Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 14, 2019 | |
Document Information [Line Items] | ||
Entity Registrant Name | Net Element, Inc. | |
Entity Central Index Key | 0001499961 | |
Trading Symbol | nete | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding (in shares) | 4,117,878 | |
Entity Shell Company | false | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Title of 12(b) Security | Common Stock |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash | $ 840,170 | $ 1,645,481 |
Accounts receivable, net | 5,073,168 | 6,290,412 |
Prepaid expenses and other assets | 978,737 | 1,749,221 |
Total current assets, net | 6,892,075 | 9,685,114 |
Equipment, net | 16,205 | 25,335 |
Intangible assets, net | 6,237,789 | 6,441,743 |
Goodwill | 9,007,752 | 9,007,752 |
Operating lease right-of-use asset | 442,094 | |
Other long term assets | 655,180 | 604,070 |
Total assets | 23,251,095 | 25,764,014 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Accounts payable | 5,274,781 | 6,368,444 |
Accrued expenses | 2,881,256 | 2,535,947 |
Deferred revenue | 449,451 | 1,495,849 |
Notes payable (current portion) | 224,364 | 433,448 |
Operating lease liability (current portion) | 61,108 | |
Due to related party | 200,694 | 387,814 |
Total current liabilities | 9,091,654 | 11,221,502 |
Operating lease liability (net of current portion) | 380,986 | |
Notes payable (net of current portion) | 7,074,978 | 5,946,046 |
Total liabilities | 16,547,618 | 17,167,548 |
STOCKHOLDERS' EQUITY | ||
Series A Convertible Preferred stock ($.0001 par value, 1,000,000 shares authorized, no shares issued and outstanding at June 30, 2019 and December 31, 2018) | ||
Common stock ($.0001 par value, 100,000,000 shares authorized and 4,184,514 and 3,863,019 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively) | 410 | 386 |
Paid in capital | 185,267,054 | 183,246,232 |
Accumulated other comprehensive loss | (2,252,261) | (2,232,163) |
Accumulated deficit | (176,131,798) | (172,292,252) |
Non-controlling interest | (179,928) | (125,737) |
Total stockholders' equity | 6,703,477 | 8,596,466 |
Total liabilities and stockholders' equity | $ 23,251,095 | $ 25,764,014 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 4,184,514 | 3,863,019 |
Common stock, shares outstanding (in shares) | 4,184,514 | 3,863,019 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net revenues | ||||
Revenues | $ 16,487,311 | $ 16,464,717 | $ 31,534,494 | $ 32,447,111 |
Costs and expenses: | ||||
Selling, general and administrative | 2,299,070 | 2,499,496 | 4,683,936 | 4,945,977 |
Non-cash compensation | 2,005,840 | 22,500 | 2,020,847 | 104,511 |
Bad debt expense | 143,190 | 877,898 | 482,498 | 999,171 |
Depreciation and amortization | 747,347 | 662,525 | 1,598,567 | 1,366,063 |
Total costs and operating expenses | 19,096,812 | 17,876,427 | 34,947,360 | 34,848,064 |
Loss from operations | (2,609,501) | (1,411,710) | (3,412,866) | (2,400,953) |
Interest expense | (252,582) | (235,738) | (497,635) | (478,976) |
Other income | 103,159 | 674,236 | 16,766 | 323,423 |
Net loss from continuing operations before income taxes | (2,758,924) | (973,212) | (3,893,735) | (2,556,506) |
Income taxes | ||||
Net loss from continuing operations | (2,758,924) | (973,212) | (3,893,735) | (2,556,506) |
Net income attributable to the non-controlling interest | 40,225 | 69,481 | 54,191 | 41,929 |
Net loss attributable to Net Element, Inc. stockholders | (2,718,699) | (903,731) | (3,839,545) | (2,514,577) |
Foreign currency translation | (5,537) | 29,662 | (20,099) | 68,977 |
Comprehensive loss attributable to common stockholders | $ (2,724,236) | $ (874,069) | $ (3,859,644) | $ (2,445,600) |
Loss per share - basic and diluted (in dollars per share) | $ (0.65) | $ (0.23) | $ (0.95) | $ (0.65) |
Weighted average number of common shares outstanding - basic and diluted (in shares) | 4,199,076 | 3,853,130 | 4,032,258 | 3,853,130 |
Service Fees [Member] | ||||
Net revenues | ||||
Revenues | $ 16,487,311 | $ 16,464,717 | $ 31,534,494 | $ 32,447,111 |
Costs and expenses: | ||||
Costs and expenses | $ 13,901,365 | $ 13,814,008 | $ 26,161,512 | $ 27,432,342 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities | ||
Net loss attributable to Net Element, Inc. stockholders | $ (3,839,545) | $ (2,514,577) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Non-controlling interest | (54,191) | (41,929) |
Share based compensation | 2,020,847 | 104,511 |
Deferred revenue | (1,046,398) | 58,319 |
Provision for bad debt | (8,927) | |
Depreciation and amortization | 1,598,567 | 1,366,063 |
Non cash interest | 21,711 | 35,196 |
Changes in assets and liabilities: | ||
Accounts receivable | 1,165,261 | 571,405 |
Prepaid expenses and other assets | 668,646 | (352,703) |
Accounts payable and accrued expenses | (1,123,949) | (2,111,768) |
Net cash used in operating activities | (597,978) | (2,885,483) |
Cash flows from investing activities: | ||
Purchase of portfolios and client acquisition costs | (1,210,278) | (878,446) |
Purchase of equipment and changes in other assets | (468,287) | 9,898 |
Net cash used in investing activities | (1,678,565) | (868,548) |
Cash flows from financing activities: | ||
Proceeds from indebtedness | 1,116,500 | |
Repayment of indebtedness | (209,084) | (1,038,665) |
Lease liability | 442,094 | |
Related party advances | 166,561 | 34,927 |
Net cash provided by (used in) financing activities | 1,516,071 | (1,003,738) |
Effect of exchange rate changes on cash | 6,271 | 17,633 |
Net decrease in cash | (754,201) | (4,740,136) |
Cash and restricted cash at beginning of period | 2,249,551 | 11,733,271 |
Cash and restricted cash at end of period | 1,495,350 | 6,993,135 |
Supplemental disclosure of cash flow information | ||
Interest | 475,924 | 444,232 |
Taxes | $ 103,841 | $ 4,140 |
Note 1 - Basis of Presentation
Note 1 - Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Basis of Accounting [Text Block] | NOTE 1. BASIS OF PRESENTATION The accompanying June 30, 2019 not 10 December 31, 2018. not The condensed consolidated unaudited financial statements contained in this report include the accounts of Net Element, Inc., and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
Note 2 - Organization and Opera
Note 2 - Organization and Operations | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Nature of Operations [Text Block] | NOTE 2. Net Element, Inc. (collectively with its subsidiaries, “Net Element”, “we”, “us”, “our” or the “Company”) is a financial technology-driven group specializing in payment acceptance and value-added solutions across multiple channels in the United States and selected international markets. We are differentiated by our proprietary technology which enables us to provide a broad suite of payment products and end-to-end transaction processing services. We operate in two 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 PayOnline, we provide transactional services, mobile payment transactions, online payment transactions and other payment technologies in emerging countries in the Eurasian Economic Community ("EAEC"), 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 third ® ® ®, ® may Our mobile solutions business, PayOnline, provides relationships and contracts with mobile operators that gives us the ability to offer our clients in-app, premium SMS (short message services, which is a text messaging service), Wireless Application Protocol (WAP)-click, one August 2017, not Also part of our transactional services business, Aptito is a proprietary, 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 a 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. |
Note 3 - Liquidity
Note 3 - Liquidity | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Liquidation Basis of Accounting [Text Block] | NOTE 3. We expect to fund our operating cash needs for the next twelve The Company is continuing with its plan to further fund, grow and expand its payment processing operations through organic growth and acquisition of profitable residual buyouts. To fund our operating cash needs, we may June 30, 2019 10.1 |
Note 4 - Summary of Significant
Note 4 - Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Significant Accounting Policies [Text Block] | NOTE 4. Significant accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. The Company’s significant accounting policies are described below. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with GAAP and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). Principles of Consolidation These consolidated financial statements include the accounts of Net Element, Inc. and our subsidiary companies. All significant intercompany accounts and transactions have been eliminated in consolidation. Cash We maintain our 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 at FDIC insured institutions. The bank balances exceeded FDIC limits by approximately $283,000 and $600,000 at June 30, 2019 and December 31, 2018, respectively. We maintained approximately $41,000 and $74,000 in uninsured bank accounts in Russia and the Cayman Islands at June 30, 2019 and December 31, 2018, respectively. Restricted Cash Restricted cash represents funds held-on-deposit with processing banks pursuant to agreements to cover potential merchant losses. It is presented as other long-term assets on the accompanying consolidated balance sheets since the related agreements extend beyond the next twelve months. Following the adoption of ASU 2016 - 18, Statement of Cash Flows: Restricted Cash (Topic 230 ), the Company includes restricted cash along with the cash balance for presentation in the consolidated statements of cash flows. The reconciliation between the consolidated balance sheet and the consolidated statement of cash flows is as follows: June 30, 2019 December 31, 2018 Cash on consolidated balance sheet $ 840,170 $ 1,645,481 Restricted cash 655,180 604,070 Total cash and restricted cash $ 1,495,350 $ 2,249,551 Accounts Receivable and Credit Policies Accounts receivable consist primarily of uncollateralized credit card processing residual payments due from processing banks requiring payment within thirty days following the end of each month. Accounts receivable also include amounts due from the sales of our technology solutions to its customers. The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts, if necessary, which reflects management’s best estimate of the amounts that will not be collected. The allowance is estimated based on management’s knowledge of its customers, historical loss experience and existing economic conditions. Accounts receivable and the allowance are written-off when, in management’s opinion, all collection efforts have been exhausted. Inventories Inventories consist of POS equipment which we use to service both merchants and ISG's. Often, we will provide the equipment as an incentive for merchants and independent sales agents to enter into a merchant contracts with us. The term of these contracts has an average length of three years and the cost of the equipment plus any setup fees will be amortized over the contract period. If the merchants terminate their contract with us early, they are obligated to either return the equipment or pay for it. Intangible Assets Intangible assets acquired, either individually or with a group of other assets (but not those acquired in a business combination), are initially recognized and measured based on fair value. Goodwill acquired in business combinations is initially computed as the amount paid in excess of the fair value of the net assets acquired. We did not acquire any businesses during the year ended December 31, 2018 or the six months ended June 30, 2019. The cost of internally developing, maintaining and restoring intangible assets (including goodwill) that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity are recognized as an expense when incurred. Intangible assets include acquired merchant relationships, recurring cash flow portfolios, referral agreements, trademarks, tradenames, website development costs and non-compete agreements. Merchant relationships represent the fair value of customer relationships purchased by us. Recurring cash flow portfolios give us the right to retain a greater share of the cash flow, in the form of paying less commissions to an independent sales agent, related to certain future transactions with the agent referred sales partners. Referral agreements represent the right to exclusively obtain referrals from a partner for their customers' credit card processing services. We amortize definite lived identifiable intangible assets using a method that reflects the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise utilized. The estimated useful lives of our customer-related intangible assets approximate the expected distribution of cash flows on a straight-line basis from each asset. The useful lives of contract-based intangible assets are equal to the terms of the agreement. Management evaluates the remaining useful lives and carrying values of long-lived assets, including definite lived intangible assets, at least annually, or when events and circumstances warrant such a review, to determine whether significant events or changes in circumstances indicate that a change in the useful life or impairment in value may have occurred. There were no impairment charges during the six months ended June 30, 2019 and June 30, 2018. Goodwill In accordance with ASC 350, Intangibles—Goodwill and Other , we test goodwill for impairment for each reporting unit on an annual basis, or when events or circumstances indicate the fair value of a reporting unit is below its carrying value. Our goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. The goodwill generated from the business combinations is primarily related to the value placed on the employee workforce and expected synergies. Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred. Such changes may include, among others, a significant decline in expected future cash flows, a significant adverse change in the business climate, and unforeseen competition. We have the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. The option of whether or not to perform a qualitative assessment is made annually and may vary by reporting unit. Factors we consider in the qualitative assessment include general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of our reporting units, events or changes affecting the composition or carrying amount of the net assets of its reporting units, sustained decrease in its share price, and other relevant entity specific events. If the management determines on the basis of qualitative factors that the fair value of the reporting unit is more likely than not less than the carrying value, then we perform a quantitative test for that reporting unit. The fair value of each reporting unit is compared to the reporting unit’s carrying value, including goodwill. Subsequent to the adoption on January 1, 2017 of Accounting Standards Update (“ASU”) No. 2017 - 04, Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment, if the fair value of a reporting unit is less than its carrying value, we recognize an impairment equal to the excess carrying value, not to exceed the total amount of goodwill allocated to that reporting unit. At December 31, 2018, our management determined that an impairment charge of approximately $636,000 was necessary to reduce the goodwill relating to the acquisition of PayOnline. The impairment charge was primarily related to a decrease in International Transaction Solutions projected sales for 2019, which is the base year utilized for determining the discounted cash flows. We have not recognized an impairment charge to Goodwill for PayOnline during the six months ended June 30, 2019. For a discussion of the estimate methodology and the significance of various inputs, please see the subheading below titled “Use of Estimates.” Capitalized Customer Acquisition Costs, Net Capitalized customer acquisition costs consist of up-front cash payments made to 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 cash 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 amounts are receivable but not yet earned and the capitalized acquisition costs are amortized on a straight-line basis over a period of approximately four years. These capitalized costs, net of amortization expense, are included in intangible assets on the accompanying consolidated balance sheets (See Note 5 – item labeled “ Client Acquisition Costs ”). Accrued Residual Commissions We record commissions 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 obligations 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. Fair Value Measurements Our financial instruments consist primarily of cash, accounts receivables, accounts payables, and a note payable. The carrying values of these financial instruments are considered to be representative of their fair values due to the short-term nature of these instruments. The carrying amount of notes payable of approximately $ 7.3 million and $6.4 million at June 30, 2019 and December 31, 2018, respectively, approximates fair value because current borrowing rates do not materially differ from market rates for similar bank borrowings. The notes payable are classified as a Level 2 item within the fair value hierarchy. We measure 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. We use 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, were measured at fair value by us at the acquisition date. The fair values of our 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 our 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. Goodwill impairment is primarily based on observable inputs using company specific information and is classified as Level 3. Leases Effective January 1, 2019, we adopted Accounting Standards Update (ASU) 2016 - 02, Leases (Topic 842 ) which supersedes the lease accounting requirements in Accounting Standards Codification (ASC) 840, Leases (Topic 840 ). Please refer to Recent Accounting Pronouncements below for additional information on the adoption of Topic 842 and the impact upon adoption to the Company’s consolidated financial statements. Under Topic 842, we applied a dual approach to all leases whereby we are a lessee and classify leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the Company. Lease classification is evaluated at the inception of the lease agreement. Regardless of classification, we record a right-of-use asset and a lease liability for all leases with a term greater than 12 months. Our lease, for the premises we occupy for the North American Transaction Solutions segment's U.S. headquarters, was classified as an operating lease as of January 1, 2019. Operating lease expense is recognized on a straight-line basis over the term of the lease. We identify leases in our contracts if the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. We do not allocate lease consideration between lease and non-lease components and record a lease liability equal to the present value of the remaining fixed consideration under the lease. Any interest rate implicit in our leases are generally not readily determinable. Accordingly, we use our estimated incremental borrowing rate at the commencement date of the lease to determine the present value discount of the lease liability. We estimate the incremental borrowing rate for each lease based on an evaluation of our expected credit rating and the prevailing market rates for collateralized debt in a similar economic environment with similar payment terms and maturity dates commensurate with the term of the lease. The right-of-use asset for each lease is equal to the lease liability, adjusted for unamortized initial direct costs and lease incentives. We exclude options to extend or terminate leases from the calculation of the lease liability unless it is reasonably certain the option will be exercised. Revenue Recognition and Deferred Revenue We recognize revenue when all of the following criteria are met: ( 1 ) the parties to the contract have approved the contract and are committed to perform their respective obligations, ( 2 ) we can identify each party’s rights regarding the goods or services to be transferred, ( 3 ) we can identify the payment terms for the goods or services to be transferred, ( 4 ) the contract has commercial substance, and ( 5 ) it is probable that we will collect substantially all of the consideration to which we will be entitled in exchange for the goods or services that will be transferred to the customer. We consider 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. We record cash received in advance of revenue recognition as deferred revenue. Revenue consists primarily of fees generated through the electronic processing of payment transactions and related services and is recognized as revenue during the period the transactions are processed or when the related services are performed. Our transactional processing fees are generated primarily from TOT Payments doing business as Unified Payments, which is our North American Transaction Solutions segment, PayOnline, which is our International Transaction Solutions segment, and Aptito, which is our point of sale solution for restaurants. We work directly with payment card networks and banks so that our merchants do not need to manage the complex systems, rules, and requirements of the payments industry. We satisfy our performance obligations and therefore recognize the transactional processing service fees as revenue upon authorization of a transaction by the merchant’s customer’s bank. The majority of our revenues is derived from volume-based payment processing fees ("discount fees”) and other related fixed transaction or service fees. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed. Discount fees are recognized at the time the merchants’ transactions are processed. Generally, where we have control over merchant pricing, merchant portability, credit risk and ultimate responsibility for the merchant relationship, revenues are reported at the time of sale on a gross basis equal to the full amount of the discount charged to the merchant. This amount includes interchange fees paid to card issuing banks and assessments paid to payment card networks pursuant to which such parties receive payments based primarily on processing volume for particular groups of merchants. Revenues generated from merchant portfolios where we do not have control over merchant pricing, liability for merchant losses or credit risk or rights of portability are reported net of interchange and other fees. Revenues are also derived from a variety of fixed transaction or service fees, including authorization fees, convenience fees, statement fees, annual fees, and fees for other miscellaneous services, such as handling chargebacks. Revenues derived from service fees are recognized at the time the services are performed and there are no further performance obligations. Revenue from the sale of equipment is recognized upon transfer of ownership and delivery to the customer, after which there are no further performance obligations. We primarily report revenues gross as a principal versus net as an agent. Although some of our processing agreements vary with respect to specific terms, the transactional processing service fees collected from merchants generally are recognized as revenue on a gross basis as we are the principal in the delivery of the managed payments solutions to the sellers. The gross fees we collect are intended to cover the interchange, assessments and other processing and non-processing fees which are included and are part of our gross margin. We have primary responsibility for providing end-to-end payment processing services for our clients. Our clients contract us for all credit card processing services, including transaction authorization, settlement, dispute resolution, data/transmission security, risk management, reporting, technical support and other value-added services. We have concluded that we are the principal because we control the services before delivery to the merchant, and are primarily responsible for the delivery of the services, have discretion in setting prices charged to merchants, and responsible for losses. We also have pricing latitude and can provide services using several different network options. 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. 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. We account 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. We classify the liability for unrecognized tax benefits as current to the extent we anticipate 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. Our evaluation of uncertain tax positions was performed for the tax years ended December 31, 2012 and forward, the tax years which remain subject to examination at June 30, 2019. Interchange, Network Fees and Other Cost of Services Interchange and network fees consist primarily of fees that are directly related to discount fee revenue. These include interchange fees paid to issuers and assessment fees payable to card associations, which are a percentage of the processing volume we generate from Visa and Mastercard, AMEX, and Discover, as well as fees charged by card-issuing banks. Other costs of services include costs directly attributable to processing and bank sponsorship costs, which may not be based on a percentage of volume. These costs also include related costs such as residual payments to sales groups, which are based on a percentage of the net revenues generated from merchant referrals. In certain merchant processing bank relationships we are liable for chargebacks against a merchant equal to the volume of the transaction. Losses resulting from chargebacks against a merchant are included in other cost of services or as a bad debt expense, determined on the timing and nature of the specific transaction, on the accompanying consolidated statement of operations. We evaluate the risk for such transactions and our potential loss from chargebacks based primarily on historical experience and other relevant factors. Foreign Currency Transactions We are subject to exchange rate risk in our foreign operations in Russia, the functional currency of which is the Russian ruble, where we generate service fee revenues, interest income or expense, incur product development, engineering, website development, and selling, general and administrative costs and expenses. Our Russian subsidiaries pay a majority of their operating expenses in their local currencies, exposing us to exchange rate risk. Use of Estimates The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Such estimates include, but are not limited to, the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions, amortization of intangible assets, goodwill and asset impairment review, valuation reserves for accounts receivable, valuation of acquired or current merchant portfolios, incurred but not reported claims, revenue recognition for multiple element arrangements, loss reserves, assumptions used in the calculation of equity-based compensation and in the calculation of income taxes, and certain tax assets and liabilities, as well as, the related valuation allowances. Actual results could differ from those estimates. Below is a summary of the Company’s critical accounting estimates for which the nature of management’s assumptions are material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and for which the impact of the estimates and assumptions on financial condition or operating performance is material. Goodwill The Company tests goodwill for impairment using a fair value approach at least annually, absent some triggering event that would require an interim impairment assessment. Significant estimates and assumptions are used in our goodwill impairment review and include the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units and determining the fair value of each reporting unit. Our assessment of qualitative factors involves significant judgments about expected future business performance, general market conditions, and regulatory changes. In a quantitative assessment, the fair value of each reporting unit is determined based largely on the present value of projected future cash flows, growth assumptions regarding discount rates, estimated growth rates and our future long-term business plans. Changes in any of these estimates or assumptions could materially affect the determination of fair value and the associated goodwill impairment charge for each reporting unit. Recent Accounting Pronouncements Adoption of ASU 2016 - 02, Leases In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016 - 02, “Leases (Topic 842 )” 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. Effective January 1, 2019, we adopted Topic 842 using the modified retrospective transition method. Under this method, we applied Topic 842 to the lease for the premises we occupy for our North American Transaction Solutions segment's U.S. headquarters. There was no cumulative impact adjustment necessary with the adoption to our accumulated deficit on January 1, 2019. Our consolidated financial statements for periods ending after January 1, 2019 are presented in accordance with the requirements of Topic 842, while comparative prior period amounts have not been adjusted and continue to be reported in accordance with Topic 840. Please refer to "Leases" above for a description of our lease accounting policies upon the adoption on Topic 842. We originally recorded an operating lease right-of-use asset and operating lease liability of approximately $ 471,000 for this lease which is in effect and had commenced prior to January 1, 2019, and has an original lease term of more than 12 months. Recent accounting pronouncements not yet adopted In January 2017, the FASB issued ASU 2017 - 04 “Intangibles - Goodwill and Other (Topic 350 ): Simplifying the Test for Goodwill Impairment”. This update simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under this updated standard, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity also should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if any. This guidance is effective prospectively and is effective for interim and annual periods beginning after December 15, 2019 with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016 - 13, “Financial Instruments - Credit Losses (Topic 326 ): Measurement of Credit Losses on Financial Instruments.” The amendments in this update changed how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are within the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The guidance will become effective for us on January 1, 2020. Early adoption is permitted for periods beginning on or after January 1, 2019. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. |
Note 5 - Intangible Assets
Note 5 - Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Goodwill and Intangible Assets Disclosure [Text Block] | NOTE 5. The Company had approximately $ 6.2 $6.4 June 30, 2019 December 31, 2018, Intangible assets consisted of the following as of June 30, 2019 Cost Accumulated Amortization Carrying Value Amortization Life and Method IP Software $ 2,343,888 $ (2,207,648 ) $ 136,240 3 years - straight-line Portfolios and Client Lists 7,668,665 (5,039,681 ) 2,628,984 4 years - straight-line Client Acquisition Costs 7,488,403 (4,015,838 ) 3,472,565 4 years - straight-line PCI Certification 449,000 (449,000 ) - 3 years - straight-line Trademarks 703,586 (703,586 ) - 3 years - straight-line Domain Names 437,810 (437,810 ) - 3 years - straight-line Total $ 19,091,351 $ (12,853,562 ) $ 6,237,789 Intangible assets consisted of the following as of December 31, 2018 Cost Accumulated Amortization Carrying Value Amortization Life and Method IP Software $ 2,309,291 $ (2,139,891 ) $ 169,400 3 years - straight-line Portfolios and Client Lists 7,576,665 (4,333,866 ) 3,242,799 4 years - straight-line Client Acquisition Costs 6,370,124 (3,340,581 ) 3,029,544 4 years - straight-line PCI Certification 449,000 (449,000 ) - 3 years - straight-line Trademarks 703,586 (703,586 ) - 3 years - straight-line Domain Names 437,810 (437,810 ) - 3 years - straight-line Total $ 17,846,476 $ (11,404,732 ) $ 6,441,743 Amortization expense for the intangible assets was approximately $ 649,000 $654,000 three June 30, 2019 2018, six June 30, 2019 2018 1.4 $1.3 The following table presents the estimated aggregate future amortization expense of intangible assets: 2019 (remainder of year) $ 754,893 2020 1,509,785 2021 1,509,785 2022 1,487,078 2023 976,248 Balance June 30, 2019 $ 6,237,789 |
Note 6 - Accrued Expenses
Note 6 - Accrued Expenses | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Accounts Payable and Accrued Liabilities Disclosure [Text Block] | NOTE 6. At June 30, 2019 December 31, 2018, 2.9 $2.5 not June 30, 2019 December 31, 2018. June 30, 2019 December 31, 2018 Accrued professional fees $ 82,346 $ 174,915 PayOnline accrual 1,126,273 1,126,273 Accrued interest 117,482 108,202 Accrued bonus 1,481,304 1,157,556 Accrued foreign taxes (43,920 ) (45,952 ) Other accrued expenses 117,771 14,953 Total accrued expenses $ 2,881,256 $ 2,535,947 On October 25, 2016, $1,433,475 June 30, 2019 December 31, 2018, $1.1 Included in accrued bonus are non-discretionary compensation due to our Chairman and CEO, which was approximately $1.2 $566,000 June 30, 2019 December 31, 2018, 315,000 $291,000 June 30, 2019 December 31, 2018, Included in other accrued expenses at June 30, 2019 $100,000 |
Note 7 - Notes Payable
Note 7 - Notes Payable | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | NOTE 7. Notes payable consist of the following: June 30, 2019 December 31, 2018 RBL Capital Group, LLC $ 7,419,684 $ 6,512,268 Priority Payments Systems LLC - - Subtotal 7,419,684 6,512,268 Less: deferred loan costs (120,342 ) (132,774 ) Subtotal 7,299,342 6,379,494 Less: current portion (224,364 ) (433,448 ) Long term debt $ 7,074,978 $ 5,946,046 RBL Capital Group, LLC On June 30, 2014, May 2, 2016, $10 $15 February 2019. March 20, 2018. The co-borrowers’ obligations to RBL pursuant to the RBL Loan Agreement are secured by a first not Borrowings from the Credit Facility in the amounts of $3,315,000, $400,000 $250,000 March 20, 2018, $4,544,087 August 2017. four 4 14.19%, $85,634 August 2018 July 2021, $3,170,967 July 2021. $133,600 July 2021. On December 28, 2018, $2,131,500, 14%. December 20, 2019 one 1 $18,804, eleven 11 $24,867. January 20, 2020, thirty-six 36 $72,850, December 20, 2022 On May 24, 2019, $1,116,500, 14%. May 24th, 2019 one 1 $11,562, eleven 11 $13,025. January 20, 2020, thirty-six 36 $38,159, May 20, 2023 At June 30, 2019 7.6 Priority Payment Systems LLC On May 18, 2017, May 18, 2017. $2,000,000. 6% 10.25% December 31, 2018. 2018. Pursuant to the security agreement, any borrowings are secured by collateral consisting of accounts, cash or cash equivalents, residuals related to the merchants originated by us and processed by PPS. The loan agreement, the note and the security agreement contain customary representations, warranties, events of default, remedies and affirmative and negative covenants, as well as the right of first On June 27, 2017, (i) The original term loan was modified into a multi - draw loan with an increase of the borrowing limit to $2,500,000 (ii) The loan maturity was extended to May 20, 2021. The draw-down period was extended to coincide with the loan maturity date of May 20, 2021. Scheduled notes payable principal repayment at June 30, 2019 2019 (remainder of year) $ 224,364 2020 1,295,537 2021 4,503,078 2022 1,212,410 2023 184,295 Balance June 30, 2019 $ 7,419,684 |
Note 8 - Concentrations
Note 8 - Concentrations | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Concentration Risk Disclosure [Text Block] | NOTE 8. Our credit card processing revenues are from merchant customer transactions, which were processed primarily by two third 5% three six June 30, 2019 2018. During the six June 30, 2019, 49 35 7 six June 30, 2018, 65% 14% 5% During the three June 30, 2019, 46% 38% 8% three June 30, 2018, 60 17 5% |
Note 9 - Commitments and Contin
Note 9 - Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 9. Leases North American Transaction Solutions During May 2013, 4,101 3363 163rd 705 707, 33160. May 1, 2013 December 31, 2016, $16,800 $19,448 $233,377 January 1, 2016 December 31, 2016. five August 1, 2017 July 31, 2022 $14,354 $172,248 Net Element Software, our subsidiary, currently leases 1,654 $24,300.The June 1, 2019 International Transaction Solutions PayOnline leased approximately 4,675 $84,457 September 30, 2018. This space was reduced to 3,385 $56,000 August 31, 2019. We believe that our current facilities are suitable and adequate for our present purposes, and we anticipate that we will be able to extend our existing leases on terms satisfactory to us or move to new facilities on acceptable terms. The following table presents a reconciliation of the undiscounted future minimum lease payments, under the lease for the premises we occupy for our North American Transaction Solutions segment's U.S. headquarters, to the amounts reported as operating lease liabilities on the consolidated balance sheet as of June 30, 2019: Operating Lease Undiscounted future minimum lease payments: 2019 (remainder of year) $ 86,124 2020 172,248 2021 172,248 2022 100,478 Total $ 531,098 Amount representing imputed interest (89,004 ) Total operating lease liability 442,094 Current portion of operating lease liability (61,108 ) Operating Lease Liability, non-current $ 380,986 As of June 30, 2019 Remaining term on Lease 3.08 Incremental borrowing rate 12 % As of June 30, 2019, not 842, 113,000 Litigation, Claims, and Assessments With respect to all legal, regulatory and governmental proceedings, and in accordance with ASC 450 20, Contingencies—Loss Contingencies no may In addition, we are involved in ordinary course legal proceedings, which include all claims, lawsuits, investigations and proceedings, including unasserted claims, which are probable of being asserted, arising in the ordinary course of business and otherwise not not Aptito.com, Inc. On August 6, 2014, 11th 125,000 125,000 two one ten 125,000 two one ten two one ten 125,000 two one ten On July 18, 2017, not 125,000 August 6, 2014. In March 2018, 125,000 not In July 2018, A court ordered mediation conference was held on April 24, 2019 May 1, 2019 Gene Zell In June 2014, October 2014, On April 13, 2015, August 26, 2015, March 2017 In 2018, OVHA Patent Claim On January 15, 2019, against no 3rd In May 2019, |
Note 10 - Related Party Transac
Note 10 - Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Related Party Transactions Disclosure [Text Block] | NOTE 10. During the three June 30, 2019 2018, $18,000 $195,000 $128,000 three June 30, 2019 2018, During the six June 30, 2019 2018, $36,000 365,000 $235,000 six June 30, 2019 2018, At June 30, 2019 December 31, 2018, 201,000 $388,000, |
Note 11 - Stockholders' Equity
Note 11 - Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Stockholders' Equity Note Disclosure [Text Block] | NOTE 11. On October 5, 2017, one ten On June 12, 2015 June 13, 2016, 100,000,000 300,000,000 400,000,000, October 2, 2017, 300,000,000 100,000,000. The following table represents the change in our stockholders' equity for the three six June 30, 2019 2018: Three and Six Months Ended June 30, 2018 Common Stock Paid in Stock Comprehensive Non-controlling Accumulated Equity (Deficiency) Shares Amount Capital Subscription Income interest Deficit in Equity Balance December 31, 2017 3,853,100 $ 385.31 $ 183,119,222 $ (50,585 ) $ (2,530,238 ) $ (39,186 ) $ (167,356,070 ) $ 13,143,528 Share based compensation 2,733 0.74 82,010 - - - - 82,011 Shares issued for consulting services - - - 50,585 - - - 50,585 Net income (loss) - - - - - 27,553 (1,610,847 ) (1,583,294 ) Comprehensive loss - foreign currency translation - - - - 39,315 - - 39,315 Balance March 31, 2018 3,855,833 $ 386.05 $ 183,201,232 $ - $ (2,490,923 ) $ (11,633 ) $ (168,966,917 ) $ 11,732,145 Share based compensation 2,980 0.30 22,500 - - - - 22,500 Net loss - - - - - (69,481 ) (903,731 ) (973,212 ) Comprehensive loss - foreign currency translation - - - - 29,662 - - 29,662 Balance June 30, 2018 3,858,813 $ 386.35 $ 183,223,731 $ - $ (2,461,261 ) $ (81,114 ) $ (169,870,648 ) $ 10,811,095 Three and Six Months Ended June 30, 2019 Common Stock Paid in Stock Comprehensive Non-controlling Accumulated Equity (Deficiency) Shares Amount Capital Subscription Income interest Deficit in Equity Balance December 31, 2018 3,863,019 $ 386.30 $ 183,246,232 $ - $ (2,232,163 ) $ (125,737 ) $ (172,292,252 ) $ 8,596,466 Share based compensation 2,448 0.24 15,006 - - - - 15,006 Net loss - - - - - (13,966 ) (1,120,847 ) (1,134,813 ) Comprehensive loss - foreign currency translation - - - - (14,561 ) - - (14,561 ) Balance March 31, 2019 3,865,467 $ 386.55 $ 183,261,238 $ - $ (2,246,724 ) $ (139,703 ) $ (173,413,099 ) $ 7,462,098 Share based compensation 319,047 23.90 2,005,816 - - - - 2,005,840 Net loss - - - - - (40,225 ) (2,718,699 ) (2,758,924 ) Comprehensive loss - foreign currency translation - - - - (5,537 ) - - (5,537 ) Balance June 30, 2019 4,184,514 $ 410.45 $ 185,267,054 $ - $ (2,252,261 ) $ (179,928 ) $ (176,131,798 ) $ 6,703,477 Equity Incentive Plan Activity On December 5, 2013, 2013 “2013 2013 may one 422 1986, may not may not On November 27, 2018, 2013 178,900 773,000 2013 The maximum aggregate number of shares of common stock available for award under the 2013 June 30, 2019 December 31, 2018 82,003 323,498, 2013 2013 During the three June 30, 2019 2018, 2013 $15,000 $22,500, During the six June 30, 2019 2018, 2013 $30,000 $45,000, During the three June 30, 2019 80,000 2013 $503,000. At June 30, 2019 December 31, 2018 154,004 74,004, $9.16 8.69 7.77 June 30, 2019 December 31, 2018. During the three June 30, 2019 22,000 2013 $138,000. three June 30, 2019, 214,507 2013 $1,349,000. |
Note 12 - Warrants and Options
Note 12 - Warrants and Options | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Share-based Payment Arrangement [Text Block] | NOTE 12. Options At June 30, 2019 December 31, 2018, 314 ,218 234,218, $3.27 $134.00 Due to the high level of volatility in the stock price of our common stock, our management determined the grant date fair value of the options using the then quoted stock price at the grant date. Warrants At June 30, 2019 December 31, 2018, 728,583 June 30, 2019 $6.18 3.50 December 31, 2018, $6.18 4.00 Non-Incentive Plan Options At June 30, 2019 December 31, 2018, 323,498 $21.84. 1.42 June 30, 2019. June 30, 2019 December 31, 2018 no |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with GAAP and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). |
Consolidation, Policy [Policy Text Block] | Principles of Consolidation These consolidated financial statements include the accounts of Net Element, Inc. and our subsidiary companies. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash We maintain our 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 $283,000 $600,000 June 30, 2019 December 31, 2018, $41,000 $74,000 June 30, 2019 December 31, 2018, |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | Restricted Cash Restricted cash represents funds held-on-deposit with processing banks pursuant to agreements to cover potential merchant losses. It is presented as other long-term assets on the accompanying consolidated balance sheets since the related agreements extend beyond the next twelve 2016 18, Statement of Cash Flows: Restricted Cash 230 June 30, 2019 December 31, 2018 Cash on consolidated balance sheet $ 840,170 $ 1,645,481 Restricted cash 655,180 604,070 Total cash and restricted cash $ 1,495,350 $ 2,249,551 |
Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block] | Accounts Receivable and Credit Policies Accounts receivable consist primarily of uncollateralized credit card processing residual payments due from processing banks requiring payment within thirty not |
Inventory, Policy [Policy Text Block] | Inventories Inventories consist of POS equipment which we use to service both merchants and ISG's. Often, we will provide the equipment as an incentive for merchants and independent sales agents to enter into a merchant contracts with us. The term of these contracts has an average length of three |
Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block] | Intangible Assets Intangible assets acquired, either individually or with a group of other assets (but not not December 31, 2018 six June 30, 2019. The cost of internally developing, maintaining and restoring intangible assets (including goodwill) that are not Intangible assets include acquired merchant relationships, recurring cash flow portfolios, referral agreements, trademarks, tradenames, website development costs and non-compete agreements. Merchant relationships represent the fair value of customer relationships purchased by us. Recurring cash flow portfolios give us the right to retain a greater share of the cash flow, in the form of paying less commissions to an independent sales agent, related to certain future transactions with the agent referred sales partners. Referral agreements represent the right to exclusively obtain referrals from a partner for their customers' credit card processing services. We amortize definite lived identifiable intangible assets using a method that reflects the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise utilized. The estimated useful lives of our customer-related intangible assets approximate the expected distribution of cash flows on a straight-line basis from each asset. The useful lives of contract-based intangible assets are equal to the terms of the agreement. Management evaluates the remaining useful lives and carrying values of long-lived assets, including definite lived intangible assets, at least annually, or when events and circumstances warrant such a review, to determine whether significant events or changes in circumstances indicate that a change in the useful life or impairment in value may no six June 30, 2019 June 30, 2018. |
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | Goodwill In accordance with ASC 350, Intangibles—Goodwill and Other Our goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. The goodwill generated from the business combinations is primarily related to the value placed on the employee workforce and expected synergies. Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred. Such changes may We have the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. The option of whether or not may not January 1, 2017 No. 2017 04, not At December 31, 2018, $636,000 2019, not six June 30, 2019. For a discussion of the estimate methodology and the significance of various inputs, please see the subheading below titled “Use of Estimates.” |
Goodwill and Intangible Assets, Capitalized Customer Acquisition Costs, Net, Policy [Policy Text Block] | Capitalized Customer Acquisition Costs, Net Capitalized customer acquisition costs consist of up-front cash payments made to 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 cash payment to the ISG is based on the estimated gross margin for the first not four 5 Client Acquisition Costs |
Accrued Residual Commissions, Policy [Policy Text Block] | Accrued Residual Commissions We record commissions 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 obligations 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. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value Measurements Our financial instruments consist primarily of cash, accounts receivables, accounts payables, and a note payable. The carrying values of these financial instruments are considered to be representative of their fair values due to the short-term nature of these instruments. The carrying amount of notes payable of approximately $ 7.3 $6.4 June 30, 2019 December 31, 2018, not 2 We measure 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. We use a three three Level 1 Level 2 Level 3 not 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, were measured at fair value by us at the acquisition date. The fair values of our merchant portfolios are primarily based on Level 3 3. 3. |
Lessee, Leases [Policy Text Block] | Leases Effective January 1, 2019, 2016 02, Leases 842 840, Leases 840 842 Under Topic 842, not 12 January 1, 2019. We identify leases in our contracts if the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. We do not not |
Revenue from Contract with Customer [Policy Text Block] | Revenue Recognition and Deferred Revenue We recognize revenue when all of the following criteria are met: ( 1 2 3 4 5 not not Our transactional processing fees are generated primarily from TOT Payments doing business as Unified Payments, which is our North American Transaction Solutions segment, PayOnline, which is our International Transaction Solutions segment, and Aptito, which is our point of sale solution for restaurants. We work directly with payment card networks and banks so that our merchants do not The majority of our revenues is derived from volume-based payment processing fees ("discount fees”) and other related fixed transaction or service fees. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed. Discount fees are recognized at the time the merchants’ transactions are processed. Generally, where we have control over merchant pricing, merchant portability, credit risk and ultimate responsibility for the merchant relationship, revenues are reported at the time of sale on a gross basis equal to the full amount of the discount charged to the merchant. This amount includes interchange fees paid to card issuing banks and assessments paid to payment card networks pursuant to which such parties receive payments based primarily on processing volume for particular groups of merchants. Revenues generated from merchant portfolios where we do not Revenues are also derived from a variety of fixed transaction or service fees, including authorization fees, convenience fees, statement fees, annual fees, and fees for other miscellaneous services, such as handling chargebacks. Revenues derived from service fees are recognized at the time the services are performed and there are no no We primarily report revenues gross as a principal versus net as an agent. Although some of our processing agreements vary with respect to specific terms, the transactional processing service fees collected from merchants generally are recognized as revenue on a gross basis as we are the principal in the delivery of the managed payments solutions to the sellers. The gross fees we collect are intended to cover the interchange, assessments and other processing and non-processing fees which are included and are part of our gross margin. We have primary responsibility for providing end-to-end payment processing services for our clients. Our clients contract us for all credit card processing services, including transaction authorization, settlement, dispute resolution, data/transmission security, risk management, reporting, technical support and other value-added services. We have concluded that we are the principal because we control the services before delivery to the merchant, and are primarily responsible for the delivery of the services, have discretion in setting prices charged to merchants, and responsible for losses. We also have pricing latitude and can provide services using several different network options. |
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. |
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 We account for uncertainty in income taxes using a two first not second 50% one December 31, 2012 June 30, 2019. |
Cost of Goods and Service [Policy Text Block] | Interchange, Network Fees and Other Cost of Services Interchange and network fees consist primarily of fees that are directly related to discount fee revenue. These include interchange fees paid to issuers and assessment fees payable to card associations, which are a percentage of the processing volume we generate from Visa and Mastercard, AMEX, and Discover, as well as fees charged by card-issuing banks. Other costs of services include costs directly attributable to processing and bank sponsorship costs, which may not |
Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign Currency Transactions We are subject to exchange rate risk in our foreign operations in Russia, the functional currency of which is the Russian ruble, where we generate service fee revenues, interest income or expense, incur product development, engineering, website development, and selling, general and administrative costs and expenses. Our Russian subsidiaries pay a majority of their operating expenses in their local currencies, exposing us to exchange rate risk. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Such estimates include, but are not not Below is a summary of the Company’s critical accounting estimates for which the nature of management’s assumptions are material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and for which the impact of the estimates and assumptions on financial condition or operating performance is material. Goodwill The Company tests goodwill for impairment using a fair value approach at least annually, absent some triggering event that would require an interim impairment assessment. Significant estimates and assumptions are used in our goodwill impairment review and include the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units and determining the fair value of each reporting unit. Our assessment of qualitative factors involves significant judgments about expected future business performance, general market conditions, and regulatory changes. In a quantitative assessment, the fair value of each reporting unit is determined based largely on the present value of projected future cash flows, growth assumptions regarding discount rates, estimated growth rates and our future long-term business plans. Changes in any of these estimates or assumptions could materially affect the determination of fair value and the associated goodwill impairment charge for each reporting unit. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements Adoption of ASU 2016 02, In February 2016, 2016 02, 842 December 15, 2018, January 1, 2019, 842 842 no January 1, 2019. January 1, 2019 842, not 840. 842. We originally recorded an operating lease right-of-use asset and operating lease liability of approximately $ 471,000 January 1, 2019, 12 Recent accounting pronouncements not In January 2017, 2017 04 350 2 not December 15, 2019 not In June 2016, 2016 13, 326 January 1, 2020. January 1, 2019. not |
Note 4 - Summary of Significa_2
Note 4 - Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Notes Tables | |
Restrictions on Cash and Cash Equivalents [Table Text Block] | June 30, 2019 December 31, 2018 Cash on consolidated balance sheet $ 840,170 $ 1,645,481 Restricted cash 655,180 604,070 Total cash and restricted cash $ 1,495,350 $ 2,249,551 |
Note 5 - Intangible Assets (Tab
Note 5 - Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Notes Tables | |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | Cost Accumulated Amortization Carrying Value Amortization Life and Method IP Software $ 2,343,888 $ (2,207,648 ) $ 136,240 3 years - straight-line Portfolios and Client Lists 7,668,665 (5,039,681 ) 2,628,984 4 years - straight-line Client Acquisition Costs 7,488,403 (4,015,838 ) 3,472,565 4 years - straight-line PCI Certification 449,000 (449,000 ) - 3 years - straight-line Trademarks 703,586 (703,586 ) - 3 years - straight-line Domain Names 437,810 (437,810 ) - 3 years - straight-line Total $ 19,091,351 $ (12,853,562 ) $ 6,237,789 Cost Accumulated Amortization Carrying Value Amortization Life and Method IP Software $ 2,309,291 $ (2,139,891 ) $ 169,400 3 years - straight-line Portfolios and Client Lists 7,576,665 (4,333,866 ) 3,242,799 4 years - straight-line Client Acquisition Costs 6,370,124 (3,340,581 ) 3,029,544 4 years - straight-line PCI Certification 449,000 (449,000 ) - 3 years - straight-line Trademarks 703,586 (703,586 ) - 3 years - straight-line Domain Names 437,810 (437,810 ) - 3 years - straight-line Total $ 17,846,476 $ (11,404,732 ) $ 6,441,743 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | 2019 (remainder of year) $ 754,893 2020 1,509,785 2021 1,509,785 2022 1,487,078 2023 976,248 Balance June 30, 2019 $ 6,237,789 |
Note 6 - Accrued Expenses (Tabl
Note 6 - Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Notes Tables | |
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | June 30, 2019 December 31, 2018 Accrued professional fees $ 82,346 $ 174,915 PayOnline accrual 1,126,273 1,126,273 Accrued interest 117,482 108,202 Accrued bonus 1,481,304 1,157,556 Accrued foreign taxes (43,920 ) (45,952 ) Other accrued expenses 117,771 14,953 Total accrued expenses $ 2,881,256 $ 2,535,947 |
Note 7 - Notes Payable (Tables)
Note 7 - Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Notes Tables | |
Schedule of Long-term Debt Instruments [Table Text Block] | June 30, 2019 December 31, 2018 RBL Capital Group, LLC $ 7,419,684 $ 6,512,268 Priority Payments Systems LLC - - Subtotal 7,419,684 6,512,268 Less: deferred loan costs (120,342 ) (132,774 ) Subtotal 7,299,342 6,379,494 Less: current portion (224,364 ) (433,448 ) Long term debt $ 7,074,978 $ 5,946,046 |
Schedule of Maturities of Long-term Debt [Table Text Block] | 2019 (remainder of year) $ 224,364 2020 1,295,537 2021 4,503,078 2022 1,212,410 2023 184,295 Balance June 30, 2019 $ 7,419,684 |
Note 9 - Commitments and Cont_2
Note 9 - Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Notes Tables | |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | Operating Lease Undiscounted future minimum lease payments: 2019 (remainder of year) $ 86,124 2020 172,248 2021 172,248 2022 100,478 Total $ 531,098 Amount representing imputed interest (89,004 ) Total operating lease liability 442,094 Current portion of operating lease liability (61,108 ) Operating Lease Liability, non-current $ 380,986 As of June 30, 2019 Remaining term on Lease 3.08 Incremental borrowing rate 12 % |
Note 11 - Stockholders' Equity
Note 11 - Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Notes Tables | |
Schedule of Stockholders Equity [Table Text Block] | Three and Six Months Ended June 30, 2018 Common Stock Paid in Stock Comprehensive Non-controlling Accumulated Equity (Deficiency) Shares Amount Capital Subscription Income interest Deficit in Equity Balance December 31, 2017 3,853,100 $ 385.31 $ 183,119,222 $ (50,585 ) $ (2,530,238 ) $ (39,186 ) $ (167,356,070 ) $ 13,143,528 Share based compensation 2,733 0.74 82,010 - - - - 82,011 Shares issued for consulting services - - - 50,585 - - - 50,585 Net income (loss) - - - - - 27,553 (1,610,847 ) (1,583,294 ) Comprehensive loss - foreign currency translation - - - - 39,315 - - 39,315 Balance March 31, 2018 3,855,833 $ 386.05 $ 183,201,232 $ - $ (2,490,923 ) $ (11,633 ) $ (168,966,917 ) $ 11,732,145 Share based compensation 2,980 0.30 22,500 - - - - 22,500 Net loss - - - - - (69,481 ) (903,731 ) (973,212 ) Comprehensive loss - foreign currency translation - - - - 29,662 - - 29,662 Balance June 30, 2018 3,858,813 $ 386.35 $ 183,223,731 $ - $ (2,461,261 ) $ (81,114 ) $ (169,870,648 ) $ 10,811,095 Three and Six Months Ended June 30, 2019 Common Stock Paid in Stock Comprehensive Non-controlling Accumulated Equity (Deficiency) Shares Amount Capital Subscription Income interest Deficit in Equity Balance December 31, 2018 3,863,019 $ 386.30 $ 183,246,232 $ - $ (2,232,163 ) $ (125,737 ) $ (172,292,252 ) $ 8,596,466 Share based compensation 2,448 0.24 15,006 - - - - 15,006 Net loss - - - - - (13,966 ) (1,120,847 ) (1,134,813 ) Comprehensive loss - foreign currency translation - - - - (14,561 ) - - (14,561 ) Balance March 31, 2019 3,865,467 $ 386.55 $ 183,261,238 $ - $ (2,246,724 ) $ (139,703 ) $ (173,413,099 ) $ 7,462,098 Share based compensation 319,047 23.90 2,005,816 - - - - 2,005,840 Net loss - - - - - (40,225 ) (2,718,699 ) (2,758,924 ) Comprehensive loss - foreign currency translation - - - - (5,537 ) - - (5,537 ) Balance June 30, 2019 4,184,514 $ 410.45 $ 185,267,054 $ - $ (2,252,261 ) $ (179,928 ) $ (176,131,798 ) $ 6,703,477 |
Note 2 - Organization and Ope_2
Note 2 - Organization and Operations (Details Textual) | 6 Months Ended |
Jun. 30, 2019 | |
Number of Reportable Segments | 2 |
Note 3 - Liquidity (Details Tex
Note 3 - Liquidity (Details Textual) $ in Millions | Jun. 30, 2019USD ($) |
Line of Credit Facility, Remaining Borrowing Capacity | $ 10.1 |
Note 4 - Summary of Significa_3
Note 4 - Summary of Significant Accounting Policies (Details Textual) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Jan. 01, 2019 | |
Cash, Uninsured Amount | $ 283,000 | $ 600,000 | ||
Impairment of Intangible Assets (Excluding Goodwill), Total | 0 | $ 0 | ||
Goodwill, Impairment Loss | 0 | $ 636,000 | ||
Finite-Lived Intangible Asset, Useful Life | ||||
Long-term Debt, Total | 7,299,342 | $ 6,379,494 | ||
Operating Lease, Right-of-Use Asset | 442,094 | |||
Operating Lease, Liability, Total | $ 442,094 | |||
Accounting Standards Update 2016-02 [Member] | ||||
Operating Lease, Right-of-Use Asset | $ 471,000 | |||
Operating Lease, Liability, Total | $ 471,000 | |||
Client Acquisition Costs [Member] | ||||
Finite-Lived Intangible Asset, Useful Life | 4 years | 4 years | ||
Weighted Average [Member] | ||||
Merchant Contracts, Term | 3 years | |||
Russia and Cayman Islands [Member] | ||||
Cash, Uninsured Amount | $ 41,000 | $ 74,000 |
Note 4 - Summary of Significa_4
Note 4 - Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Cash on consolidated balance sheet | $ 840,170 | $ 1,645,481 | ||
Restricted cash | 655,180 | 604,070 | ||
Total cash and restricted cash | $ 1,495,350 | $ 2,249,551 | $ 6,993,135 | $ 11,733,271 |
Note 5 - Intangible Assets (Det
Note 5 - Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets, Net, Ending Balance | $ 6,237,789 | $ 6,237,789 | $ 6,441,743 | ||
Amortization of Intangible Assets, Total | $ 649,000 | $ 654,000 | $ 1,400,000 | $ 1,300,000 |
Note 5 - Intangible Assets - In
Note 5 - Intangible Assets - Intangible Assets (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Intangible assets, cost | $ 19,091,351 | $ 17,846,476 |
Intangible assets, accumulated amortization | (12,853,562) | (11,404,732) |
Intangible assets, carrying value | 6,237,789 | $ 6,441,743 |
Intangible assets, useful life (Year) | ||
Computer Software, Intangible Asset [Member] | ||
Intangible assets, cost | 2,343,888 | $ 2,309,291 |
Intangible assets, accumulated amortization | (2,207,648) | (2,139,891) |
Intangible assets, carrying value | $ 136,240 | $ 169,400 |
Intangible assets, useful life (Year) | 3 years | 3 years |
Portfolios and Client Lists [Member] | ||
Intangible assets, cost | $ 7,668,665 | $ 7,576,665 |
Intangible assets, accumulated amortization | (5,039,681) | (4,333,866) |
Intangible assets, carrying value | $ 2,628,984 | $ 3,242,799 |
Intangible assets, useful life (Year) | 4 years | 4 years |
Client Acquisition Costs [Member] | ||
Intangible assets, cost | $ 7,488,403 | $ 6,370,124 |
Intangible assets, accumulated amortization | (4,015,838) | (3,340,581) |
Intangible assets, carrying value | $ 3,472,565 | $ 3,029,544 |
Intangible assets, useful life (Year) | 4 years | 4 years |
PCI Certifiction [Member] | ||
Intangible assets, cost | $ 449,000 | $ 449,000 |
Intangible assets, accumulated amortization | (449,000) | (449,000) |
Intangible assets, carrying value | ||
Intangible assets, useful life (Year) | 3 years | 3 years |
Trademarks [Member] | ||
Intangible assets, cost | $ 703,586 | $ 703,586 |
Intangible assets, accumulated amortization | (703,586) | (703,586) |
Intangible assets, carrying value | ||
Intangible assets, useful life (Year) | 3 years | 3 years |
Internet Domain Names [Member] | ||
Intangible assets, cost | $ 437,810 | $ 437,810 |
Intangible assets, accumulated amortization | (437,810) | (437,810) |
Intangible assets, carrying value | ||
Intangible assets, useful life (Year) | 3 years | 3 years |
Note 5 - Intangible Assets - Es
Note 5 - Intangible Assets - Estimated Aggregate Future Amortization Expense (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
2019 (remainder of year) | $ 754,893 | |
2020 | 1,509,785 | |
2021 | 1,509,785 | |
2022 | 1,487,078 | |
2023 | 976,248 | |
Balance | $ 6,237,789 | $ 6,441,743 |
Note 6 - Accrued Expenses (Deta
Note 6 - Accrued Expenses (Details Textual) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | Oct. 25, 2016 |
Accrued Liabilities, Current, Total | $ 2,881,256 | $ 2,535,947 | |
Other Accrued Expenses [Member] | |||
Accrual for Merchant Loss | 100,000 | ||
Chief Executive Officer [Member] | |||
Accrued Bonuses | 1,200,000 | 566,000 | |
Employees [Member] | |||
Accrued Bonuses | 315,000 | 291,000 | |
PayOnline [Member] | |||
Business Combination, Contingent Consideration, Liability, Total | $ 1,100,000 | $ 1,100,000 | $ 1,433,475 |
Note 6 - Accrued Expenses - Acc
Note 6 - Accrued Expenses - Accrued expenses (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Accrued professional fees | $ 82,346 | $ 174,915 |
PayOnline accrual | 1,126,273 | 1,126,273 |
Accrued interest | 117,482 | 108,202 |
Accrued bonus | 1,481,304 | 1,157,556 |
Accrued foreign taxes | (43,920) | (45,952) |
Other accrued expenses | 117,771 | 14,953 |
Total accrued expenses | $ 2,881,256 | $ 2,535,947 |
Note 7 - Notes Payable (Details
Note 7 - Notes Payable (Details Textual) | May 24, 2019USD ($) | Dec. 28, 2018USD ($) | Mar. 20, 2018USD ($) | May 18, 2017USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 19, 2018USD ($) | Dec. 31, 2018 | Jun. 27, 2017USD ($) | May 02, 2016USD ($) | Jun. 30, 2014USD ($) |
Proceeds from Issuance of Debt | $ 1,116,500 | ||||||||||
RBL Capital Group, LLC [Member] | RBL Loan Agreement [Member] | |||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 15,000,000 | $ 10,000,000 | |||||||||
RBL Capital Group, LLC [Member] | RBL Loan Agreement [Member] | Conversion of Credit Facility to Term Notes, Conversion One [Member] | |||||||||||
Debt Conversion, Original Debt, Amount | $ 3,315,000 | ||||||||||
RBL Capital Group, LLC [Member] | RBL Loan Agreement [Member] | Conversion of Credit Facility to Term Notes, Conversion Two [Member] | |||||||||||
Debt Conversion, Original Debt, Amount | 400,000 | ||||||||||
RBL Capital Group, LLC [Member] | RBL Loan Agreement [Member] | Conversion of Credit Facility to Term Notes, Conversion Three [Member] | |||||||||||
Debt Conversion, Original Debt, Amount | $ 250,000 | ||||||||||
RBL Capital Group, LLC [Member] | RBL Term Note [Member] | |||||||||||
Debt Instrument, Face Amount | $ 4,544,087 | ||||||||||
Debt Instrument, Number of Interest-only Payments | 4 | ||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 14.19% | ||||||||||
Debt Instrument, Periodic Payment, Total | $ 85,634 | ||||||||||
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid | 3,170,967 | ||||||||||
Back End Refinancing Fee | $ 133,600 | ||||||||||
Proceeds from Lines of Credit, Total | $ 1,116,500 | $ 2,131,500 | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 14.00% | 14.00% | |||||||||
RBL Capital Group, LLC [Member] | RBL Term Note [Member] | Credit for General Working Capital Purposes [Member] | |||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 7,600,000 | ||||||||||
RBL Capital Group, LLC [Member] | RBL Term Note [Member] | Debt Instrument, Redemption, Period One [Member] | |||||||||||
Debt Instrument, Number of Interest-only Payments | 1 | 1 | |||||||||
Debt Instrument, Periodic Payment, Interest | $ 11,562 | $ 18,804 | |||||||||
RBL Capital Group, LLC [Member] | RBL Term Note [Member] | Debt Instrument, Redemption, Period Two [Member] | |||||||||||
Debt Instrument, Number of Interest-only Payments | 11 | 11 | |||||||||
Debt Instrument, Periodic Payment, Interest | $ 13,025 | $ 24,867 | |||||||||
RBL Capital Group, LLC [Member] | RBL Term Note [Member] | Debt Instrument, Redemption, Period Three [Member] | |||||||||||
Debt Instrument, Number of Interest-only Payments | 36 | 36 | |||||||||
Debt Instrument, Periodic Payment, Total | $ 38,159 | $ 72,850 | |||||||||
Priority Payment Systems LLC [Member] | |||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 2,500,000 | ||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 10.25% | ||||||||||
Proceeds from Issuance of Debt | $ 2,000,000 | ||||||||||
Priority Payment Systems LLC [Member] | Prime Rate [Member] | |||||||||||
Debt Instrument, Basis Spread on Variable Rate | 6.00% |
Note 7 - Notes Payable - Notes
Note 7 - Notes Payable - Notes Payable (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Long-term debt, gross | $ 7,419,684 | $ 6,512,268 |
Less: deferred loan costs | (120,342) | (132,774) |
Subtotal | 7,299,342 | 6,379,494 |
Less: current portion | (224,364) | (433,448) |
Long term debt | 7,074,978 | 5,946,046 |
RBL Capital Group, LLC [Member] | ||
Long-term debt, gross | 7,419,684 | 6,512,268 |
Priority Payment Systems LLC [Member] | ||
Long-term debt, gross |
Note 7 - Notes Payable - Schedu
Note 7 - Notes Payable - Scheduled Notes Payable Principal Repayment (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
2019 (remainder of year) | $ 224,364 | |
2020 | 1,295,537 | |
2021 | 4,503,078 | |
2022 | 1,212,410 | |
2023 | 184,295 | |
Balance | $ 7,419,684 | $ 6,512,268 |
Note 8 - Concentrations (Detail
Note 8 - Concentrations (Details Textual) - Revenue Benchmark [Member] - Customer Concentration Risk [Member] | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Number of Major Customers | 2 | 2 | 1 | ||
Concentration Risk, Percentage | 5.00% | 5.00% | 5.00% | ||
Priority Payment Systems LLC [Member] | |||||
Concentration Risk, Percentage | 46.00% | 60.00% | 49.00% | 65.00% | |
BIN and ICA [Member | |||||
Concentration Risk, Percentage | 38.00% | 17.00% | 35.00% | 14.00% | |
First Data Corp [Member] | |||||
Concentration Risk, Percentage | 8.00% | 5.00% | 7.00% | 5.00% |
Note 9 - Commitments and Cont_3
Note 9 - Commitments and Contingencies (Details Textual) | Oct. 01, 2018USD ($)ft² | Oct. 05, 2017 | Aug. 01, 2017USD ($) | May 31, 2013USD ($) | Sep. 30, 2018USD ($)ft² | Dec. 31, 2016USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2018shares | Jul. 18, 2017shares | Aug. 06, 2014shares | May 02, 2013ft² |
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | $ 113,000 | ||||||||||
Reverse Stock Split [Member] | |||||||||||
Stockholders' Equity Note, Stock Split, Conversion Ratio | 10 | ||||||||||
Lawsuit Against Aptito.com, Inc. and Shareholders of Aptito.com, Inc. [Member] | Aptito, LLC [Member] | |||||||||||
Number of Parent's Shares in Dispute Related to Acquisition | shares | 125,000 | 125,000 | 125,000 | ||||||||
Lease Agreement for Office at Florida [Member] | |||||||||||
Area of Real Estate Property | ft² | 4,101 | ||||||||||
Periodic Lease and Rental Expense, Per Month | $ 14,354 | $ 16,800 | $ 19,448 | ||||||||
Periodic Lease and Rental Expense, Annual | $ 172,248 | $ 233,377 | |||||||||
Lessee, Operating Lease, Term of Contract | 5 years | ||||||||||
Lease Agreement for Office in Yekaterinburg, Russia [Member] | |||||||||||
Area of Real Estate Property | ft² | 1,654 | ||||||||||
Periodic Lease and Rental Expense, Annual | $ 24,300 | ||||||||||
Lease Agreement for Office in Moscow Russia [Member] | |||||||||||
Area of Real Estate Property | ft² | 3,385 | 4,675 | |||||||||
Periodic Lease and Rental Expense, Annual | $ 56,000 | $ 84,457 |
Note 9 - Commitments and Cont_4
Note 9 - Commitments and Contingencies - Minimum Lease Payments for North American Transaction Solutions Segment (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
2019 (remainder of year) | $ 86,124 | |
2020 | 172,248 | |
2021 | 172,248 | |
2022 | 100,478 | |
Total | 531,098 | |
Amount representing imputed interest | (89,004) | |
Total operating lease liability | 442,094 | |
Current portion of operating lease liability | (61,108) | |
Operating lease liability (net of current portion) | $ 380,986 | |
Remaining term on Lease (Year) | 3 years 29 days | |
Incremental borrowing rate | 12.00% |
Note 10 - Related Party Trans_2
Note 10 - Related Party Transactions (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Due to Related Parties, Current, Total | $ 200,694 | $ 200,694 | $ 387,814 | ||
Prime Portfolios, LLC [Member] | |||||
Payments for Commissions | 18,000 | $ 18,000 | 36,000 | $ 36,000 | |
Key Members of Management Owned Companies [Member] | |||||
Payments for Commissions | 195,000 | $ 128,000 | 365,000 | $ 235,000 | |
Chief Executive Officer [Member] | |||||
Due to Related Parties, Current, Total | $ 201,000 | $ 201,000 | $ 388,000 |
Note 11 - Stockholders' Equit_2
Note 11 - Stockholders' Equity (Details Textual) | Nov. 27, 2018shares | Oct. 05, 2017 | Oct. 02, 2017shares | Jun. 13, 2016shares | Jun. 12, 2015shares | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2018USD ($) | Dec. 31, 2018shares |
Increase (Decrease) in Common Stock Shares Authorized | (300,000,000) | 100,000,000 | 100,000,000 | |||||||
Common Stock, Shares Authorized | 100,000,000 | 400,000,000 | 300,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 314,218 | 314,218 | 234,218 | |||||||
Share-based Payment Arrangement, Option [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 154,004 | 154,004 | 74,004 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares | $ 9.16 | $ 9.16 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 8 years 251 days | 7 years 281 days | ||||||||
Plan 2013 [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 178,900 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 773,000 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 82,003 | 82,003 | 323,498 | |||||||
Plan 2013 [Member] | Board of Directors [Member] | ||||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount, Total | $ | $ 15,000 | $ 22,500 | $ 30,000 | $ 45,000 | ||||||
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture | 22,000 | |||||||||
Share-based Payment Arrangement, Expense | $ | $ 138,000 | |||||||||
Plan 2013 [Member] | Executive Officer [Member] | ||||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount, Total | $ | $ 503,000 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 80,000 | |||||||||
Plan 2013 [Member] | Employees and Consultants [Member] | ||||||||||
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture | 214,507 | |||||||||
Share-based Payment Arrangement, Expense | $ | $ 1,349,000 | |||||||||
Reverse Stock Split [Member] | ||||||||||
Stockholders' Equity Note, Stock Split, Conversion Ratio | 10 |
Note 11 - Stockholders' Equit_3
Note 11 - Stockholders' Equity - Change in Stockholders' Equity (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Balance | $ 7,462,098 | $ 8,596,466 | $ 11,732,145 | $ 13,143,528 | $ 8,596,466 | $ 13,143,528 |
Share based compensation | 2,005,840 | 15,006 | 22,500 | 82,011 | ||
Shares issued for consulting services | 50,585 | |||||
Net income (loss) | (2,758,924) | (1,134,813) | (973,212) | (1,583,294) | (3,893,735) | (2,556,506) |
Comprehensive loss - foreign currency translation | (5,537) | (14,561) | 29,662 | 39,315 | (20,099) | 68,977 |
Balance | $ 6,703,477 | $ 7,462,098 | $ 10,811,095 | $ 11,732,145 | $ 6,703,477 | $ 10,811,095 |
Common Stock [Member] | ||||||
Balance (in shares) | 3,865,467 | 3,863,019 | 3,855,833 | 3,853,100 | 3,863,019 | 3,853,100 |
Balance | $ 386.55 | $ 386.30 | $ 386.05 | $ 385.31 | $ 386.30 | $ 385.31 |
Share based compensation (in shares) | 319,047 | 2,448 | 2,980 | 2,733 | ||
Share based compensation | $ 23.90 | $ 0.24 | $ 0.30 | $ 0.74 | ||
Shares issued for consulting services (in shares) | ||||||
Shares issued for consulting services | ||||||
Net income (loss) | ||||||
Comprehensive loss - foreign currency translation | ||||||
Balance (in shares) | 4,184,514 | 3,865,467 | 3,858,813 | 3,855,833 | 4,184,514 | 3,858,813 |
Balance | $ 410.45 | $ 386.55 | $ 386.35 | $ 386.05 | $ 410.45 | $ 386.35 |
Additional Paid-in Capital [Member] | ||||||
Balance | 183,261,238 | 183,246,232 | 183,201,232 | 183,119,222 | 183,246,232 | 183,119,222 |
Share based compensation | 2,005,816 | 15,006 | 22,500 | 82,010 | ||
Shares issued for consulting services | ||||||
Net income (loss) | ||||||
Comprehensive loss - foreign currency translation | ||||||
Balance | 185,267,054 | 183,261,238 | 183,223,731 | 183,201,232 | 185,267,054 | 183,223,731 |
Stock Subscriptions [Member] | ||||||
Balance | (50,585) | (50,585) | ||||
Share based compensation | ||||||
Shares issued for consulting services | 50,585 | |||||
Net income (loss) | ||||||
Comprehensive loss - foreign currency translation | ||||||
Balance | ||||||
AOCI Attributable to Parent [Member] | ||||||
Balance | (2,246,724) | (2,232,163) | (2,490,923) | (2,530,238) | (2,232,163) | (2,530,238) |
Share based compensation | ||||||
Shares issued for consulting services | ||||||
Net income (loss) | ||||||
Comprehensive loss - foreign currency translation | (5,537) | (14,561) | 29,662 | 39,315 | ||
Balance | (2,252,261) | (2,246,724) | (2,461,261) | (2,490,923) | (2,252,261) | (2,461,261) |
Noncontrolling Interest [Member] | ||||||
Balance | (139,703) | (125,737) | (11,633) | (39,186) | (125,737) | (39,186) |
Share based compensation | ||||||
Shares issued for consulting services | ||||||
Net income (loss) | (40,225) | (13,966) | (69,481) | 27,553 | ||
Comprehensive loss - foreign currency translation | ||||||
Balance | (179,928) | (139,703) | (81,114) | (11,633) | (179,928) | (81,114) |
Retained Earnings [Member] | ||||||
Balance | (173,413,099) | (172,292,252) | (168,966,917) | (167,356,070) | (172,292,252) | (167,356,070) |
Share based compensation | ||||||
Shares issued for consulting services | ||||||
Net income (loss) | (2,718,699) | (1,120,847) | (903,731) | (1,610,847) | ||
Comprehensive loss - foreign currency translation | ||||||
Balance | $ (176,131,798) | $ (173,413,099) | $ (169,870,648) | $ (168,966,917) | $ (176,131,798) | $ (169,870,648) |
Note 12 - Warrants and Options
Note 12 - Warrants and Options (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 314,218 | 234,218 | |
Non-Incentive Plan Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 323,498 | 323,498 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ 21.84 | $ 21.84 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 1 year 153 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ 0 | $ 0 | |
Warrants to Purchase Common Stock [Member] | |||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 728,583 | 728,583 | |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6.18 | $ 6.18 | |
Warrants and Rights Outstanding, Remaining Contractual Term | 3 years 182 days | 4 years | |
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ 3.27 | $ 3.27 | |
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ 134 | $ 134 |