ 2,391 2020 9,564 2021 9,564 2022 9,564 2023 9,564 2024 and thereafter 4,831 Total undiscounted cash flows 45,478 Less: interest (11,948 ) Present value of lease liabilities $ 33,530 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT Property and equipment consist of the following: Estimated September 30, December 31, Furniture, fixtures and vehicle 2-5 years $ 93,893 $ 155,165 Website and internal use software 3 years 9,592,301 8,098,483 Computers and software 3-7 years 568,408 704,407 10,254,602 8,958,055 Less: accumulated depreciation and amortization (6,900,648 ) (5,621,391 ) Right of use assets, net 1,917,858 - $ 5,271,812 $ 3,336,664 Depreciation and amortization expense were $530,520 and $490,483 for the three months ended September 30, 2019 and 2018, respectively, and $1,647,290 and $1,387,150 for the nine months ended September 30, 2019 and 2018, respectively. |
Promissory Notes
Promissory Notes | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
PROMISSORY NOTES | 6. PROMISSORY NOTES January 2018 Notes - Upon issuance of the Notes, FlexShopper, LLC 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. On August 29, 2018, FlexShopper, LLC issued amended and restated Notes to Mr. Heiser and NRNS under which (1) the maturity date for such Notes was set at June 30, 2019 and (2) in connection with the completion of an Equity Financing (as defined in the Notes), the holders of such Notes were granted the option to convert up to 50% of the outstanding principal of the Notes plus accrued and unpaid interest thereon into the securities issued in the Equity Financing at a conversion price equal to the price paid to the Company by the underwriters for such securities, net of the underwriting discount. In connection with the offering of units in September 2018, Mr. Heiser and NRNS elected to convert the convertible portion of the Notes, resulting in the issuance by the Company of 602,974 shares of common stock and 301,487 warrants to Mr. Heiser and 1,507,395 shares of common stock and 753,697 warrants to NRNS. Prior to Mr. Heiser's Note maturity date, the Company paid down the entire principal and interest balance on June 28, 2019 in the amount of $507,339. NRNS amended and restated the NRNS Note such that the maturity date of the revised Note was set at June 30, 2021. In addition, the Company drew $500,000 on the Note held by NRNS on June 28, 2019. As of September 30, 2019, $1,776,580 of principal and accrued and unpaid interest was outstanding on NRNS's Note. January 2019 Note - February 2019 Note - Debt Principal Interest 2019 $ - $ 72,143 2020 $ 1,000,000 $ - 2021 $ 3,750,000 $ - |
Loan Payable Under Credit Agree
Loan Payable Under Credit Agreement | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
LOAN PAYABLE UNDER CREDIT AGREEMENT | 7. 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 $32,500,000 from the Lender until the Commitment Termination Date and must repay all borrowed amounts one year thereafter, on the date that is 12 months following the Commitment Termination Date (unless such amounts become due or payable on an earlier date pursuant to the terms of the Credit Agreement). On April 1, 2019, the Commitment Termination Date was extended to February 28, 2021. The Lender was granted a security interest in certain leases as collateral under the Credit Agreement. The interest rate charged on amounts borrowed is LIBOR plus 11% per annum. At September 30, 2019, amounts borrowed bear interest at 13.03%. The Company had $11,899,373 available under the Credit Agreement as of September 30, 2019. 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 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 (each capitalized term, as defined in the Credit Agreement). Upon a Permitted Change of Control (as defined in the Credit Agreement), FlexShopper must refinance the debt under the Credit Agreement, subject to the payment of an early termination fee. A summary of the covenant requirements, and FlexShopper's actual results at September 30, 2019, follows: September 30, Required Covenant Actual Position Equity Book Value not less than $ 8,000,000 $ 10,628,126 Unrestricted Cash greater than 1,500,000 3,172,362 Consolidated Total Debt to Equity Book Value ratio not to exceed 4.75 2.39 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. Availability under the Credit Agreement is subject to a borrowing base which is redetermined from time to time and based on specific advance rates on eligible current assets. Interest expense incurred under the Credit Agreement amounted to $725,702 and $2,415,231 for the three and nine months ended September 30, 2019, respectively, and $689,667 and $2,103,891 for the three and nine months ended September 30, 2018, respectively. As of September 30, 2019, the outstanding balance under the Credit Agreement was $20,600,627. Such amount is presented in the consolidated balance sheet net of unamortized issuance costs of $367,346. Interest is payable monthly on the outstanding balance of the amounts borrowed. No principal is expected to be repaid in the next twelve months due to the Commitment Termination Date having been extended to February 28, 2021, or from reductions in the borrowing base. Accordingly, all principal is shown as a non-current liability at September 30, 2019. |
Capital Structure
Capital Structure | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
CAPITAL STRUCTURE | 8. 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 preferred stock, par value $0.001 per share. Of this amount, 250,000 shares have 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 has the right to determine the rights and preferences of any future designation of the Company's preferred stock, subject to the terms of the Series 1 and Series 2 Convertible Preferred Stock. ● Series 1 Convertible Preferred Stock - As of September 30, 2019, each share of Series 1 Convertible Preferred Stock was convertible into 1.26547 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. 68,214 shares of Series 1 Convertible Preferred Stock were converted into 86,323 shares of common stock during the nine months ended September 30, 2019. As of September 30, 2019, there were 171,191 shares of Series 1 Convertible Preferred Stock outstanding, which are convertible into 216,637 shares of common stock. ● Series 2 Convertible Preferred Stock - Shares of Series 2 Preferred Stock 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, 2019 totaled approximately $7,783,368. As of September 30, 2019, each share of Series 2 Preferred Stock was convertible into approximately 257 shares of common stock; provided the conversion rate is subject to further increase pursuant to a weighted average anti-dilution provision. The holders of the Series 2 Preferred Stock 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), holders of Series 2 Preferred Stock 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 shares of Series 2 Preferred Stock been converted to common stock immediately before the Liquidation Event or Deemed Liquidation Event. Common Stock The Company is authorized to issue 40,000,000 shares of common stock, par value $0.0001 per share. Each share of common stock entitles the holder to one vote at all stockholder meetings. The common stock is traded on the Nasdaq Capital Market under the symbol "FPAY." Warrants 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 additional warrants exercisable for an aggregate 1,055,184 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 (see Note 6). The warrants are 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 part of a consulting agreement with XLR8 Capital Partners LLC (the "Consultant"), an entity of which the Company's Chairman is manager, the Company agreed to issue 40,000 warrants to the Consultant monthly for 12 months beginning on March 1, 2019 at an exercise price of $1.25 per share or , if the closing share price on the last day of the month exceeds $1.25, then such exercise price will be 110% of the closing share price. The warrants are immediately exercisable and expire following the close of business on June 30, 2023. As of September 30, 2019, the Company recorded an expense of $84,819 based on a weighted average valuation of $0.30 per warrant as determined by the fair market value of the Company's warrants that are actively traded and listed on the Nasdaq Capital Market under the symbol "FPAYW". Grant Warrants Expense Valuation Date Granted Recorded Per Warrant March 31, 2019 40,000 $ 11,200 $ 0.28 April 30, 2019 40,000 $ 10,000 $ 0.25 May 31, 2019 40,000 $ 10,000 $ 0.25 June 30, 2019 40,000 $ 12,000 $ 0.30 July 31, 2019 40,000 $ 14,904 $ 0.37 August 31, 2019 40,000 $ 14,884 $ 0.37 September 30, 2019 40,000 $ 11,831 $ 0.30 280,000 $ 84,819 $ 0.30 The following table summarizes information about outstanding stock warrants as of September 30, 2019, all of which are exercisable: Common Series 2 Preferred Weighted Average Exercise Stock Warrants Stock Warrants Remaining Price Outstanding Outstanding Contractual Life $ 10.00 200,001 <1 year $ 5.50 177,304 2 years $ 1.25 6,965,184 4 years $ 1.76 40,000 4 years $ 2.00 40,000 4 years $ 1.69 40,000 4 years $ 1,250 - 439 4 years 7,462,489 439 |
Stock Options
Stock Options | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
STOCK OPTIONS | 9. 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 thereunder, 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. On February 21, 2019, the Company's Board of Directors approved Amendment No. 1 to the 2018 Plan, subject to stockholder approval. On May 2, 2019, the Company's stockholders approved the 2018 Plan Amendment that increased (a) the total number of shares available for issuance under the 2018 Plan by 1,000,000 shares and (b) the number of shares available for issuance as "incentive stock options" within the meaning of Internal Revenue Code Section 422 by 1,000,000 shares. 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, 2019 follows: Number of Weighted Weighted Aggregate Outstanding at January 1, 2019 620,900 $ 3.75 Granted 1,334,851 0.85 Forfeited (174,933 ) 1.36 100,087 Expired (25,000 ) 6.20 Outstanding at September 30, 2019 1,755,818 $ 1.75 8.83 $ 952,494 Vested and exercisable at September 30, 2019 803,126 $ 2.64 8.18 $ 334,420 The weighted average grant date fair value of options granted during the nine-month period ended September 30, 2019 was $0.52 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 $ 0.85 Expected life 6.8 years Expected volatility 63 % Dividend yield 0 % Risk-free interest rate 2.40 % The expected dividend yield is based on the Company's historical dividend yield. The expected volatility is based on the historical volatility of the Company's common stock. 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 consolidated statements of operations was $117,134 and $445,906 for the three and nine months ended September 30, 2019, respectively, and $28,544 and $101,025 for the three and nine months ended September 30, 2018, respectively. Unrecognized compensation cost related to non-vested options at September 30, 2019 amounted to approximately $317,915, which is expected to be recognized over a weighted average period of 0.93 years. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 10. INCOME TAXES As of December 31, 2018, the Company had federal net operating loss carryforwards ("NOL") of approximately $75,400,000 and state net operating loss carryforwards of approximately $18,600,000 available to offset future taxable income which expire from 2024 to 2037. NOL's created after January 1, 2018 do not expire, but are limited . Management believes that the federal and state deferred tax asset as of December 31, 2018 does not satisfy the realization criteria and has recorded a full valuation allowance to offset the deferred tax asset. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
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 $ 17,877,284 $ 10,130,269 Allowance for doubtful accounts (9,900,704 ) (3,754,306 ) Accounts receivable, net $ 7,976,580 $ 6,375,963 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 $9,838,873 and $19,215,275 for the three and nine months ended September 30, 2019, respectively, and $6,766,876 and $14,209,066 for the three and nine months ended September 30, 2018, respectively. September 30, December 31, Beginning balance $ 3,754,306 $ 2,139,765 Provision for write-offs 25,361,673 23,239,189 Accounts written off (19,215,275 ) (21,624,648 ) Ending balance $ 9,900,704 $ 3,754,306 |
Lease Merchandise | Lease Merchandise - The net leased merchandise balances consisted of the following as of September 30, 2019 and December 31, 2018: September 30, December 31, Lease merchandise at cost $ 45,713,984 $ 48,893,012 Accumulated depreciation (18,931,951 ) (14,338,295 ) Impairment reserve (2,440,417 ) (2,190,020 ) Lease merchandise, net $ 24,341,616 $ 32,364,697 Lease merchandise at cost represents the undepreciated cost of rental merchandise at the time of purchase. |
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 6) 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 $0 and $35,000 for the three and nine months ended September 30, 2018. Debt issuance costs of $60,000 incurred in conjunction with the subordinated Promissory Notes entered into on January 25, 2019 and February 19, 2019 (see Note 6) 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 $8,138 and $21,701 for the three and nine months ended September 30, 2019, respectively. |
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 for the nine months ended September 30, 2019 and the three and nine months ended September 30, 2018, 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. The following table for 2019 reflects a change in the conversion rates of the Series 1 Convertible Preferred Stock and Series 2 Convertible Preferred Stock due to anti-dilution adjustments as a result of FlexShopper's September 2018 equity offering. Nine Months ended September 30, 2019 2018 Series 1 Convertible Preferred Stock 216,637 145,197 Series 2 Convertible Preferred Stock 5,639,745 7,506,249 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 112,785 150,111 Common Stock Options 1,755,818 445,400 Common Stock Warrants 7,462,489 7,182,488 15,187,474 15,429,445 The following table sets forth the computation of basic and diluted earnings per share for the three months ended September 30, 2019: September 30, Numerator Net income $ 1,387,982 Convertible Series 2 Preferred Share dividends (609,717 ) Convertible Series 2 Preferred Share dividends attributable to Series 1 Convertible Preferred Stock 7,386 Net Income attributable to Series 1 Convertible Preferred Stock (16,814 ) Numerator for diluted EPS – income attributable to common shareholders after assumed conversions $ 768,837 Denominator Denominator for basic EPS – weighted average shares 17,666,193 Effect of dilutive securities Common stock options 576,369 Common stock warrants 1,555,824 Denominator for diluted EPS – adjusted weighted average shares 19,798,386 Basic EPS $ 0.04 Diluted EPS $ 0.04 |
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. The Company has elected to use the Black-Scholes-Merton (BSM) pricing model to determine the fair value of all stock option awards (see Note 9). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
Income Taxes | Income Taxes The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of September 30, 2019, and 2018, 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 Nine Months ended September 30, 2019 2018 Lease revenues and fees $ 89,028,352 $ 58,439,865 Provision for doubtful accounts 25,075,156 16,563,888 Lease revenues and fees, net of lessor bad debt expense $ 63,953,196 $ 41,875,977 The new standard also impacted 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 has elected a package of optional practical expedients which includes the option to retain the current classification of leases entered into prior to January 1, 2019. The Company has concluded that there is no material impact to the consolidated balance sheets, consolidated statements of operations, or consolidated statements of cash flows as a result of the new standard. The Company adopted this new guidance on January 1, 2019 (see Note 4 below). |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of accounts receivable | September 30, December 31, Accounts receivable $ 17,877,284 $ 10,130,269 Allowance for doubtful accounts (9,900,704 ) (3,754,306 ) Accounts receivable, net $ 7,976,580 $ 6,375,963 |
Schedule of allowance for doubtful accounts | September 30, December 31, Beginning balance $ 3,754,306 $ 2,139,765 Provision for write-offs 25,361,673 23,239,189 Accounts written off (19,215,275 ) (21,624,648 ) Ending balance $ 9,900,704 $ 3,754,306 |
Schedule of net leased merchandise | September 30, December 31, Lease merchandise at cost $ 45,713,984 $ 48,893,012 Accumulated depreciation (18,931,951 ) (14,338,295 ) Impairment reserve (2,440,417 ) (2,190,020 ) Lease merchandise, net $ 24,341,616 $ 32,364,697 |
Schedule of anti-dilutive securities excluded from computation of earnings per share | Nine Months ended September 30, 2019 2018 Series 1 Convertible Preferred Stock 216,637 145,197 Series 2 Convertible Preferred Stock 5,639,745 7,506,249 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 112,785 150,111 Common Stock Options 1,755,818 445,400 Common Stock Warrants 7,462,489 7,182,488 15,187,474 15,429,445 |
Schedule of basic and diluted earnings per share | September 30, Numerator Net income $ 1,387,982 Convertible Series 2 Preferred Share dividends (609,717 ) Convertible Series 2 Preferred Share dividends attributable to Series 1 Convertible Preferred Stock 7,386 Net Income attributable to Series 1 Convertible Preferred Stock (16,814 ) Numerator for diluted EPS – income attributable to common shareholders after assumed conversions $ 768,837 Denominator Denominator for basic EPS – weighted average shares 17,666,193 Effect of dilutive securities Common stock options 569,922 Common stock warrants 1,555,823 Series 1 convertible Preferred Stock 216,637 Series 2 convertible Preferred Stock 112,785 Denominator for diluted EPS – adjusted weighted average shares 20,121,360 Basic EPS $ 0.04 Diluted EPS $ 0.04 |
Schedule of lease revenues and fees | Nine Months ended September 30, 2019 2018 Lease revenues and fees $ 89,028,352 $ 58,439,865 Provision for doubtful accounts 25,075,156 16,563,888 Lease revenues and fees, net of lessor bad debt expense $ 63,953,196 $ 41,875,977 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Notes To Financial Statements [Abstract] | |
Schedule of balance sheet information related to leases | Balance Sheet Classification September 30, Assets Operating Lease Asset Property and Equipment, net $ 1,884,822 Finance Lease Asset Property and Equipment, net 33,036 Total Lease Assets $ 1,917,858 Liabilities Operating Lease Liability – current portion Current Lease Liabilities $ 116,403 Finance Lease Liability – current portion Current Lease Liabilities 5,455 Operating Lease Liability- net of current portion Long Term Lease Liabilities 1,885,096 Finance Lease Liability – net of current portion Long Term Lease Liabilities 28,075 Total Lease Liabilities $ 2,035,029 |
Schedule of weighted-average discount rate and weighted-average remaining lease term | Weighted Average Discount Rate Weighted Average Remaining Lease Term Operating Leases 13.50 % 9 Finance Leases 13.40 % 5 |
Schedule of supplemental cash flow information | Nine months ended Cash payments for operating leases $ 157,719 Cash payments for finance leases 2,391 New operating lease asset obtained in exchange for lease liabilities 1,869,287 New finance lease asset obtained in exchange for lease liabilities 34,772 |
Schedule of undiscounted operating lease liabilities | Operating Leases 2019 $ 6,864 2020 303,681 2021 416,998 2022 407,450 2023 419,674 2024 and thereafter 2,048,091 Total undiscounted cash flows 3,602,758 Less: interest (1,601,259 ) Present value of lease liabilities $ 2,001,499 |
Schedule of undiscounted finance lease liabilities | Finance Leases 2019 $ 2,391 2020 9,564 2021 9,564 2022 9,564 2023 9,564 2024 and thereafter 4,831 Total undiscounted cash flows 45,478 Less: interest (11,948 ) Present value of lease liabilities $ 33,530 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Estimated September 30, December 31, Furniture, fixtures and vehicle 2-5 years $ 93,893 $ 155,165 Website and internal use software 3 years 9,592,301 8,098,483 Computers and software 3-7 years 568,408 704,407 10,254,602 8,958,055 Less: accumulated depreciation and amortization (6,900,648 ) (5,621,391 ) Right of use assets, net 1,917,858 - $ 5,271,812 $ 3,336,664 |
Promissory Notes (Tables)
Promissory Notes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of principal and accrued and unpaid interest was outstanding | Debt Principal Interest 2019 $ - $ 72,143 2020 $ 1,000,000 $ - 2021 $ 3,750,000 $ - |
Loan Payable Under Credit Agr_2
Loan Payable Under Credit Agreement (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of covenant requirements, and FlexShopper's actual results | September 30, Required Covenant Actual Position Equity Book Value not less than $ 8,000,000 $ 10,628,126 Unrestricted Cash greater than 1,500,000 3,172,362 Consolidated Total Debt to Equity Book Value ratio not to exceed 4.75 2.39 |
Capital Structure (Tables)
Capital Structure (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
Schedule of warrants | Grant Warrants Expense Valuation Date Granted Recorded Per Warrant March 31, 2019 40,000 $ 11,200 $ 0.28 April 30, 2019 40,000 $ 10,000 $ 0.25 May 31, 2019 40,000 $ 10,000 $ 0.25 June 30, 2019 40,000 $ 12,000 $ 0.30 July 31, 2019 40,000 $ 14,904 $ 0.37 August 31, 2019 40,000 $ 14,884 $ 0.37 September 30, 2019 40,000 $ 11,831 $ 0.30 280,000 $ 84,819 $ 0.30 |
Schedule of outstanding stock warrants | Common Series 2 Preferred Weighted Average Exercise Stock Warrants Stock Warrants Remaining Price Outstanding Outstanding Contractual Life $ 10.00 200,001 <1 year $ 5.50 177,304 2 years $ 1.25 6,965,184 4 years $ 1.76 40,000 4 years $ 2.00 40,000 4 years $ 1.69 40,000 4 years $ 1,250 - 439 4 years 7,462,489 439 |
Stock Options (Tables)
Stock Options (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of information about stock options | Number of Weighted Weighted Aggregate Outstanding at January 1, 2019 620,900 $ 3.75 Granted 1,334,851 0.85 Forfeited (174,933 ) 1.36 100,087 Expired (25,000 ) 6.20 Outstanding at September 30, 2019 1,755,818 $ 1.75 8.83 $ 952,494 Vested and exercisable at September 30, 2019 803,126 $ 2.64 8.18 $ 334,420 |
Schedule of option input into a Black Scholes option pricing model | Exercise price $ 0.85 Expected life 6.8 years Expected volatility 63 % Dividend yield 0 % Risk-free interest rate 2.40 % |
Business (Details)
Business (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Business (Textual) | |
Limited liability percentage of FlexShopper, LLC | 100.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | |||
Accounts receivable | $ 17,877,284 | $ 10,130,269 | |
Allowance for doubtful accounts | (9,900,704) | (3,754,306) | $ (2,139,765) |
Accounts receivable, net | $ 7,976,580 | $ 6,375,963 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | |||||
Beginning balance | $ 3,754,306 | $ 2,139,765 | $ 2,139,765 | ||
Provision for write-offs | 25,075,156 | 16,563,888 | 23,239,189 | ||
Accounts written off | $ (9,838,873) | $ (6,766,876) | (19,215,275) | $ (14,209,066) | (21,624,648) |
Ending balance | $ 9,900,704 | $ 9,900,704 | $ 3,754,306 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Lease merchandise at cost | $ 45,713,984 | $ 48,893,012 |
Accumulated depreciation | (18,931,951) | (14,338,295) |
Impairment reserve | (2,440,417) | (2,190,020) |
Lease merchandise, net | $ 24,341,616 | $ 32,364,697 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 15,187,474 | 15,429,445 |
Common Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 1,755,818 | 445,400 |
Common Stock Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 7,462,489 | 7,182,488 |
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 | 216,637 | 145,197 |
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 | 5,639,745 | 7,506,249 |
Series 3 Convertible Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 112,785 | 150,111 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Numerator | ||||
Net income | $ 1,387,982 | $ (2,717,403) | $ 1,581,579 | $ (6,978,653) |
Convertible Series 2 Preferred Share dividends | 609,717 | $ 609,168 | $ 1,828,167 | $ 1,817,672 |
Convertible Series 2 Preferred Share dividends attributable to Series 1 Convertible Preferred Stock | 7,386 | |||
Net Income attributable to Series 1 Convertible Preferred Stock | (16,814) | |||
Numerator for diluted EPS - income attributable to common shareholders after assumed conversions | $ 768,837 | |||
Denominator | ||||
Denominator for basic EPS – weighted average shares | 17,666,193 | |||
Effect of dilutive securities | ||||
Denominator for diluted EPS - adjusted weighted average shares | 19,798,386 | |||
Basic EPS | $ 0.04 | $ (0.56) | $ (0.01) | $ (1.59) |
Diluted EPS | $ 0.04 | $ (0.56) | $ (0.01) | $ (1.59) |
Common Stock Options [Member] | ||||
Denominator | ||||
Effect of dilutive securities | 576,369 | |||
Common Stock Warrants [Member] | ||||
Denominator | ||||
Effect of dilutive securities | 1,555,824 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details 5) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Lease revenues and fees | $ 89,028,352 | $ 58,439,865 | ||
Provision for doubtful accounts | 25,075,156 | 16,563,888 | ||
Lease revenues and fees, net of lessor bad debt expense | $ 22,267,261 | $ 14,609,409 | $ 63,953,196 | $ 41,875,977 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies (Details Textual) - USD ($) | Jan. 30, 2018 | Jan. 29, 2018 | Feb. 19, 2019 | Jan. 25, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Summary of Significant Accounting Policies (Textual) | |||||||||
Amortization method | Straight-line method | ||||||||
Accounts receivable charged off against allowance | $ 9,838,873 | $ 6,766,876 | $ 19,215,275 | $ 14,209,066 | $ 21,624,648 | ||||
Amortization | 8,138 | 0 | 21,701 | 35,000 | |||||
Capitalized software costs | 535,640 | 730,554 | $ 1,584,666 | 1,737,931 | |||||
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. | ||||||||
Debt issuance costs | $ 35,000 | $ 35,000 | $ 60,000 | $ 60,000 | |||||
Interest expense | 103,368 | 167,689 | $ 208,640 | 425,996 | |||||
Intangible assets, terms | 10 years | ||||||||
Capitalized development costs | 90,828 | ||||||||
Capitalized Computer Software, Amortization Expense | $ 513,149 | $ 468,289 | $ 1,596,396 | $ 1,290,562 |
Leases (Details)
Leases (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Operating Lease Asset | $ 1,917,858 | |
Finance Lease Asset | 33,036 | |
Total Lease Assets | 1,917,858 | |
Liabilities | ||
Operating Lease Liability – current portion | 121,858 | |
Finance Lease Liability – current portion | 5,455 | |
Operating Lease Liability- net of current portion | 1,885,096 | |
Finance Lease Liability – net of current portion | 28,075 | |
Total Lease Liabilities | $ 2,035,029 |
Leases (Details 1)
Leases (Details 1) | Sep. 30, 2019 |
Operating Leases [Member] | |
Weighted Average Discount Rate | 13.50% |
Weighted Average Remaining Lease Term (in years) | 9 years |
Finance Leases [Member] | |
Weighted Average Discount Rate | 13.40% |
Weighted Average Remaining Lease Term (in years) | 5 years |
Leases (Details 2)
Leases (Details 2) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Notes To Financial Statements [Abstract] | ||
Cash payments for operating leases | $ 157,719 | |
Cash payments for finance leases | 1,243 | |
New operating lease asset obtained in exchange for lease liabilities | 1,869,287 | |
New finance lease asset obtained in exchange for lease liabilities | $ 34,772 |
Leases (Details 3)
Leases (Details 3) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Present value of lease liabilities | $ 191,001 | |
Operating Leases [Member] | ||
2019 | $ 6,864 | |
2020 | 303,681 | |
2021 | 416,998 | |
2022 | 407,450 | |
2023 | 419,674 | |
2024 and thereafter | 2,048,091 | |
Total undiscounted cash flows | 3,602,758 | |
Less: interest | (1,601,259) | |
Present value of lease liabilities | 2,001,499 | |
Finance Leases [Member] | ||
2019 | 2,391 | |
2020 | 9,564 | |
2021 | 9,564 | |
2022 | 9,564 | |
2023 | 9,564 | |
2024 and thereafter | 4,831 | |
Total undiscounted cash flows | 45,478 | |
Less: interest | (11,948) | |
Present value of lease liabilities | $ 33,530 |
Leases (Details Textual)
Leases (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Leases (Textual) | |||
Operating leases expiration, description | Operating leases expiring at various times through 2028. | ||
Lease description | The Company pays a base monthly rent of $31,532 with payments increasing by 3% on each yearly anniversary of the commencement date. The initial lease term is for 9 years with the Company having a one-time option to extend for 5 years. | ||
Operating lease costs | $ 121,314 | $ 287,170 | |
Operating lease liability | $ 191,001 | ||
Operating lease assets | $ 191,001 | ||
Direct costs associated with operating lease capitalized | $ 14,900 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 10,254,602 | $ 8,958,055 |
Less: accumulated depreciation and amortization | (6,900,648) | (5,621,391) |
Right of use assets, net | 1,917,858 | |
Property and equipment, net | 5,271,812 | 3,336,664 |
Furniture, fixtures and vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 93,893 | 155,165 |
Website and internal use software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 9,592,301 | 8,098,483 |
Estimated Useful Lives | 3 years | |
Computers and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 568,408 | $ 704,407 |
Minimum [Member] | Furniture, fixtures and vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 2 years | |
Minimum [Member] | Computers and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Maximum [Member] | Furniture, fixtures and vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Maximum [Member] | Computers and software [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, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property and Equipment (Textual) | ||||
Depreciation and amortization expense | $ 530,520 | $ 490,483 | $ 1,647,290 | $ 1,387,150 |
Promissory Notes (Details)
Promissory Notes (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
2019 [Member] | |
Debt Principal | |
Debt Instrument, Periodic Payment, Interest | 72,143 |
2020 [Member] | |
Debt Principal | 1,000,000 |
Debt Instrument, Periodic Payment, Interest | |
2021 [Member] | |
Debt Principal | 3,750,000 |
Debt Instrument, Periodic Payment, Interest |
Promissory Notes (Details Textu
Promissory Notes (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | ||||
Aug. 29, 2019 | Feb. 19, 2019 | Jan. 25, 2019 | Sep. 30, 2018 | Jan. 30, 2018 | Sep. 30, 2019 | |
Promissory Notes (Textual) | ||||||
Description of credit facility | Upon 30 days' prior written notice from the applicable noteholder and the Company can prepay principal and interest at any time without penalty. | |||||
Interest rate | 5.00% | |||||
Description of notes | The Company paid down the entire principal and interest balance on June 28, 2019 in the amount of $507,339. NRNS amended and restated the NRNS Note such that the maturity date of the revised Note was set at June 30, 2021. In addition, the Company drew $500,000 on the Note held by NRNS on June 28, 2019. As of September 30, 2019, $1,776,580 of principal and accrued and unpaid interest was outstanding on NRNS's Note. | |||||
Chief Financial Officer [Member] | ||||||
Promissory Notes (Textual) | ||||||
Description of credit facility | Payment of principal and accrued interest under the January Note is due and payable by FlexShopper, LLC on April 30, 2020 and FlexShopper, LLC can prepay principal and interest at any time without penalty. | |||||
Interest rate | 5.00% | 18.03% | ||||
Description of notes | As of September 30, 2019, $1,015,185 of principal and accrued and unpaid interest was outstanding on the January Note. | |||||
Principal amount | $ 1,000,000 | |||||
Commitment fee percentage | 2.00% | |||||
Lender total value | $ 20,000 | |||||
NRNS [Member] | ||||||
Promissory Notes (Textual) | ||||||
Commitment letters aggregate amounts | $ 2,500,000 | |||||
Description of credit facility | Payment of principal and accrued interest under the February Note is due and payable by FlexShopper, LLC on June 30, 2021 and FlexShopper, LLC can prepay principal and interest at any time without penalty. | |||||
Interest rate | 5.00% | 18.03% | ||||
Issuance of notes, description | FlexShopper, LLC 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. | |||||
Issuance of common stock | 1,507,395 | |||||
Issuance of warrants | 753,697 | |||||
Description of notes | FlexShopper, LLC issued amended and restated Notes to Mr. Heiser and NRNS under which (1) the maturity date for such Notes was set at June 30, 2019 and (2) in connection with the completion of an Equity Financing (as defined in the Notes), the holders of such Notes were granted the option to convert up to 50% of the outstanding principal of the Notes plus accrued and unpaid interest thereon into the securities issued in the Equity Financing at a conversion price equal to the price paid to the Company by the underwriters for such securities, net of the underwriting discount. | As of September 30, 2019, $2,030,378 of principal and accrued and unpaid interest was outstanding on the February Note. | ||||
Principal amount | $ 2,000,000 | |||||
Commitment fee percentage | 2.00% | |||||
Lender total value | $ 40,000 | |||||
Mr. Heiser [Member] | ||||||
Promissory Notes (Textual) | ||||||
Commitment letters aggregate amounts | $ 1,000,000 | |||||
Interest rate | 18.03% | |||||
Issuance of common stock | 602,974 | |||||
Issuance of warrants | 301,487 |
Loan Payable under Credit Agr_3
Loan Payable under Credit Agreement (Details) | Sep. 30, 2019USD ($) |
Required Covenant [Member] | |
Short-term Debt [Line Items] | |
Equity Book Value not less than | $ 8,000,000 |
Unrestricted Cash greater than | $ 1,500,000 |
Consolidated Total Debt to Equity Book Value ratio not to exceed | 4.75 |
Actual Position [Member] | |
Short-term Debt [Line Items] | |
Equity Book Value not less than | $ 10,628,126 |
Unrestricted Cash greater than | $ 3,172,362 |
Consolidated Total Debt to Equity Book Value ratio not to exceed | 2.39 |
Loan Payable under Credit Agr_4
Loan Payable under Credit Agreement (Details Textual) - USD ($) | Apr. 01, 2019 | Jan. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Loan Payable Under Credit Agreement (Textual) | |||||||
Interest expense | $ 1,061,794 | $ 1,061,827 | $ 3,265,771 | $ 3,040,832 | |||
Description of credit facility | Upon 30 days' prior written notice from the applicable noteholder and the Company can prepay principal and interest at any time without penalty. | ||||||
Interest rate | 5.00% | ||||||
Outstanding balance Credit Agreement | 20,600,627 | 20,600,627 | |||||
Unamortized issuance costs | 367,346 | 367,346 | $ 164,752 | ||||
Credit Agreement [Member] | |||||||
Loan Payable Under Credit Agreement (Textual) | |||||||
Borrowed from lender | 32,500,000 | 32,500,000 | |||||
Interest expense | $ 725,702 | $ 689,667 | $ 2,415,231 | $ 2,103,891 | |||
Description of credit facility | The Commitment Termination Date was extended to February 28, 2021. | ||||||
Interest rate | 11.00% | 13.03% | 13.03% | ||||
Repayment of loan payable under credit agreement | $ 11,899,373 |
Capital Structure (Details)
Capital Structure (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2019 | |
Class of Warrant or Right [Line Items] | ||
Expense Recorded | $ 10,007,500 | |
Warrant [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrants Granted | 280,000 | |
Expense Recorded | $ 84,819 | |
Valuation Per Warrant | $ 0.30 | |
March 31, 2019 [Member] | Warrant [Member] | ||
Class of Warrant or Right [Line Items] | ||
Grant Date | Mar. 31, 2019 | |
Warrants Granted | 40,000 | |
Expense Recorded | $ 11,200 | |
Valuation Per Warrant | $ 0.28 | |
April 30, 2019 [Member] | Warrant [Member] | ||
Class of Warrant or Right [Line Items] | ||
Grant Date | Apr. 30, 2019 | |
Warrants Granted | 40,000 | |
Expense Recorded | $ 10,000 | |
Valuation Per Warrant | $ 0.25 | |
May 31, 2019 [Member] | Warrant [Member] | ||
Class of Warrant or Right [Line Items] | ||
Grant Date | May 31, 2019 | |
Warrants Granted | 40,000 | |
Expense Recorded | $ 10,000 | |
Valuation Per Warrant | $ 0.25 | |
June 30, 2019 [Member] | Warrant [Member] | ||
Class of Warrant or Right [Line Items] | ||
Grant Date | Jun. 30, 2019 | |
Warrants Granted | 40,000 | |
Expense Recorded | $ 12,000 | |
Valuation Per Warrant | $ 0.30 | |
July 31, 2019 [Member] | Warrant [Member] | ||
Class of Warrant or Right [Line Items] | ||
Grant Date | Jul. 31, 2019 | |
Warrants Granted | 40,000 | |
Expense Recorded | $ 14,904 | |
Valuation Per Warrant | $ 0.37 | |
August 31, 2019 [Member] | Warrant [Member] | ||
Class of Warrant or Right [Line Items] | ||
Grant Date | Aug. 31, 2019 | |
Warrants Granted | 40,000 | |
Expense Recorded | $ 14,884 | |
Valuation Per Warrant | $ 0.37 | |
September 30, 2019 [Member] | Warrant [Member] | ||
Class of Warrant or Right [Line Items] | ||
Grant Date | Sep. 30, 2019 | |
Warrants Granted | 40,000 | |
Expense Recorded | $ 11,831 | |
Valuation Per Warrant | $ 0.30 |
Capital Structure (Details 1)
Capital Structure (Details 1) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 0.30 |
Series 2 Preferred Stock Warrants Outstanding | 439 |
10.00 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 10 |
Common Stock Warrants Outstanding | 200,001 |
Series 2 Preferred Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 1 year |
5.50 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 5.50 |
Common Stock Warrants Outstanding | 177,304 |
Series 2 Preferred Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 2 years |
1.25 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1.25 |
Common Stock Warrants Outstanding | 6,965,184 |
Series 2 Preferred Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 4 years |
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 | 4 years |
1.76 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1.76 |
Common Stock Warrants Outstanding | 40,000 |
Series 2 Preferred Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 4 years |
2.00 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 2 |
Common Stock Warrants Outstanding | 40,000 |
Series 2 Preferred Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 4 years |
1.69 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1.69 |
Common Stock Warrants Outstanding | 40,000 |
Series 2 Preferred Stock Warrants Outstanding | |
Weighted Average Remaining Contractual Life | 4 years |
Capital Structure (Details Text
Capital Structure (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Jun. 30, 2016 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Jan. 30, 2018 | |
Capital Structure (Textual) | ||||||
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 | ||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||||
Warrants exercisable for shares of common stock | 5,750,000 | |||||
Warrant exercise price | $ 1.25 | |||||
Stated value, percentage | 5.00% | |||||
Issuance of warrants | $ 1,750 | |||||
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. | |||||
Conversion of preferred stock to common stock, shares | 86,323 | |||||
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 | ||||||
Capital Structure (Textual) | ||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Preferred stock, shares authorized (in shares) | 250,000 | 250,000 | ||||
Convertible preferred stock, stated value | $ 5 | $ 5 | ||||
Conversion of preferred stock to common stock, shares | (68,214) | |||||
Series 2 Convertible Preferred Stock [Member] | ||||||
Capital Structure (Textual) | ||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | |||||
Preferred stock, shares authorized (in shares) | 25,000 | |||||
Proceeds from sale of stock | $ 20,000,000 | |||||
Convertible preferred stock, shares issued upon conversion | 20,000 | |||||
Convertible preferred stock, stated value | $ 1,000 | |||||
Gross proceeds | $ 1,950,000 | |||||
Additional sale of shares | 1,952 | |||||
Cumulative accrued dividends | $ 7,783,368 | |||||
Description of warrants expiration | Initial exercise price of $1,250 per share, which expire seven years after the date of issuance. | |||||
Stated value, percentage | 10.00% | |||||
Series 2 Convertible Preferred Stock [Member] | Preferred Stock [Member] | ||||||
Capital Structure (Textual) | ||||||
Preferred stock, shares authorized (in shares) | 25,000 | |||||
Series 2 Convertible Preferred Stock [Member] | ||||||
Capital Structure (Textual) | ||||||
Conversion of preferred stock to common stock, shares | 257 | |||||
Series 1 Convertible Preferred Stock [Member] | ||||||
Capital Structure (Textual) | ||||||
Convertible preferred stock, terms of conversion, description | 68,214 shares of Series 1 Convertible Preferred Stock were converted into 86,323 shares of common stock during the six months ended September 30, 2019. As of September 30, 2019, there were 171,191 shares of Series 1 Convertible Preferred Stock outstanding, which are convertible into 216,637 shares of common stock. | |||||
Series 1 Convertible Preferred Stock [Member] | Preferred Stock [Member] | ||||||
Capital Structure (Textual) | ||||||
Preferred stock, shares authorized (in shares) | 250,000 | |||||
Convertible, conversion price per share | $ 1.26547 | |||||
Series 2 Convertible Preferred Stock [Member] | ||||||
Capital Structure (Textual) | ||||||
Conversion of preferred stock to common stock, shares | ||||||
Series 2 Convertible Preferred Stock [Member] | ||||||
Capital Structure (Textual) | ||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | |||||
Preferred stock, shares authorized (in shares) | 250,000 | |||||
Convertible preferred stock, stated value | $ 5 | |||||
Warrant [Member] | ||||||
Capital Structure (Textual) | ||||||
Conversion of preferred stock to common stock, shares | 439 | |||||
Exercise price of warrants | $ 0.30 | |||||
Series 2 preferred stock warrants outstanding | 439 | |||||
Warrants exercisable for shares of common stock | 5,750,000 | 1,055,184 | ||||
Description of warrants expiration | The warrants are immediately exercisable and expire five years from the date of issuance. | The warrants are exercisable at $1.25 per share of common stock and expire on September 28, 2023. | ||||
Warrant exercise price | $ 1.25 | $ 1.25 | ||||
Issuance of warrants | $ 40,000 | |||||
Warrant [Member] | Consultant [Member] | ||||||
Capital Structure (Textual) | ||||||
Description of warrants expiration | The warrants are immediately exercisable and expire following the close of business on June 30, 2023. | |||||
Warrant exercise price | $ 1.25 | |||||
Valuation Expenses | $ 84,819 | |||||
Warrant. description | If the closing share price on the last day of the month exceeds $1.25, then such exercise price will be 110% of the closing share price. |
Stock Options (Details)
Stock Options (Details) - Employee Stock Option [Member] | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Number of options | |
Outstanding Balance | shares | 620,900 |
Granted | shares | 1,334,851 |
Forfeited | shares | (174,933) |
Expired | shares | (25,000) |
Outstanding Balance | shares | 1,755,818 |
Vested and exercisable | shares | 803,126 |
Weighted average exercise price | |
Outstanding Balance | $ / shares | $ 3.75 |
Granted | $ / shares | 0.85 |
Forfeited | $ / shares | 1.36 |
Expired | $ / shares | 6.20 |
Outstanding Balance | $ / shares | 1.75 |
Vested and exercisable | $ / shares | $ 2.64 |
Weighted average contractual term (years) | |
Outstanding at September 30, 2019 | 8 years 9 months 29 days |
Vested and exercisable | 8 years 2 months 5 days |
Aggregate intrinsic value | |
Forfeited | $ | $ 100,087 |
Outstanding at September 30, 2019 | $ | 952,494 |
Vested and exercisable at September 30, 2019 | $ | |
Vested and exercisable and expected to vest thereafter | $ | $ 334,420 |
Stock Options (Details 1)
Stock Options (Details 1) - Employee Stock Option [Member] | 9 Months Ended |
Sep. 30, 2019$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price | $ 0.85 |
Expected life | 6 years 9 months 18 days |
Expected volatility | 63.00% |
Dividend yield | 0.00% |
Risk-free interest rate | 2.40% |
Stock Options (Details Textual)
Stock Options (Details Textual) - USD ($) | May 02, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Apr. 26, 2018 |
Stock Options (Textual) | ||||||
Weighted average grant date fair value of options granted | $ 0.52 | |||||
Unrecognized compensation cost related to non-vested options | $ 317,915 | |||||
Weighted average period | 11 months 4 days | |||||
Compensation expense | $ 117,134 | $ 28,544 | $ 530,724 | $ 101,025 | ||
Omnibus Equity Compensation Plan One [Member] | ||||||
Stock Options (Textual) | ||||||
Common shares authorized for issuance (in shares) | 307,000 | |||||
Omnibus Equity Compensation Plan [Member] | ||||||
Stock Options (Textual) | ||||||
Issuance of shares | 1,057,000 | |||||
Common shares authorized for issuance (in shares) | 750,000 | |||||
Stock Options [Member] | ||||||
Stock Options (Textual) | ||||||
Stock options granted period, description | (a) the total number of shares available for issuance under the 2018 Plan by 1,000,000 shares and (b) the number of shares available for issuance as "incentive stock options" within the meaning of Internal Revenue Code Section 422 by 1,000,000 shares. | 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. |
Income Taxes (Details)
Income Taxes (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Income Taxes (Textual) | |
Operating loss carryforwards expiration period, description | Offset future taxable income which expire from 2024 to 2037. NOL's created after January 1, 2018 do not expire, but are limited. |
State and Local Jurisdiction [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | $ 18,600,000 |
Federal [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | $ 75,400,000 |