Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 06, 2020 | |
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 | Mar. 31, 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
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 Common Stock, Shares Outstanding | 21,351,643 | |
Entity File Number | 001-37945 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State Country Code | DE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Cash | $ 5,454,520 | $ 6,868,472 |
Accounts receivable, net | 8,459,944 | 8,272,332 |
Prepaid expenses | 760,610 | 672,242 |
Lease merchandise, net | 29,898,676 | 31,063,104 |
Total current assets | 44,573,750 | 46,876,150 |
PROPERTY AND EQUIPMENT, net | 5,414,740 | 5,260,407 |
OTHER ASSETS, net | 74,623 | 78,335 |
Total assets | 50,063,113 | 52,214,892 |
CURRENT LIABILITIES: | ||
Accounts payable | 3,161,491 | 4,567,889 |
Accrued payroll and related taxes | 293,004 | 513,267 |
Loan payable under credit agreement to beneficial shareholder, net of $16,244 at 2020 of unamortized issuance costs | 2,294,829 | |
Promissory notes to related parties, net of $1,333 at 2020 and $5,333 at 2019 of unamortized issuance costs, including accrued interest | 1,212,777 | 1,067,740 |
Accrued expenses | 1,600,988 | 1,372,901 |
Lease liability - current portion | 129,203 | 27,726 |
Total current liabilities | 8,692,292 | 7,549,523 |
Loan payable under credit agreement to beneficial shareholder, net of $178,687 at 2020 and $281,138 at 2019 of unamortized issuance costs and current portion | 25,243,117 | 28,904,738 |
Promissory notes to related parties, net of $20,690 at 2020 and $24,828 at 2019 of unamortized issuance costs and current portion | 3,729,310 | 3,725,172 |
Lease liabilities less current portion | 2,031,370 | 2,067,184 |
Total liabilities | 39,696,089 | 42,246,617 |
STOCKHOLDERS' EQUITY | ||
Series 1 Convertible Preferred Stock, $0.001 par value - authorized 250,000 shares, issued and outstanding 171,191 shares at $5.00 stated value | 855,955 | 855,955 |
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 21,351,643 shares at 2020 and 17,783,960 shares at 2019 | 2,135 | 1,779 |
Additional paid in capital | 35,660,429 | 35,313,721 |
Accumulated deficit | (48,103,495) | (48,155,180) |
Total stockholders' equity | 10,367,024 | 9,968,275 |
Total liabilities and stockholders' equity | $ 50,063,113 | $ 52,214,892 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Loan payable unamortized issuance costs | $ 16,244 | |
Promissory notes to related parties net of unamortized issuance costs | 1,333 | 5,333 |
Loan payable unamortized issuance costs and current portion | 178,687 | 281,138 |
Promissory notes to related parties net unamortized issuance costs and current portion | $ 20,690 | $ 24,828 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 21,351,643 | 17,783,960 |
Common stock, shares outstanding | 21,351,643 | 17,783,960 |
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 | 171,191 |
Convertible preferred stock, shares outstanding | 171,191 | 171,191 |
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 | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues: | ||
Lease revenues and fees, net | $ 23,697,705 | $ 21,784,779 |
Lease merchandise sold | 1,145,042 | 946,618 |
Total revenues | 24,842,747 | 22,731,397 |
Costs and expenses: | ||
Cost of lease revenues, consisting of depreciation and impairment of lease merchandise | 16,196,949 | 15,277,939 |
Cost of lease merchandise sold | 630,781 | 565,007 |
Marketing | 1,031,145 | 848,546 |
Salaries and benefits | 2,548,869 | 1,758,087 |
Operating expenses | 3,171,692 | 2,596,282 |
Total costs and expenses | 23,579,436 | 21,045,861 |
Operating income | 1,263,311 | 1,685,536 |
Interest expense including amortization of debt issuance costs | 1,211,626 | 1,181,993 |
Net Income | 51,685 | 503,543 |
Dividends on Series 2 Convertible Preferred Shares | 609,717 | 609,168 |
Deemed dividend from exchange offer of warrants | 713,212 | |
Net loss attributable to common shareholders | $ (1,271,244) | $ (105,625) |
Basic and diluted (loss) per common share: | ||
Basic and diluted | $ (0.06) | $ (0.01) |
WEIGHTED AVERAGE COMMON SHARES: | ||
Basic and diluted | 19,903,435 | 17,650,847 |
Consolidated Statements of Chan
Consolidated Statements 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, 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 | 25,529 | 25,529 | ||||
Issuance of warrants in connection with consulting agreement | 11,200 | 11,200 | ||||
Refund of costs related to equity raise | 13,147 | 13,147 | ||||
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 | 503,543 | 503,543 | ||||
Balance at Mar. 31, 2019 | $ 855,955 | $ 21,952,000 | $ 1,767 | 34,465,425 | (48,229,052) | 9,046,095 |
Balance, shares at Mar. 31, 2019 | 171,191 | 21,952 | 17,666,193 | |||
Balance at Dec. 31, 2019 | $ 855,955 | $ 21,952,000 | $ 1,779 | 35,313,721 | (48,155,180) | 9,968,275 |
Balance, shares at Dec. 31, 2019 | 171,191 | 21,952 | 17,783,960 | |||
Provision for compensation expense related to stock options | 171,815 | 171,815 | ||||
Issuance of warrants in connection with consulting agreement | 43,999 | 43,999 | ||||
Exercise of warrants into common stock | $ 10 | 131,240 | 131,250 | |||
Exercise of warrants into common stock, shares | 105,000 | |||||
Exchange offer of warrants | $ 346 | (346) | ||||
Exchange offer of warrants, shares | 3,462,683 | |||||
Net income | 51,685 | 51,685 | ||||
Balance at Mar. 31, 2020 | $ 855,955 | $ 21,952,000 | $ 2,135 | $ 35,660,429 | $ (48,103,495) | $ 10,367,024 |
Balance, shares at Mar. 31, 2020 | 171,191 | 21,952 | 21,351,643 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 51,685 | $ 503,543 |
Adjustments to reconcile net income/(loss) to net cash provided by (used in) operating activities: | ||
Depreciation and impairment of lease merchandise | 16,196,949 | 15,277,939 |
Other depreciation and amortization | 554,359 | 584,968 |
Compensation expense related to issuance of stock options and warrants | 215,814 | 36,729 |
Provision for doubtful accounts | 7,682,927 | 7,344,944 |
Interest in kind added to promissory notes balance | 141,038 | 167,119 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (7,870,539) | (7,479,319) |
Prepaid expenses and other | (87,873) | (17,624) |
Lease merchandise | (15,032,521) | (11,095,183) |
Security deposits | 2,943 | (60,000) |
Accounts payable | (1,406,398) | (5,211,226) |
Accrued payroll and related taxes | (220,263) | (197,565) |
Accrued expenses | 330,408 | (320,979) |
Net cash provided by (used in) operating activities | 558,529 | (466,654) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment, including capitalized software costs | (646,414) | (553,184) |
Net cash used in investing activities | (646,414) | (553,184) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Principal payment under finance lease obligation | (1,515) | |
Refund of equity issuance related costs | 13,147 | |
Proceeds from exercise of warrants | 131,250 | |
Proceeds from promissory notes, net of fees | 2,940,000 | |
Proceeds from loan payable under credit agreement | 1,900,000 | 1,241,328 |
Repayment of loan payable under credit agreement | (3,353,000) | (6,665,989) |
Repayment of installment loan | (2,802) | (2,802) |
Net cash used in financing activities | (1,326,067) | (2,474,316) |
DECREASE IN CASH | (1,413,952) | (3,494,154) |
CASH, beginning of period | 6,868,472 | 6,141,210 |
CASH, end of period | 5,454,520 | 2,647,056 |
Supplemental cash flow information: | ||
Interest paid | 985,763 | 993,544 |
Deemed dividend from exchange offer of warrants | 713,212 | |
Conversion of preferred stock to common stock | $ 341,070 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
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, 2019. The consolidated balance sheet as of December 31, 2019 contained herein has been derived from audited financial statements. |
Business
Business | 3 Months Ended |
Mar. 31, 2020 | |
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 | 3 Months Ended |
Mar. 31, 2020 | |
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 - March 31, December 31, Accounts receivable $ 20,687,556 $ 18,249,273 Allowance for doubtful accounts (12,227,612 ) (9,976,941 ) Accounts receivable, net $ 8,459,944 $ 8,272,332 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. Accounts receivable balances charged off against the allowance were $5,432,256 for the three months ended March 31, 2020 and $5,029,904 for the three months ended March 31, 2019. Three Months Ended Year Ended Beginning balance $ 9,976,941 $ 3,754,306 Provision 7,682,927 34,838,046 Accounts written off (5,432,256 ) (28,615,411 ) Ending balance $ 12,227,612 $ 9,976,941 Lease Merchandise - The net leased merchandise balances consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, Lease merchandise at cost $ 49,090,635 $ 46,807,570 Accumulated depreciation (16,901,851 ) (13,518,181 ) Impairment reserve (2,290,108 ) (2,226,285 ) Lease merchandise, net $ 29,898,676 $ 31,063,104 Lease merchandise at cost represents the undepreciated cost of rental merchandise at the time of purchase. Deferred Debt Issuance Costs - Debt issuance costs of $60,000 incurred in conjunction with the subordinated Promissory Notes entered into on January 25, 2019 and February 19, 2019 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 $8,139 for the three months ended March 31, 2020 and $5,425 for the three months ended March 31, 2019. 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 three months ended March 31, 2020 and the three months ended March 31, 2019, 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 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 induced conversion of warrants. Three Months ended March 31, 2020 2019 Series 1 Convertible Preferred Stock 226,366 216,637 Series 2 Convertible Preferred Stock 5,845,695 5,639,745 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 116,903 112,785 Common Stock Options 2,419,818 605,400 Common Stock Warrants 1,752,488 7,222,489 10,361,270 13,797,056 The following table sets forth the computation of basic and diluted earnings per share: Three Months ended March 31, 2020 2019 Numerator Net income $ 51,685 $ 503,543 Convertible Series 2 Preferred Share dividends (609,717 ) (609,168 ) Deemed dividend from exchange offer of warrants (713,212 ) - Numerator for basic and diluted EPS $ (1,271,244 ) $ (105,625 ) Denominator Denominator for basic and diluted EPS - weighted average shares 19,903,435 17,650,847 Basic EPS $ (0.06 ) $ (0.01 ) Diluted EPS $ (0.06 ) $ (0.01 ) 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. 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 March 31, 2020, and 2019, 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. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
LEASES | 4. LEASES Lease Commitments In February 2016, the FASB issued ASU No. 2016-02, Leases as amended ("Topic 842"), which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Under Topic 842, lessees are 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 determined that the new standard will not materially impact the timing of revenue recognition. The new standard resulted in the Company classifying bad debt expense incurred as a reduction of lease revenue and fees within the consolidated statement of operations including retrospective presentation of prior year financial information. As a result of the change in presentation, the breakout of lease revenues and fees, net of lessor bad debt expense, that ties the consolidated statements of operations is shown below: Three Months ended March 31, 2020 2019 Lease billings and accruals $ 31,380,632 $ 29,129,723 Provision for doubtful accounts 7,682,927 7,344,944 Lease revenues and fees $ 23,697,705 $ 21,784,779 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. In August 2017, FlexShopper entered into a 12-month lease with two additional three-year options for retail store space in West Palm Beach, Florida. In April 2018, FlexShopper exercised its option to extend the term of the lease to September 30, 2021. In January 2019, FlexShopper entered into a 108-month lease with an option for one additional five-year term for 21,622 square feet of office space in Boca Raton, FL to accommodate FlexShopper's business and its employees (the "January 2019 Lease"). The monthly rent for this space is approximately $31,500 with annual three percent increases throughout the initial 108-month lease term beginning on the anniversary of the commencement date. The rental expense for the three months ended March 31, 2020 and 2019 was approximately $167,000 and $99,000, respectively. At March 31, 2020, the future minimum annual lease payments are approximately as follows: 2020 $ 305,000 2021 428,000 2022 419,000 2023 429,000 2024 437,000 Thereafter 1,616,000 $ 3,634,000 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 March 31, 2020, is shown in the table below. Supplemental balance sheet information related to leases is as follows: Balance Sheet Classification March 31, December 31, Assets Operating Lease Asset Property and Equipment, net $ 1,813,072 $ 1,847,932 Finance Lease Asset Property and Equipment, net 33,322 31,299 Total Lease Assets $ 1,846,394 $ 1,879,231 Liabilities Operating Lease Liability - current portion Current Lease Liabilities $ 122,221 $ 22,088 Finance Lease Liability - current portion Current Lease Liabilities 6,982 5,638 Operating Lease Liability- net of current portion Long Term Lease Liabilities 2,003,638 2,040,576 Finance Lease Liability - net of current portion Long Term Lease Liabilities 27,732 26,608 Total Lease Liabilities $ 2,160,573 $ 2,094,910 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 leases: Weighted Average Discount Rate Weighted Average Remaining Lease Term Operating Leases 13.44 % 8 Finance Leases 13.30 % 4 Upon adoption of Topic 842, discount rates for existing operating leases were established as of January 1, 2019. The discount rate for the new operating lease for space in 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 over the lease term within interest expense and amortization 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 $106,880 for the three months ended March 31, 2020. Supplemental cash flow information related to operating leases is as follows: Three Months ended March 31, 2020 2019 Cash payments for operating leases $ 6,864 $ 66,000 Cash payments for finance leases 2,661 - New operating lease asset obtained in exchange for lease liabilities - 191,000 New finance lease asset obtained in exchange for lease liabilities 4,033 - Below is a summary of undiscounted operating lease liabilities as of March 31, 2020. 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 2020 $ 296,813 2021 416,998 2022 407,450 2023 419,674 2024 432,264 2025 and thereafter 1,615,830 Total undiscounted cash flows 3,589,029 Less: interest (1,463,170 ) Present value of lease liabilities $ 2,125,859 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 March 31, 2020. 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 2020 $ 8,388 2021 11,184 2022 11,184 2023 9,699 2024 4,782 Total undiscounted cash flows 45,237 Less: interest (10,523 ) Present value of lease liabilities $ 34,714 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT Property and equipment consist of the following: Estimated March 31, December 31, Furniture, fixtures and vehicle 2-5 years $ 99,429 $ 95,671 Website and internal use software 3 years 10,724,091 10,123,830 Computers and software 3-7 years 639,341 596,946 11,462,861 10,816,447 Less: accumulated depreciation and amortization (7,894,515 ) (7,435,271 ) Right of use assets, net 1,846,394 1,879,231 $ 5,414,740 $ 5,260,407 Depreciation and amortization expense were $459,244 and $523,934 for the three months ended March 31, 2020 and 2019, respectively. |
Promissory Notes
Promissory Notes | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020, $1,828,886 of principal and accrued and unpaid interest was outstanding on NRNS's Note. January 2019 Note - February 2019 Note - Amounts payable under the promissory notes are as follows: Debt Principal Interest 2020 $ 1,000,000 $ 214,110 2021 $ 3,750,000 $ - |
Loan Payable Under Credit Agree
Loan Payable Under Credit Agreement | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020, amounts borrowed bear interest at 11.70%. The Company had $4,767,123 available under the Credit Agreement as of March 31, 2020. 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 March 31, 2020, follows: March 31, 2020 Required Covenant Actual Position Equity Book Value not less than $ 8,000,000 $ 10,367,024 Unrestricted Cash greater than 1,500,000 5,454,520 Consolidated Total Debt to Equity Book Value ratio not to exceed 4.75 3.13 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. |
Capital Structure
Capital Structure | 3 Months Ended |
Mar. 31, 2020 | |
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 $0.001 par value preferred stock. 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 determines the rights and preferences of the Company's preferred stock. ● Series 1 Convertible Preferred Stock - As of March 31, 2020, each share of Series 1 Convertible Preferred Stock was convertible into 1.32230 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. As of March 31, 2020, there were 171,191 shares of Series 1 Convertible Preferred Stock outstanding, which are convertible into 226,366 shares of common stock. ● Series 2 Convertible Preferred Stock - 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 March 31, 2020 totaled approximately $9,002,801. As of March 31, 2020, each Series 2 Preferred Share was convertible into approximately 266 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 "Public Warrants"). The warrants were immediately exercisable and expire five years from the date of issuance. The warrants were 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. 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. In February 2020, this agreement was extended for an additional six months through August 31, 2020. During the three months ended March 31, 2020, the Company recorded an expense of $43,999 based on a weighted average valuation of $0.37 per warrant. Warrants Expense Valuation Grant Date Granted Recorded Per Warrant January 31, 2020 40,000 $ 16,503 $ 0.41 February 29, 2020 40,000 $ 18,727 $ 0.47 March 31, 2020 40,000 $ 8,769 $ 0.22 120,000 $ 43,999 $ 0.37 The following table summarizes information about outstanding stock warrants as of March 31, 2020, all of which are exercisable: Common Series 2 Preferred Weighted Average Exercise Stock Warrants Stock Warrants Remaining Price Outstanding Outstanding Contractual Life $ 5.50 177,304 2 years $ 1.25 1,215,184 3 years $ 1.76 40,000 3 years $ 2.00 40,000 3 years $ 1.69 40,000 3 years $ 1.54 40,000 3 years $ 2.01 40,000 3 years $ 2.78 40,000 3 years $ 2.53 40,000 3 years $ 2.93 40,000 3 years $ 1.40 40,000 3 years $ 1,250 - 439 3 years 1,752,488 439 |
Stock Options
Stock Options | 3 Months Ended |
Mar. 31, 2020 | |
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 three months ended March 31, 2020 and March 31, 2019 is as follows: Number of Weighted Weighted Aggregate Outstanding at January 1, 2020 2,004,318 $ 1.72 Granted 425,000 2.53 Forfeited (9,500 ) 1.17 4,453 Expired - Outstanding at March 31, 2020 2,419,818 $ 1.86 8.05 $ 539,949 Vested and exercisable at March 31, 2020 853,485 $ 2.49 7.77 $ 226,328 Outstanding at January 1, 2019 620,900 $ 3.75 Granted 29,000 0.87 Forfeited (19,500 ) 1.27 $ 788 Expired (25,000 ) 6.20 $ Outstanding at March 31, 2019 605,400 $ 3.59 7.92 4,408 Vested and exercisable at March 31, 2019 304,900 $ 3.59 6.58 The weighted average grant date fair value of options granted during the three-month period ended March 31, 2020 and March 31, 2019 was $1.39 and $0.34 per share respectively. 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: Three Months ended March 31, 2020 2019 Exercise price $ 2.53 $ 0.87 Expected life 5.1 years 5.5 years Expected volatility 64 % 38 % Dividend yield 0 % 0 % Risk-free interest rate 1.69 % 2.50 % 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 $171,815 for the three months ended March 31, 2020, and $25,529 for the three months ended March 31, 2019. Unrecognized compensation cost related to non-vested options at March 31, 2020 amounted to approximately $912,915, which is expected to be recognized over a weighted average period of 3.44 years. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 10. INCOME TAXES As of March 31, 2020, the Company had federal net operating loss carryforwards ("NOL") of approximately $66,900,000 and state net operating loss carryforwards of approximately $6,000,000 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 March 31, 2020 does not satisfy the realization criteria and has recorded a full valuation allowance to offset the deferred tax asset. |
Exchange Offer of Warrants
Exchange Offer of Warrants | 3 Months Ended |
Mar. 31, 2020 | |
Warrants [Abstract] | |
EXCHANGE OFFER OF WARRANTS | 11. EXCHANGE OFFER OF WARRANTS On February 4, 2020, the Company completed an exchange offer relating to outstanding public warrants, in which the holders of the public warrants were offered 0.62 shares of common stock for each outstanding warrant tendered (the "Warrant Exchange Offer"). In total, 5,351,290 warrants were exchanged for 3,317,812 shares in accordance with the Warrant Exchange Offer. On February 19, 2020, the Company exchanged all remaining untendered public warrants for common stock at a rate of 0.56 shares per public warrant in accordance with the terms of the Warrant Agreement (the "Mandatory Conversion of Warrants"). In total 258,610 warrants were exchanged for 144,871 shares in this transaction. As a result of this transaction, the Company recognized a deemed dividend of $713,212 resulting from the excess intrinsic value at the date of the exchange of the total issued common stock over the warrants. Also, on February 19, 2020, "FPAYW" was removed from listing on Nasdaq and deregistered under the Securities Exchange Act. |
Contingencies and other Uncerta
Contingencies and other Uncertainties | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES AND OTHER UNCERTAINTIES | 12. CONTINGENCIES AND OTHER UNCERTAINTIES The extent of the impact and effects of the recent outbreak of the coronavirus (COVID-19) on the operation and financial performance of our business will depend on future developments, including the duration and spread of the outbreak, the recovery time of the disrupted supply chains, or the uncertainty with respect to the accessibility of additional liquidity or capital markets, all of which are highly uncertain and cannot be predicted. If the demand for the Company's leases are impacted by this outbreak for an extended period, our results of operations may be materially adversely affected. |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | 13. COMMITMENTS The Company does not have any commitments other than real property leases (Note 4). |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS Paycheck Protection Program FlexShopper, LLC (the "Borrower") applied for and received a loan (the "Loan") from Customers Bank (the "Lender") in the principal amount of $1,914,100, pursuant to the Paycheck Protection Program (the "PPP") under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was enacted March 27, 2020. The Loan is evidenced by a promissory note (the "Note"), dated April 30, 2020, issued by the Borrower to the Lender. The Note matures on April 30, 2022, and bears interest at the rate of 1.00% per annum, payable monthly commencing on November 30, 2020, following an initial deferral period as specified under the PPP. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalty. Proceeds from the Loan will be available to the Borrower to fund designated expenses, including certain payroll costs, group health care benefits and other permitted expenses, in accordance with the PPP. Under the terms of the PPP, up to the entire sum of the principal amount and accrued interest may be forgiven to the extent the Loan proceeds are used for qualifying expenses as described in the CARES Act and applicable implementing guidance issued by the U.S. Small Business Administration under the PPP. The Company intends to cause the Borrower to use the entire Loan amount for designated qualifying expenses and to apply for forgiveness of the Loan in accordance with the terms of the PPP. Promissory note On April 30, 2020, FlexShopper, LLC and 122 Partners, LLC, as lender, agreed to extend the maturity date of the subordinated promissory note in the principal amount of $1,000,000, issued by FlexShopper, LLC pursuant to the subordinated debt financing letter agreement, dated January 25, 2019, to April 30, 2021. For more information, see Note 6 to Notes to Consolidated Financial Statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
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 - March 31, December 31, Accounts receivable $ 20,687,556 $ 18,249,273 Allowance for doubtful accounts (12,227,612 ) (9,976,941 ) Accounts receivable, net $ 8,459,944 $ 8,272,332 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. Accounts receivable balances charged off against the allowance were $5,432,256 for the three months ended March 31, 2020 and $5,029,904 for the three months ended March 31, 2019. Three Months Ended Year Ended Beginning balance $ 9,976,941 $ 3,754,306 Provision 7,682,927 34,838,046 Accounts written off (5,432,256 ) (28,615,411 ) Ending balance $ 12,227,612 $ 9,976,941 |
Lease Merchandise | Lease Merchandise - The net leased merchandise balances consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, Lease merchandise at cost $ 49,090,635 $ 46,807,570 Accumulated depreciation (16,901,851 ) (13,518,181 ) Impairment reserve (2,290,108 ) (2,226,285 ) Lease merchandise, net $ 29,898,676 $ 31,063,104 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 $60,000 incurred in conjunction with the subordinated Promissory Notes entered into on January 25, 2019 and February 19, 2019 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 $8,139 for the three months ended March 31, 2020 and $5,425 for the three months ended March 31, 2019. |
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 three months ended March 31, 2020 and the three months ended March 31, 2019, 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 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 induced conversion of warrants. Three Months ended March 31, 2020 2019 Series 1 Convertible Preferred Stock 226,366 216,637 Series 2 Convertible Preferred Stock 5,845,695 5,639,745 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 116,903 112,785 Common Stock Options 2,419,818 605,400 Common Stock Warrants 1,752,488 7,222,489 10,361,270 13,797,056 The following table sets forth the computation of basic and diluted earnings per share: Three Months ended March 31, 2020 2019 Numerator Net income $ 51,685 $ 503,543 Convertible Series 2 Preferred Share dividends (609,717 ) (609,168 ) Deemed dividend from exchange offer of warrants (713,212 ) - Numerator for basic and diluted EPS $ (1,271,244 ) $ (105,625 ) Denominator Denominator for basic and diluted EPS - weighted average shares 19,903,435 17,650,847 Basic EPS $ (0.06 ) $ (0.01 ) Diluted EPS $ (0.06 ) $ (0.01 ) |
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. |
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 March 31, 2020, and 2019, 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of accounts receivable | March 31, December 31, Accounts receivable $ 20,687,556 $ 18,249,273 Allowance for doubtful accounts (12,227,612 ) (9,976,941 ) Accounts receivable, net $ 8,459,944 $ 8,272,332 |
Schedule of allowance for doubtful accounts | Three Months Ended Year Ended Beginning balance $ 9,976,941 $ 3,754,306 Provision 7,682,927 34,838,046 Accounts written off (5,432,256 ) (28,615,411 ) Ending balance $ 12,227,612 $ 9,976,941 |
Schedule of net leased merchandise | March 31, December 31, Lease merchandise at cost $ 49,090,635 $ 46,807,570 Accumulated depreciation (16,901,851 ) (13,518,181 ) Impairment reserve (2,290,108 ) (2,226,285 ) Lease merchandise, net $ 29,898,676 $ 31,063,104 |
Schedule of anti-dilutive securities excluded from computation of earnings per share | Three Months ended March 31, 2020 2019 Series 1 Convertible Preferred Stock 226,366 216,637 Series 2 Convertible Preferred Stock 5,845,695 5,639,745 Series 2 Convertible Preferred Stock issuable upon exercise of warrants 116,903 112,785 Common Stock Options 2,419,818 605,400 Common Stock Warrants 1,752,488 7,222,489 10,361,270 13,797,056 |
Schedule of basic and diluted earnings per share | Three Months ended March 31, 2020 2019 Numerator Net income $ 51,685 $ 503,543 Convertible Series 2 Preferred Share dividends (609,717 ) (609,168 ) Deemed dividend from exchange offer of warrants (713,212 ) - Numerator for basic and diluted EPS $ (1,271,244 ) $ (105,625 ) Denominator Denominator for basic and diluted EPS - weighted average shares 19,903,435 17,650,847 Basic EPS $ (0.06 ) $ (0.01 ) Diluted EPS $ (0.06 ) $ (0.01 ) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Schedule of lease revenues and fees | Three Months ended March 31, 2020 2019 Lease billings and accruals $ 31,380,632 $ 29,129,723 Provision for doubtful accounts 7,682,927 7,344,944 Lease revenues and fees $ 23,697,705 $ 21,784,779 |
Schedule of future minimum annual lease payments | 2020 $ 305,000 2021 428,000 2022 419,000 2023 429,000 2024 437,000 Thereafter 1,616,000 $ 3,634,000 |
Schedule of balance sheet information related to leases | Balance Sheet Classification March 31, December 31, Assets Operating Lease Asset Property and Equipment, net $ 1,813,072 $ 1,847,932 Finance Lease Asset Property and Equipment, net 33,322 31,299 Total Lease Assets $ 1,846,394 $ 1,879,231 Liabilities Operating Lease Liability - current portion Current Lease Liabilities $ 122,221 $ 22,088 Finance Lease Liability - current portion Current Lease Liabilities 6,982 5,638 Operating Lease Liability- net of current portion Long Term Lease Liabilities 2,003,638 2,040,576 Finance Lease Liability - net of current portion Long Term Lease Liabilities 27,732 26,608 Total Lease Liabilities $ 2,160,573 $ 2,094,910 |
Schedule of weighted-average discount rate and weighted-average remaining lease term | Weighted Average Discount Rate Weighted Average Remaining Lease Term Operating Leases 13.44 % 8 Finance Leases 13.30 % 4 |
Schedule of supplemental cash flow information | Three Months ended March 31, 2020 2019 Cash payments for operating leases $ 6,864 $ 66,000 Cash payments for finance leases 2,661 - New operating lease asset obtained in exchange for lease liabilities - 191,000 New finance lease asset obtained in exchange for lease liabilities 4,033 - |
Schedule of undiscounted operating lease liabilities | Operating Leases 2020 $ 296,813 2021 416,998 2022 407,450 2023 419,674 2024 432,264 2025 and thereafter 1,615,830 Total undiscounted cash flows 3,589,029 Less: interest (1,463,170 ) Present value of lease liabilities $ 2,125,859 |
Schedule of undiscounted finance lease liabilities | Finance Leases 2020 $ 8,388 2021 11,184 2022 11,184 2023 9,699 2024 4,782 Total undiscounted cash flows 45,237 Less: interest (10,523 ) Present value of lease liabilities $ 34,714 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Estimated March 31, December 31, Furniture, fixtures and vehicle 2-5 years $ 99,429 $ 95,671 Website and internal use software 3 years 10,724,091 10,123,830 Computers and software 3-7 years 639,341 596,946 11,462,861 10,816,447 Less: accumulated depreciation and amortization (7,894,515 ) (7,435,271 ) Right of use assets, net 1,846,394 1,879,231 $ 5,414,740 $ 5,260,407 |
Promissory Notes (Tables)
Promissory Notes (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of amounts payable under the promissory notes | Debt Principal Interest 2020 $ 1,000,000 $ 214,110 2021 $ 3,750,000 $ - |
Loan Payable Under Credit Agr_2
Loan Payable Under Credit Agreement (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of covenant requirements, and FlexShopper's actual results | March 31, 2020 Required Covenant Actual Position Equity Book Value not less than $ 8,000,000 $ 10,367,024 Unrestricted Cash greater than 1,500,000 5,454,520 Consolidated Total Debt to Equity Book Value ratio not to exceed 4.75 3.13 |
Capital Structure (Tables)
Capital Structure (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of weighted average valuation | Warrants Expense Valuation Grant Date Granted Recorded Per Warrant January 31, 2020 40,000 $ 16,503 $ 0.41 February 29, 2020 40,000 $ 18,727 $ 0.47 March 31, 2020 40,000 $ 8,769 $ 0.22 120,000 $ 43,999 $ 0.37 |
Schedule of outstanding stock warrants | Common Series 2 Preferred Weighted Average Exercise Stock Warrants Stock Warrants Remaining Price Outstanding Outstanding Contractual Life $ 5.50 177,304 2 years $ 1.25 1,215,184 3 years $ 1.76 40,000 3 years $ 2.00 40,000 3 years $ 1.69 40,000 3 years $ 1.54 40,000 3 years $ 2.01 40,000 3 years $ 2.78 40,000 3 years $ 2.53 40,000 3 years $ 2.93 40,000 3 years $ 1.40 40,000 3 years $ 1,250 - 439 3 years 1,752,488 439 |
Stock Options (Tables)
Stock Options (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of information about stock options | Number of Weighted Weighted Aggregate Outstanding at January 1, 2020 2,004,318 $ 1.72 Granted 425,000 2.53 Forfeited (9,500 ) 1.17 4,453 Expired - Outstanding at March 31, 2020 2,419,818 $ 1.86 8.05 $ 539,949 Vested and exercisable at March 31, 2020 853,485 $ 2.49 7.77 $ 226,328 Outstanding at January 1, 2019 620,900 $ 3.75 Granted 29,000 0.87 Forfeited (19,500 ) 1.27 $ 788 Expired (25,000 ) 6.20 $ Outstanding at March 31, 2019 605,400 $ 3.59 7.92 4,408 Vested and exercisable at March 31, 2019 304,900 $ 3.59 6.58 |
Schedule of option input into a Black Scholes option pricing model | Three Months ended March 31, 2020 2019 Exercise price $ 2.53 $ 0.87 Expected life 5.1 years 5.5 years Expected volatility 64 % 38 % Dividend yield 0 % 0 % Risk-free interest rate 1.69 % 2.50 % |
Business (Details)
Business (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Business (Textual) | |
Limited liability percentage of FlexShopper, LLC | 100.00% |
Ownership percentage | 100.00% |
Future growth term | 12 months |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Accounts receivable | $ 20,687,556 | $ 18,249,273 |
Allowance for doubtful accounts | (12,227,612) | (9,976,941) |
Accounts receivable, net | $ 8,459,944 | $ 8,272,332 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||
Beginning balance | $ 9,976,941 | $ 3,754,306 | $ 3,754,306 |
Provision | 7,682,927 | 7,344,944 | 34,838,046 |
Accounts written off | (5,432,256) | $ (5,029,904) | (28,615,411) |
Ending balance | $ 12,227,612 | $ 9,976,941 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Lease merchandise at cost | $ 49,090,635 | $ 46,807,570 |
Accumulated depreciation | (16,901,851) | (13,518,181) |
Impairment reserve | (2,290,108) | (2,226,285) |
Lease merchandise, net | $ 29,898,676 | $ 31,063,104 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 10,361,270 | 13,797,056 |
Common Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 2,419,818 | 605,400 |
Common Stock Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 1,752,488 | 7,222,489 |
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 | 226,366 | 216,637 |
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 | 5,845,695 | 5,639,745 |
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 | 116,903 | 112,785 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator | ||
Net income | $ 51,685 | $ 503,543 |
Convertible Series 2 Preferred Share dividends | (609,717) | (609,168) |
Deemed dividend from exchange offer of warrants | (713,212) | |
Numerator for basic and diluted EPS | $ (1,271,244) | $ (105,625) |
Denominator | ||
Denominator for basic and diluted EPS - weighted average shares | 19,903,435 | 17,650,847 |
Basic EPS | $ (0.06) | $ (0.01) |
Diluted EPS | $ (0.06) | $ (0.01) |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Feb. 19, 2019 | Jan. 25, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies (Textual) | |||||
Amortization method | Straight-line method | ||||
Accounts receivable charged off against allowance | $ 5,432,256 | $ 5,029,904 | $ 28,615,411 | ||
Capitalized software costs | 600,261 | 547,044 | |||
Capitalized software amortization expense | $ 436,767 | 508,182 | |||
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 | $ 60,000 | $ 60,000 | |||
Intangible Assets, terms | 10 years | ||||
Tax benefits, description | 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. | ||||
Unrecognized tax benefits | |||||
Promissory Notes [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Amortization included in interest expense | 8,139 | 5,425 | |||
Credit Agreement [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Amortization included in interest expense | $ 86,208 | $ 54,840 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Lease billings and accruals | $ 31,380,632 | $ 29,129,723 |
Provision for doubtful accounts | 7,682,927 | 7,344,944 |
Lease revenues and fees | $ 23,697,705 | $ 21,784,779 |
Leases (Details 1)
Leases (Details 1) | Mar. 31, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 305,000 |
2021 | 428,000 |
2022 | 419,000 |
2023 | 429,000 |
2024 | 437,000 |
Thereafter | 1,616,000 |
Total | $ 3,634,000 |
Leases (Details 2)
Leases (Details 2) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Operating Lease Asset | $ 1,813,072 | $ 1,847,932 |
Finance Lease Asset | 33,322 | 31,299 |
Total Lease Assets | 1,846,394 | 1,879,231 |
Liabilities | ||
Operating Lease Liability - current portion | 122,221 | 22,088 |
Finance Lease Liability - current portion | 6,982 | 5,638 |
Operating Lease Liability- net of current portion | 2,003,638 | 2,040,576 |
Finance Lease Liability - net of current portion | 27,732 | 26,608 |
Total Lease Liabilities | $ 2,160,573 | $ 2,094,910 |
Leases (Details 3)
Leases (Details 3) | Mar. 31, 2020 |
Operating Leases [Member] | |
Weighted Average Discount Rate | 13.44% |
Weighted Average Remaining Lease Term (in years) | 8 years |
Finance Leases [Member] | |
Weighted Average Discount Rate | 13.30% |
Weighted Average Remaining Lease Term (in years) | 4 years |
Leases (Details 4)
Leases (Details 4) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Cash payments for operating leases | $ 6,864 | $ 66,000 |
Cash payments for finance leases | 2,661 | |
New operating lease asset obtained in exchange for lease liabilities | $ 191,000 | |
New finance lease asset obtained in exchange for lease liabilities | $ 4,033 |
Leases (Details 5)
Leases (Details 5) | Mar. 31, 2020USD ($) |
Operating Leases [Member] | |
2020 | $ 296,813 |
2021 | 416,998 |
2022 | 407,450 |
2023 | 419,674 |
2024 | 432,264 |
2025 and thereafter | 1,615,830 |
Total undiscounted cash flows | 3,589,029 |
Less: interest | (1,463,170) |
Present value of lease liabilities | 2,125,859 |
Finance Leases [Member] | |
2020 | 8,388 |
2021 | 11,184 |
2022 | 11,184 |
2023 | 9,699 |
2024 | 4,782 |
Total undiscounted cash flows | 45,237 |
Less: interest | (10,523) |
Present value of lease liabilities | $ 34,714 |
Leases (Details Textual)
Leases (Details Textual) | 1 Months Ended | 3 Months Ended | ||||
Jan. 31, 2019USD ($)ft² | Apr. 30, 2018 | Aug. 31, 2017 | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
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 | $ 106,880 | |||||
Operating lease liability | $ 191,001 | |||||
Operating lease assets | $ 191,001 | |||||
Rental expense | $ 167,000 | $ 99,000 | ||||
Description of leasing arrangements | FlexShopper exercised its option to extend the term of the lease to September 30, 2021. | |||||
Monthly rent | $ 31,500 | |||||
Term of lease | 108 months | 12 months | 12 months | |||
Area of land | ft² | 21,622 | |||||
Additional lease term | 5 years | |||||
Annual percentage | 3.00% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 11,462,861 | $ 10,816,447 |
Less: accumulated depreciation and amortization | (7,894,515) | (7,435,271) |
Right of use assets, net | 1,846,394 | 1,879,231 |
Property and equipment, net | 5,414,740 | 5,260,407 |
Furniture, fixtures and vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 99,429 | 95,671 |
Website and internal use software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 10,724,091 | 10,123,830 |
Estimated Useful Lives | 3 years | |
Computers and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 639,341 | $ 596,946 |
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 | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Property and Equipment (Textual) | ||
Depreciation and amortization expense | $ 459,244 | $ 523,934 |
Promissory Notes (Details)
Promissory Notes (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Debt Principal | $ 1,914,100 |
2020 [Member] | |
Debt Principal | 1,000,000 |
Interest | 214,110 |
2021 [Member] | |
Debt Principal | 3,750,000 |
Interest |
Promissory Notes (Details Textu
Promissory Notes (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | |||||
Apr. 30, 2020 | Aug. 29, 2019 | Feb. 19, 2019 | Jan. 25, 2019 | Sep. 30, 2018 | Jan. 30, 2018 | Mar. 31, 2020 | |
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. | ||||||
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 March 31, 2020, $1,828,886 of principal and accrued and unpaid interest was outstanding on NRNS's Note. | ||||||
Subsequent Event [Member] | |||||||
Debt instrument maturity date | Apr. 30, 2021 | ||||||
NRNS [Member] | |||||||
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 | 16.70% | ||||||
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 March 31, 2020, $2,090,156 of principal and accrued and unpaid interest was outstanding on the February Note. | |||||
Commitment fee percentage | 2.00% | ||||||
Lender total value | $ 40,000 | ||||||
Heiser [Member] | |||||||
Interest rate | 16.70% | ||||||
Issuance of common stock | 602,974 | ||||||
Chief Financial Officer [Member] | |||||||
Description of credit facility | Payment of the principal amount and accrued interest under the January 2019 Note was 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 | 16.70% | ||||||
Description of notes | As of March 31, 2020, $1,045,068 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 |
Loan Payable Under Credit Agr_3
Loan Payable Under Credit Agreement (Details) | Mar. 31, 2020USD ($) |
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 | $ 10,367,024 |
Unrestricted Cash greater than | $ 5,454,520 |
Consolidated Total Debt to Equity Book Value ratio not to exceed | 3.13 |
Loan Payable Under Credit Agr_4
Loan Payable Under Credit Agreement (Details Textual) - USD ($) | Apr. 01, 2019 | Jan. 30, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Loan Payable Under Credit Agreement (Textual) | |||||
Interest expense | $ 1,211,626 | $ 1,181,993 | |||
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. | ||||
Outstanding balance Credit Agreement | 27,732,877 | ||||
Unamortized issuance costs | 178,687 | $ 281,138 | |||
Credit Agreement [Member] | |||||
Loan Payable Under Credit Agreement (Textual) | |||||
Borrowed from lender | 32,500,000 | ||||
Interest expense | $ 901,530 | $ 953,910 | |||
Description of credit facility | The Commitment Termination Date was extended to February 28, 2021. | ||||
Interest rate | 11.00% | 11.70% | |||
Repayment of loan payable under credit agreement | $ 4,767,123 |
Capital Structure (Details)
Capital Structure (Details) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Warrants Granted | shares | 120,000 |
Expense Recorded | $ | $ 43,999 |
Valuation Per Warrant | $ / shares | $ 0.37 |
January 31, 2020 [Member] | |
Class of Warrant or Right [Line Items] | |
Grant Date | Jan. 31, 2020 |
Warrants Granted | shares | 40,000 |
Expense Recorded | $ | $ 16,503 |
Valuation Per Warrant | $ / shares | $ 0.41 |
February 29, 2020 [Member] | |
Class of Warrant or Right [Line Items] | |
Grant Date | Feb. 29, 2020 |
Warrants Granted | shares | 40,000 |
Expense Recorded | $ | $ 18,727 |
Valuation Per Warrant | $ / shares | $ 0.47 |
March 31, 2020 [Member] | |
Class of Warrant or Right [Line Items] | |
Grant Date | Mar. 31, 2020 |
Warrants Granted | shares | 40,000 |
Expense Recorded | $ | $ 8,769 |
Valuation Per Warrant | $ / shares | $ 0.22 |
Capital Structure (Details 1)
Capital Structure (Details 1) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 0.37 |
Common Stock Warrants Outstanding | 1,752,488 |
Series 2 Preferred Stock Warrants Outstanding | 439 |
Exercise Price 5.50 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 5.50 |
Common Stock Warrants Outstanding | 177,304 |
Weighted Average Remaining Contractual Life | 2 years |
Exercise Price 1.25 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1.25 |
Common Stock Warrants Outstanding | 1,215,184 |
Weighted Average Remaining Contractual Life | 3 years |
Exercise Price 1.76 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1.76 |
Common Stock Warrants Outstanding | 40,000 |
Weighted Average Remaining Contractual Life | 3 years |
Exercise Price 2.00 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 2 |
Common Stock Warrants Outstanding | 40,000 |
Weighted Average Remaining Contractual Life | 3 years |
Exercise Price 1.69 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1.69 |
Common Stock Warrants Outstanding | 40,000 |
Weighted Average Remaining Contractual Life | 3 years |
Exercise Price 1.54 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1.54 |
Common Stock Warrants Outstanding | 40,000 |
Weighted Average Remaining Contractual Life | 3 years |
Exercise Price 2.01 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 2.01 |
Common Stock Warrants Outstanding | 40,000 |
Weighted Average Remaining Contractual Life | 3 years |
Exercise Price 2.78 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 2.78 |
Common Stock Warrants Outstanding | 40,000 |
Weighted Average Remaining Contractual Life | 3 years |
Exercise Price 2.53 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 2.53 |
Common Stock Warrants Outstanding | 40,000 |
Weighted Average Remaining Contractual Life | 3 years |
Exercise Price 2.93 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 2.93 |
Common Stock Warrants Outstanding | 40,000 |
Weighted Average Remaining Contractual Life | 3 years |
Doller One Point Four Zero [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1.40 |
Common Stock Warrants Outstanding | 40,000 |
Weighted Average Remaining Contractual Life | 3 years |
Exercise Price 1,250 [Member] | |
Class of Warrant or Right [Line Items] | |
Exercise Price | $ / shares | $ 1,250 |
Common Stock Warrants Outstanding | |
Series 2 Preferred Stock Warrants Outstanding | 439 |
Weighted Average Remaining Contractual Life | 3 years |
Capital Structure (Details Text
Capital Structure (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Sep. 30, 2018 | Jun. 30, 2016 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Capital Structure (Textual) | |||||
Common stock, shares authorized | 40,000,000 | 40,000,000 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||
Outstanding principal percentage | 100.00% | ||||
Issuance of warrants | $ 131,250 | ||||
Preferred Stock [Member] | |||||
Capital Structure (Textual) | |||||
Preferred stock, par value | $ 0.001 | ||||
Preferred stock, shares authorized | 500,000 | ||||
Common Stock [Member] | |||||
Capital Structure (Textual) | |||||
Common stock, shares authorized | 40,000,000 | ||||
Common stock, par value | $ 0.0001 | ||||
Convertible preferred stock, terms of conversion, description | 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. | ||||
Series Two Convertible Preferred Stock [Member] | |||||
Capital Structure (Textual) | |||||
Description of warrants expiration | 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. | ||||
Series 1 Convertible Preferred Stock [Member] | |||||
Capital Structure (Textual) | |||||
Convertible preferred stock, terms of conversion, description | There were 171,191 shares of Series 1 Convertible Preferred Stock outstanding, which are convertible into 226,366 shares of common stock. | ||||
Convertible, conversion price per share | $ 1.32230 | ||||
Series 1 Convertible Preferred Stock [Member] | Preferred Stock [Member] | |||||
Capital Structure (Textual) | |||||
Preferred stock, shares authorized | 250,000 | ||||
Series 2 Convertible Preferred Stock [Member] | |||||
Capital Structure (Textual) | |||||
Preferred stock, shares authorized | 25,000 | ||||
Preferred stock conversion into common stock, shares | 266 | ||||
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 | $ 9,002,801 | ||||
Stated value, percentage | 10.00% | ||||
Warrant [Member] | |||||
Capital Structure (Textual) | |||||
Exercise price of warrants | $ 0.37 | ||||
Common stock warrants outstanding | 1,752,488 | ||||
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 were 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 | |||
Valuation Expenses | $ 43,999 | ||||
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 | ||||
Warrant. description | If the closing share price on the last day of the month exceeds $1.25, then such exercise price will be 110% of the closing share price. |
Stock Options (Details)
Stock Options (Details) - Employee Stock Option [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Number of options | ||
Outstanding | 2,004,318 | 620,900 |
Granted | 425,000 | 29,000 |
Forfeited | (9,500) | (19,500) |
Expired | (25,000) | |
Outstanding | 2,419,818 | 605,400 |
Vested and exercisable | 853,485 | 304,900 |
Weighted average exercise price | ||
Outstanding | $ 1.72 | $ 3.75 |
Granted | 2.53 | 0.87 |
Forfeited | 1.17 | 1.27 |
Expired | 6.20 | |
Outstanding | 1.86 | 3.59 |
Vested and exercisable | $ 2.49 | $ 3.59 |
Weighted average contractual term (years) | ||
Outstanding | 8 years 18 days | 7 years 11 months 1 day |
Vested and exercisable | 7 years 9 months 7 days | 6 years 6 months 29 days |
Aggregate intrinsic value | ||
Forfeited | $ 4,453 | $ 788 |
Outstanding | 539,949 | $ 4,408 |
Vested and exercisable | $ 226,328 |
Stock Options (Details1)
Stock Options (Details1) - Employee Stock Option [Member] - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 2.53 | $ 0.87 |
Expected life | 5 years 4 days | 5 years 18 days |
Expected volatility | 64.00% | 38.00% |
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 1.69% | 2.50% |
Stock Options (Details Textual)
Stock Options (Details Textual) - USD ($) | May 02, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Apr. 26, 2018 |
Stock Options (Textual) | ||||
Weighted average grant date fair value of options granted | $ 1.39 | $ 0.34 | ||
Unrecognized compensation cost related to non-vested options | $ 912,915 | |||
Weighted average period | 3 years 5 months 9 days | |||
Compensation expense | $ 215,814 | $ 36,729 | ||
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. | |||
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 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
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 | $ 6,000,000 |
Federal [Member] | |
Income Taxes (Textual) | |
Net operating loss carryforwards | $ 66,900,000 |
Exchange Offer of Warrants (Det
Exchange Offer of Warrants (Details) - USD ($) | Feb. 04, 2020 | Feb. 19, 2020 | Mar. 31, 2020 |
Exchange Offer of Warrants (Textual) | |||
Warrant offered | $ 0.62 | $ 0.56 | |
Exchange offer of warrants, description | In total, 5,351,290 warrants were exchanged for 3,317,812 shares in accordance with the Warrant Exchange Offer | In total 258,610 warrants were exchanged for 144,871 shares in this transaction. | |
Deemed dividend | $ 713,212 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Apr. 30, 2020 | Mar. 31, 2020 | |
Subsequent Events (Textual) | ||
Principal amount | $ 1,914,100 | |
Maturity date, description | The Note matures on April 30, 2022, and bears interest at the rate of 1.00% per annum, payable monthly commencing on November 30, 2020, following an initial deferral period as specified under the PPP. | |
Subsequent Event [Member] | ||
Subsequent Events (Textual) | ||
Principal amount | $ 1,000,000 |