Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 30, 2016 | Jun. 30, 2015 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | Net Element, Inc. | ||
Entity Central Index Key | 1,499,961 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Trading Symbol | NETE | ||
Entity Common Stock, Shares Outstanding | 113,045,246 | ||
Entity Public Float | $ 15,248,991 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 1,025,747 | $ 503,343 |
Accounts receivable, net | 5,198,993 | 3,417,173 |
Prepaid expenses and other assets | 1,106,016 | 962,698 |
Total current assets, net | 7,330,756 | 4,883,214 |
Fixed assets, net | 162,123 | 70,918 |
Intangible assets, net | 5,423,880 | 2,492,050 |
Goodwill | 9,643,752 | 6,671,750 |
Other long term assets | 353,050 | 204,737 |
Total assets | 22,913,561 | 14,322,669 |
Current liabilities: | ||
Accounts payable | 5,858,837 | 2,698,257 |
Deferred revenue | 743,910 | 472,482 |
Accrued expenses | 2,975,066 | 2,351,885 |
Notes payable (current portion) | 518,437 | 98,493 |
Due to related parties | 329,881 | 0 |
Total current liabilities | 10,426,131 | 5,621,117 |
Notes payable (net of current portion) | 3,446,563 | 3,216,507 |
Total liabilities | $ 13,872,694 | $ 8,837,624 |
Commitments and contingencies | ||
STOCKHOLDERS' EQUITY | ||
Common stock ($.0001 par value, 300,000,000 shares authorized at December 31, 2015 and 200,000,000 shares authorized at December 31, 2014; 112,619,596 and 45,881,523 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively) | $ 11,262 | $ 4,589 |
Paid in capital | $ 154,351,558 | 136,689,629 |
Stock subscription receivable | (1,111,130) | |
Accumulated other comprehensive loss | $ (1,565,822) | (1,251,461) |
Accumulated deficit | (143,955,048) | (129,116,344) |
Non-controlling interest | 198,917 | 269,762 |
Total stockholders' equity | 9,040,867 | 5,485,045 |
Total liabilities and stockholders' equity | 22,913,561 | 14,322,669 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Series A Convertible Preferred stock ($.0001 par value, 1,000,000 shares authorized, no shares issued and outstanding, at December 31, 2015 and December 31, 2014) | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS _Pa
CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Common stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 200,000,000 |
Common stock, shares issued | 112,619,596 | 45,881,523 |
Common stock, shares outstanding | 112,619,596 | 45,881,523 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Net revenues | ||
Service fees | $ 31,204,871 | $ 21,236,704 |
Branded content | 9,030,491 | 0 |
Total Revenues | 40,235,362 | 21,236,704 |
Costs and expenses: | ||
Cost of service Fees | 25,858,098 | 15,925,924 |
Cost of branded content | 8,119,117 | 0 |
General and administrative (includes $4,306,304 and $4,267,334 of share based compensation for the twelve months ended December 31, 2015 and 2014 respectively) | 13,616,781 | 11,353,244 |
Provision for (recovery of) bad debt | 649,571 | (1,153,147) |
Depreciation and amortization | 2,513,162 | 2,358,136 |
Total costs and operating expenses | 50,756,729 | 28,484,157 |
Loss from operations | (10,521,367) | (7,247,453) |
Interest expense, net | (3,575,698) | (3,705,694) |
(Loss) gain on change in fair value and settlement of beneficial conversion derivative | (26,932,496) | 5,569,158 |
Gain (loss) on debt extinguishment | 27,743,980 | (6,184,219) |
Gain on debt restructure | 0 | 1,596,000 |
Gain (loss) from asset disposal | 40,369 | (87,151) |
Other expense | (82,714) | (155,407) |
Net loss before income taxes | (13,327,926) | (10,214,766) |
Income taxes | 0 | 0 |
Net loss | (13,327,926) | (10,214,766) |
Net loss attributable to the noncontrolling interest | 74,314 | 29,250 |
Net loss attributable to Net Element, Inc. stockholders | (13,253,612) | (10,185,516) |
Dividends for the benefit of preferred stockholders | (1,585,092) | 0 |
Net loss attributable to common stockholders | (14,838,704) | (10,185,516) |
Foreign currency translation | (314,361) | (1,080,911) |
Comprehensive loss attributable to common stockholders | $ (15,153,065) | $ (11,266,427) |
Loss per share - basic and diluted | $ (0.23) | $ (0.27) |
Weighted average number of common shares outstanding - basic and diluted | 63,911,199 | 37,255,052 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS [Parenthetical] - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Non-Cash Compensation | $ 4,306,304 | $ 4,267,334 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Total | Preferred Stock [Member] | Common Stock [Member] | Paid-in Capital [Member] | Stock Subscription [Member] | Comprehensive Income [Member] | Noncontrolling Interest [Member] | Retained Earnings [Member] |
Balance at Dec. 31, 2013 | $ (15,407,642) | $ 0 | $ 3,229 | $ 103,486,144 | $ 329,406 | $ (170,550) | $ (125,043) | $ (118,930,828) |
Balance (in shares) at Dec. 31, 2013 | 0 | 32,273,298 | ||||||
Share based compensation | 3,678,113 | $ 0 | $ 176 | 3,677,937 | 0 | 0 | 0 | 0 |
Share based compensation (in shares) | 0 | 1,755,749 | ||||||
Shares issued and issuable for acquisitions | 0 | $ 0 | $ 6 | 329,400 | (329,406) | 0 | 0 | 0 |
Shares issued and issuable for acquisitions (in shares) | 0 | 57,288 | ||||||
Shares issued to acquire non-controlling interest | 1,041,147 | $ 0 | $ 32 | 617,060 | 0 | 0 | 424,055 | 0 |
Shares issued to acquire non-controlling interest (in shares) | 0 | 323,085 | ||||||
Shares issued in connection with debt conversion | 9,525,963 | $ 0 | $ 556 | 10,636,537 | (1,111,130) | 0 | 0 | 0 |
Shares issued in connection with debt conversion (in shares) | 0 | 5,569,158 | ||||||
Shares issued in connection with debt restructuring | 204,000 | $ 0 | $ 10 | 203,990 | 0 | 0 | 0 | 0 |
Shares issued in connection with debt restructuring (in shares) | 0 | 100,000 | ||||||
Shares issued in connection with note conversion | 16,712,481 | $ 0 | $ 580 | 16,711,901 | 0 | 0 | 0 | 0 |
Shares issued in connection with note conversion (in shares) | 0 | 5,802,945 | ||||||
Extinguishment of T1T obligation | 1,086,968 | $ 0 | $ 0 | 1,086,968 | 0 | 0 | 0 | 0 |
NASDAQ share registration fees | (60,308) | 0 | 0 | (60,308) | 0 | 0 | 0 | 0 |
Comprehensive loss - foreign currency translation | (1,080,911) | 0 | 0 | 0 | 0 | (1,080,911) | 0 | 0 |
Net loss | (10,214,766) | 0 | 0 | 0 | 0 | 0 | (29,250) | (10,185,516) |
Balance at Dec. 31, 2014 | 5,485,045 | $ 0 | $ 4,589 | 136,689,629 | (1,111,130) | (1,251,461) | 269,762 | (129,116,344) |
Balance (in shares) at Dec. 31, 2014 | 0 | 45,881,523 | ||||||
Share based compensation | 4,306,304 | $ 0 | $ 406 | 4,305,898 | 0 | 0 | 0 | 0 |
Share based compensation (in shares) | 0 | 4,015,315 | ||||||
Shares issued and issuable for acquisitions | 3,600,000 | $ 0 | $ 477 | 3,599,523 | 0 | 0 | 0 | 0 |
Shares issued and issuable for acquisitions (in shares) | 0 | 4,768,212 | ||||||
Shares issued in connection with debt restructuring | 1,346,648 | $ 0 | $ 421 | 1,346,227 | 0 | 0 | 0 | 0 |
Shares issued in connection with debt restructuring (in shares) | 0 | 4,208,049 | ||||||
Preferred shares issued | 0 | $ 5,287,082 | $ 0 | 0 | 0 | 0 | 0 | 0 |
Preferred shares issued (in shares) | 5,500 | 0 | ||||||
Preferred shares converted to common shares | 9,036,084 | $ (5,287,082) | $ 3,371 | 9,032,713 | 0 | 0 | 0 | 0 |
Preferred shares converted to common shares (in shares) | (5,500) | 33,760,446 | ||||||
Preferred share dividends paid | 1,585,092 | $ 0 | $ 613 | 1,584,479 | ||||
Preferred share dividends paid (in shares) | 0 | 6,128,908 | ||||||
Shares issued in exchange for warrants, net of discount | (2,679,861) | $ 250 | (2,680,111) | |||||
Shares issued in exchange for warrants, net of discount (in shares) | 2,500,000 | |||||||
Repurchase of non-controlling interest | 0 | $ 0 | $ 0 | (3,489) | 0 | 0 | 3,469 | 0 |
Shares issued for insider financing (in shares) | 0 | 11,357,143 | ||||||
Write-Off stock subscription receivable | 0 | $ 0 | (1,111,130) | 1,111,130 | 0 | 0 | 0 | |
Comprehensive loss - foreign currency translation | (314,361) | 0 | $ 0 | 0 | 0 | (314,361) | 0 | 0 |
Net loss | (13,327,926) | 0 | 0 | 0 | 0 | 0 | (74,314) | (14,838,704) |
Balance at Dec. 31, 2015 | 9,040,867 | $ 0 | $ 11,262 | 154,351,558 | 0 | (1,565,822) | 198,917 | (143,955,048) |
Balance (in shares) at Dec. 31, 2015 | 0 | 112,619,596 | ||||||
Shares issued for insider financing | $ 1,588,954 | $ 0 | $ 1,135 | $ 1,587,819 | $ 0 | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities | ||
Net loss | $ (13,253,612) | $ (10,185,516) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities | ||
Non controlling interest | (74,309) | 394,286 |
Share based compensation | 4,306,304 | 4,267,334 |
Loss (gain) on change in fair value and settlement of beneficial conversion derivative | 26,932,495 | (5,569,158) |
(Gain) loss on debt extinguishment | (27,743,980) | 6,184,219 |
Depreciation and amortization | 2,513,162 | 2,358,136 |
Amortization of debt discount | 3,027,354 | 1,644,626 |
(Recovery of ) provision for loan losses | 0 | (1,649,858) |
(Gain) loss on disposal of fixed assets | (40,369) | 16,137 |
Gain on MBF debt restructure | 0 | (1,596,000) |
Changes in assets and liabilities, net of acquisitions and the effect of consolidation of equity affiliates | ||
Accounts receivable, net | (1,502,205) | 6,974,701 |
Advances to aggregators | 10,022 | 934,816 |
Deferred revenue | 271,428 | 233,084 |
Prepaid expenses and other assets | 291,631 | (445,555) |
Accounts payable | 3,160,577 | (338,618) |
Accrued expenses | 410,730 | (968,609) |
Net cash (used in) provided by operating activities | (1,690,772) | 2,254,025 |
Cash flows from investing activities | ||
Purchase of portfolio and client acquisition costs | (878,085) | (1,039,752) |
Sale of portfolio | 300,000 | 0 |
Note receivable | 0 | (2,650) |
Acquisition of PayOnline assets, net of cash received | (3,195,452) | 0 |
Purchase of fixed and other assets | (579,209) | (750,936) |
Net cash used in investing activities | (4,352,746) | (1,793,338) |
Cash flows from financing activities | ||
Repayment to Financial Institutions | 0 | 10,088,870 |
Proceeds from preferred stock | 5,500,000 | 0 |
Proceeds from indebtedness | 650,000 | (10,433,367) |
Repayment of indebtedness | 0 | 0 |
Related party advances | 331,273 | 418,099 |
Net cash provided by financing activities | 6,481,273 | 73,602 |
Effect of exchange rate changes on cash | 84,649 | (157,265) |
Net increase in cash | 522,404 | 377,024 |
Cash at beginning of period | 503,343 | 126,319 |
Cash at end of period | 1,025,747 | 503,343 |
Cash paid during the period for: | ||
Interest | 548,344 | 1,109,731 |
Taxes | 74,563 | 38,993 |
Inssuance of Common Stock upon conversion of indebtedness | 1,436,648 | 25,233,473 |
Inssuance of Common Stock upon redemption of Preferred Stock | 9,036,084 | 0 |
Inssuance of Common Stock in exchange for Warrants | 2,679,861 | 0 |
Inssuance of Common Stock for acquisition | $ 9,036,084 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Basis of Presentation Net Element, Inc. (“We”, “us”, “our” or the “Company”) is a financial technology-driven group specializing in mobile payments and other transactional services in emerging countries and in the United States. We are differentiated by our proprietary technology which enables us to provide a broad suite of payment products, end-to-end transaction processing services and superior client support. We have three reportable segments: (i) U.S. payment processing, (ii) Mobile payment processing (primarily in Russian Federation and CIS) (iii) Online payment processing (primarily in Russian Federation and CIS). We are able to deliver our services across multiple points of access, or “multi-channel,” including brick and mortar locations, software integration, e-commerce, mobile operator billing, mobile and tablet-based solutions. In the United States, via our U.S. based subsidiaries, we generate revenues from transactional services and other payment technologies for small and medium-sized businesses. Through TOT Group Russia and Net Element Russia, we provide transactional services, mobile payment transactions, online payment transactions and other payment technologies in emerging countries in the Russian Federation, Commonwealth of Independent States (“CIS”), Europe and Asia. Our transactional services business enables merchants to accept credit cards as well as other forms of payment, including debit cards, checks, gift cards, loyalty programs and alternative payment methods in traditional card-present or swipe transactions, as well as card-not-present transactions, such as those conducted over the phone or through the Internet or a mobile device. We market and sell our services through both independent sales groups (“ISGs”), which are non-employee, external sales organizations and other third party resellers of our products and services, and directly to merchants through electronic media, telemarketing and other programs, including utilizing partnerships with other companies that market products and services to local and international merchants. In addition, we partner with banks such as BMO Harris Bank, N.A. in the United States and VTB Bank, Bank of Moscow, Raiffeisen Bank, Kazkommertsbank, and Rietumu Bank in the Russian Federation, CIS, Europe and Asia to sponsor us for membership in Visa ® ® PayOnline provides flexible high-tech payment solutions to companies doing business on the Internet or in the mobile environment. PayOnline specializes in integration and customization of payment solutions for websites and mobile apps. In particular, PayOnline arranges payment on the website of any commercial organization, which increases the convenience of using the website and helps maximize the number of successful transactions. In addition, PayOnline is focused on providing online and mobile payment acceptance services to the travel industry through direct integration with leading Global Distribution Systems, which includes Amadeus® and Sabre®. Key regions of the PayOnline company are: the CIS, Eastern Europe, Central Asia, Western Europe, North America and Asia major sub regions. PayOnline offices are located in Russia and in the Republic of Cyprus. We included the results of PayOnline starting May 20, 2015. Our mobile payments business, Digital Provider, LLC (f/k/a Tot Money, LLC) (“Digital Provider”) provides carrier-integrated mobile payments solutions. Our relationships with mobile operators give us substantial geographic coverage, a strong capacity for innovation in mobile payments and messaging, and the ability to offer our clients’ in-app, premium SMS, online and carrier billing services. We also market our own branded content which is a new business line for our mobile payments business. Aptito is a proprietary, next-generation, cloud-based payments platform for the hospitality industry, which creates an online consumer experience in offline commerce environments via tablet, mobile and all other cloud-connected devices. Aptito’s easy to use point-of-sale (“POS”) system makes things easier by providing comprehensive solution to the hospitality industry to help streamline management and operations. Orders placed tableside by customers directly speed up the ordering process and improve overall efficiency. Aptito's mobile POS system provides portability to the staff while performing all the same functions as a traditional POS system, and more. Basis of Presentation The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the balance sheet date and the reported amounts of expenses for the period presented. Actual results could differ from those estimates. Significant estimates include (i) the valuation of acquired merchant portfolios (ii) the recoverability of long-lived assets, (iii) the remaining useful lives of long-lived assets, and (iv) the sufficiency of merchant, legal, and other reserves. On an ongoing basis, the Company evaluates the sufficiency and accuracy of its estimates. Actual results could differ from those estimates. Reclassifications Certain amounts in the 2014 consolidated financial statements have been reclassified to conform with the current year presentation. These reclassifications had no effect on the reported results of operations. The Company maintains its U.S. dollar-denominated cash in several non-interest bearing bank deposit accounts. All U.S. non-interest bearing transaction accounts are insured up to a maximum of $ 250,000 The Company maintains $ 922,062 318,416 respectively. Receivables are stated net of allowance for doubtful accounts. The Company estimates its allowance based on experience with its service providers and its judgment as to the likelihood of their ultimate payment. The Company also considers collection experience and makes estimates regarding collectability based on trends in aging. In Russia, the service providers are subsidiaries of large telecommunication companies and we do not reserve for these receivables given our experience with these service providers. The Company maintains an inventory of terminals, which it uses to service both merchants and independent sales agents. If the terminals are sold for a fee, the Company expenses the cost of these terminals, plus any set up fees at the time of the sale. Many times, the Company will provide the terminals as an incentive to stay with the Company for an average of three year period. In this case the cost of the terminal plus any set up fees will be amortized over three years, which is the average length of a merchant contract. If the merchants leave before the end of their contract, they are obligated to either return the terminal or pay for the terminal. The Company has $ 345,459 532,315 268,501 292,718 130,970 200,987 The Company depreciates its furniture and equipment and computers over a term of two to ten years. Computers and software are depreciated over terms between two and five years. Leasehold improvements are depreciated over the shorter of the economic life or term of each lease. All of our assets are depreciated on a straight-line basis for financial statement purposes. Expenditures for repairs and maintenance are charged to operating expense as incurred. Expenditures that increase the value or productive capacity of assets are capitalized. At the time of retirements, sales, or other dispositions of property and equipment, the original cost and related accumulated depreciation are removed from the respective accounts, and the gains or losses are presented as other expenses. Included in the Company’s intangible assets are merchant portfolios, which represent the net book value of an acquired merchant customer base, and are amortized on a straight-line basis over their respective useful lives, generally three to five years. Merchant portfolios are assessed for impairment if events or circumstances indicate that their respective carrying values are not recoverable from the future anticipated undiscounted net cash flows attributable to such assets. In such cases, the amount of any potential impairment would be measured as the excess, if any, of carrying value over the fair value of such assets. The Company also capitalizes direct expenses associated with filing of patents and patent applications and amortizes the capitalized intellectual property costs over five years beginning when the patent is approved. Additionally, the Company capitalizes the fair value of intangible assets acquired in business combinations. The Company performs valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocates the purchase price of each acquired business to its respective net tangible and intangible assets. Acquired intangible assets include: merchant portfolios, trade names, non-compete agreements, customer relationships and technology. Capitalized customer acquisition costs consist of up-front cash payments made to certain Independent Sales Groups (“ISG’s”) for the establishment of new merchant relationships. Capitalized customer acquisition costs represent incremental, direct customer acquisition costs that are recoverable through gross margins associated with merchant contracts. The up-front payment to the ISG is based on the estimated gross margin for the first year of the merchant contract. The deferred customer acquisition cost asset is recorded at the time of payment and the capitalized acquisition costs are primarily amortized on a straight-line basis over a period of three years. Management evaluates the capitalized customer acquisition cost for impairment at each balance sheet date by comparing, on a pooled basis by vintage month of origination, the expected future net undiscounted cash flows from underlying merchant relationships to the carrying amount of capitalized customer acquisition costs. If the estimated future net cash flows are lower than the recorded carrying amount, indicating an impairment of the carrying value of the capitalized customer acquisition costs, the impairment loss is charged to operations. During the years ended December 31, 2015 and 2014, the Company recorded $ 878,085 347,204 356,757 85,769 1,048,060 526,728 Accrued Residual Commissions The Company reports commission payments as a cost of revenues in the accompanying consolidated statement of operations and comprehensive loss. We pay agent commissions to ISGs and independent sales agents based on the processing volume of the merchants enrolled. The commission payments are based on varying percentages of the volume processed by us on behalf of the merchants. Percentages vary based on the program type and transaction volume of each merchant. We report commission payments as a cost of revenues in the accompanying consolidated statement of operations and comprehensive loss. At December 31, 2015 and 2014 the residual commissions payable to ISGs and independent sales agents were $ 1,205,751 514,252 We pay agent commission on annual fees between January and April of each year. We amortize the annual fees paid in equal monthly amounts from date of payment to end of year. We pay our agent commissions for annual fees in advance of recognizing the associated revenue. We deferred $ 483,090 175,800 Convertible securities containing detachable warrants where the conversion price of the security and/or the exercise price of the warrants are affected by the current market price of our common stock are accounted for as derivative financial instruments when the exercise and conversion prices are not considered to be indexed to our stock. For such issuances of convertible securities with detachable warrants, the Company initially records both the warrant and the beneficial conversion feature (“BCF”) at fair value, using option pricing models commonly used by the financial services industry (Black-Scholes-Merton options pricing model) using inputs generally observable in the financial services industry. These derivative financial instruments are marked-to-market each reporting period, with unrealized changes in value reflected in earnings under the caption “gain (loss) on change in fair value of derivative”. For discounts arising from issuances of instruments embedded in a debt security, the discount is presented on the consolidated balance sheets as a discount to the principal amount of the related note payable. For discounts arising from issuances of instruments embedded in an equity security, the discount is presented as a reduction to additional paid-in-capital. The resulting discounts arising from the initial recording of the warrants and BCF are amortized over the term of the host security. The classification of the amortization is based on the nature of the host instrument. In this respect, amortization of discounts associated with debt issuances are classified as interest expense, whereas amortization of discounts associated with preferred stock issuances are classified as preferred stock dividends. At the time a warrant or BCF is exercised or cancelled, the fair value of the derivative financial instrument at the time of exercise/cancellation is calculated, and a realized gain or loss on conversion is determined and reported as “gain (loss) on settlement of derivative”. The Company’s financial instruments consist primarily of cash, accounts receivables, merchant portfolios, notes receivable, trade payables and debt instruments. The carrying values of cash and cash equivalents, accounts receivable and trade payables are considered to be representative of their respective fair values due to the short-term nature of these instruments. The carrying amount of the long-term debt of $3.9 million as of December 31, 2015 approximates fair value because the Company’s current borrowing rate does not materially differ from market rates for similar bank borrowings. The long-term debt is classified as a Level 2 item within the fair value hierarchy. The Company measures certain nonfinancial assets and liabilities at fair value on a nonrecurring basis. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level fair value hierarchy to prioritize the inputs used to measure fair value and maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 Quoted market prices in active markets for identical assets or liabilities as of the reporting date Level 2 Observable market based inputs or unobservable inputs that are corroborated by market data Level 3 Unobservable inputs that are not corroborated by market data These non-financial assets and liabilities include intangible assets and liabilities acquired in a business combination as well as impairment calculations, when necessary. The fair value of the assets acquired and liabilities assumed in connection with the PayOnline acquisition, as discussed in Note 4, were measured at fair value by the Company at the acquisition date. The fair values of the Company’s merchant portfolios are primarily based on Level 3 inputs and are generally estimated based upon independent appraisals that include discounted cash flow analyses based on the Company’s most recent cash flow projections, and, for years beyond the projection period, estimates based on assumed growth rates. Assumptions are also made regarding appropriate discount rates, perpetual growth rates, and capital expenditures, among others. In certain circumstances, the discounted cash flow analyses are corroborated by a market-based approach that utilizes comparable company public trading values, and, where available, values observed in private market transactions. The inputs used by management for the fair value measurements include significant unobservable inputs, and therefore, the fair value measurements employed are classified as Level 3. The goodwill impairment was primarily based on observable inputs using company specific information and is classified as Level 3. The Company’s total revenue was $ 40,235,362 21,234,704 31,204,871 9,030,491 The credit card processing revenues were from merchant customer transactions, which are processed primarily by three “third-party” processors. For the twelve months ended December 31, 2015 and 2014, the Company processed 51 63 10 24 The mobile electronic payment revenues were from merchant customer transactions, which are processed primarily by three mobile operators during the twelve months ended December 31, 2015 and two mobile operators during the twelve months ended December 31, 2014. For the year ended December 31, 2015, the Company processed 9 5 3 3.4 3.5 The Company is subject to exchange rate risk in its foreign operations in Russia, the functional currency of which is Russian Ruble, where the Company generates service fee revenues and interest income and incurs product development, engineering, website development, and general and administrative costs and expenses. The Russian engineering operations pay a majority of their operating expenses in their local currencies, exposing the Company to exchange rate risk. The Company does not engage in any currency hedging activities. The Company recognizes revenue when the following four basic criteria have been met: (1) persuasive evidence of a sales arrangement exists; (2) performance of services has occurred, (3) the sales price is fixed or determinable, and (4) collectability is reasonably assured. The Company considers persuasive evidence of a sales arrangement to be the receipt of a billable transaction from aggregators, signed contract or the processing of a credit card transaction. Collectability is assessed based on a number of factors, including transaction history with the customer and the credit worthiness of the customer. If it is determined that the collection is not reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash. The Company records cash received in advance of revenue recognition as deferred revenue. Our revenues for the years ended December 31, 2015 and 2014 are principally derived from the following sources: Transactional Processing Fees: Transactional processing fees are generated primarily from TOT Payments doing business as Unified Payments, which is our US transaction processing company, PayOnline, which is our Russian online transaction processing company, consolidated effective May 20, 2015 when we obtained control of PayOnline. See “PayOnline” in Note 4 for additional more information and Aptito our point of sale solution for restaurants. Our transactional processing companies derive revenues primarily from the electronic processing of services including: credit, debit, electronic benefits transfer and alternative payment methods card processing authorized and captured through proprietary and third party networks, electronic gift certificate processing, and equipment sales. These revenues are recorded as bankcard and other processing transactions when processed. In addition to generating service fees, Aptito earns monthly license fees for use of its platform. Typically, fees charged to merchants for these processing services are based on a variable percentage of the dollar amount of each transaction and in some instances, additional fees are charged for each transaction. Merchant customers also may be charged miscellaneous fees, including statement fees, annual fees, monthly minimum fees, fees for handling chargebacks, gateway fees, and fees for other miscellaneous services. Generally, we (i) are the primary obligor in our arrangements with our merchant customers, (ii) have latitude in establishing the price of our services, (iii) have the ability to change the product and perform parts of the services, (iv) have discretion in supplier selection, (v) have latitude in determining the product and service specifications to meet the needs of our merchant customers, and (vi) assume credit risk. In such cases, we report revenues as gross of fees deducted by our sponsoring member banks, as well as fees deducted from card-issuing member banks and card associations (Visa® and MasterCard®) on behalf of our sponsoring member banks for interchange and assessments. These fees charged by the card associations to process the credit card transactions are recorded separately as cost of revenue and interchange fees in the accompanying condensed consolidated statement of operations and comprehensive loss. Service Fees: Mobile payment processing revenues for third party content providers continue to be accounted for as service fees and presented net of aggregator and mobile operator payments on the consolidated financial statements as these revenues are considered to be agency fees. Cost of revenues for Digital Provider is comprised primarily of mobile operator fees, content provider fees and fees for short numbers paid to mobile operators. Additionally, penalties and penalty recoveries are recorded as cost of sales. Service revenues for mobile payment processing services are presented net as these revenues are considered to be agency fees. Subscription revenues for our branded content are recognized when a content subscriber initiates the purchase of our access to content using WAP-click, Internet-click, or a SMS-to-short number registered to us. Digital Provider’s subscription revenues are recorded at the amounts charged to the third party customer. Cost of revenues for Digital Provider branded content includes fees due to mobile operators and marketing partners, as well as short number fees. Cost of revenues for TOT Payments, Aptito and PayOnline is comprised primarily of processing fees paid to third parties attributable to providing transaction processing and service fees for POS system usage by our merchant customers. Interchange fees and cost of services are recognized as incurred, which generally occurs in the same period in which the corresponding revenue is recognized. Interchange fees are set by the card networks, and are paid to the card-issuing bank. Interchange fees are calculated as a percentage of the dollar volume processed plus a per transaction fee. We also pay Visa® and MasterCard® network dues. The Company has multiple element arrangements that include bundled transactions with merchants encompassing annual PCI (payment card industry) fees, annual membership fees, and monthly processing fees. The Company adopted accounting standard update No 2009-13, “MultipleDeliverable Revenue Arrangements” (ASU 2009-13). ASU 2009-13 requires the use of the relative selling price method of allocating total consideration to units of accounting in a multiple element arrangement and eliminates the residual method. This accounting principle requires an entity to allocate revenue in an arrangement using estimated selling price deliverables if it does not have vendor specific objective evidence (VSOE) or third party evidence (TPE) of selling price. VSOE is the price charged when the same or similar product or service is sold separately. The Company defines VSOE as a median price of recent stand-alone transactions that are priced within a narrow range. TPE is determined based on the prices charged by our competitors for a similar deliverable when sold separately. The Company evaluates each deliverable in its arrangements to determine whether it represents a separate unit of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value to our customers. The Company’s products (i.e., terminals) and services qualify as separate units of accounting under ASU 2009-13. The Company’s payment processing division derives revenues primarily from the electronic processing of services including credit, debit and electronic benefits transfer card processing authorized and captured through third party networks, check conversion and guarantee, electronic gift certificate processing, and equipment leasing and sales. These revenues are recorded as bankcard and other processing transactions when processed. Typically, fees charged to merchants for these processing services are based on a variable percentage of the dollar amount of each transaction and in some instances, additional fees are charged for each transaction. Merchant customers may also be charged miscellaneous fees, including statement fees, annual fees, monthly minimum fees, fees for handling chargebacks, gateway fees, and fees for other miscellaneous services. The fair value for annual fees is based on the annual contract renewal price and is deemed to represent stand-alone selling price based upon VSOE. The fair value for processing is based on prices charged by our competitors for similar deliverables when sold separately and is deemed to represent stand-alone selling price based upon TPE. Deferred revenue represents primarily amounts received in advance for annual fee billings and are recognized on a pro rata basis over the service period. Generally, the Company (i) is the primary obligor in its arrangements with its merchant customers, (ii) has latitude in establishing the price of its services, (iii) has the ability to change the product and perform parts of the services, (iv) has discretion in supplier selection, (v) has latitude in determining the product and service specifications to meet the needs of its merchant customers, and (vi) assumes credit risk. In such cases, the Company reports revenues as gross of fees deducted by its sponsoring member banks, as well as fees deducted from card-issuing member banks and card associations (Visa/MasterCard) on behalf of its sponsoring member banks for interchange and assessments. These fees charged by the card associations to process the credit card transactions are recorded separately as cost of sales and interchange fees in the accompanying consolidated statement of operations. Basic net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares issuable upon exercise of common stock options or warrants. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would have an anti-dilutive effect. At both December 31, 2014 and 2015, the Company had 8,938,900 14,643,688 The Company reviews its long-lived assets for impairment whenever events or changes indicate that the carrying amount of an asset or group of assets may not be recoverable. During the year ended December 31, 2015 and 2014, there was no impairment of goodwill and intangible assets. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize net deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes. The Company’s evaluation of uncertain tax positions was performed for the tax years ended December 31, 2011 and forward, the tax years which remain subject to examination at December 31, 2015. Please see Note 15 for discussion of the Company’s uncertain tax positions. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which defers by one year the effective date of ASU 2014-09. Accordingly, this guidance is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted for interim and annual periods beginning after December 15, 2016. The Company plans to adopt this guidance on January 1, 2018. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on the Company’s financial position, results of operations and cash flows. In November 2014, the FASB issued Accounting Standards Update 2014-16 (“ASU 2014-16”), Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). ASU 2014-16 does not change the current criteria in GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required, but clarifies how current GAAP should be interpreted in the evaluation of the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share, reducing existing diversity in practice. ASU 2014-16 is effective for annual periods beginning after December 15, 2015, and interim periods thereafter. The adoption of ASU 2014-16 will not have a material impact on our consolidated financial statements, as we do not have outstanding hybrid financial instruments at December 31, 2015. In September 2015, the FASB issued ASU 2015-16, “Business Combinations,” which simplifies the accounting for measurement-period adjustments by eliminating the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires the cumulative impact of measurement period adjustments, including the impact on prior periods, to be recognized in the reporting period in which the adjustment is identified. The ASU is effective for public companies for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. The Company evaluated the effects of the ASU 2015-16 and elected to early adopt the ASU during the third quarte |
BASIS OF PRESENTATION AND PRINC
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | NOTE 2. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION Following the consolidation principles promulgated by U.S. GAAP, the consolidated financial statements of the Company include the assets, liabilities, results of operations, and cash flows of the following subsidiaries: (1) TOT Group, Inc., a 100 The subsidiaries listed above are the parent companies of several other subsidiaries, which hold the Company’s underlying investments or operating entities. TOT Group is the parent company of TOT Payments, LLC (“TOT Payments”) doing business as Unified Payments a wholly owned subsidiary formed in Florida, Aptito, LLC, a 80 • TOT Payments, LLC is the parent company of: - Process Pink, LLC, a wholly owned subsidiary formed in Florida; - TOT HPS, LLC, a wholly owned subsidiary formed in Florida; - TOT FBS, LLC, a wholly owned subsidiary formed in Florida; - TOT New Edge, LLC, a wholly owned subsidiary formed in Florida; - TOT BPS, LLC, a wholly owned subsidiary formed in Florida • OOO TOT Group Russia is the parent company of its wholly owned subsidiary OOO Digital Provider (f/k/a OOO TOT Money)(a company formed in Russia), Payonline Systems, LLC (a wholly-owned company formed in Russia), Innovative Payment Technologies, LLC (a wholly-owned company formed in Russia) and TOT Group Kazakhstan, a wholly owned subsidiary formed in Kazakhstan. • Netlab Systems, LLC is the parent company of Tech Solutions LTD (Cayman Islands). • Net Element Russia is the parent company of 99 • TOT Group Europe LTD is 100% owner of Polimore Capital Limited (Cyprus) and Brosword Holding Limited (Cyprus) All material intercompany accounts and transactions have been eliminated in consolidation. |
LIQUIDITY AND GOING CONCERN CON
LIQUIDITY AND GOING CONCERN CONSIDERATIONS | 12 Months Ended |
Dec. 31, 2015 | |
Liquidity And Going Concern Considerations [Abstract] | |
Liquidity and Going Concern Considerations [Text Block] | NOTE 3. LIQUIDITY AND GOING CONCERN CONSIDERATIONS The Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company had a net loss of $ 13.3 144.0 3.1 Failure to successfully continue developing the Company’s payment processing operations and maintain contracts with merchants, mobile phone carriers and content providers to use TOT Group’s services could harm the Company’s revenues and materially adversely affect its financial condition and results of operations. The Company faces all of the risks inherent in a new business, including the need for significant additional capital, management’s potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with developing the Company’s technologies and operations. The Company is continuing with its plan to further grow and expand its payment processing operations in emerging markets, particularly in Russia and surrounding countries. Management believes that its current operating strategy will provide the opportunity for the Company to continue as a going concern as long as we are able to obtain additional financing; however, there is no assurance this will occur. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. We are required to continually meet the listing requirements of The NASDAQ Capital Market (including a minimum bid price for our common stock of $1.00 per share) to maintain the listing of our common stock on The NASDAQ Capital Market. On June 19, 2015, we received a deficiency letter from The NASDAQ Capital Market indicating that for 30 consecutive trading days our common stock had a closing bid price below the $1.00 per share minimum. In accordance with NASDAQ Listing Rules, we were provided a compliance period of 180 calendar days, or until December 16, 2015, to regain compliance with this requirement. On December 17, 2015, we received a letter from The NASDAQ Capital Market notifying us that the initial period of 180 calendar days previously provided to the Company to regain compliance with the requirement was extended for an additional 180 calendar day period, or until June 13, 2016. We can regain compliance with the minimum closing bid price requirement if the bid price of our Common Stock closes at $1.00 per share or higher for a minimum of 10 consecutive business days. If we do not regain compliance with the minimum closing bid price requirement by June 13, 2016, The NASDAQ Capital Market will provide written notice that our securities are subject to delisting. At such time, we would be entitled to appeal the delisting determination to a NASDAQ Listing Qualifications Panel. We have received Board and shareholder approval to facilitate a reverse stock split to increase the bid price of our common stock, if required. We cannot provide any assurance that our stock price will recover within the permitted grace period. The independent auditors’ reports on the Company’s consolidated financial statements for the years ended December 31, 2015 and 2014 contain explanatory paragraphs expressing substantial doubt as to the Company’s ability to continue as a going concern. |
ACQUISITION OF PAYONLINE
ACQUISITION OF PAYONLINE | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | NOTE 4. ACQUISITION OF PAYONLINE On May 20, 2015, our subsidiaries TOT Group Europe, Ltd. and TOT Group Russia LLC, entered into an agreement to acquire all of the assets and liabilities that comprise PayOnline. PayOnline’s business includes the operation of a protected payment processing system to accept bank card payments for goods and services. Purchase consideration consists of a combination of $ 3.6 3.6 Purchase Consideration: Initial purchase Adjustments Final purchase Cash $ 3.6 $ - $ 3.6 Fair Value of Earnout - 0.6 0.6 Issuance of Net Element Stock 3.6 $ - 3.6 Total Consideration Transferred $ 7.2 $ 0.6 $ 7.8 Purchase Price Allocation to Identifiable assets acquired and liabilities assumed (Preliminary) Current Assets $ 0.8 $ - $ 0.8 Merchant Portfolios and Client lists 1.9 (0.5) 1.4 Other Intangible Assets 4.8 (1.9) 2.9 Goodwill - 3.0 3.0 Fixed Assets 0.1 - 0.1 Currrent Liabilities (0.4) - (0.4) Total Identifiable Net Assets 7.2 0.6 7.8 Total Purchase Price Allocation $ 7.2 $ 7.8 We engaged a valuation expert to value the PayOnline net assets and this report was completed in March, 2016. Valuation resulted in a re-allocation of the values assigned to merchant portfolios, client lists and other intangible assets, with a corresponding increase to goodwill. Purchase consideration was increased due to recognition of an estimate of $ 0.6 0.5 1.9 3.0 Unaudited Pro Forma Information - Acquisitions The following unaudited supplemental pro forma results of operations include the results of operations of PayOnline acquired in the second quarter of 2015 as if it had been consolidated as of January 1, 2014, and have been provided for illustrative purposes only and do not purport to be indicative of the actual results that would have been achieved by the combined companies for the periods presented or that may be achieved by the combined companies in the future. Future results may vary significantly from the results reflected in the following pro forma financial information because of future events and transactions, as well as other factors, many of which are beyond the Company’s control. The unaudited pro forma combined results of operations for the twelve months ended December 31, 2015 and 2014 have been prepared by adjusting the historical results of the Company to include the historical results of PayOnline as if the acquisition of PayOnline occurred on January 1, 2014. The pro forma results of operations do not include any adjustments to eliminate the impact of acquisition related costs or any cost savings or other synergies that may result from these acquisitions. Twelve Twelve Months Months Ended Ended December 31, 2015 December 31, 2014 Net Revenues $ 42,725,207 $ 27,404,966 Net Loss from Operations $ (12,240,344) $ (8,513,638) |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | NOTE 5. ACCOUNTS RECEIVABLE Accounts receivable consist of amounts due from processors and Russian mobile operators/intermediaries. Total accounts receivable amounted to $ 5,198,993 3,417,173 1,764,087 1,346,118 211,019 0 3,223,287 2,071,053 The $ 3,223,287 2,071,053 103,031 754,162 496,709 104,591 1,649,858 |
FIXED ASSETS
FIXED ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure [Text Block] | NOTE 6. FIXED ASSETS Useful life (in years) December 31, 2015 December 31, 2014 Furniture and equipment 3 - 10 $ 174,133 $ 132,228 Computers 2 - 5 141,692 61,369 Total 315,825 193,597 Less: Accumulated depreciation (153,702) (122,679) Total fixed assets, net $ 162,123 $ 70,918 Depreciation expense for the years ended December 31, 2015 and 2014 was $ 129,343 84,488 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets Disclosure [Text Block] | NOTE 7. INTANGIBLE ASSETS 5,423,880 2,492,050 Portfolios and Client Acquisition PCI Domain Covenant Not to IP Sofware Client Lists Costs Certification Trademarks Names Compete Total Balance at December 31, 2013 $ 243,825 $ 1,698,421 $ 380,511 $ - $ - $ - $ 641,667 $ 2,964,424 Additions 371,992 1,151,000 343,331 - - - - 1,866,323 Amortization (94,893) (1,766,690) (197,114) - - - (280,000) (2,338,697) Balance at December 31, 2014 $ 520,924 $ 1,082,731 $ 526,728 $ - $ - $ - $ 361,667 $ 2,492,050 Additions due to Payonline purchase 1,328,000 1,410,000 - 449,000 708,062 429,939 - 4,325,001 Other additions 163,129 878,085 1,041,214 Amortization (463,451) (842,806) (356,753) (93,542) (146,290) (90,793) (280,000) (2,273,635) Divested - (160,750) - - - - - (160,750) Balance at December 31, 2015 $ 1,548,602 $ 1,489,175 $ 1,048,060 $ 355,458 $ 561,772 $ 339,146 $ 81,667 $ 5,423,880 Amortization expense for the year ended December 31, 2015 was $ 2,383,818 110,183 Amortization expense for the year ended December 31, 2014 was $ 2,338,697 65,049 As a result of the Payonline purchase, we acquired certain intangible assets with a fair market value of $ 4,325,001 1,328,000 1,410,000 449,000 708,062 429,939 The $ 163,129 300,000 270,000 109,250 160,250 139,250 Software The Company capitalizes software development costs that add value to or extend the useful of the related software it develops for internal use and licensing. Costs for routine software updates are expensed as incurred. Capitalized costs are amortized over 36 months on a straight-line basis. Impairment is reviewed quarterly to ensure only viable active costs are capitalized. During 2015 and 2014, the Company capitalized $ 163,129 371,992 107,619 243,341 46,868 100,782 8,642 27,869 Merchant Portfolios Merchant Portfolios consisted of purchased portfolios that earn future streams of income for the foreseeable future. The remaining useful lives of these portfolios ranged from 15 36 1,489,175 1,082,731 The useful lives of merchant portfolios represent management’s best estimate over which the Company will recognize the economic benefits of these intangible assets. Non-Compete During the year ended December 31, 2013, two key executives signed covenants not to compete. These covenants have a three-year life and have an unamortized value of $ 81,667 361,667 The following table presents the estimated aggregate amortization expense of other intangible assets for the next five years ending December 31, 2016 - 2020. Year Amortization Expense 2016 $ 1,862,405 2017 1,780,738 2018 1,780,737 2019 - 2020 - Total $ 5,423,880 |
SHORT TERM LOANS
SHORT TERM LOANS | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Short-term Debt [Text Block] | NOTE 8. SHORT TERM LOANS Alfa-Bank Factoring Agreement At December 31, 2013, we had $ 8,478,810 In September 2012, Digital Provider had a factoring agreement with Alfa-Bank. Pursuant to the agreement Digital Provider assigned to Alfa-Bank its accounts receivable as security for financing for up to 300 9.8 80 9.70 11.95 10 0.33 100 3.28 In September 2014, Digital Provider entered into the Supplement Agreement No. 14 and the Supplement Agreement No. 15 with Alfa-Bank, which renewed and amended the Factoring Credit Facility (“FCF”). Pursuant to such amendments, the FCF was renewed and will expire on June 30, 2016. The maximum aggregate limit of financing was increased to 415 10.8 13.22 14.50 80 100 Alfa-Bank Credit Agreement In August 2012, Digital Provider entered into a Credit Agreement with Alfa-Bank. Pursuant to the Credit Agreement, Alfa-Bank agreed to provide a line of credit to Digital Provider with the credit line limit set at 300 9.8 53.9 1.8 3.55 55.0 1.8 14 Bank Otkritie Credit Agreement In November 2014, Digital Provider entered into a factoring services agreement (together with related and ancillary agreements, collectively, the “Bank Otkritie Agreement”) with Bank Otkritie Financial Corporation (“Bank Otkritie”). No funds were drawn under the Bank Otkritie Agreement and the agreement was terminated on August 31, 2015. Term Loan On April 14, 2015, Revere Wealth Management, LLC provided a $ 200,000 12 2,500 65,000 Senior Convertible Notes and Warrants On April 30, 2015, the Company entered into a $ 5,000,000 5,000,000 2,709,360 The investors had the right to purchase additional Notes and Warrants, up to $ 10,000,000 The notes accrued interest at 7 18 5,000,000 1.624 The Warrants had a term of three years from issuance and were immediately exercisable to purchase shares of our common stock at an initial exercise price of $ 1.74 Pursuant to a letter agreement dated August 4, 2015, (i) all Notes became automatically (i.e., without any further action by Company or the investors) null and void as of October 11, 2015 (the “Moratorium Date”) with no obligations or liabilities whatsoever of the Company relating thereto; (ii) the investors' right to purchase, and the Company's obligation to issue, Additional Notes and Additional Warrants (each, as defined in the Debt SPA) became automatically (i.e., without any further action by the Company or the investors) null and void as of the Moratorium Date with no obligations or liabilities whatsoever of the Company relating thereto. On December 1, 2015, the Company warrants previously issued to Series A Preferred stock investors were terminated and cancelled in exchange for 2,500,000 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities Disclosure [Text Block] | NOTE 9. ACCRUED EXPENSES At December 31, 2015 and December 31, 2014, accrued expenses amounted to $ 2,975,065 2,351,885 December 31, December 31, 2015 2014 Accrued professional fees $ 220,140 $ 295,144 Short term loan advances 200,000 75,346 Accrued payroll 79,653 70,463 Accrued bonus 2,254,316 1,409,131 Accrued foreign taxes 79,691 189,690 Other accrued expenses 141,265 312,111 $ 2,975,065 $ 2,351,885 Accrued performance bonuses of $ 2,254,316 1,409,131 |
LONG TERM DEBT
LONG TERM DEBT | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Long-term Debt [Text Block] | NOTE 10. LONG TERM DEBT December 31, December 31, 2015 2014 RBL Capital Group LLC $ 3,965,000 $ 3,315,000 Convertible Notes Payable - - Total Debt 3,965,000 3,315,000 Less Current Portion (518,437) (98,493) Long Term Debt $ 3,446,563 $ 3,216,507 RBL Capital Group, LLC Effective June 30, 2014, TOT Group, Inc. and its subsidiaries as co-borrowers, TOT Payments, LLC, TOT BPS, LLC, TOT FBS, LLC, Process Pink, LLC, TOT HPS, LLC and TOT New Edge, LLC, entered into a Loan and Security Agreement with RBL Capital Group, LLC (“RBL”), as lender (the “RBL Loan Agreement”). Pursuant to the RBL Loan Agreement, we may borrow up to $ 10,000,000 18 13.90 10.65 18.635 3,315,000 400,000 250,000 6,035,000 6,685,000 The co-borrowers’ obligations to RBL pursuant to the RBL Loan Agreement are secured by a first priority security interest in all of the co-borrowers’ tangible and intangible assets, including but not limited to their merchants, merchant contracts and proceeds thereof, and all right title and interest in co-borrowers’ processing contracts, contract rights, and portfolio cash flows with all processors of co-borrowers. Effective February 10, 2015, we entered into a $ 400,000 13.90 10,911 8,000 Effective March 27, 2015, we entered into a $ 250,000 13.90 6,819 5,000 During July 2014, $ 3,315,000 13.90 90,421 3.0 239 65 On April 7, 2014 we repaid the two notes payables to RBL, with a combined aggregate principal balance of $ 2,350,956 2,601, 842 250,886 The note with the principal balance of $ 1,416,926 92,239 16,020 42,508 1,567,693 77,560 15.636 5 106,856 The note with the principal balance of $ 934,030 90,615 9,505 1,034,150 84,584 5 116,533 Cayman Invest, S.A. On April 21, 2014, we entered into a Secured Convertible Senior Promissory Note (the “Note”) with Cayman Invest, S.A. (“CI”). Pursuant to the Note, CI agreed to loan $ 11,200,000 12 10 15 5,569,158 15 During 2014, we recorded a gain on the change in fair value on the beneficial conversion derivative in the amount of $ 5,569,158 3,962,406 A stock subscription receivable for $ 1,111,130 Capital Sources of New York and Georgia Notes LLC The Company had a unsecured $ 2,300,000 15.0 111,519 15.0 12.0 108,268 In January 2014, the preferred membership interests in Unified Payments plus accrued payment in kind (PIK) interest thereon was converted to an 8 13.3 On September 15, 2014 we completed a debt exchange program with Crede Capital, LLC, which eliminated both the Capital Sources and Georgia Notes debt obligations. In addition, the transaction eliminated certain unamortized related accrued interest and debt discount. On September 15, 2014, we entered into a Master Exchange Agreement with Crede CG III, Ltd., an exempted company incorporated under the laws of Bermuda (“Crede”). Prior to entering into the Agreement, Crede acquired two existing promissory notes that had been previously issued by us, one with $ 2,343,500 13,533,360 Crede elected to exchange the entire amount of both promissory notes on September 15, 2014. The “exchange price” for this initial exchange was $ 5.70 125 3,481,768 2,321,177 80 2,462,987 The effects of the transaction were as follows: Total Shares Provided 5,802,945 Market Price Sept 15, 2014 $ 2.88 Value of Stock Issued $ 16,712,482 Georgia Notes (13,268,000) Accrued interest (345,360) Discount on Georgia Notes 1,663,865 Capital Sources (2,300,000) Loss on Debt Extinguishment $ 2,462,987 Scheduled Debt Principal Repayment Long term debt consisted of the Following: 2016 $ 518,437 2017 872,964 2018 1,002,342 2019 1,150,897 2020 420,360 Balance December 31, 2015 $ 3,965,000 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 11. COMMITMENTS AND CONTINGENCIES Lease Commitments In May 2013, we entered into a lease agreement for approximately 5,200 16,800 134,400 17,640 211,680 18,522 222,264 19,448 233,377 Netlabs Systems, LLC, through its Russian representative office, currently leases 650 11,000 January 10, 2015 940 15,800 Net Element Russia leases approximately 2,033 66,514 14,571 January 31, 2017 February 28, 2017 Share Issuance Commitments On December 3, 2015, the Company’s Compensation Committee approved and authorized the issuance of 5,791,717 1,042,509 On December 3, 2015, the Compensation Committee awarded to Oleg Firer, the Chief Executive Officer of the Company, 3,750,000 On December 3, 2015, the Compensation Committee awarded to Steven Wolberg, the Chief Legal Officer of the Company, 800,000 The company is committed for the future issuance of shares to satisfy its obligations for the purchase of PayOnline Systems (Also see Note 4). Litigation First Data Corporation On July 30, 2013, TOT Payments, LLC, brought an action against First Data Corporation in the State of New York Supreme Court (Index No. 652663-2013). The amount of damages being sought is $ 10,000,000 150,000 250,000 OOO-RM Invest On March 17, 2014, we were served with a lawsuit brought by OOO-RM Invest in the US District Court, Southern District of Florida. In its complaint, OOO-RM Invest claims that on or about July 11, 2012 it entered into an “oral agreement” with us allegedly agreeing: (a) to form a new entity, TOT Money International, LTD that would continue the operations of Plaintiff; (b) that we would provide TOT Money International, LTD financing in the amount of 600,000,000 30 50 On August 12, 2014, legal counsel representing Net Element, Inc. received a Notice from the American Arbitration Association advising that the same Plaintiffs in the RMV Invest case above have instituted a parallel Arbitration claim dealing with substantially the same issues as addressed in the lawsuit. As with the referenced lawsuit, we strongly deny the allegations referenced in the arbitration proceedings. Legal counsel representing us filed a Motion to Dismiss, or in the Alternative, Stay Arbitration in the federal court case. That Motion was denied on the basis that there is a pending Motion to Dismiss on jurisdictional Grounds. In October 2014, legal counsel filed a Motion to Dismiss with the Arbitrator on several grounds: (1) by filing the federal court action RM Invest waived its right to arbitrate and (2) RM Invest should not be permitted to pursue the same relief in two actions. The Arbitration case was dismissed in view of the Federal Court action. On October 1, 2015 the parties to the lawsuit entered into a confidential settlement agreement fully and finally resolving and settling any and all claims against one another arising from the matters referenced in this lawsuit. As part of the settlement agreement, the parties also agreed to broad releases precluding legal action for any claims against one another, howsoever arising and whether referenced in the lawsuit or not. On October 2, 2015, the parties to the lawsuit filed a Joint Stipulation of Settlement and the court entered an order administratively closing the case. Wayne Orkin On June 27, 2014, we were served with a lawsuit filed in the Los Angeles County of the Superior Court of California by Wayne Orkin (“Orkin”). Orkin was a former employee of an entity First Business Solutions, LLC (“FBS”) that was a subsidiary of Unified Payments, LLC. The assets of Unified Payments, LLC were acquired by us in April 2013. Unified Payments, LLC is also a named defendant in this lawsuit. In his complaint, Orkin is claiming a “unity of interest in ownership” between the Defendants and that each of the named defendants were agents, alter egos and authorized representatives of one another. Orkin claims that the defendants breached its obligations pursuant to a verbal agreement allegedly into entered into in 2010 whereby he would allegedly be entitled to certain royalties resulting from the sales of a payment browser technology purchased by FBS from Orkin’s entity. The Plaintiff is claiming unspecified damages for alleged breach of contract, breach of covenant of good faith and fair dealing, misappropriation of technology, fraud and conversion. The Company asserts that it never had any dealings with Orkin and strongly denies all allegations contained in the Complaint. On September 23, 2014, The Court upheld the Motion to set aside a default judgment previously entered against Unified Payments. On the Motion to Dismiss (“demurrer”), Plaintiffs attorney filed an amended complaint to address certain deficiencies raised by our counsel. Requests for Discovery were served on Plaintiff’s counsel who recently requested an extension for filing responses thereto. At the court hearing on our demurrer to the Plaintiffs First Amended Complaint, the court gave the Plaintiff another opportunity to clarify its Complaint and Orkin filed a Second Amended Complaint in the California litigation on June 8, 2015. The Defendants filed a Demurrer in response. At a hearing on the matter, the judge sustained the Defendants demurrer to the breach of fiduciary duty claim against Unified Payments and Net Element essentially dismissing these claims. However, the judge allowed the contract and fraud claims to proceed against all defendants. The parties recently took depositions of various Plaintiff and Defendant parties. Litigation is proceeding in the California Courts and the trial is currently scheduled for June 27, 2016. As the employment agreement between Orkin and FBS has an arbitration clause that is binding on Orkin in his lawsuit against Unified Payments for alleged breach of the employment agreement, the parties agreed in early November 2014 to stipulate to arbitration in Florida and to stay the California proceedings pending the outcome of the arbitration. A Demand for Arbitration was served on the company on May 5th. The Company will be defending the claims set out in the Arbitration Complaint. The Company did not assume any of the contracts from the Unified Payments entity it acquired in 2013. The Company understands that the Predecessor Unified entity has filed counterclaims against Orkin in the arbitration matter and that the Arbitration is scheduled for hearing at the end of May 2016. Aptito.com, Inc. Our subsidiary (Aptito, LLC) filed a lawsuit against Aptito.com, Inc. and the shareholders of Aptito.com, Inc., in state court in the 11th Judicial Circuit in and for Miami-Dade County. This is an interpleader action in regards to 125,000 Gene Zell In June 2014, we, as plaintiff, commenced an action in the Miami-Dade Circuit Court, Florida against Gene Zell for defamation of our Company and CEO and tortious interference with our business relationships. In October 2014, the court granted a temporary injunction against Zell enjoining him from posting any information about our Company and CEO on any website and enjoining him from contacting our business partners or investors. Zell violated the Court Order and the Court granted a Motion imposing sanctions against Zell. We continue to seek enforcement of the Court Order. Zell recently filed a Motion to set aside the Court Order alleging he was unaware of the Court Proceedings. The Court dismissed Zell’s Motion to dissolve the injunction and the case is moving forward. Zell served Discovery demands on the Company that was addressed by legal counsel. The matter remains pending. Dan Hudson In August 2015, we, as plaintiff, commenced an action in the Miami-Dade Circuit Court, Florida against Dan Hudson for defamation of our Company and CEO and tortious interference with our business relationships. The Motion is for an injunction against Hudson enjoining him from posting any information about our Company and CEO on any website and enjoining him from contacting our business partners or investors. The Company has been unable to locate the Defendant to serve process on him. This matter is proceeding. Mari Vanna In March 2016, the Company learned that Mari Vanna DC, LLC (“the Plaintiff”) had filed a lawsuit in the United States District Court for the District of Columbia against Net Element and its TOT Group and Unified Payments subsidiaries. The Company has not been served any legal papers at this time but is aware of the filed suit. The Plaintiff alleges among other things, that the Company and its subsidiaries improperly withheld and failed to remit certain credit card transaction proceeds they processed on behalf of the Plaintiff. The Company disputes the allegations in the lawsuit and has proactively entered into discussions with the Plaintiff to resolve this matter. The parties have tentatively reached a settlement of this matter. Other Legal Proceedings We also are involved in certain legal proceedings and claims which arise in the ordinary course of business. In our opinion, based on consultations with outside counsel, the results of any of these ordinary course matters, individually and in the aggregate, are not expected to have a material effect on our results of operations, financial condition, or cash flows. As more information becomes available, if management should determine that an unfavorable outcome is probable on such a claim and that the amount of such probable loss that it will incur on that claim is reasonably estimable, we will record a reserve for the claim in question. If and when we record such a reserve is recorded, it could be material and could adversely impact our results of operations, financial condition, and cash flows. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | NOTE 12. RELATED PARTY TRANSACTIONS At January 1, 2014, we had $ 1,451,357 1,149,391 301,966 77,128 241,173 301,966 77,128 77,128 On September 11, 2014, per recommendation of the Compensation Committee of the Board of Directors of the Company, the Board of Directors approved and authorized the issuance to Oleg Firer, the Chief Executive Officer of the Company, 1,438,137 On September 18, 2015 we received $ 50,000 100,000 On October 5, 2015 we received $ 50,000 50,000 We received three installments of $ 332,985 During 2015 the Company’s CEO and Star Capital (an entity related to the CEO) provided advances to the Company totaling $ 745,712 425,000 125,000 300,000 320,712 329,881 9,169 Mobile Solutions and Online Solutions. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Stockholders Equity Note Disclosure [Text Block] | NOTE 13. STOCKHOLDERS’ EQUITY On December 9, 2014, our shareholders approved the increase in authorized common stock from 100,000,000 200,000,000 On June 12, 2015, our shareholders approved the increase in authorized common stock from 200,000,000 300,000,000 On September 11, 2015, we entered into a letter agreement (as subsequently amended) by and among our company and certain accredited investors, including certain of our directors and officers, providing for the issuance of 11,357,143 11,357,143 0.14 The options expire on the fifth (5th) annual anniversary of the date of the letter agreement. Prior to expiration, each restricted options is exercisable into one restricted share at the exercise price of $ 0.22 110 Equity Incentive Plan On December 5, 2013, our Board submitted and the shareholders approved the Net Element International, Inc. 2013 Equity Incentive Plan (the “2013 Plan”). Awards under the 2013 Plan may be granted in any one or all of the following forms: (i) incentive stock options (“Incentive Stock Options”) meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”); (ii) non-qualified stock options (“Non-Qualified Stock Options”) (unless otherwise indicated, references to “Options” include both Incentive Stock Options and Non-Qualified Stock Options); (iii) stock appreciation rights (“Stock Appreciation Rights”), which may be awarded either in tandem with Options (“Tandem Stock Appreciation Rights”) or on a stand-alone basis (“Nontandem Stock Appreciation Rights”); (iv) shares of common stock that are restricted (“Restricted Shares”); (v) units representing shares of common stock (“Performance Shares”); (vi) units that do not represent shares of common stock but which may be paid in the form of common stock (“Performance Units”); and (vii) shares of common stock that are not subject to any conditions to vesting (“Unrestricted Shares”). The maximum aggregate number of shares of common stock available for award under the 2013 Plan at September 30, 2015 is 9,121,422 On September 11, 2014, per recommendation of our Compensation Committee of the Board of Directors, the Board of Directors approved and authorized the issuance to Oleg Firer, the Chief Executive Officer of the Company, 1,438,137 On December 10, 2014, the Compensation Committee of the Board of Directors of the Company approved and authorized the issuance to various employees, 1,807,921 119,194 1,684,534 897,800 670,000 On December 8, 2015, we issued 3,167,351 0.24 10 996,598 During 2015 and 2014, we issued common stock to the members of our Board of Directors and recorded compensation charges of $ 87,000 225,550 Stock Issuances In May 2014, the Company issued 100,000 shares of its common stock in connection with a restructuring of its indebtedness to MBF Merchant Capital, LLC. Effective June 30, 2014, we executed Amendment No. 1 with Oleg Firer, Steven Wolberg, Georgia Notes 18, LLC and Vladimir Sadovskiy. Prior to the date of this Amendment No. 1, the parties intended that the number of shares of common stock (the “Shares”) to be issued would be calculated to reflect Shares that constituted a 10% ownership interest in the Company on a pre-share issuance basis. As and with effect from the Effective Date, the parties agree that the number of Shares to be issued pursuant to the Exchange Agreement shall be calculated to reflect Shares that constitute a 10 617,093 323,085 On June 30, 2014, as a result of the closing of the credit facility under the RBL Loan Agreement, the entire principal amount of the Cayman Invest Note was converted into 5,569,158 On September 15, 2014, we entered into a Master Exchange Agreement, (the “Agreement”) with Crede. Crede acquired two existing promissory notes that had been previously issued by the Company, one with $ 2,343,500 13,533,360 The “exchange price” for this initial exchange was $ 5.70 125 3,481,768 2,321,177 5,802,945 80 Sale of Series A Preferred Stock On April 30, 2015, we entered into a $ 5,500,000 5,500 9 18 April 20, 2017 1.74 The conversion rights embedded in the Series A Convertible Preferred Stock are at a conversion price below-market, and subject to further market price adjustments and “down round” provisions. As a result, the beneficial conversion feature (“BCF”) was accounted for as derivative financial instrument. The BCF was valued at date of issuance using the Black- Scholes-Merton options pricing model, resulting in a recorded value of $ 212,918 During the year ended December 31, 2015, holders of Series A Convertible Preferred Stock converted 5,500 39,889,354 4,208,049 1,346,648 1,585,092 |
WARRANTS AND OPTIONS
WARRANTS AND OPTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 14. WARRANTS AND OPTIONS Warrants In 2013, the Company (then known as Cazador Acquisition Corporation Ltd.) issued warrants to purchase 8,940,000 8,938,900 We issued 2,709,360 2,500,000 1.74 At December 31, 2015, the warrants had a weighted average exercise price of $ 7.50 1.75 7.50 2.75 Options In November 2015, we issued options to purchase 11,357,143 0.22 5 11,357,143 904,222 At December 31, 2015, we had 14,643,688 0.23 5.98 119,194 1.34 9.94 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | NOTE 15. INCOME TAXES The components of income (loss) before income tax provision are as follows: December 31, December 31, 2015 2014 United States $ (11,748,447) $ (11,024,546) Foreign (1,579,479) 809,780 $ (13,327,926) $ (10,214,766) There was no current U.S. income tax or deferred income tax provision for years ended December 31, 2015 and December 31, 2014. There were current foreign tax provisions of $ 79,000 154,036 December 31, December 31, 2015 2014 U. S. Federal statutory income tax rate 34.0 % 34.0 % State income tax, net of federal tax benefit 4.1 % 3.3 % Debt Extinguishment 0.0 % -8.4 % Currency translation adjustment 3.9 % 3.7 % Stock based compensation related permanent differences -5.9 % 0.0 % Dividend Preferred Stock related permanent differences -3.6 % 0.0 % Change in uncertain tax liabilities -0.5 % -1.4 % Difference in foreign tax rates 0.1 % -0.6 % Change in valuation allowance -32.7 % -32.0 % Effective income tax rate -0.6 % -1.4 % The effective tax rate on operations of - 0.6 34 to dividends paid on preferred stock, stock based compensation and the increase in our valuation allowance. 1.4 34 December 31, December 31, 2015 2014 Deferred tax assets: Net operating loss carry forwards $ 17,086,460 $ 14,590,807 Stock based compensation 572,004 - Contingent legal expenses 235,259 - Basis difference in goodwill 3,038,988 3,488,850 Basis difference in fixed assets 62,710 11,815 Basis difference in intangible assets 1,447,782 1,286,862 Valuation allowance for deferred tax assets (22,443,203) (19,378,334) Total deferred tax assets - - Deferred tax liabilities: Basis difference in fixed assets - - Basis difference in intangible assets - - Total deferred tax liabilities - - Net deferred taxes $ - $ - Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts of assets and liabilities used for income tax purposes. At December 31, 2015, we had cumulative federal and state net operating losses (“NOLs”) carry forwards of approximately $ 44.9 . At December 31, 2014, we had cumulative federal state NOLs carry forwards of approximately 38.8 $ 10.4 9.2 $ 3.1 $ 22.4 The timing and manner in which we will be able to utilize some of its NOLs is limited by Section 382 of the Internal Revenue Code of 1986, as amended (IRC). IRC Section 382 imposes limitations on a corporation’s ability to use its NOLs when it undergoes an “ownership change.” Generally, an ownership change occurs if one or more shareholders, each of whom owns 5% or more in value of a corporation’s stock, increase their percentage ownership, in the aggregate, by more than 50% over the lowest percentage of stock owned by such shareholders at any time during the preceding three-year period. Because on June 10, 2014, we underwent an ownership change as defined by IRC Section 382, the limitation applies to us. The losses generated prior to the ownership change date (pre-change losses) are subject to the Section 382 limitation. The pre-change losses may only become available to be utilized by the Company at the rate of $2.4 million per year. Any unused losses can be carried forward, subject to their original carryforward limitation periods. In the year 2015, approximately $2.4 million in the pre-change losses was released from the Section 382 loss limitation. The Company can still fully utilize the NOLs generated after the change of the ownership, which was approximately $5.1 million 9.2 million |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | NOTE 16. SEGMENT INFORMATION Prior to the third quarter of 2015, we had a single reportable business segment: payment processing for electronic commerce. On May 20, 2015, we obtained financial and operational control of PayOnline, a provider of online payment processing of online transactions in emerging markets for services fees. Additionally, we rebranded our mobile payments business to Digital Provider and began reporting gross revenues for mobile payments where we provide access to branded content. Given the size of assets and revenues from PayOnline and Digital Provider, we began reporting segment information for three operating segments. Our three reportable segments include: (i) North America Transaction Solutions for electronic commerce, (ii) mobile solutions (primary Russian Federation and CIS) (iii) Online solutions, which started up with our acquisition of PayOnline Solutions on May 20, 2015. Management determines the reportable segments based on the internal reporting used by our Chief Operating Decision Maker to evaluate performance and to assess where to allocate resources. During the twelve months ending December 31, 2015, the principal revenue stream for all segments came from services fees and branded content. During the twelve months ending December 31, 2014 the revenue stream for all segments was service fees. Factors management used to identify the entity’s reportable segments The Company’s reportable segments are business units that offer different products and services in different geographies. The reportable segments are each managed separately because they offer distinct products, in distinct geographic locations, with different delivery and service processes. North America Transaction Solutions Our US payment processing business segment consists of the former Unified Payments business and Aptito. This segment operates primarily in North America. In March 2013, we acquired all of the business assets of Unified Payments, a provider of comprehensive turnkey, payment processing solutions to small and medium size business owners (merchants) and independent sales organizations across the United States. In April 2013, we purchased 80% of Aptito, a cloud based Software-as-a-Service (“SaaS”) restaurant management solution, which provides integrated POS, mPOS, Kiosk, Digital Menus functionality to drive consumer engagement via Apple® iPad®-based POS, kiosk and all other cloud-connected devices. Mobile Solutions Our Russian mobile and online payment processing segment consists of Digital Provider which operates primarily in Russia. In June 2012, we formed our subsidiary, OOO TOT Money to develop a business in mobile commerce payment processing. TOT Money launched its initial operations in Russia as a payment facilitator using SMS (short message services, which is a text messaging service) and MMS (multimedia message services) for mobile phone subscribers in Russia. During 2015, we changed or business model, rebranded our name to Digital Provider, and began to offer branded content to subscribers. Online Solutions On May 20, 2015, we acquired the net assets that comprise PayOnline, which includes a protected payment processing system to accept bank card payments for goods and services. PayOnline primarily operates in Russia and CIS. The accounting policies of the individual transactions in the reportable segments are the same as those of the Company, as described in Note 1. Transactions between reportable segments are primarily conducted at market rates, resulting in segment profits or expenses that are eliminated for reporting consolidated results. Segment Summary Information 2015 2015 2014 2014 North America $ 27,388,598 $ 2,912,363 $ 19,373,877 $ 3,089,053 Russia and CIS 12,846,764 6,366,814 1,862,827 94,460 Twelve months ended December 31, 2015 North Mobile Online Corporate Total Net revenues $ 27,388,598 $ 9,043,705 $ 3,803,059 $ - $ 40,235,362 Cost of revenues 23,497,808 8,124,763 2,354,644 - 33,977,215 Gross Margin 3,890,790 918,942 1,448,415 - 6,258,147 Gross margin % 14 % 10 % 38 % - 16 % General, administrative, asset disposal and other (Unallocated includes $4,306,304 in share based compensation) 2,038,833 1,043,187 1,349,970 9,184,791 13,616,781 Provision (recovery) for bad debt 749,952 (100,868) - 487 649,571 Depreciation and amortization 1,212,266 20,625 971,830 308,441 2,513,162 Interest expense (income), net 538,994 - 773 3,035,931 3,575,698 Loss on change in fair value and settlement of beneficial conversion derivative - - - 26,932,496 26,932,496 Gain on debt extinguishment - - (27,743,980) (27,743,980) Net (loss) income for segment $ (649,255) $ (44,002) $ (874,158) $ (11,718,166) $ (13,285,581) Segment assets $ 7,673,994 $ 1,848,574 $ 7,531,767 $ 5,859,226 $ 22,913,561 Expenditures for long-lived assets $ 991,739 $ 67,039 $ 4,429,664 $ - $ 5,488,442 Twelve months ended December 31, 2014 North Mobile Online Corporate Total Net revenues $ 19,373,877 $ 1,862,827 $ - $ - $ 21,236,704 Cost of revenues 15,925,924 - - - 15,925,924 Gross Margin 3,447,953 1,862,827 - - 5,310,780 Gross margin % 18 % 100 % - - 25 % General, administrative, asset disposal and other (Unallocated includes $4,267,334 in share based compensation) 2,859,512 573,239 - 7,920,493 11,353,244 Provision (recovery) for bad debt 496,711 (1,649,858) - - (1,153,147) Depreciation and amortization 2,009,332 2,894 - 345,910 2,358,136 Interest expense (income), net 2,388,833 271,233 - 1,045,628 3,705,694 Income from change in fair value and settlement of beneficial conversion derivative - - - (5,569,158) (5,569,158) Loss on debt extinguishment - - - 6,184,219 6,184,219 Gain on debt restructure (1,596,000) (1,596,000) Net (loss) income for segment $ (4,306,435) $ 2,665,319 $ - $ (8,331,092) $ (9,972,208) Segment assets $ 5,860,470 $ 1,761,752 $ - $ 6,700,447 $ 14,322,669 Expenditures for long-lived assets $ 1,866,323 $ 69,307 $ - $ - $ 1,935,630 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 17 . SUBSEQUENT EVENTS On January 21, 2016, the Company entered into an amendment of a letter agreement with its Chairman, Kenges Rakishev. The amendment provided for $ 910,000 4,664,275 0.1951 4,664,275 Each common stock option will expire on the fifth (5 th The transaction is subject to shareholder approval. In the event that the Stockholders Approval is not obtained within 120 days from the amendment date, the Investor and the Company agreed that at the Investor’s election, (i) the purchase price for the Restricted Shares and the Restricted Options shall be automatically amended to be equal to the product of (x) 4,664,275 and (y) the sum of $0.1951 and $0.125, in which case the Investor will have paid to the Company the difference between such price and the previously paid purchase price for the Restricted Shares and the Restricted Options, (ii) the number of Restricted Shares and the Restricted Options issuable to the Investor will be adjusted to be equal to the quotient determined by dividing (I) $910,000 by (II) $0.3201, or (iii) the Restricted Options will not be issued and the Investor will be issued the number of Restricted Shares calculated on the basis of $0.1951 per share purchase price. On February 26, 2016, the Company’s CEO advanced $ 55,924 During January 2016, the Company issued 167,500 224,450 Pursuant to the second installment provisions of the PayOnline purchase agreement, the Company issued 425,650 |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Organization [Policy Text Block] | Organization Net Element, Inc. (“We”, “us”, “our” or the “Company”) is a financial technology-driven group specializing in mobile payments and other transactional services in emerging countries and in the United States. We are differentiated by our proprietary technology which enables us to provide a broad suite of payment products, end-to-end transaction processing services and superior client support. We have three reportable segments: (i) U.S. payment processing, (ii) Mobile payment processing (primarily in Russian Federation and CIS) (iii) Online payment processing (primarily in Russian Federation and CIS). We are able to deliver our services across multiple points of access, or “multi-channel,” including brick and mortar locations, software integration, e-commerce, mobile operator billing, mobile and tablet-based solutions. In the United States, via our U.S. based subsidiaries, we generate revenues from transactional services and other payment technologies for small and medium-sized businesses. Through TOT Group Russia and Net Element Russia, we provide transactional services, mobile payment transactions, online payment transactions and other payment technologies in emerging countries in the Russian Federation, Commonwealth of Independent States (“CIS”), Europe and Asia. |
Business Description [Policy Text Block] | Business Our transactional services business enables merchants to accept credit cards as well as other forms of payment, including debit cards, checks, gift cards, loyalty programs and alternative payment methods in traditional card-present or swipe transactions, as well as card-not-present transactions, such as those conducted over the phone or through the Internet or a mobile device. We market and sell our services through both independent sales groups (“ISGs”), which are non-employee, external sales organizations and other third party resellers of our products and services, and directly to merchants through electronic media, telemarketing and other programs, including utilizing partnerships with other companies that market products and services to local and international merchants. In addition, we partner with banks such as BMO Harris Bank, N.A. in the United States and VTB Bank, Bank of Moscow, Raiffeisen Bank, Kazkommertsbank, and Rietumu Bank in the Russian Federation, CIS, Europe and Asia to sponsor us for membership in Visa ® ® PayOnline provides flexible high-tech payment solutions to companies doing business on the Internet or in the mobile environment. PayOnline specializes in integration and customization of payment solutions for websites and mobile apps. In particular, PayOnline arranges payment on the website of any commercial organization, which increases the convenience of using the website and helps maximize the number of successful transactions. In addition, PayOnline is focused on providing online and mobile payment acceptance services to the travel industry through direct integration with leading Global Distribution Systems, which includes Amadeus® and Sabre®. Key regions of the PayOnline company are: the CIS, Eastern Europe, Central Asia, Western Europe, North America and Asia major sub regions. PayOnline offices are located in Russia and in the Republic of Cyprus. We included the results of PayOnline starting May 20, 2015. Our mobile payments business, Digital Provider, LLC (f/k/a Tot Money, LLC) (“Digital Provider”) provides carrier-integrated mobile payments solutions. Our relationships with mobile operators give us substantial geographic coverage, a strong capacity for innovation in mobile payments and messaging, and the ability to offer our clients’ in-app, premium SMS, online and carrier billing services. We also market our own branded content which is a new business line for our mobile payments business. Aptito is a proprietary, next-generation, cloud-based payments platform for the hospitality industry, which creates an online consumer experience in offline commerce environments via tablet, mobile and all other cloud-connected devices. Aptito’s easy to use point-of-sale (“POS”) system makes things easier by providing comprehensive solution to the hospitality industry to help streamline management and operations. Orders placed tableside by customers directly speed up the ordering process and improve overall efficiency. Aptito's mobile POS system provides portability to the staff while performing all the same functions as a traditional POS system, and more. |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the balance sheet date and the reported amounts of expenses for the period presented. Actual results could differ from those estimates. Significant estimates include (i) the valuation of acquired merchant portfolios (ii) the recoverability of long-lived assets, (iii) the remaining useful lives of long-lived assets, and (iv) the sufficiency of merchant, legal, and other reserves. On an ongoing basis, the Company evaluates the sufficiency and accuracy of its estimates. Actual results could differ from those estimates. |
Reclassification, Policy [Policy Text Block] | Reclassifications Certain amounts in the 2014 consolidated financial statements have been reclassified to conform with the current year presentation. These reclassifications had no effect on the reported results of operations. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents The Company maintains its U.S. dollar-denominated cash in several non-interest bearing bank deposit accounts. All U.S. non-interest bearing transaction accounts are insured up to a maximum of $ 250,000 The Company maintains $ 922,062 318,416 respectively. |
Trade and Other Accounts Receivable, Policy [Policy Text Block] | Accounts Receivable Receivables are stated net of allowance for doubtful accounts. The Company estimates its allowance based on experience with its service providers and its judgment as to the likelihood of their ultimate payment. The Company also considers collection experience and makes estimates regarding collectability based on trends in aging. In Russia, the service providers are subsidiaries of large telecommunication companies and we do not reserve for these receivables given our experience with these service providers. |
Other Current Assets [Policy Text Block] | Other Current Assets The Company maintains an inventory of terminals, which it uses to service both merchants and independent sales agents. If the terminals are sold for a fee, the Company expenses the cost of these terminals, plus any set up fees at the time of the sale. Many times, the Company will provide the terminals as an incentive to stay with the Company for an average of three year period. In this case the cost of the terminal plus any set up fees will be amortized over three years, which is the average length of a merchant contract. If the merchants leave before the end of their contract, they are obligated to either return the terminal or pay for the terminal. The Company has $ 345,459 532,315 268,501 292,718 130,970 200,987 |
Property, Plant and Equipment, Policy [Policy Text Block] | Fixed Assets The Company depreciates its furniture and equipment and computers over a term of two to ten years. Computers and software are depreciated over terms between two and five years. Leasehold improvements are depreciated over the shorter of the economic life or term of each lease. All of our assets are depreciated on a straight-line basis for financial statement purposes. Expenditures for repairs and maintenance are charged to operating expense as incurred. Expenditures that increase the value or productive capacity of assets are capitalized. At the time of retirements, sales, or other dispositions of property and equipment, the original cost and related accumulated depreciation are removed from the respective accounts, and the gains or losses are presented as other expenses. |
Goodwill and Intangible Assets, Policy [Policy Text Block] | Included in the Company’s intangible assets are merchant portfolios, which represent the net book value of an acquired merchant customer base, and are amortized on a straight-line basis over their respective useful lives, generally three to five years. Merchant portfolios are assessed for impairment if events or circumstances indicate that their respective carrying values are not recoverable from the future anticipated undiscounted net cash flows attributable to such assets. In such cases, the amount of any potential impairment would be measured as the excess, if any, of carrying value over the fair value of such assets. The Company also capitalizes direct expenses associated with filing of patents and patent applications and amortizes the capitalized intellectual property costs over five years beginning when the patent is approved. Additionally, the Company capitalizes the fair value of intangible assets acquired in business combinations. The Company performs valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocates the purchase price of each acquired business to its respective net tangible and intangible assets. Acquired intangible assets include: merchant portfolios, trade names, non-compete agreements, customer relationships and technology. |
Capitalized Customer Acquisition Costs [Policy Text Block] | Capitalized Customer Acquisition Costs, Net Capitalized customer acquisition costs consist of up-front cash payments made to certain Independent Sales Groups (“ISG’s”) for the establishment of new merchant relationships. Capitalized customer acquisition costs represent incremental, direct customer acquisition costs that are recoverable through gross margins associated with merchant contracts. The up-front payment to the ISG is based on the estimated gross margin for the first year of the merchant contract. The deferred customer acquisition cost asset is recorded at the time of payment and the capitalized acquisition costs are primarily amortized on a straight-line basis over a period of three years. Management evaluates the capitalized customer acquisition cost for impairment at each balance sheet date by comparing, on a pooled basis by vintage month of origination, the expected future net undiscounted cash flows from underlying merchant relationships to the carrying amount of capitalized customer acquisition costs. If the estimated future net cash flows are lower than the recorded carrying amount, indicating an impairment of the carrying value of the capitalized customer acquisition costs, the impairment loss is charged to operations. During the years ended December 31, 2015 and 2014, the Company recorded $ 878,085 347,204 356,757 85,769 1,048,060 526,728 |
Commissions, Policy [Policy Text Block] | Accrued Residual Commissions The Company reports commission payments as a cost of revenues in the accompanying consolidated statement of operations and comprehensive loss. We pay agent commissions to ISGs and independent sales agents based on the processing volume of the merchants enrolled. The commission payments are based on varying percentages of the volume processed by us on behalf of the merchants. Percentages vary based on the program type and transaction volume of each merchant. We report commission payments as a cost of revenues in the accompanying consolidated statement of operations and comprehensive loss. At December 31, 2015 and 2014 the residual commissions payable to ISGs and independent sales agents were $ 1,205,751 514,252 We pay agent commission on annual fees between January and April of each year. We amortize the annual fees paid in equal monthly amounts from date of payment to end of year. We pay our agent commissions for annual fees in advance of recognizing the associated revenue. We deferred $ 483,090 175,800 |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Financial Instruments Convertible securities containing detachable warrants where the conversion price of the security and/or the exercise price of the warrants are affected by the current market price of our common stock are accounted for as derivative financial instruments when the exercise and conversion prices are not considered to be indexed to our stock. For such issuances of convertible securities with detachable warrants, the Company initially records both the warrant and the beneficial conversion feature (“BCF”) at fair value, using option pricing models commonly used by the financial services industry (Black-Scholes-Merton options pricing model) using inputs generally observable in the financial services industry. These derivative financial instruments are marked-to-market each reporting period, with unrealized changes in value reflected in earnings under the caption “gain (loss) on change in fair value of derivative”. For discounts arising from issuances of instruments embedded in a debt security, the discount is presented on the consolidated balance sheets as a discount to the principal amount of the related note payable. For discounts arising from issuances of instruments embedded in an equity security, the discount is presented as a reduction to additional paid-in-capital. The resulting discounts arising from the initial recording of the warrants and BCF are amortized over the term of the host security. The classification of the amortization is based on the nature of the host instrument. In this respect, amortization of discounts associated with debt issuances are classified as interest expense, whereas amortization of discounts associated with preferred stock issuances are classified as preferred stock dividends. At the time a warrant or BCF is exercised or cancelled, the fair value of the derivative financial instrument at the time of exercise/cancellation is calculated, and a realized gain or loss on conversion is determined and reported as “gain (loss) on settlement of derivative”. |
Fair Value Measurement, Policy [Policy Text Block] | The Company’s financial instruments consist primarily of cash, accounts receivables, merchant portfolios, notes receivable, trade payables and debt instruments. The carrying values of cash and cash equivalents, accounts receivable and trade payables are considered to be representative of their respective fair values due to the short-term nature of these instruments. The carrying amount of the long-term debt of $3.9 million as of December 31, 2015 approximates fair value because the Company’s current borrowing rate does not materially differ from market rates for similar bank borrowings. The long-term debt is classified as a Level 2 item within the fair value hierarchy. The Company measures certain nonfinancial assets and liabilities at fair value on a nonrecurring basis. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level fair value hierarchy to prioritize the inputs used to measure fair value and maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 Quoted market prices in active markets for identical assets or liabilities as of the reporting date Level 2 Observable market based inputs or unobservable inputs that are corroborated by market data Level 3 Unobservable inputs that are not corroborated by market data These non-financial assets and liabilities include intangible assets and liabilities acquired in a business combination as well as impairment calculations, when necessary. The fair value of the assets acquired and liabilities assumed in connection with the PayOnline acquisition, as discussed in Note 4, were measured at fair value by the Company at the acquisition date. The fair values of the Company’s merchant portfolios are primarily based on Level 3 inputs and are generally estimated based upon independent appraisals that include discounted cash flow analyses based on the Company’s most recent cash flow projections, and, for years beyond the projection period, estimates based on assumed growth rates. Assumptions are also made regarding appropriate discount rates, perpetual growth rates, and capital expenditures, among others. In certain circumstances, the discounted cash flow analyses are corroborated by a market-based approach that utilizes comparable company public trading values, and, where available, values observed in private market transactions. The inputs used by management for the fair value measurements include significant unobservable inputs, and therefore, the fair value measurements employed are classified as Level 3. The goodwill impairment was primarily based on observable inputs using company specific information and is classified as Level 3. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentrations The Company’s total revenue was $ 40,235,362 21,234,704 31,204,871 9,030,491 The credit card processing revenues were from merchant customer transactions, which are processed primarily by three “third-party” processors. For the twelve months ended December 31, 2015 and 2014, the Company processed 51 63 10 24 The mobile electronic payment revenues were from merchant customer transactions, which are processed primarily by three mobile operators during the twelve months ended December 31, 2015 and two mobile operators during the twelve months ended December 31, 2014. For the year ended December 31, 2015, the Company processed 9 5 3 3.4 3.5 |
Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign Currency Transactions The Company is subject to exchange rate risk in its foreign operations in Russia, the functional currency of which is Russian Ruble, where the Company generates service fee revenues and interest income and incurs product development, engineering, website development, and general and administrative costs and expenses. The Russian engineering operations pay a majority of their operating expenses in their local currencies, exposing the Company to exchange rate risk. The Company does not engage in any currency hedging activities. |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition The Company recognizes revenue when the following four basic criteria have been met: (1) persuasive evidence of a sales arrangement exists; (2) performance of services has occurred, (3) the sales price is fixed or determinable, and (4) collectability is reasonably assured. The Company considers persuasive evidence of a sales arrangement to be the receipt of a billable transaction from aggregators, signed contract or the processing of a credit card transaction. Collectability is assessed based on a number of factors, including transaction history with the customer and the credit worthiness of the customer. If it is determined that the collection is not reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash. The Company records cash received in advance of revenue recognition as deferred revenue. Our revenues for the years ended December 31, 2015 and 2014 are principally derived from the following sources: Transactional Processing Fees: Transactional processing fees are generated primarily from TOT Payments doing business as Unified Payments, which is our US transaction processing company, PayOnline, which is our Russian online transaction processing company, consolidated effective May 20, 2015 when we obtained control of PayOnline. See “PayOnline” in Note 4 for additional more information and Aptito our point of sale solution for restaurants. Our transactional processing companies derive revenues primarily from the electronic processing of services including: credit, debit, electronic benefits transfer and alternative payment methods card processing authorized and captured through proprietary and third party networks, electronic gift certificate processing, and equipment sales. These revenues are recorded as bankcard and other processing transactions when processed. In addition to generating service fees, Aptito earns monthly license fees for use of its platform. Typically, fees charged to merchants for these processing services are based on a variable percentage of the dollar amount of each transaction and in some instances, additional fees are charged for each transaction. Merchant customers also may be charged miscellaneous fees, including statement fees, annual fees, monthly minimum fees, fees for handling chargebacks, gateway fees, and fees for other miscellaneous services. Generally, we (i) are the primary obligor in our arrangements with our merchant customers, (ii) have latitude in establishing the price of our services, (iii) have the ability to change the product and perform parts of the services, (iv) have discretion in supplier selection, (v) have latitude in determining the product and service specifications to meet the needs of our merchant customers, and (vi) assume credit risk. In such cases, we report revenues as gross of fees deducted by our sponsoring member banks, as well as fees deducted from card-issuing member banks and card associations (Visa® and MasterCard®) on behalf of our sponsoring member banks for interchange and assessments. These fees charged by the card associations to process the credit card transactions are recorded separately as cost of revenue and interchange fees in the accompanying condensed consolidated statement of operations and comprehensive loss. Service Fees: Mobile payment processing revenues for third party content providers continue to be accounted for as service fees and presented net of aggregator and mobile operator payments on the consolidated financial statements as these revenues are considered to be agency fees. Cost of revenues for Digital Provider is comprised primarily of mobile operator fees, content provider fees and fees for short numbers paid to mobile operators. Additionally, penalties and penalty recoveries are recorded as cost of sales. Service revenues for mobile payment processing services are presented net as these revenues are considered to be agency fees. Subscription revenues for our branded content are recognized when a content subscriber initiates the purchase of our access to content using WAP-click, Internet-click, or a SMS-to-short number registered to us. Digital Provider’s subscription revenues are recorded at the amounts charged to the third party customer. Cost of revenues for Digital Provider branded content includes fees due to mobile operators and marketing partners, as well as short number fees. Cost of revenues for TOT Payments, Aptito and PayOnline is comprised primarily of processing fees paid to third parties attributable to providing transaction processing and service fees for POS system usage by our merchant customers. Interchange fees and cost of services are recognized as incurred, which generally occurs in the same period in which the corresponding revenue is recognized. Interchange fees are set by the card networks, and are paid to the card-issuing bank. Interchange fees are calculated as a percentage of the dollar volume processed plus a per transaction fee. We also pay Visa® and MasterCard® network dues. The Company has multiple element arrangements that include bundled transactions with merchants encompassing annual PCI (payment card industry) fees, annual membership fees, and monthly processing fees. The Company adopted accounting standard update No 2009-13, “MultipleDeliverable Revenue Arrangements” (ASU 2009-13). ASU 2009-13 requires the use of the relative selling price method of allocating total consideration to units of accounting in a multiple element arrangement and eliminates the residual method. This accounting principle requires an entity to allocate revenue in an arrangement using estimated selling price deliverables if it does not have vendor specific objective evidence (VSOE) or third party evidence (TPE) of selling price. VSOE is the price charged when the same or similar product or service is sold separately. The Company defines VSOE as a median price of recent stand-alone transactions that are priced within a narrow range. TPE is determined based on the prices charged by our competitors for a similar deliverable when sold separately. The Company evaluates each deliverable in its arrangements to determine whether it represents a separate unit of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value to our customers. The Company’s products (i.e., terminals) and services qualify as separate units of accounting under ASU 2009-13. The Company’s payment processing division derives revenues primarily from the electronic processing of services including credit, debit and electronic benefits transfer card processing authorized and captured through third party networks, check conversion and guarantee, electronic gift certificate processing, and equipment leasing and sales. These revenues are recorded as bankcard and other processing transactions when processed. Typically, fees charged to merchants for these processing services are based on a variable percentage of the dollar amount of each transaction and in some instances, additional fees are charged for each transaction. Merchant customers may also be charged miscellaneous fees, including statement fees, annual fees, monthly minimum fees, fees for handling chargebacks, gateway fees, and fees for other miscellaneous services. The fair value for annual fees is based on the annual contract renewal price and is deemed to represent stand-alone selling price based upon VSOE. The fair value for processing is based on prices charged by our competitors for similar deliverables when sold separately and is deemed to represent stand-alone selling price based upon TPE. Deferred revenue represents primarily amounts received in advance for annual fee billings and are recognized on a pro rata basis over the service period. Generally, the Company (i) is the primary obligor in its arrangements with its merchant customers, (ii) has latitude in establishing the price of its services, (iii) has the ability to change the product and perform parts of the services, (iv) has discretion in supplier selection, (v) has latitude in determining the product and service specifications to meet the needs of its merchant customers, and (vi) assumes credit risk. In such cases, the Company reports revenues as gross of fees deducted by its sponsoring member banks, as well as fees deducted from card-issuing member banks and card associations (Visa/MasterCard) on behalf of its sponsoring member banks for interchange and assessments. These fees charged by the card associations to process the credit card transactions are recorded separately as cost of sales and interchange fees in the accompanying consolidated statement of operations. |
Earnings Per Share, Policy [Policy Text Block] | Net Loss per Share Basic net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares issuable upon exercise of common stock options or warrants. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would have an anti-dilutive effect. At both December 31, 2014 and 2015, the Company had 8,938,900 14,643,688 |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes indicate that the carrying amount of an asset or group of assets may not be recoverable. During the year ended December 31, 2015 and 2014, there was no impairment of goodwill and intangible assets. |
Income Tax, Policy [Policy Text Block] | Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize net deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes. The Company’s evaluation of uncertain tax positions was performed for the tax years ended December 31, 2011 and forward, the tax years which remain subject to examination at December 31, 2015. Please see Note 15 for discussion of the Company’s uncertain tax positions. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued and Adopted Accounting Guidance In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which defers by one year the effective date of ASU 2014-09. Accordingly, this guidance is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted for interim and annual periods beginning after December 15, 2016. The Company plans to adopt this guidance on January 1, 2018. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on the Company’s financial position, results of operations and cash flows. In November 2014, the FASB issued Accounting Standards Update 2014-16 (“ASU 2014-16”), Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). ASU 2014-16 does not change the current criteria in GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required, but clarifies how current GAAP should be interpreted in the evaluation of the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share, reducing existing diversity in practice. ASU 2014-16 is effective for annual periods beginning after December 15, 2015, and interim periods thereafter. The adoption of ASU 2014-16 will not have a material impact on our consolidated financial statements, as we do not have outstanding hybrid financial instruments at December 31, 2015. In September 2015, the FASB issued ASU 2015-16, “Business Combinations,” which simplifies the accounting for measurement-period adjustments by eliminating the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires the cumulative impact of measurement period adjustments, including the impact on prior periods, to be recognized in the reporting period in which the adjustment is identified. The ASU is effective for public companies for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. The Company evaluated the effects of the ASU 2015-16 and elected to early adopt the ASU during the third quarter of 2015. The ASU will be applied prospectively to the acquisitions which require adjustments to the provisional amounts that occurred during the open measurement periods, regardless of the acquisition date. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. This ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and entities are permitted to apply either prospectively or retrospectively; early adoption is permitted. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on the Company’s financial position, results of operations and cash flows. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”. The new standard principally affects accounting standards for equity investments, financial liabilities where the fair value option has been elected, and the presentation and disclosure requirements for financial instruments. Upon the effective date of the new standards, all equity investments in unconsolidated entities, other than those accounted for using the equity method of accounting, will generally be measured at fair value through earnings. There will no longer be an available-for-sale classification and therefore, no changes in fair value will be reported in other comprehensive income for equity securities with readily determinable fair values. The new guidance on the classification and measurement will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and early adoption is permitted. The Company is in the process of evaluating the impact of the adoption of ASU 2016-01 on the Company’s financial position, results of operations and cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases” which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. The ASU is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update 2016-08 Revenue from Contracts with Customers (Topic 606) to clarify implementation guidance on principal versus agent considerations (for reporting revenue on a gross or net basis). The ASU is an amendment to Topic 606, clarifies the implementation guidance, and requires an entity to account for revenue as an agent when another entity controls the specified good or service before that good or service is transferred to the customer. This ASU is effective for annual periods beginning after December 15, 2017. The Company is currently evaluating the effects, if any, which the adoption of this guidance will have on the Company’s financial position, results of operations and cash flows. |
ACQUISITION OF PAYONLINE (Table
ACQUISITION OF PAYONLINE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following table summarizes the fair value of consideration paid and the preliminary and final allocation of purchase price to the fair value of tangible and intangible assets acquired and liabilities assumed: Purchase Consideration: Initial purchase Adjustments Final purchase Cash $ 3.6 $ - $ 3.6 Fair Value of Earnout - 0.6 0.6 Issuance of Net Element Stock 3.6 $ - 3.6 Total Consideration Transferred $ 7.2 $ 0.6 $ 7.8 Purchase Price Allocation to Identifiable assets acquired and liabilities assumed (Preliminary) Current Assets $ 0.8 $ - $ 0.8 Merchant Portfolios and Client lists 1.9 (0.5) 1.4 Other Intangible Assets 4.8 (1.9) 2.9 Goodwill - 3.0 3.0 Fixed Assets 0.1 - 0.1 Currrent Liabilities (0.4) - (0.4) Total Identifiable Net Assets 7.2 0.6 7.8 Total Purchase Price Allocation $ 7.2 $ 7.8 |
Business Acquisition, Pro Forma Information [Table Text Block] | Twelve Twelve Months Months Ended Ended December 31, 2015 December 31, 2014 Net Revenues $ 42,725,207 $ 27,404,966 Net Loss from Operations $ (12,240,344) $ (8,513,638) |
FIXED ASSETS (Tables)
FIXED ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment [Table Text Block] | Useful life (in years) December 31, 2015 December 31, 2014 Furniture and equipment 3 - 10 $ 174,133 $ 132,228 Computers 2 - 5 141,692 61,369 Total 315,825 193,597 Less: Accumulated depreciation (153,702) (122,679) Total fixed assets, net $ 162,123 $ 70,918 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | The Company had $ 5,423,880 2,492,050 Portfolios and Client Acquisition PCI Domain Covenant Not to IP Sofware Client Lists Costs Certification Trademarks Names Compete Total Balance at December 31, 2013 $ 243,825 $ 1,698,421 $ 380,511 $ - $ - $ - $ 641,667 $ 2,964,424 Additions 371,992 1,151,000 343,331 - - - - 1,866,323 Amortization (94,893) (1,766,690) (197,114) - - - (280,000) (2,338,697) Balance at December 31, 2014 $ 520,924 $ 1,082,731 $ 526,728 $ - $ - $ - $ 361,667 $ 2,492,050 Additions due to Payonline purchase 1,328,000 1,410,000 - 449,000 708,062 429,939 - 4,325,001 Other additions 163,129 878,085 1,041,214 Amortization (463,451) (842,806) (356,753) (93,542) (146,290) (90,793) (280,000) (2,273,635) Divested - (160,750) - - - - - (160,750) Balance at December 31, 2015 $ 1,548,602 $ 1,489,175 $ 1,048,060 $ 355,458 $ 561,772 $ 339,146 $ 81,667 $ 5,423,880 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | The following table presents the estimated aggregate amortization expense of other intangible assets for the next five years ending December 31, 2016 - 2020. Year Amortization Expense 2016 $ 1,862,405 2017 1,780,738 2018 1,780,737 2019 - 2020 - Total $ 5,423,880 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | The following table details the items comprising the balances outstanding as of December 31, 2015 and December 31, 2014. December 31, December 31, 2015 2014 Accrued professional fees $ 220,140 $ 295,144 Short term loan advances 200,000 75,346 Accrued payroll 79,653 70,463 Accrued bonus 2,254,316 1,409,131 Accrued foreign taxes 79,691 189,690 Other accrued expenses 141,265 312,111 $ 2,975,065 $ 2,351,885 |
LONG TERM DEBT (Tables)
LONG TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments [Table Text Block] | Long Term debt consisted of the following: December 31, December 31, 2015 2014 RBL Capital Group LLC $ 3,965,000 $ 3,315,000 Convertible Notes Payable - - Total Debt 3,965,000 3,315,000 Less Current Portion (518,437) (98,493) Long Term Debt $ 3,446,563 $ 3,216,507 |
Schedule of Extinguishment of Debt [Table Text Block] | The transaction was recorded with a $ 2,462,987 The effects of the transaction were as follows: Total Shares Provided 5,802,945 Market Price Sept 15, 2014 $ 2.88 Value of Stock Issued $ 16,712,482 Georgia Notes (13,268,000) Accrued interest (345,360) Discount on Georgia Notes 1,663,865 Capital Sources (2,300,000) Loss on Debt Extinguishment $ 2,462,987 |
Schedule of Maturities of Long-term Debt [Table Text Block] | Scheduled principal maturities on RBL indebtedness at December 31, 2015 is as follows: Long term debt consisted of the Following: 2016 $ 518,437 2017 872,964 2018 1,002,342 2019 1,150,897 2020 420,360 Balance December 31, 2015 $ 3,965,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block] | The components of income (loss) before income tax provision are as follows: December 31, December 31, 2015 2014 United States $ (11,748,447) $ (11,024,546) Foreign (1,579,479) 809,780 $ (13,327,926) $ (10,214,766) |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | The following is a reconciliation of the effective income tax rate with the U.S. federal statutory income tax rate at December 31, 2015 and December 31, 2014: December 31, December 31, 2015 2014 U. S. Federal statutory income tax rate 34.0 % 34.0 % State income tax, net of federal tax benefit 4.1 % 3.3 % Debt Extinguishment 0.0 % -8.4 % Currency translation adjustment 3.9 % 3.7 % Stock based compensation related permanent differences -5.9 % 0.0 % Dividend Preferred Stock related permanent differences -3.6 % 0.0 % Change in uncertain tax liabilities -0.5 % -1.4 % Difference in foreign tax rates 0.1 % -0.6 % Change in valuation allowance -32.7 % -32.0 % Effective income tax rate -0.6 % -1.4 % |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | Significant components of our deferred tax assets and liabilities as of December 31, 2015 and December 31, 2014 are as follows: December 31, December 31, 2015 2014 Deferred tax assets: Net operating loss carry forwards $ 17,086,460 $ 14,590,807 Stock based compensation 572,004 - Contingent legal expenses 235,259 - Basis difference in goodwill 3,038,988 3,488,850 Basis difference in fixed assets 62,710 11,815 Basis difference in intangible assets 1,447,782 1,286,862 Valuation allowance for deferred tax assets (22,443,203) (19,378,334) Total deferred tax assets - - Deferred tax liabilities: Basis difference in fixed assets - - Basis difference in intangible assets - - Total deferred tax liabilities - - Net deferred taxes $ - $ - |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Revenue from External Customers by Geographic Areas [Table Text Block] | Geographic Summary Information 2015 2015 2014 2014 North America $ 27,388,598 $ 2,912,363 $ 19,373,877 $ 3,089,053 Russia and CIS 12,846,764 6,366,814 1,862,827 94,460 |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | The following tables present financial information of the Company’s reportable segments at December 31, 2015. The “corporate and eliminations” column includes all corporate expenses and intercompany eliminations for consolidated purposes. Prior to May 20, 2015, we only had one segment Payment processing for electronic transactions. Twelve months ended December 31, 2015 North Mobile Online Corporate Total Net revenues $ 27,388,598 $ 9,043,705 $ 3,803,059 $ - $ 40,235,362 Cost of revenues 23,497,808 8,124,763 2,354,644 - 33,977,215 Gross Margin 3,890,790 918,942 1,448,415 - 6,258,147 Gross margin % 14 % 10 % 38 % - 16 % General, administrative, asset disposal and other (Unallocated includes $4,306,304 in share based compensation) 2,038,833 1,043,187 1,349,970 9,184,791 13,616,781 Provision (recovery) for bad debt 749,952 (100,868) - 487 649,571 Depreciation and amortization 1,212,266 20,625 971,830 308,441 2,513,162 Interest expense (income), net 538,994 - 773 3,035,931 3,575,698 Loss on change in fair value and settlement of beneficial conversion derivative - - - 26,932,496 26,932,496 Gain on debt extinguishment - - (27,743,980) (27,743,980) Net (loss) income for segment $ (649,255) $ (44,002) $ (874,158) $ (11,718,166) $ (13,285,581) Segment assets $ 7,673,994 $ 1,848,574 $ 7,531,767 $ 5,859,226 $ 22,913,561 Expenditures for long-lived assets $ 991,739 $ 67,039 $ 4,429,664 $ - $ 5,488,442 Twelve months ended December 31, 2014 North Mobile Online Corporate Total Net revenues $ 19,373,877 $ 1,862,827 $ - $ - $ 21,236,704 Cost of revenues 15,925,924 - - - 15,925,924 Gross Margin 3,447,953 1,862,827 - - 5,310,780 Gross margin % 18 % 100 % - - 25 % General, administrative, asset disposal and other (Unallocated includes $4,267,334 in share based compensation) 2,859,512 573,239 - 7,920,493 11,353,244 Provision (recovery) for bad debt 496,711 (1,649,858) - - (1,153,147) Depreciation and amortization 2,009,332 2,894 - 345,910 2,358,136 Interest expense (income), net 2,388,833 271,233 - 1,045,628 3,705,694 Income from change in fair value and settlement of beneficial conversion derivative - - - (5,569,158) (5,569,158) Loss on debt extinguishment - - - 6,184,219 6,184,219 Gain on debt restructure (1,596,000) (1,596,000) Net (loss) income for segment $ (4,306,435) $ 2,665,319 $ - $ (8,331,092) $ (9,972,208) Segment assets $ 5,860,470 $ 1,761,752 $ - $ 6,700,447 $ 14,322,669 Expenditures for long-lived assets $ 1,866,323 $ 69,307 $ - $ - $ 1,935,630 |
SUMMARY OF SIGNIFICANT ACCOUN33
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Significant accounting policies [Line Items] | |||
Cash Fdic Insured Amount Cash Noninterest Bearing Transaction Accounts | $ 250,000 | ||
Foreign bank balances that are not FDIC insured | 922,062 | $ 318,416 | |
Terminals Acquired Amount, Net | 345,459 | 532,315 | |
Terminals Acquired Amount, Net Held With Merchants | 268,501 | 292,718 | |
Terminals Amortization Amount Net | 130,970 | 200,987 | |
Accrued Sales Commission, Current | 1,205,751 | 514,252 | |
Deferred Sales Commission | 483,090 | 175,800 | |
Finite-lived Intangible Assets Acquired | 4,325,001 | 1,866,323 | |
Amortization of Intangible Assets | 2,273,635 | 2,338,697 | |
Finite-Lived Intangible Assets, Net, Total | 5,423,880 | 2,492,050 | $ 2,964,424 |
Revenue, Net | $ 40,235,362 | $ 21,236,704 | |
Warrants issued and outstanding that are anti-dilutive in effect | 8,938,900 | ||
Sales Revenue, Net [Member] | |||
Significant accounting policies [Line Items] | |||
Concentration Risk, Percentage | 10.00% | 24.00% | |
Sales Revenue, Net [Member] | Megaphone [Member] | |||
Significant accounting policies [Line Items] | |||
Concentration Risk, Percentage | 3.00% | ||
Sales Revenue, Net [Member] | Cynergy Data [Member] | |||
Significant accounting policies [Line Items] | |||
Concentration Risk, Percentage | 51.00% | 63.00% | |
Sales Revenue, Net [Member] | Beeline [Member] | |||
Significant accounting policies [Line Items] | |||
Concentration Risk, Percentage | 9.00% | 3.40% | |
Sales Revenue, Net [Member] | MTS [Member] | |||
Significant accounting policies [Line Items] | |||
Concentration Risk, Percentage | 5.00% | 3.50% | |
Card Transactions [Member] | |||
Significant accounting policies [Line Items] | |||
Revenue, Net | $ 31,204,871 | ||
Mobile Electronics Payments [Member] | |||
Significant accounting policies [Line Items] | |||
Revenue, Net | $ 9,030,491 | ||
Capitalized Patent Cost [Member] | |||
Significant accounting policies [Line Items] | |||
Intangible Assets, Useful life | 5 years | ||
Customer Acquiaition Cost [Member] | |||
Significant accounting policies [Line Items] | |||
Finite-lived Intangible Assets Acquired | $ 878,085 | $ 347,204 | |
Amortization of Intangible Assets | 356,757 | 85,769 | |
Finite-Lived Intangible Assets, Net, Total | $ 1,048,060 | $ 526,728 | |
Maximum [Member] | |||
Significant accounting policies [Line Items] | |||
Intangible Assets, Useful life | 5 years | ||
Maximum [Member] | Computers And Software [Member] | |||
Significant accounting policies [Line Items] | |||
Property, Plant and Equipment, Useful Life | 5 years | ||
Maximum [Member] | Furniture equipment and computers [Member] | |||
Significant accounting policies [Line Items] | |||
Property, Plant and Equipment, Useful Life | 10 years | ||
Minimum [Member] | |||
Significant accounting policies [Line Items] | |||
Intangible Assets, Useful life | 3 years | ||
Minimum [Member] | Computers And Software [Member] | |||
Significant accounting policies [Line Items] | |||
Property, Plant and Equipment, Useful Life | 2 years | ||
Minimum [Member] | Furniture equipment and computers [Member] | |||
Significant accounting policies [Line Items] | |||
Property, Plant and Equipment, Useful Life | 3 years |
BASIS OF PRESENTATION AND PRI34
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION (Details Textual) | 12 Months Ended |
Dec. 31, 2015 | |
OOO TOT Group Russia [Member] | |
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |
Noncontrolling Interest, Ownership Percentage by Parent | 99.00% |
TOT Group [Member] | |
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |
Subsidiary or Equity Method Investee, Cumulative Percentage Ownership after All Transactions | 100.00% |
Florida Aptito LLC [Member] | |
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |
Noncontrolling Interest, Ownership Percentage by Parent | 80.00% |
LIQUIDITY AND GOING CONCERN C35
LIQUIDITY AND GOING CONCERN CONSIDERATIONS (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Liquidity and Going Concern Considerations [Line Items] | ||
Net income (loss) | $ (13,253,612) | $ (10,185,516) |
Working capital deficit | 3,100,000 | |
Accumulated deficit | $ (143,955,048) | $ (129,116,344) |
Minimum Bid Price Closing Requirement Description | We are required to continually meet the listing requirements of The NASDAQ Capital Market (including a minimum bid price for our common stock of $1.00 per share) to maintain the listing of our common stock on The NASDAQ Capital Market. On June 19, 2015, we received a deficiency letter from The NASDAQ Capital Market indicating that for 30 consecutive trading days our common stock had a closing bid price below the $1.00 per share minimum. In accordance with NASDAQ Listing Rules, we were provided a compliance period of 180 calendar days, or until December 16, 2015, to regain compliance with this requirement. On December 17, 2015, we received a letter from The NASDAQ Capital Market notifying us that the initial period of 180 calendar days previously provided to the Company to regain compliance with the requirement was extended for an additional 180 calendar day period, or until June 13, 2016. We can regain compliance with the minimum closing bid price requirement if the bid price of our Common Stock closes at $1.00 per share or higher for a minimum of 10 consecutive business days. If we do not regain compliance with the minimum closing bid price requirement by June 13, 2016, The NASDAQ Capital Market will provide written notice that our securities are subject to delisting. At such time, we would be entitled to appeal the delisting determination to a NASDAQ Listing Qualifications Panel. We have received Board and shareholder approval to facilitate a reverse stock split to increase the bid price of our common stock, if required. We cannot provide any assurance that our stock price will recover within the permitted grace period. |
ACQUISITION OF PAYONLINE (Detai
ACQUISITION OF PAYONLINE (Details) - USD ($) | 1 Months Ended | ||
May. 20, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Purchase Consideration: | |||
Cash | $ 0 | ||
Issuance of Net Element Stock | 0 | ||
Adjustments, Fair Value of Earnout | 600,000 | ||
Adjustments, Total Consideration Transferred | 600,000 | ||
Purchase Price Allocation to Identifiable assets acquired and liabilities assumed (Preliminary) | |||
Current Assets | 0 | ||
Goodwill | $ 9,643,752 | $ 6,671,750 | |
Fixed Assets | 0 | ||
Currrent Liabilities | 0 | ||
Adjustments, Merchant Portfolios and Client lists | (500,000) | ||
Adjustments, Other Intangible Assets | (1,900,000) | ||
Adjustments, Goodwill | 3,000,000 | ||
Adjustments, Total Identifiable Net Assets | 600,000 | ||
Intial Purchase Price Allocations [Member] | |||
Purchase Consideration: | |||
Cash | 3,600,000 | ||
Fair Value of Earnout | 0 | ||
Issuance of Net Element Stock | 3,600,000 | ||
Total Consideration Transferred | 7,200,000 | ||
Purchase Price Allocation to Identifiable assets acquired and liabilities assumed (Preliminary) | |||
Current Assets | 800,000 | ||
Merchant Portfolios and Client lists | 1,900,000 | ||
Other Intangible Assets | 4,800,000 | ||
Goodwill | 0 | ||
Fixed Assets | 100,000 | ||
Currrent Liabilities | (400,000) | ||
Total Identifiable Net Assets | 7,200,000 | ||
Total Purchase Price Allocation | 7,200,000 | ||
Final Purchase Price Allocation [Member] | |||
Purchase Consideration: | |||
Cash | 3,600,000 | ||
Fair Value of Earnout | 600,000 | ||
Issuance of Net Element Stock | 3,600,000 | ||
Total Consideration Transferred | 7,800,000 | ||
Purchase Price Allocation to Identifiable assets acquired and liabilities assumed (Preliminary) | |||
Current Assets | 800,000 | ||
Merchant Portfolios and Client lists | 1,400,000 | ||
Other Intangible Assets | 2,900,000 | ||
Goodwill | 3,000,000 | ||
Fixed Assets | 100,000 | ||
Currrent Liabilities | (400,000) | ||
Total Identifiable Net Assets | 7,800,000 | ||
Total Purchase Price Allocation | $ 7,800,000 |
ACQUISITION OF PAYONLINE (Det37
ACQUISITION OF PAYONLINE (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Business Acquisition [Line Items] | ||
Net Revenues | $ 42,725,207 | $ 27,404,966 |
Net Loss from Operations | $ (12,240,344) | $ (8,513,638) |
ACQUISITION OF PAYONLINE (Det38
ACQUISITION OF PAYONLINE (Details Textual) $ in Millions | 1 Months Ended |
May. 20, 2015USD ($) | |
Business Acquisition [Line Items] | |
Payments to Acquire Businesses, Gross | $ 0 |
Business Acquisition, Equity Interest Issued or Issuable, Description | The Company will be required to issue additional shares if the market value of the shares provided is less than $3.6 million in 12 months. |
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Consideration Transferred | $ 0.6 |
Business Combination Provisional Information Initial Accounting Incomplete Adjustment Merchant Portfolio | 0.5 |
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Intangibles | 1.9 |
Business Combination Provisional Information Initial Accounting Incomplete Adjustment Goodwill | 3 |
Restricted Stock [Member] | |
Business Acquisition [Line Items] | |
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ 3.6 |
ACCOUNTS RECEIVABLE (Details Te
ACCOUNTS RECEIVABLE (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 5,198,993 | $ 3,417,173 |
Merchants [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 3,223,287 | 2,071,053 |
Allowance for Doubtful Accounts Receivable, Current | 103,031 | |
Allowance for Loan and Lease Losses, Write-offs | 754,162 | 496,709 |
Credit Card Processing Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 3,223,287 | 2,071,053 |
Mobile Operators [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 1,764,087 | 1,346,118 |
Russian operations [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for Loan and Lease Losses Write-offs, Net, Total | (104,591) | (1,649,858) |
Pay Online [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 211,019 | $ 0 |
FIXED ASSETS (Details)
FIXED ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | ||
Total fixed assets, gross | $ 315,825 | $ 193,597 |
Less: Accumulated depreciation | (153,702) | (122,679) |
Total fixed assets, net | 162,123 | 70,918 |
Furniture and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total fixed assets, gross | 174,133 | 132,228 |
Computers [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total fixed assets, gross | $ 141,692 | $ 61,369 |
Maximum [Member] | Furniture and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Furniture and equipment, Useful life | 10 years | |
Maximum [Member] | Computers [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Furniture and equipment, Useful life | 5 years | |
Minimum [Member] | Furniture and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Furniture and equipment, Useful life | 3 years | |
Minimum [Member] | Computers [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Furniture and equipment, Useful life | 2 years |
FIXED ASSETS (Details Textual)
FIXED ASSETS (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 129,343 | $ 84,488 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||
Balance Beginning | $ 2,492,050 | $ 2,964,424 |
Additions | 4,325,001 | 1,866,323 |
Other additions | 1,041,214 | |
Amortization | (2,273,635) | (2,338,697) |
Divested | (160,750) | |
Balance Ending | 5,423,880 | 2,492,050 |
IP Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance Beginning | 520,924 | 243,825 |
Additions | 1,328,000 | 371,992 |
Other additions | 163,129 | |
Amortization | (463,451) | (94,893) |
Divested | 0 | |
Balance Ending | 1,548,602 | 520,924 |
Portfolios and Client Lists [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance Beginning | 1,082,731 | 1,698,421 |
Additions | 1,410,000 | 1,151,000 |
Amortization | (842,806) | (1,766,690) |
Divested | (160,750) | |
Balance Ending | 1,489,175 | 1,082,731 |
Client Acquisition Costs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance Beginning | 526,728 | 380,511 |
Additions | 0 | 343,331 |
Other additions | 878,085 | |
Amortization | (356,753) | (197,114) |
Divested | 0 | |
Balance Ending | 1,048,060 | 526,728 |
PCI Certification [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance Beginning | 0 | 0 |
Additions | 449,000 | 0 |
Amortization | (93,542) | 0 |
Divested | 0 | |
Balance Ending | 355,458 | 0 |
Tradmarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance Beginning | 0 | 0 |
Additions | 708,062 | 0 |
Amortization | (146,290) | 0 |
Divested | 0 | |
Balance Ending | 561,772 | 0 |
Domain Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance Beginning | 0 | 0 |
Additions | 429,939 | 0 |
Amortization | (90,793) | 0 |
Divested | 0 | |
Balance Ending | 339,146 | 0 |
Covenent Not to Compete [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance Beginning | 361,667 | 641,667 |
Additions | 0 | 0 |
Amortization | (280,000) | (280,000) |
Divested | 0 | |
Balance Ending | $ 81,667 | $ 361,667 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Finite-Lived Intangible Assets [Line Items] | |||
2,016 | $ 1,862,405 | ||
2,017 | 1,780,738 | ||
2,018 | 1,780,737 | ||
2,019 | 0 | ||
2,020 | 0 | ||
Total | $ 5,423,880 | $ 2,492,050 | $ 2,964,424 |
INTANGIBLE ASSETS (Details Text
INTANGIBLE ASSETS (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Sep. 16, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Net, Total | $ 5,423,880 | $ 2,492,050 | $ 2,964,424 | |
Costs Incurred, Development Costs | 163,129 | 371,992 | ||
Cost of Goods Sold, Amortization | 2,383,818 | 2,338,697 | ||
Finite-lived Intangible Assets Acquired | 4,325,001 | 1,866,323 | ||
Proceeds from Sale of Intangible Assets | (300,000) | 0 | ||
North America [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Capitalized Software Development Costs for Software Sold to Customers | 163,129 | |||
Cost of Sales [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Cost of Goods Sold, Amortization | $ 110,183 | 65,049 | ||
Maximum [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 5 years | |||
Finite-Lived Intangible Assets, Remaining Amortization Period | 36 months | |||
Minimum [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 3 years | |||
Finite-Lived Intangible Assets, Remaining Amortization Period | 15 months | |||
Point Of Sale Software [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived Intangible Assets Acquired | $ 107,619 | 243,341 | ||
Payment Processing Software [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived Intangible Assets Acquired | 46,868 | 100,782 | ||
Mobile Payments Billing Software [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived Intangible Assets Acquired | 8,642 | 27,869 | ||
Portfolios and Client Lists [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Net, Total | 1,489,175 | 1,082,731 | 1,698,421 | |
Finite-lived Intangible Assets Acquired | 1,410,000 | 1,151,000 | ||
Noncompete Agreements [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived Intangible Assets, Fair Value Disclosure | 81,667 | 361,667 | ||
Computer Software, Intangible Asset [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived Intangible Assets Acquired | 1,328,000 | |||
PCI Certifiction [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived Intangible Assets Acquired | 449,000 | |||
Trademarks [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived Intangible Assets Acquired | 708,062 | |||
Internet Domain Names [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Net, Total | 339,146 | 0 | $ 0 | |
Finite-lived Intangible Assets Acquired | $ 429,939 | $ 0 | ||
Merchant portfolios [Member] | North America [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Net, Total | $ 160,250 | |||
Proceeds from Sale of Intangible Assets | 300,000 | |||
Finite-Lived Intangible Assets, Gross | 270,000 | |||
Finite-Lived Intangible Assets, Accumulated Amortization | 109,250 | |||
Gain (Loss) on Disposition of Intangible Assets | $ 139,250 | |||
Covenant Agreements [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 3 years |
SHORT TERM LOANS (Details Textu
SHORT TERM LOANS (Details Textual) | Apr. 14, 2015USD ($) | Apr. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2014USD ($) | Sep. 30, 2012RUB | Aug. 31, 2012USD ($) | Dec. 31, 2015USD ($)$ / sharesshares | Apr. 20, 2015USD ($)$ / shares | Dec. 31, 2014USD ($)$ / shares | Sep. 30, 2014RUB | Apr. 07, 2014USD ($) | Dec. 31, 2013USD ($) | Sep. 30, 2012USD ($) | Sep. 30, 2012RUB | Aug. 31, 2012RUB |
Short-term Debt [Line Items] | ||||||||||||||
Short-term Debt, Total | $ 0 | $ 0 | $ 8,478,810 | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 7.50 | $ 7.50 | ||||||||||||
Debt Instrument, Face Amount | $ 106,856 | |||||||||||||
Common Stock [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Stock Issued During Period, Shares, Upon Conversion Of Warrants | shares | 2,500,000 | |||||||||||||
Term Loan [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Short-term Debt, Total | $ 200,000 | |||||||||||||
Debt Instrument, Interest Rate During Period | 12.00% | |||||||||||||
Debt Instrument, Fee Amount | $ 2,500 | |||||||||||||
Proceeds from Short-term Debt, Total | $ 65,000 | |||||||||||||
Senior Convertible Notes and Warrants [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 18.00% | |||||||||||||
Debt Instrument, Fee Amount | $ 5,000,000 | |||||||||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 1.624 | |||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 1.74 | |||||||||||||
Debt Default, Short-term Debt, Amount | $ 5,000,000 | |||||||||||||
Debt Instrument, Interest Rate, Increase (Decrease) | 7.00% | |||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares | 2,709,360 | 2,709,360 | ||||||||||||
Securities Purchase Agreements [Member] | Convertible Debt [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Debt Instrument, Face Amount | $ 5,000,000 | |||||||||||||
Maximum [Member] | Senior Convertible Notes and Warrants [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Debt Instrument, Face Amount | $ 10,000,000 | |||||||||||||
Factoring Agreement With Alfa Bank [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Credit facility, maximum borrowing amount | $ 9,800,000 | RUB 300,000,000 | ||||||||||||
Maximum percentage of accounts receivable determining available credit | 80.00% | 80.00% | ||||||||||||
Debt Instrument, Interest Rate, Effective Percentage Rate Range, Minimum | 9.70% | |||||||||||||
Debt Instrument, Interest Rate, Effective Percentage Rate Range, Maximum | 11.95% | |||||||||||||
Line of Credit Facility, Current Borrowing Capacity | $ 10,800,000 | RUB 415,000,000 | ||||||||||||
Factoring Agreement With Alfa Bank [Member] | Maximum [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Credit facility, maximum borrowing amount | $ 3,280,000 | |||||||||||||
Factoring fee, per account receivable | RUB | RUB 100 | |||||||||||||
Percentage of Compensation Fees | 14.50% | |||||||||||||
Percentage of Monetary Claim Payable | 100.00% | |||||||||||||
Factoring Agreement With Alfa Bank [Member] | Minimum [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Credit facility, maximum borrowing amount | $ 330,000 | |||||||||||||
Factoring fee, per account receivable | RUB | RUB 10 | |||||||||||||
Percentage of Compensation Fees | 13.22% | |||||||||||||
Percentage of Monetary Claim Payable | 80.00% | |||||||||||||
Credit Agreement With Alfa Bank [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Credit facility, maximum borrowing amount | $ 9,800,000 | RUB 300,000,000 | ||||||||||||
Long-term Line of Credit | $ 1,800,000 | RUB 53,900,000 | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.55% | 3.55% | ||||||||||||
Restricted Cash and Cash Equivalents | $ 1,800,000 | RUB 55,000,000 | ||||||||||||
Interest rate for short term loans, maximum | 14.00% |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Accounts Payable and Accrued Liabilities [Line Items] | ||
Accrued professional fees | $ 220,140 | $ 295,144 |
Short term loan advances | 200,000 | 75,346 |
Accrued payroll | 79,653 | 70,463 |
Accrued bonus | 2,254,316 | 1,409,131 |
Accrued foreign taxes | 79,691 | 189,690 |
Other accrued expenses | 141,265 | 312,111 |
Accrued expenses | $ 2,975,066 | $ 2,351,885 |
ACCRUED EXPENSES (Details Textu
ACCRUED EXPENSES (Details Textual) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Accounts Payable and Accrued Liabilities [Line Items] | ||
Accrued Bonuses, Current | $ 2,254,316 | $ 1,409,131 |
Accrued Liabilities, Current | $ 2,975,066 | $ 2,351,885 |
LONG TERM DEBT (Details)
LONG TERM DEBT (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Long-term Debt, Total | $ 3,965,000 | $ 3,315,000 |
Less Current Portion | (518,437) | (98,493) |
Long Term Debt | 3,446,563 | 3,216,507 |
Convertible Notes Payable [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Total | 0 | 0 |
RBL Capital Group, LLC [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Total | $ 3,965,000 | $ 3,315,000 |
LONG TERM DEBT (Details 1)
LONG TERM DEBT (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 15, 2014 | |
Debt Instrument [Line Items] | |||
Total Shares Provided | 5,569,158 | ||
Loss on Debt Extinguishment | $ 27,743,980 | $ (6,184,219) | |
Crede CG III, Ltd. [Member] | |||
Debt Instrument [Line Items] | |||
Total Shares Provided | 5,802,945 | ||
Market Price Sept 15, 2014 | $ 2.88 | $ 5.70 | |
Value of Stock Issued | $ 16,712,482 | ||
Loss on Debt Extinguishment | 2,462,987 | ||
Crede CG III, Ltd. [Member] | Georgia Notes, LLC [Member] | |||
Debt Instrument [Line Items] | |||
Long-term Debt, Gross | (13,268,000) | ||
Crede CG III, Ltd. [Member] | Accrued interest [Member] | |||
Debt Instrument [Line Items] | |||
Loss on Debt Extinguishment | (345,360) | ||
Crede CG III, Ltd. [Member] | Discount on Georgia Notes [Member] | |||
Debt Instrument [Line Items] | |||
Loss on Debt Extinguishment | 1,663,865 | ||
Crede CG III, Ltd. [Member] | Capital Sources [Member] | |||
Debt Instrument [Line Items] | |||
Loss on Debt Extinguishment | $ (2,300,000) |
LONG TERM DEBT (Details 2)
LONG TERM DEBT (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
2,016 | $ 518,437 | |
2,017 | 872,964 | |
2,018 | 1,002,342 | |
2,019 | 1,150,897 | |
2,020 | 420,360 | |
Balance December 31, 2015 | $ 3,965,000 | $ 3,315,000 |
LONG TERM DEBT (Details Textual
LONG TERM DEBT (Details Textual) - USD ($) | Feb. 10, 2015 | Apr. 07, 2014 | Mar. 27, 2015 | Sep. 15, 2014 | Aug. 20, 2014 | Jul. 17, 2014 | Apr. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Jul. 31, 2014 | Jun. 30, 2014 |
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Maturity Date | Jan. 1, 2017 | ||||||||||
Debt Instrument, Face Amount | $ 106,856 | ||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 5,569,158 | ||||||||||
Gains (Losses) on Extinguishment of Debt | $ 27,743,980 | $ (6,184,219) | |||||||||
Long-term Debt, Total | 3,965,000 | 3,315,000 | |||||||||
Working Capital Deficit | $ 3,100,000 | ||||||||||
Write off of Deferred Debt Issuance Cost | 3,962,406 | ||||||||||
Common Stock, Share Subscribed but Unissued, Subscriptions Receivable | 1,111,130 | ||||||||||
Notes Payable One [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Notes Payable, Total | 1,416,926 | ||||||||||
Debt Instrument, Face Amount | 250,886 | ||||||||||
Long-term Debt, Total | 2,350,956 | ||||||||||
Debt Instrument, Periodic Payment, Interest | $ 77,560 | ||||||||||
Debt Instrument, Interest Rate During Period | 15.636% | ||||||||||
Prepayment Premium | $ 42,508 | ||||||||||
Restructuring Charges, Total | 92,239 | ||||||||||
Interest Expense, Debt | 16,020 | ||||||||||
Repayments of Notes Payable | $ 1,567,693 | ||||||||||
Restructuring Interest Rate | 5.00% | ||||||||||
Notes Payable Two [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Notes Payable, Total | $ 934,030 | ||||||||||
Debt Instrument, Face Amount | 116,533 | ||||||||||
Long-term Debt, Total | 2,601,842 | ||||||||||
Debt Instrument, Periodic Payment, Interest | 84,584 | ||||||||||
Restructuring Charges, Total | 90,615 | ||||||||||
Interest Expense, Debt | 9,505 | ||||||||||
Repayments of Notes Payable | $ 1,034,150 | ||||||||||
Restructuring Interest Rate | 5.00% | ||||||||||
Loan Cost [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term Debt, Total | $ 65,000 | ||||||||||
RBL Capital Group LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Periodic Payment | $ 10,911 | $ 6,819 | $ 90,421 | ||||||||
Debt Instrument, Face Amount | $ 400,000 | $ 250,000 | $ 11,200,000 | ||||||||
Debt Instrument, Debt Default, Interest Rate | 12.00% | ||||||||||
Debt Conversion, Converted Instrument, Rate | 15.00% | ||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 5,569,158 | ||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 10,000,000 | $ 10,000,000 | |||||||||
Common Stock Issued And Outstanding Percentage | 15.00% | ||||||||||
Long-term Line of Credit | $ 3,315,000 | ||||||||||
Debt Instrument, Interest Rate During Period | 13.90% | 13.90% | 13.90% | 13.90% | |||||||
Payments of Debt Issuance Costs | $ 8,000 | $ 5,000 | |||||||||
Debt Instrument, Term | 18 months | ||||||||||
Line of Credit Facility, Interest Rate at Period End | 18.635% | ||||||||||
RBL Capital Group LLC [Member] | Shares Issued One [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term Debt, Total | $ 400,000 | ||||||||||
RBL Capital Group LLC [Member] | Shares Issued Two [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term Debt, Total | 250,000 | ||||||||||
RBL Capital Group LLC [Member] | Letter of Credit [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 6,685,000 | ||||||||||
Debt Instrument, Debt Default, Description of Violation or Event of Default | After maturity of the loan, until all borrowings are paid in full, with respect to the advances under the credit facility, an additional three percent per annum would be added to such interest rate, and for any other amounts, obligations or payments due to RBL, an annual default rate not to exceed the lesser of (i) the prime rate plus 13% per annum and (ii) 18.635% per annum. | ||||||||||
Long-term Debt, Total | $ 3,315,000 | ||||||||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 6,035,000 | ||||||||||
RBL Capital Group LLC [Member] | Letter of Credit [Member] | Prime Rate [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Basis Spread on Variable Rate | 10.65% | ||||||||||
RBL Capital Group LLC [Member] | MBF Loan [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Face Amount | $ 3,000,000 | ||||||||||
Working Capital Deficit | $ 239,000 | ||||||||||
Capital Sources of NY [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Conversion, Original Debt, Amount | $ 2,343,500 | ||||||||||
Capital Sources of NY [Member] | Notes Payable [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Notes Payable, Total | $ 2,300,000 | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 15.00% | ||||||||||
Debt Instrument, Periodic Payment | $ 108,268 | $ 111,519 | |||||||||
Debt Instrument, Debt Default, Interest Rate | 15.00% | ||||||||||
Debt Instrument, Convertible, Automatic Conversion Feature, Percentage of Diluted Shares | 0.00% | ||||||||||
Georgia Notes, LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | ||||||||||
Debt Instrument, Face Amount | $ 13,300,000 | ||||||||||
Debt Conversion, Original Debt, Amount | $ 13,533,360 | ||||||||||
Crede CG III, Ltd. [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Conversion, Converted Instrument, Rate | 125.00% | 125.00% | |||||||||
Debt Conversion, Converted Instrument, Shares Issued | 5,802,945 | ||||||||||
Gains (Losses) on Extinguishment of Debt | $ 2,462,987 | ||||||||||
Debt Instrument, Convertible, Conversion Price | $ 5.70 | $ 2.88 | |||||||||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 80.00% | 80.00% | |||||||||
Crede CG III, Ltd. [Member] | Shares Issued One [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 3,481,768 | 3,481,768 | |||||||||
Crede CG III, Ltd. [Member] | Shares Issued Two [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 2,321,177 | 2,321,177 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Textual) | 1 Months Ended | 12 Months Ended | ||||
Mar. 17, 2014USD ($) | Jul. 30, 2013USD ($) | Dec. 31, 2015USD ($)ft²ashares | Apr. 07, 2014USD ($) | Dec. 31, 2013USD ($) | May. 31, 2013USD ($)ft² | |
Commitments And Contingencies [Line Items] | ||||||
Debt Instrument, Face Amount | $ 106,856 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | shares | 5,791,717 | |||||
Aptito, LLC [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Stock Issued During Period, Shares, Acquisitions | shares | 125,000 | |||||
Miami [Member] | Office Building [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Lease Expiration Date | Jan. 31, 2013 | |||||
Yekaterinburg [Member] | Small Office Building [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Lease Expiration Date | Jan. 10, 2015 | |||||
Operating Leases, Rent Expense, Net, Total | $ 11,000 | |||||
Area of Land | ft² | 650 | |||||
Yekaterinburg [Member] | Larger Office Building [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Lease Expiration Date | Jan. 31, 2016 | |||||
Operating Leases, Rent Expense, Net, Total | $ 15,800 | |||||
Area of Land | a | 940 | |||||
Moscow [Member] | Office Building [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Operating Leases, Rent Expense, Net, Total | $ 66,514 | |||||
Area of Land | ft² | 2,033 | |||||
Moscow [Member] | Apartment Building [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Lease Expiration Date | Feb. 28, 2017 | |||||
Operating Leases, Rent Expense, Net, Total | $ 14,571 | |||||
OOO-RM Invest [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Loss Contingency, Damages Sought, Value | $ 50,000,000 | |||||
Debt Instrument, Face Amount | $ 600,000,000 | |||||
Equity Method Investment, Ownership Percentage | 30.00% | |||||
Chief Executive Officer [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Due to Officers or Stockholders, Current | $ 1,042,509 | |||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | shares | 3,750,000 | |||||
Chief Legal Officer [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | shares | 800,000 | |||||
TOT Payments [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Loss Contingency, Damages Sought, Value | $ 10,000,000 | |||||
TOT Payments [Member] | Maximum [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Amount Of Unpaid Residual Income | 250,000 | |||||
TOT Payments [Member] | Minimum [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Amount Of Unpaid Residual Income | $ 150,000 | |||||
Office Space In Miami Florida [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Operating Leases Future Monthly Minimum Payments Remainder Of Fiscal Year | $ 16,800 | |||||
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | 134,400 | |||||
Operating Leases Future Monthly Minimum Payments Due Current | 17,640 | |||||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | 211,680 | |||||
Operating Leases Future Monthly Minimum Payments Due In Two Years | 18,522 | |||||
Operating Leases, Future Minimum Payments, Due in Two Years | $ 222,264 | |||||
Operating Leases Future Monthly Minimum Payments Due In Three Years | $ 19,448 | |||||
Operating Leases, Future Minimum Payments, Due in Three Years | $ 233,377 | |||||
Area of Real Estate Property | ft² | 5,200 | |||||
Office Space In Russia [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Lease Expiration Date | Jan. 31, 2017 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) | Dec. 11, 2015 | Nov. 12, 2015 | Oct. 07, 2015 | Oct. 06, 2015 | Oct. 05, 2015 | Sep. 11, 2014 | Jun. 10, 2014 | Sep. 18, 2015 | Oct. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Apr. 07, 2014 | Jan. 31, 2014 |
Related Party Transaction [Line Items] | ||||||||||||||
Due to Related Parties, Current | $ 329,881 | $ 0 | $ 1,451,357 | |||||||||||
Debt Instrument, Face Amount | $ 106,856 | |||||||||||||
Due to Related Parties | 329,881 | |||||||||||||
Stock Issued During Period, Value, New Issues | 0 | |||||||||||||
RUSSIAN FEDERATION | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Due to Related Parties | 9,169 | |||||||||||||
Chief Executive Officer [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Repayments of Related Party Debt | 125,000 | |||||||||||||
Proceeds from Related Party Debt | $ 50,000 | $ 50,000 | 745,712 | |||||||||||
Due to Related Parties | 320,712 | |||||||||||||
Options to Purchase of Restricted Stock | 1,438,137 | |||||||||||||
Stock Issued During Period, Value, New Issues | 300,000 | |||||||||||||
Payment For Related Party Debt | $ 425,000 | |||||||||||||
Director [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Proceeds from Related Party Debt | $ 100,000 | |||||||||||||
Related Party Transaction, Amounts of Transaction | $ 332,985 | $ 332,985 | $ 332,985 | |||||||||||
T1T Lab [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Due to Related Parties, Current | 1,149,391 | |||||||||||||
Enerfund LLC [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Due to Related Parties, Current | $ 301,966 | |||||||||||||
Repayments of Related Party Debt | $ 77,128 | |||||||||||||
Gains (Losses) on Extinguishment of Debt, before Write off of Deferred Debt Issuance Cost | $ 241,173 | |||||||||||||
Debt Instrument, Face Amount | 301,966 | |||||||||||||
Long-term Debt, Gross | $ 77,128 | |||||||||||||
Payment For Related Party Debt | $ 77,128 | |||||||||||||
Officer [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Proceeds from Related Party Debt | $ 50,000 |
STOCKHOLDERS' EQUITY (Details T
STOCKHOLDERS' EQUITY (Details Textual) - USD ($) | Dec. 08, 2015 | Dec. 10, 2014 | Nov. 30, 2015 | Apr. 30, 2015 | Sep. 30, 2014 | Sep. 15, 2014 | Jun. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | Sep. 11, 2015 | Jun. 12, 2015 | Dec. 09, 2014 |
Class of Warrant or Right [Line Items] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 5,791,717 | ||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 5,569,158 | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 0 | ||||||||||||
Conversion of Stock, Shares Converted | 39,889,354 | ||||||||||||
Stock Issued During Period, Value, Other | $ (2,679,861) | ||||||||||||
Common Stock, Shares Authorized | 300,000,000 | 200,000,000 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost, Total | $ 1,684,534 | ||||||||||||
Dividends, Preferred Stock, Stock | $ 1,585,092 | ||||||||||||
Common Share Exercise Price Percentage | 110.00% | ||||||||||||
Common Stock [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Stock Issued During Period, Shares, New Issues | 0 | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 0 | ||||||||||||
Stock Issued During Period, Shares, Other | 2,500,000 | ||||||||||||
Stock Issued During Period, Value, Other | $ 250 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | 11,357,143 | ||||||||||||
Stock Issued During Period Shares For Insider Financing | 11,357,143 | ||||||||||||
Equity Incentive Plan [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | 3,167,351 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost | $ 996,598 | ||||||||||||
Minimum [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Common Stock, Shares Authorized | 200,000,000 | 100,000,000 | |||||||||||
Maximum [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Common Stock, Shares Authorized | 300,000,000 | 200,000,000 | |||||||||||
RBL Capital Group LLC [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 5,569,158 | ||||||||||||
Georgia Notes, LLC [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Debt Conversion, Original Debt, Amount | $ 13,533,360 | ||||||||||||
Capital Sources of NY [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Debt Conversion, Original Debt, Amount | $ 2,343,500 | ||||||||||||
NETE [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Stock Issued During Period, Shares, New Issues | 323,085 | ||||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 10.00% | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 617,093 | ||||||||||||
Crede CG III, Ltd. [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Debt Conversion, Converted Instrument, Rate | 125.00% | 125.00% | |||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 5,802,945 | ||||||||||||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 80.00% | 80.00% | |||||||||||
Crede CG III, Ltd. [Member] | Shares Issued One [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 3,481,768 | 3,481,768 | |||||||||||
Crede CG III, Ltd. [Member] | Shares Issued Two [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 2,321,177 | 2,321,177 | |||||||||||
Director [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost, Total | $ 87,000 | $ 225,550 | |||||||||||
Master Exchange Agreement [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Share Price | $ 5.70 | ||||||||||||
Restricted Stock [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,807,921 | ||||||||||||
Stock Issued During Period, Value, Share-based Compensation, Gross | $ 897,800 | ||||||||||||
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures, Total | 670,000 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 0.22 | ||||||||||||
Restricted Stock [Member] | Equity Funding [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Shares Issued, Price Per Share | $ 0.14 | ||||||||||||
Plan 2013 [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 9,121,422 | ||||||||||||
Incentive Stock Option [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 119,194 | ||||||||||||
Oleg Firer [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Stock Issued During Period, Shares, Issued for Services | 1,438,137 | ||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||
Class of Warrant or Right [Line Items] | |||||||||||||
Stock Issued During Period, Shares, New Issues | 5,500 | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 5,500,000 | ||||||||||||
Preferred Stock, Dividend Rate, Percentage | 9.00% | 18.00% | |||||||||||
Conversion Of Stock Conversion Price | $ 1.74 | ||||||||||||
Preferred Stock, Redemption Date | Apr. 20, 2017 | ||||||||||||
Preferred Stock, Discount on Shares | $ 212,918 | ||||||||||||
Conversion of Stock, Shares Converted | 5,500 | ||||||||||||
Stock Issued During Period, Shares, Other | 4,208,049 |
WARRANTS AND OPTIONS (Details T
WARRANTS AND OPTIONS (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2015 | Apr. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Class of Warrant or Right [Line Items] | ||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 7.50 | $ 7.50 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 14,643,688 | 119,194 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 0.23 | $ 1.34 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 5 years 11 months 23 days | 9 years 11 months 8 days | ||
Class Of Warrant Or Right Weighted Average Remaining Contract Term | 1 year 9 months | 2 years 9 months | ||
Warrants Issued to Purchase Common Stock Exchanged Shares | 2,500,000 | |||
Cazador Acquisition Corporation Ltd [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants Issued to Purchase Common Stock | 8,940,000 | |||
Class of Warrant or Right, Outstanding | 8,938,900 | 8,938,900 | ||
Senior Convertible Notes and Warrants [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 2,709,360 | 2,709,360 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.74 | |||
Common Stock [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | 11,357,143 | |||
Stock Issued During Period Shares For Insider Financing | 11,357,143 | |||
Employee Stock Option [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Outstanding Weighted Average Exercise Price | $ 0.22 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 5 years | |||
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost | $ 904,222 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Components Of Income Loss Before Income Tax Provision [Line Items] | ||
United States | $ (11,748,447) | $ (11,024,546) |
Foreign | (1,579,479) | 809,780 |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | $ (13,327,926) | $ (10,214,766) |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Effective Income Tax Rate Reconciliation Percent [Line Items] | ||
U. S. Federal statutory income tax rate | 34.00% | 34.00% |
State income tax, net of federal tax benefit | 4.10% | 3.30% |
Debt Extinguishment | 0.00% | (8.40%) |
Currency translation adjustment | 3.90% | 3.70% |
Stock based compensation related permanent differences | (5.90%) | 0.00% |
Dividend Preferred Stock related permanent differences | (3.60%) | 0.00% |
Change in uncertain tax liabilities | (0.50%) | (1.40%) |
Difference in foreign tax rates | 0.10% | (0.60%) |
Change in valuation allowance | (32.70%) | (32.00%) |
Effective income tax rate | (0.60%) | (1.40%) |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | ||
Net operating loss carry forwards | $ 17,086,460 | $ 14,590,807 |
Stock based compensation | 572,004 | 0 |
Contingent legal expenses | 235,259 | 0 |
Basis difference in goodwill | 3,038,988 | 3,488,850 |
Basis difference in fixed assets | 62,710 | 11,815 |
Basis difference in intangible assets | 1,447,782 | 1,286,862 |
Valuation allowance for deferred tax assets | (22,443,203) | (19,378,334) |
Total deferred tax assets | 0 | 0 |
Deferred tax liabilities: | ||
Basis difference in fixed assets | 0 | 0 |
Basis difference in intangible assets | 0 | 0 |
Total deferred tax liabilities | 0 | 0 |
Net deferred taxes | $ 0 | $ 0 |
INCOME TAXES (Details Textual)
INCOME TAXES (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Income Tax Disclosure [Line Items] | ||
Current Foreign Tax Expense (Benefit) | $ 79,000 | $ 154,036 |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 3,100,000 | |
Tax Credit Carryforward, Limitations on Use | IRC Section 382 imposes limitations on a corporation’s ability to use its NOLs when it undergoes an “ownership change.” Generally, an ownership change occurs if one or more shareholders, each of whom owns 5% or more in value of a corporation’s stock, increase their percentage ownership, in the aggregate, by more than 50% over the lowest percentage of stock owned by such shareholders at any time during the preceding three-year period. Because on June 10, 2014, we underwent an ownership change as defined by IRC Section 382, the limitation applies to us. The losses generated prior to the ownership change date (pre-change losses) are subject to the Section 382 limitation. The pre-change losses may only become available to be utilized by the Company at the rate of $2.4 million per year. Any unused losses can be carried forward, subject to their original carryforward limitation periods. In the year 2015, approximately $2.4 million in the pre-change losses was released from the Section 382 loss limitation. The Company can still fully utilize the NOLs generated after the change of the ownership, which was approximately  $5.1 million. Thus, the total of approximately $ 9.2 million as of December 31, 2015 is available to offset future income. | |
Deferred Tax Assets, Valuation Allowance | $ 22,443,203 | $ 19,378,334 |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 34.00% | 34.00% |
Effective Income Tax Rate Reconciliation, Percent, Total | (0.60%) | (1.40%) |
Foreign Tax Authority [Member] | ||
Schedule of Income Tax Disclosure [Line Items] | ||
Operating Loss Carryforwards | $ 10,400,000 | $ 9,200,000 |
Federal And State Jurisdiction [Member] | ||
Schedule of Income Tax Disclosure [Line Items] | ||
Operating Loss Carryforwards | $ 44,900,000 | $ 38,800,000 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
North America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 27,388,598 | $ 19,373,877 |
Long-Lived Assets | 2,912,363 | 3,089,053 |
Russia and CIS [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 12,846,764 | 1,862,827 |
Long-Lived Assets | $ 6,366,814 | $ 94,460 |
SEGMENT INFORMATION (Details 1)
SEGMENT INFORMATION (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | ||
Net revenues | $ 40,235,362 | $ 21,236,704 |
Cost of revenues | 33,977,215 | 15,925,924 |
Gross Margin | $ 6,258,147 | $ 5,310,780 |
Gross margin (in percentage) | 16.00% | 25.00% |
General, administrative, asset disposal and other | $ 13,616,781 | $ 11,353,244 |
Provision (recovery) for bad debt | 649,571 | (1,153,147) |
Depreciation and amortization | 2,513,162 | 2,358,136 |
Interest expense (income), net | (3,575,698) | (3,705,694) |
Gain (Loss) on change in fair value and settlement of beneficial conversion derivative | (26,932,496) | 5,569,158 |
Gain (Loss) on debt extinguishment | 27,743,980 | (6,184,219) |
Gain on debt restructure | 0 | 1,596,000 |
Net (loss) income for segment | (13,327,926) | (10,214,766) |
Segment assets | 22,913,561 | 14,322,669 |
Expenditures for long-lived assets | 5,488,442 | 1,935,630 |
North America Transaction Solutions [Member] | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 27,388,598 | 19,373,877 |
Cost of revenues | 23,497,808 | 15,925,924 |
Gross Margin | $ 3,890,790 | $ 3,447,953 |
Gross margin (in percentage) | 14.00% | 18.00% |
General, administrative, asset disposal and other | $ 2,038,833 | $ 2,859,512 |
Provision (recovery) for bad debt | 749,952 | 496,711 |
Depreciation and amortization | 1,212,266 | 2,009,332 |
Interest expense (income), net | 538,994 | 2,388,833 |
Gain (Loss) on change in fair value and settlement of beneficial conversion derivative | 0 | 0 |
Gain (Loss) on debt extinguishment | 0 | |
Net (loss) income for segment | (649,255) | (4,306,435) |
Segment assets | 7,673,994 | 5,860,470 |
Expenditures for long-lived assets | 991,739 | 1,866,323 |
Mobile Solutions [Member] | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 9,043,705 | 1,862,827 |
Cost of revenues | 8,124,763 | 0 |
Gross Margin | $ 918,942 | $ 1,862,827 |
Gross margin (in percentage) | 10.00% | 100.00% |
General, administrative, asset disposal and other | $ 1,043,187 | $ 573,239 |
Provision (recovery) for bad debt | (100,868) | (1,649,858) |
Depreciation and amortization | 20,625 | 2,894 |
Interest expense (income), net | 0 | 271,233 |
Gain (Loss) on change in fair value and settlement of beneficial conversion derivative | 0 | 0 |
Gain (Loss) on debt extinguishment | 0 | 0 |
Net (loss) income for segment | (44,002) | 2,665,319 |
Segment assets | 1,848,574 | 1,761,752 |
Expenditures for long-lived assets | 67,039 | 69,307 |
Online Solutions [Member] | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 3,803,059 | 0 |
Cost of revenues | 2,354,644 | 0 |
Gross Margin | $ 1,448,415 | $ 0 |
Gross margin (in percentage) | 38.00% | 0.00% |
General, administrative, asset disposal and other | $ 1,349,970 | $ 0 |
Provision (recovery) for bad debt | 0 | 0 |
Depreciation and amortization | 971,830 | 0 |
Interest expense (income), net | 773 | 0 |
Gain (Loss) on change in fair value and settlement of beneficial conversion derivative | 0 | 0 |
Gain (Loss) on debt extinguishment | 0 | 0 |
Net (loss) income for segment | (874,158) | 0 |
Segment assets | 7,531,767 | 0 |
Expenditures for long-lived assets | 4,429,664 | 0 |
Corporate Expenses and Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 0 | 0 |
Cost of revenues | 0 | 0 |
Gross Margin | $ 0 | $ 0 |
Gross margin (in percentage) | 0.00% | 0.00% |
General, administrative, asset disposal and other | $ 9,184,791 | $ 7,920,493 |
Provision (recovery) for bad debt | 487 | 0 |
Depreciation and amortization | 308,441 | 345,910 |
Interest expense (income), net | 3,035,931 | 1,045,628 |
Gain (Loss) on change in fair value and settlement of beneficial conversion derivative | 26,932,496 | (5,569,158) |
Gain (Loss) on debt extinguishment | (27,743,980) | 6,184,219 |
Gain on debt restructure | (1,596,000) | |
Net (loss) income for segment | (11,718,166) | (8,331,092) |
Segment assets | 5,859,226 | 6,700,447 |
Expenditures for long-lived assets | $ 0 | $ 0 |
SEGMENT INFORMATION (Details Te
SEGMENT INFORMATION (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | ||
Segment Reporting, Disclosure of Major Customers | In April 2013, we purchased 80% of Aptito, a cloud based Software-as-a-Service (“SaaS”) restaurant management solution | |
Non-Cash Compensation | $ 4,306,304 | $ 4,267,334 |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) - USD ($) | Dec. 08, 2015 | Jan. 31, 2016 | Jan. 21, 2016 | Feb. 26, 2016 | Dec. 31, 2015 | Sep. 11, 2015 | Dec. 31, 2014 | Jan. 31, 2014 |
Subsequent Event [Line Items] | ||||||||
Due to Related Parties, Current | $ 329,881 | $ 0 | $ 1,451,357 | |||||
Due to Related Parties | 329,881 | |||||||
Equity Incentive Plan [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | 3,167,351 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost | $ 996,598 | |||||||
Restricted Shares [Member] | Equity Funding [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Shares Issued, Price Per Share | $ 0.14 | |||||||
Letter Agreement [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Due to Related Parties | 910,000 | |||||||
Chief Executive Officer [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Due to Related Parties | $ 320,712 | |||||||
Subsequent Event [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Subsequent Event, Description | (i) the purchase price for the Restricted Shares and the Restricted Options shall be automatically amended to be equal to the product of (x) 4,664,275 and (y) the sum of $0.1951 and $0.125, in which case the Investor will have paid to the Company the difference between such price and the previously paid purchase price for the Restricted Shares and the Restricted Options, (ii) the number of Restricted Shares and the Restricted Options issuable to the Investor will be adjusted to be equal to the quotient determined by dividing (I) $910,000 by (II) $0.3201, or (iii) the Restricted Options will not be issued and the Investor will be issued the number of Restricted Shares calculated on the basis of $0.1951 per share purchase price. | |||||||
Subsequent Event [Member] | Pay Online [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Stock Issued During Period, Shares, Purchase of Assets | 425,650 | |||||||
Subsequent Event [Member] | Employee Stock Option [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total | 4,664,275 | |||||||
Subsequent Event [Member] | Equity Incentive Plan [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | 167,500 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost | $ 224,450 | |||||||
Subsequent Event [Member] | Restricted Shares [Member] | Equity Funding [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Shares Issued, Price Per Share | $ 0.1951 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | 4,664,275 | |||||||
Subsequent Event [Member] | Chief Executive Officer [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Due to Related Parties, Current | $ 55,924 |