Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 11-May-15 | |
Document Information [Line Items] | ||
Entity Registrant Name | JetPay Corp | |
Entity Central Index Key | 1507986 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | JTPY | |
Entity Common Stock, Shares Outstanding | 13,863,823 | |
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $6,162 | $5,359 |
Restricted cash | 1,386 | 1,386 |
Accounts receivable, less allowance for doubtful accounts | 1,646 | 2,634 |
Settlement processing assets | 15,871 | 18,893 |
Prepaid expenses and other current assets | 728 | 828 |
Current assets before funds held for clients | 25,793 | 29,100 |
Funds held for clients | 57,656 | 40,833 |
Total current assets | 83,449 | 69,933 |
Property and equipment, net | 1,225 | 1,226 |
Goodwill | 41,760 | 41,760 |
Identifiable intangible assets, net of accumulated amortization of $5,388 at March 31, 2015 and $4,620 at December 31, 2014 | 26,124 | 26,892 |
Deferred financing costs, net of accumulated amortization of $4,382 at March 31, 2015 and $4,376 at December 31, 2014 | 83 | 89 |
Other assets | 4,524 | 4,502 |
Total assets | 157,165 | 144,402 |
Current liabilities: | ||
Current portion of long-term debt and capital lease obligations | 1,884 | 1,571 |
Accounts payable and accrued expenses | 9,006 | 9,153 |
Settlement processing liabilities | 14,738 | 18,024 |
Deferred revenue | 284 | 520 |
Other current liabilities | 3,553 | 3,250 |
Current liabilities before client fund obligations | 29,465 | 32,518 |
Client fund obligations | 57,656 | 40,833 |
Total current liabilities | 87,121 | 73,351 |
Long-term debt and capital lease obligations, net of current portion | 14,185 | 14,795 |
Deferred income taxes | 284 | 284 |
Other liabilities | 1,156 | 1,411 |
Total liabilities | 102,746 | 89,841 |
Commitments and Contingencies | ||
Redeemable convertible Series A and Series A-1 preferred stock, $0.001 par value per share, 97,498 shares issued and outstanding at March 31, 2015 and December 31, 2014 (liquidation preference of $58,500 at March 31, 2015) | 30,995 | 29,779 |
Stockholders’ Equity | ||
Preferred stock, $0.001 par value Authorized 1,000,000 shares, none issued | 0 | 0 |
Common stock, $0.001 par value Authorized 100,000,000 shares; 13,863,823 issued and outstanding at March 31, 2015 and December 31, 2014 | 14 | 14 |
Additional paid-in capital | 42,804 | 43,942 |
Accumulated deficit | -19,394 | -19,174 |
Total Stockholders’ Equity | 23,424 | 24,782 |
Total Liabilities and Stockholders’ Equity | $157,165 | $144,402 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets [Parenthetical] (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Finite-Lived Intangible Assets, Accumulated Amortization | $5,388 | $4,620 |
Accumulated Amortization, Deferred Finance Costs | 4,382 | 4,376 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 13,863,823 | 13,863,823 |
Common stock, shares outstanding | 13,863,823 | 13,863,823 |
Temporary Equity, Par or Stated Value Per Share | $0.00 | $0.00 |
Temporary Equity, Shares Issued | 97,498 | 97,498 |
Temporary Equity, Shares Outstanding | 97,498 | 97,498 |
Temporary Equity, Liquidation Preference | $58,500 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Processing revenues | $10,844 | $8,169 |
Cost of processing revenues | 6,456 | 4,688 |
Gross profit | 4,388 | 3,481 |
Selling, general and administrative expenses | 3,382 | 2,775 |
Change in fair value of contingent consideration liability | 11 | 0 |
Amortization of intangibles | 768 | 560 |
Depreciation | 109 | 103 |
Operating income | 118 | 43 |
Other expenses (income) | ||
Interest expense | 197 | 406 |
Amortization of deferred financing costs | 6 | 554 |
Amortization of debt discounts and conversion options | 78 | 369 |
Change in fair value of derivative liability | 0 | 50 |
Other income | -1 | -2 |
Loss before income taxes | -162 | -1,334 |
Income tax expense | 58 | 52 |
Net loss | -220 | -1,386 |
Accretion of convertible preferred stock | -1,216 | -509 |
Net loss applicable to common stockholders | ($1,436) | ($1,895) |
Basic and diluted loss per share applicable to common stockholders (in dollars per share) | ($0.10) | ($0.16) |
Weighted average shares outstanding: | ||
Basic and diluted (in shares) | 13,863,823 | 11,530,040 |
Consolidated_Statement_of_Chan
Consolidated Statement of Changes in Stockholders' Equity (USD $) | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] |
In Thousands, except Share data | ||||
Balance at Dec. 31, 2014 | $24,782 | $14 | $43,942 | ($19,174) |
Balance (in shares) at Dec. 31, 2014 | 13,863,823 | |||
Stock-based compensation expense | 78 | 0 | 78 | 0 |
Accretion of convertible preferred stock to redemption value | -1,216 | 0 | -1,216 | 0 |
Net loss | -220 | 0 | 0 | -220 |
Balance at Mar. 31, 2015 | $23,424 | $14 | $42,804 | ($19,394) |
Balance (in Shares) at Mar. 31, 2015 | 13,863,823 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating Activities | ||
Net loss | ($220) | ($1,386) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation | 109 | 103 |
Stock-based compensation | 78 | 80 |
Common stock issued as compensation | 0 | 6 |
Amortization of intangibles | 768 | 560 |
Amortization of deferred financing costs | 6 | 554 |
Amortization of debt discounts and conversion options | 78 | 369 |
Change in fair value of contingent consideration liability | 11 | 0 |
Change in fair value of derivative liability | 0 | 50 |
Change in operating assets and liabilities: | ||
Restricted cash | 0 | -25 |
Accounts receivable | 988 | 824 |
Settlement processing assets and obligations, net | -264 | -83 |
Prepaid expenses and other current assets | 100 | -34 |
Other assets | -22 | 78 |
Deferred revenue | -236 | -228 |
Accounts payable, accrued expenses and other liabilities | -147 | -770 |
Net cash provided by operating activities | 1,249 | 98 |
Investing Activities | ||
Net increase in restricted cash and cash equivalents held to satisfy client fund obligations | -16,823 | -39,103 |
Purchase of property and equipment | -115 | -83 |
Proceeds on sale of property and equipment | 8 | 1 |
Net cash used in investing activities | -16,930 | -39,185 |
Financing Activities | ||
Payments on long-term debt | -339 | -325 |
Net increase in client funds obligations | 16,823 | 39,103 |
Net cash provided by financing activities | 16,484 | 38,778 |
Net increase (decrease) in cash and cash equivalents | 803 | -309 |
Cash and cash equivalents, beginning | 5,359 | 4,799 |
Cash and cash equivalents, ending | 6,162 | 4,490 |
Supplement disclosure of cash flow information: | ||
Cash paid for interest | 466 | 379 |
Cash paid for taxes | $86 | $0 |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | Note 1. Basis of Presentation |
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for fair presentation of the consolidated financial statements of JetPay Corporation and its subsidiaries (collectively, the “Company” or “JetPay”) as of March 31, 2015 and 2014. The results of operations for the three months ended March 31, 2015 and 2014 are not necessarily indicative of the operating results for the full year. It is recommended that these consolidated financial statements be read in conjunction with the consolidated financial statements and related disclosures for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 25, 2015. | |
Organization_and_Business_Oper
Organization and Business Operations | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Note 2. Organization and Business Operations |
The Company was incorporated in Delaware on November 12, 2010 as a blank check company whose objective was to acquire, through a merger, share exchange, asset acquisition, stock purchase, plan of arrangement, recapitalization, reorganization or other similar business combination, one or more operating businesses. Until December 28, 2012, the Company’s efforts were limited to organizational activities, its initial public offering (the “Offering”) and the search for suitable business acquisition transactions. | |
Effective August 2, 2013, Universal Business Payment Solutions Acquisition Corporation changed its name to JetPay Corporation with the filing of its Amended and Restated Certificate of Incorporation. The Company’s ticker symbol on the Nasdaq Capital Market (“NASDAQ”) changed from “UBPS” to “JTPY” effective August 12, 2013. | |
The Company currently operates in two business segments: the JetPay Payment Processing Segment, which is an end-to-end processor of credit and debit card and ACH payment transactions for both businesses, with a focus on those processing internet transactions and recurring billings, as well as traditional retailers and service providers; and the JetPay Payroll Segment, which is a full-service payroll and related payroll tax payment processor, and a provider of human resource, time and labor management, and other payroll related services. The Company also initiated operations of JetPay Card Services in the fourth quarter of 2013, a division focused on providing low-cost money management and payment services to un-banked and under-banked employees of its business customers. The activity within the JetPay Card Services division was not material for the year ended December 31, 2014 and the three months ended March 31, 2015. The Company entered the payment processing and the payroll processing businesses upon consummation of the acquisitions of JetPay, LLC (“JetPay, LLC” or “JetPay Payment Services”), and A D Computer Corporation (“ADC” or “JetPay Payroll Services”) on December 28, 2012 (the “Completed Transactions”). Additionally, on November 7, 2014, the Company acquired ACI Merchant Systems, LLC (“ACI” or “JetPay Strategic Partners”), an independent sales organization specializing in relationships with banks, credit unions and other financial institutions. See Note 3. Business Acquisitions. | |
The consolidated financial statements as of December 31, 2014 and for the three months ended March 31, 2015 include the accounts of JetPay and its wholly owned subsidiaries, JetPay Payment Services, JetPay Payroll Services and JetPay Strategic Partners. All significant inter-company transactions and balances have been eliminated in consolidation. | |
The Company believes that the investments made by JetPay in its technology, infrastructure, and sales staff will help generate cash flows sufficient to cover its working capital needs. In addition to funding ongoing working capital needs, the Company’s cash requirements for the next twelve months ended March 31, 2016 include, but are not limited to: principal and interest payments on long-term debt of approximately $2.6 million; $2.0 million of unpaid deferred consideration originally due to the stockholders of ADC on December 28, 2014; and $1.2 million of deferred consideration which was paid to the unitholders of ACI on April 10, 2015. The Company expects to fund its cash needs, including capital required for acquisitions and capital expenditures, with cash flow from its operating activities, equity investments and borrowings. As disclosed in Note 8. Redeemable Convertible Preferred Stock, from October 11, 2013 to December 31, 2014, the Company sold 91,333 shares of Series A Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred”), to affiliates of Flexpoint Ford, LLC (“Flexpoint”) for an aggregate of $27.4 million, less certain costs, and has an agreement to potentially sell an additional $12.6 million of Series A Preferred to Flexpoint. Additionally, the Company sold 6,165 shares of Series A-1 Convertible Preferred Stock, par value $0.001 per share (“Series A-1 Preferred”), to affiliates of Wellington Capital Management, LLP (“Wellington”) for an aggregate of $1.85 million, and it has an agreement to potentially sell an additional $850,000 of Series A-1 Preferred to Wellington. This additional combined $13.45 million of convertible preferred stock, if sold, will be principally used as partial consideration for future acquisitions. If the Company is unable to raise additional capital, it may need to limit its future growth plans. | |
Business_Acquisition
Business Acquisition | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Business Combinations [Abstract] | |||||
Business Combination Disclosure [Text Block] | Note 3. Business Acquisition | ||||
On November 7, 2014, the Company entered into a Unit Purchase Agreement (the “Unit Purchase Agreement”) with ACI and Michael Collester and Cathy Smith, pursuant to which the Company acquired all of the outstanding equity interests of ACI from Michael Collester and Cathy Smith. | |||||
In connection with the closing, the Company paid an aggregate of $11.0 million in cash, adjusted as set forth herein, and issued 2.0 million shares of its common stock to the members of ACI with a value of approximately $3.7 million on the date of acquisition. The ACI unitholders are entitled to receive additional cash consideration of $1.2 million on April 10, 2015 and a further cash payment of $1.2 million on April 10, 2016. The initial deferred consideration payment was made on April 10, 2015. The $2.4 million of deferred consideration was recorded at $2.17 million, valuing the estimated fair value of the 2016 future payment utilizing a 16% discount rate. Additionally, ACI’s unitholders are entitled to earn up to an additional $500,000 based on the net revenue of ACI for the twelve month periods ending October 31, 2015 and 2016. This cash consideration, recorded as a non-current liability, was valued at $400,000 at the date of acquisition utilizing a Monte Carlo simulation model. The fair value of the contingent cash consideration was $410,000 at March 31, 2015. See Note 4. Summary of Significant Accounting Policies. The Company is also obligated to reimburse the members of ACI for certain tax obligations estimated at $50,000. The acquisition of ACI provides the Company with additional expertise in selling debit and credit card processing services into this channel, a base operation to sell its payroll and related payroll tax processing and payment services to its clients and the ability to cross-market its payroll payment services and its prepaid card services to ACI’s customer base. | |||||
The fair value of the identifiable assets acquired and liabilities assumed in the ACI acquisition as of the acquisition date include: (i) $250,000 cash, (ii) $521,000 for accounts receivable; (iii) $46,000 for prepaid expenses and other assets; (iv) $27,000 for fixed assets; (v) the assumption of $601,000 of liabilities; and (vi) the remainder, or approximately $17.1 million, allocated to goodwill and other identifiable intangible assets. Within the $17.1 million of acquired intangible assets, $10.6 million was assigned to goodwill, which is not subject to amortization expense under U.S. GAAP. The Company expects to deduct for tax purposes substantially all of its goodwill. The amount assigned to goodwill was deemed appropriate based on several factors, including: (i) multiple paid by market participants for businesses in the merchant card processing business; (ii) levels of ACI’s current and future projected cash flows; and (iii) the Company’s strategic business plan, which includes cross-marketing the Company’s payroll processing and prepaid card services to ACI’s customer base as well as offering merchant credit card processing services to the Company’s ADC payroll customer base. The remaining intangible assets were assigned to customer relationships for $6.3 million, software costs of $100,000, and tradename for $60,000. The Company determined that the fair value of non-compete agreements were immaterial. Customer relationships, software costs, and trade name were assigned a life of 8.5, 2 and 3 years, respectively. | |||||
Assets acquired and liabilities assumed in the ACI acquisition were recorded on the Company’s Consolidated Balance Sheets as of the acquisition date based upon their estimated fair values at such date. The results of operations of the business acquired by the Company have been included in the statements of operations since the date of acquisition. The excess of the purchase price over the estimated fair values of the underlying identifiable assets acquired and liabilities assumed were allocated to goodwill. | |||||
The allocation of the ACI purchase price and the estimated fair market values of the ACI assets acquired and liabilities assumed are shown below (in thousands): | |||||
Cash | $ | 250 | |||
Accounts receivable | 521 | ||||
Prepaid expenses and other assets | 46 | ||||
Property and equipment, net | 27 | ||||
Goodwill | 10,594 | ||||
Identifiable intangible assets | 6,460 | ||||
Total assets acquired | 17,898 | ||||
Accounts payable and accrued expenses | 601 | ||||
Total liabilities assumed | 601 | ||||
Net assets acquired | $ | 17,297 | |||
Unaudited pro forma results of operations for the three months ended March 31, 2014 as if the Company and ACI had been combined on January 1, 2014 follow. The pro forma results include estimates and assumptions which management believes are reasonable. The pro forma results do not include any anticipated cost savings or other effects of the planned integration of these entities, and are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the date indicated, or which may result in the future. | |||||
Unaudited Pro Forma Results of Operations | |||||
Three Months Ended March 31, 2014 | |||||
(in thousands) | |||||
Revenues | $ | 9,579 | |||
Operating income | $ | 328 | |||
Net loss | $ | -1,258 | |||
Net loss applicable to common stockholders | $ | -1,979 | |||
Net loss per share applicable to common stockholders | $ | -0.15 | |||
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||
Significant Accounting Policies [Text Block] | Note 4. Summary of Significant Accounting Policies | |||||||||||||
Critical 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 critical accounting policies are described below. | ||||||||||||||
Use of Estimates | ||||||||||||||
The accompanying financial statements have been prepared in accordance with U.S. GAAP and pursuant to the accounting and disclosure rules and regulations of the SEC. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of the Company’s financial statements. Such estimates include, but are not limited to, the value of purchase consideration of acquisitions; valuation of accounts receivable, reserves for chargebacks, goodwill, intangible assets, and other long-lived assets; legal contingencies; and assumptions used in the calculation of stock-based compensation and in the calculation of income taxes. Actual results may differ from these estimates under different assumptions or conditions. | ||||||||||||||
Revenue Recognition and Deferred Revenue | ||||||||||||||
The Company recognizes revenue in general when the following criteria have been met: persuasive evidence of an arrangement exists, a customer contract or purchase order exists and the fees are fixed and determinable, no significant obligations remain and collection of the related receivable is reasonably assured. Allowances for chargebacks, discounts and other allowances are estimated and recorded concurrent with the recognition of revenue and are primarily based on historic rates. | ||||||||||||||
Revenues from the Company’s credit and debit card processing operations are recognized in the period services are rendered as the Company processes credit and debit card transactions for its merchant customers or for merchant customers of its Independent Sales Organization (“ISO”) clients. The majority of the Company’s revenue within its credit and debit card processing business is comprised of transaction-based fees, which typically constitute a percentage of dollar volume processed, or a fee per transaction processed. In the case where the Company is only the processor of transactions, it charges transaction fees only and records these fees as revenues. In the case of merchant contracts or contracts with ISOs for whom it processes credit and debit card transactions for the ISO’s merchant customers, revenue is primarily comprised of fees charged to the merchant, as well as a percentage of the processed sale transaction. The Company’s contracts in most instances involve three parties: the Company, the merchant, and the sponsoring bank. Under certain of these sales arrangements, the Company’s sponsoring bank collects the gross revenue from the merchants, pays the interchange fees and assessments to the credit card associations, collects their fees and pays the Company a net residual payment representing the Company’s fee for the services provided. Accordingly, under these arrangements, the Company records the revenue net of interchange, credit card association assessments and fees and the sponsoring bank’s fees. Under the majority of the Company’s sales arrangements, the Company is billed directly for certain fees by the credit card associations and the processing bank. In this instance, revenues and cost of revenues include the credit card association fees and assessments and the sponsoring bank’s fees which are billed to the Company and for which it assumes credit risk. In all instances, the Company recognizes processing revenues net of interchange fees, which are assessed to its merchant and ISO merchant customers on all processed transactions. Interchange rates and fees are not controlled by the Company. The Company effectively functions as a clearing house collecting and remitting interchange fee settlement on behalf of issuing banks, debit networks, credit card associations and their processing customers. Additionally, the Company’s direct merchant customers have the liability for any charges properly reversed by the cardholder. In the event, however, that the Company is not able to collect such amount from the merchants due to merchant fraud, insolvency, bankruptcy or any other reason, it may be liable for any such reversed charges. The Company requires cash deposits, guarantees, letters of credit and other types of collateral from certain merchants to minimize any such contingent liability, and it also utilizes a number of systems and procedures to manage merchant risk. | ||||||||||||||
Revenues from the Company’s payroll processing operations are recognized in the period services are rendered and earned under service arrangements with clients where service fees are fixed or determinable and collectability is reasonably assured. Certain processing services are provided under annual service arrangements with revenue recognized over the service period based on when the efforts and costs are expended. The Company’s service revenue is largely attributable to payroll-related processing services where the fees are based on a fixed amount per processing period or a fixed amount per processing period plus a fee per employee or transaction processed. The revenue earned from delivery service for the distribution of certain client payroll checks and reports is included in processing revenue, and the costs for delivery are included in selling, general, and administrative expenses on the Consolidated Statements of Operations. | ||||||||||||||
Interest on funds held for clients is earned primarily on funds that are collected from clients before due dates for payroll tax administration services and for employee payment services, and invested until remittance to the applicable tax or regulatory agencies or client employee. These collections from clients are typically remitted from 1 to 30 days after receipt, with some items extending to 90 days. The interest earned on these funds is included in total revenue on the Consolidated Statements of Operations because the collecting, holding, and remitting of these funds are critical components of providing these services. | ||||||||||||||
Reserve for Chargeback Losses | ||||||||||||||
Disputes between a cardholder and a merchant periodically arise as a result of, among other things, cardholder dissatisfaction with merchandise quality or merchant services. Such disputes may not be resolved in the merchant’s favor. In these cases, the transaction is “charged back” to the merchant, which means the purchase price is refunded to the customer through the merchant’s bank and charged to the merchant. If the merchant has inadequate funds, JetPay, LLC must bear the credit risk for the full amount of the transaction. JetPay, LLC evaluates the risk for such transactions and estimates the potential loss for chargebacks based primarily on historical experience and records a loss reserve accordingly. JetPay, LLC believes its reserve for chargeback losses is adequate to cover both the known probable losses and the incurred but not yet reported losses at the balance sheet dates. Chargeback reserves totaling $304,000 and $306,000 were recorded as of March 31, 2015 and December 31, 2014, respectively. | ||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||
The carrying amounts of financial instruments, including cash and cash equivalents, restricted cash, settlement processing assets and liabilities, accounts receivable, prepaid expenses and other current assets, funds held for clients, other assets, accounts payable and accrued expenses, deferred revenue, other current liabilities and client fund obligations, approximated fair value as of the balance sheet dates presented, because of the relatively short maturity dates on these instruments. The carrying amounts of the financing arrangements approximate fair value as of the balance sheet dates presented, because interest rates on these instruments approximate market interest rates after consideration of stated interest rates, anti-dilution protection and associated warrants. | ||||||||||||||
Concentration of Credit Risk | ||||||||||||||
Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, settlement processing assets and funds held for clients. The Company’s cash and cash equivalents are deposited with major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount. | ||||||||||||||
Cash and Cash Equivalents | ||||||||||||||
The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. | ||||||||||||||
Accounts Receivable | ||||||||||||||
The Company’s accounts receivable are due from its merchant credit card and its payroll customers. Credit is extended based on the evaluation of customers’ financial condition and, generally, collateral is not required. Payment terms vary and amounts due from customers are stated in the financial statements net of an allowance for doubtful accounts. Accounts which are outstanding longer than the payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivables when they are deemed uncollectible. | ||||||||||||||
Settlement Processing Assets and Obligations | ||||||||||||||
Funds settlement refers to the process of transferring funds for sales and credits between card issuers and merchants. Depending on the type of transaction, either the credit card interchange system or the debit network is used to transfer the information and funds between the sponsoring bank and card issuing bank to complete the link between merchants and card issuers. In certain of our processing arrangements, merchant funding primarily occurs after the sponsoring bank receives the funds from the card issuer through the card networks, creating a net settlement obligation on the Company’s balance sheet. In a limited number of other arrangements, the sponsoring bank funds the merchants before it receives the net settlement funds from the card networks, creating a net settlement asset on the Company’s balance sheet. Additionally, certain of the Company’s sponsoring banks collect the gross revenue from the merchants, pay the interchange fees and assessments to the credit card associations, collect their fees for processing and pay the Company a net residual payment representing the Company’s fees for the services. In these instances, the Company does not reflect the related settlement processing assets and obligations in its Consolidated Balance Sheet. | ||||||||||||||
Timing differences in processing credit and debit card and ACH transactions, as described above, interchange expense collection, merchant reserves, sponsoring bank reserves, and exception items result in settlement processing asset and obligations. Settlement processing assets consist primarily of our receivable from merchants for the portion of the discount fee related to reimbursement of the interchange expense, our receivable from the processing bank for transactions we have funded merchants in advance of receipt of card association funding, merchant reserves held, sponsoring bank reserves and exception items, such as customer chargeback amounts receivable from merchants. Settlement processing obligations consist primarily of merchant reserves, our liability to the processing bank for transactions for which we have received funding from the members but have not funded merchants and exception items. | ||||||||||||||
Property and Equipment | ||||||||||||||
Property and equipment acquired in the Company’s recent business acquisitions have been recorded at estimated fair value. The Company records all other property and equipment acquired in the normal course of business at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets, which are generally as follows: leasehold improvements – shorter of economic life or initial term of the related lease; machinery and equipment – 5 to 15 years; and furniture and fixtures – 5 to 10 years. Significant additions or improvements extending assets’ useful lives are capitalized; normal maintenance and repair costs are expensed as incurred. | ||||||||||||||
Goodwill | ||||||||||||||
Goodwill represents the premium paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company’s business combinations. The Company performs a goodwill impairment test on at least an annual basis. Application of the goodwill impairment test requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the businesses, the useful life over which cash flows will occur and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. The Company conducts its annual goodwill impairment test as of December 31 of each year or more frequently if indicators of impairment exist. The Company periodically analyzes whether any such indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a sustained significant decline in our stock price and market capitalization, a significant adverse change in legal factors or in the business climate, unanticipated competition and/or slower expected growth rates, adverse actions or assessments by a regulator, among others. The Company compares the fair value of its reporting unit to its respective carrying value, including related goodwill. Future changes in the industry could impact the results of future annual impairment tests. The Company’s annual goodwill impairment testing indicated there was no impairment as of December 31, 2014. There can be no assurance that future tests of goodwill impairment will not result in impairment charges. | ||||||||||||||
Identifiable Intangible Assets | ||||||||||||||
Identifiable intangible assets consist primarily of customer relationships, software costs, and tradenames. Certain tradenames are considered to have indefinite lives, and as such, are not subject to amortization. These assets are tested for impairment using undiscounted cash flow methodology annually and whenever there is an impairment indicator. Estimating future cash flows requires significant judgment and projections may vary from cash flows eventually realized. Several impairment indicators are beyond the Company’s control, and determining whether or not they will occur cannot be predicted with any certainty. Customer relationships, tradenames, and software costs are amortized on a straight-line basis over their respective assigned estimated useful lives. | ||||||||||||||
Impairment of Long–Lived Assets | ||||||||||||||
The Company periodically reviews the carrying value of its long-lived assets held and used at least annually or when events and circumstances warrant such a review. If significant events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable, the Company performs a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. Cash flow projections are sometimes based on a group of assets, rather than a single asset. If cash flows cannot be separately and independently identified for a single asset, the Company determines whether impairment has occurred for the group of assets for which it can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, it measures any impairment by comparing the fair value of the asset group to its carrying value. If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset or asset group, impairment in the amount of the difference is recorded. The Company’s annual testing indicated there was no impairment as of December 31, 2014. | ||||||||||||||
Convertible Preferred Stock | ||||||||||||||
The Company accounts for the redemption premium, beneficial conversion feature and issuance costs on its Convertible Preferred Stock using the effective interest method, accreting such amounts to its Convertible Preferred Stock from the date of issuance to the earliest date of redemption. | ||||||||||||||
Share-Based Compensation | ||||||||||||||
The Company expenses employee share-based payments under ASC Topic 718, Compensation-Stock Compensation, which requires compensation cost for the grant-date fair value of share-based payments to be recognized over the requisite service period. The Company estimates the grant date fair value of the share-based awards issued in the form of options using the Black-Scholes option pricing model. | ||||||||||||||
Loss Per Share | ||||||||||||||
Basic loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. The dilutive effect of the conversion option in the Flexpoint Series A Preferred and the Wellington Series A-1 Preferred of 9,133,300 and 616,500 shares of common stock, respectively, at March 31, 2015, and the effect of 498,324 exercisable stock options granted under the Company’s Stock Incentive Plan at March 31, 2015 have been excluded from the loss per share calculation for the three months ended March 31, 2015 in that the assumed conversion of these options would be anti-dilutive. As to the three months ended March 31, 2014, the dilutive effect of the conversion option in the $10 million Secured Convertible Promissory Notes Payable (the “Notes”) of 3,333,333 shares, the effect of the conversion option in the Flexpoint Series A Preferred of 3,333,333 shares of common stock, and the effect of 197,916 exercisable stock options granted under the Company’s Stock Incentive Plan at March 31, 2014 have been excluded from the loss per share calculation in that the assumed conversion of these options would be anti-dilutive. | ||||||||||||||
Derivative Financial Instruments | ||||||||||||||
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company does review the terms of the convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound derivative instrument. | ||||||||||||||
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges recorded within other expenses (income), using the effective interest method. | ||||||||||||||
Fair value measurements | ||||||||||||||
The Company accounts for fair value measurements in accordance with ASC Topic No. 820, Fair Value Measurements and Disclosures, (“ASC Topic 820”) which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. | ||||||||||||||
ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC Topic 820 are described below: | ||||||||||||||
Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |||||||||||||
Level 2 | Applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. | |||||||||||||
Level 3 | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). | |||||||||||||
The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by ASC Topic 820, assets and liabilities are classified in their entirety based on the level of input that is significant to the fair value measurement. | ||||||||||||||
Fair Value at March 31, 2015 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
(in thousands) | ||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | - | $ | - | ||||||
Contingent consideration | $ | 1,251 | $ | - | $ | - | $ | 1,251 | ||||||
Totals | $ | 1,251 | $ | - | $ | - | $ | 1,251 | ||||||
Fair Value at December 31, 2014 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
(in thousands) | ||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | - | $ | - | ||||||
Contingent consideration | $ | 1,240 | $ | - | $ | - | $ | 1,240 | ||||||
Totals | $ | 1,240 | $ | - | $ | - | $ | 1,240 | ||||||
The following table sets forth a summary of the change in fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis: | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2015 | 2014 | |||||||||||||
(in thousands) | ||||||||||||||
Beginning Balance | $ | 1,240 | $ | 1,230 | ||||||||||
Change in fair value of derivative liability | - | 50 | ||||||||||||
Change in fair value of contingent cash consideration | 11 | - | ||||||||||||
Totals | $ | 1,251 | $ | 1,280 | ||||||||||
Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the financial instrument. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting and finance department, which reports to the Chief Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting and finance department with support from the Company’s outside consultants which are approved by the Chief Financial Officer. Level 3 financial liabilities consist of a derivative liability and contingent consideration related to the JetPay, LLC acquisition for which there are no current markets such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy will be analyzed each period based on changes in estimates or assumptions and recorded as appropriate. | ||||||||||||||
The Level 3 financial liabilities are the result of recording the Completed Transactions, the ACI acquisition and related debt instruments as more fully described below. | ||||||||||||||
In connection with the debt proceeds received under the $10 million Convertible Promissory Notes (the “Notes”), the Company recorded a derivative liability of $2.1 million on its Consolidated Balance Sheet at December 28, 2012 related to the conversion feature embedded in the Notes. The fair value of the derivative liability was classified within Level 3 of the fair value hierarchy because it was valued using pricing models that incorporate management assumptions that cannot be corroborated with observable market data. The fair value at March 31, 2015 of $0 was the result of the notes being paid in full on December 31, 2014. The change in fair value of this derivative liability of $50,000 for the three months ended March 31, 2014 was recorded within other expenses (income) in the Company’s Consolidated Statements of Operations. | ||||||||||||||
In addition to the consideration paid upon closing of the JetPay, LLC acquisition, WLES, L.P. (“WLES”), through December 28, 2017, is entitled to receive 833,333 shares of common stock if the trading price of the common stock is at least $8.00 per share for any 20 trading days out of a 30 trading day period and $5.0 million in cash if the trading price of the common stock is at least $9.50 per share for any 20 trading days out of a 30 trading day period. This contingent consideration was valued at $1.54 million at the date of acquisition based on utilization of option pricing models and was recorded as a non-current liability for $700,000 and as additional paid-in capital for $840,000 at December 31, 2012. The stock-based component value of $840,000 recorded at December 28, 2012 (the JetPay, LLC acquisition date), remains unchanged at December 31, 2014 as a result of this component being recorded as equity. The fair value at March 31, 2015 of the cash-based contingent consideration, valued at $1, was determined using a binomial option pricing model. The following assumptions were utilized in the March 2015 calculations: risk free interest rate: 0.81%; dividend yield: 0%; term of contingency of 2.76 years; and volatility: 22.3%. | ||||||||||||||
The fair value of the common stock was derived from the per share price of recent sales of the common stock at the valuation date. Management determined that the results of its valuation were reasonable. The expected life represents the remaining contractual term of the derivative. The volatility rate was developed based on analysis of the historical volatility rates of similarly situated companies (using a number of observations that was at least equal to or exceeded the number of observations in the life of the derivative financial instrument at issue). The risk free interest rates were obtained from publicly available U.S. Treasury yield curve rates. The dividend yield is zero because the Company has not paid dividends and does not expect to pay dividends in the foreseeable future. | ||||||||||||||
In addition to the consideration paid upon closing of the ACI acquisition, the previous unitholders are entitled to receive up to an additional $500,000 if certain net revenue goals are achieved through October 31, 2016. This contingent consideration was valued at $400,000 at the date of acquisition and $410,000 at March 31, 2015 based on utilization of a Monte Carlo simulation to estimate the variance and relative risk of achieving future net revenue growth and discounting the associated cash consideration payments at their present values using a credit-risk adjusted discount rate of 16.0%. The key assumptions in applying the Monte Carlo simulation included expected net revenue growth rates, the expected standard deviation and serial correlation of expected net revenue growth rates as well as a normal distribution assumption. | ||||||||||||||
The Company uses either a binomial option pricing model or the Black-Scholes option valuation model to value Level 3 financial liabilities at inception and on subsequent valuation dates. These models incorporate transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as volatility. A significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement. | ||||||||||||||
As of March 31, 2015, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy. | ||||||||||||||
In accordance with the provisions of ASC Topic 815, Derivatives and Hedging Activities, the Company presented its derivative liability at fair value on its Consolidated Balance Sheets, with the corresponding change in fair value recorded in the Company’s Consolidated Statement of Operations for the applicable reporting periods. | ||||||||||||||
Income taxes | ||||||||||||||
The Company accounts for income taxes under ASC Topic 740, Income Taxes (“ASC Topic 740”). ASC Topic 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carryovers. Deferred income tax expense (benefit) represents the change during the period in the deferred income tax assets and deferred income tax liabilities. In establishing the provision for income taxes and determining deferred income tax assets and liabilities, the Company makes judgments and interpretations based on enacted laws, published tax guidance and estimates of future earnings. ASC Topic 740 additionally requires a valuation allowance to be established when, based on available evidence, it is more likely than not that some portion or the entire deferred income tax asset will not be realized. | ||||||||||||||
ASC Topic 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company is required to file income tax returns in the United States (federal) and in various state and local jurisdictions. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions and deductions would be sustained upon examination and does not anticipate any adjustments that would result in material changes to its financial position. | ||||||||||||||
The Company’s policy for recording interest and penalties associated with unrecognized tax benefits is to record such interest and penalties as interest expense and as a component of selling, general and administrative expense, respectively. There were no amounts accrued for penalties or interest as of or during the three months ended March 31, 2015 and 2014. Management does not expect any significant changes in its unrecognized tax benefits in the next year. | ||||||||||||||
Subsequent Events | ||||||||||||||
Management evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the review, management did not identify any recognized or non-recognized subsequent events which would have required an adjustment or disclosure in the financial statements, other than those disclosed in Note 14. Subsequent Events. See Note 14. Subsequent Events below. | ||||||||||||||
Recent Accounting Pronouncements | ||||||||||||||
On February 18, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-02 Consolidation (Topic 810): Amendments to the Consolidation Analysis that amends the current consolidation guidance. The amendments affect both the variable interest entity and voting interest entity consolidation models. The new guidance is effective for the Company beginning January 1, 2016, with early adoption permitted. This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. | ||||||||||||||
On April 7, 2015, the FASB issued ASU No. 2015-03 Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of related debt liability, consistent with debt discounts. Under current accounting standards, such costs are recorded as an asset. The new guidance is effective for the Company beginning January 1, 2016, with early adoption permitted. This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. | ||||||||||||||
Property_and_Equipment_net_of_
Property and Equipment, net of Accumulated Depreciation | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Property, Plant and Equipment Disclosure [Text Block] | Note 5. Property and Equipment, net of Accumulated Depreciation | |||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
(in thousands) | ||||||||
Leasehold improvements | $ | 388 | $ | 384 | ||||
Equipment | 838 | 811 | ||||||
Furniture and fixtures | 266 | 252 | ||||||
Computer software | 143 | 121 | ||||||
Vehicles | 203 | 182 | ||||||
Assets in progress | 171 | 152 | ||||||
Total property and equipment | 2,009 | 1,902 | ||||||
Less: accumulated depreciation | -784 | -676 | ||||||
Property and equipment, net | $ | 1,225 | $ | 1,226 | ||||
Property and equipment at March 31, 2015 included $148,100 of computer equipment, net of $23,400 of accumulated depreciation that is subject to capital lease obligations. | ||||||||
Depreciation expense was $109,000 and $103,000 for the three months ended March 31, 2015 and 2014, respectively. | ||||||||
Accounts_Payable_and_Accrued_E
Accounts Payable and Accrued Expenses | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Accounts Payable and Accrued Liabilities Disclosure [Text Block] | Note 6. Accounts Payable and Accrued Expenses | |||||||
March 31, | December 31, | |||||||
Accounts payable and accrued expenses consist of the following (in thousands): | 2015 | 2014 | ||||||
Trade accounts payable | $ | 1,959 | $ | 1,828 | ||||
ACH clearing liability | 1,596 | 2,146 | ||||||
Accrued compensation | 1,319 | 1,233 | ||||||
Accrued agent commissions | 1,095 | 758 | ||||||
Related party payables | 93 | 70 | ||||||
Other | 2,944 | 3,118 | ||||||
Total | $ | 9,006 | $ | 9,153 | ||||
LongTerm_Debt_Notes_Payable_an
Long-Term Debt, Notes Payable and Capital Lease Obligations | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Debt Disclosure [Text Block] | Note 7. Long-Term Debt, Notes Payable and Capital Lease Obligations | |||||||
Long-term debt, notes payable and capital lease obligations consist of the following: | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
(in thousands) | ||||||||
Term loan payable to Metro Bank (or “Metro”), interest rate of 4.0% payable in monthly principal payments of $107,143 plus interest, maturing December 28, 2019, collateralized by the assets and equity interests of AD Computer Corporation and Payroll Tax Filing Services, Inc. | $ | 6,104 | $ | 6,425 | ||||
Term loan payable to Metro Bank, interest rate of 5.25% payable in monthly principal payments of $104,167 plus interest, maturing November 7, 2021, collateralized by the assets and equity interests of ACI Merchant Systems, LLC. | 7,500 | 7,500 | ||||||
Unsecured promissory note payable to WLES, interest rate of 5.0% payable quarterly, note principal due on December 31, 2017. Note amount excludes unamortized fair value discount of $511,878 and $552,424 at March 31, 2015 and December 31, 2014, respectively. See Note 12. Related Party Transactions. | 1,819 | 1,779 | ||||||
Unsecured promissory notes payable to stockholders, interest rate of 4% payable at maturity, note principal due September 30, 2016. See Note 12. Related Party Transactions. | 492 | 492 | ||||||
Capital lease obligations related to computer equipment at JetPay, LLC, interest rate of 5.55%, due in monthly lease payments of $4,114, maturing in May 2017, collateralized by equipment. | 140 | 154 | ||||||
Various other debt instruments related to vehicles at ADC. | 14 | 16 | ||||||
16,069 | 16,366 | |||||||
Less current portion | -1,884 | -1,571 | ||||||
$ | 14,185 | $ | 14,795 | |||||
The Metro Bank term loan agreements require the Company to provide Metro with annual financial statements within 120 days of the Company’s year-end and quarterly financial statements within 60 days after the end of each quarter. The Metro agreements also contain certain annual financial covenants with which the Company was in compliance as of March 31, 2015. | ||||||||
Maturities of long-term debt and capital lease obligation, excluding fair value and conversion option debt discounts, are as follows for the twelve months ending March 31: 2016 – $1.9 million; 2017 – $3.1 million; 2018 – $4.9 million; 2019 – $2.5 million; 2020 – $2.2 million; and $2.0 million thereafter. | ||||||||
Redeemable_Convertible_Preferr
Redeemable Convertible Preferred Stock | 3 Months Ended |
Mar. 31, 2015 | |
Convertible Preferred Stock [Abstract] | |
Convertible Preferred Stock [Text Block] | Note 8. Redeemable Convertible Preferred Stock |
On October 11, 2013, the Company issued 33,333 shares of Series A Preferred to Flexpoint for an aggregate of $10.0 million less certain agreed-upon reimbursable expenses of Flexpoint (the “Initial Closing”) pursuant to a Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into on August 22, 2013. Additionally, the Company issued 4,667 shares of Series A Preferred to Flexpoint on April 14, 2014 for an aggregate of $1.4 million; 20,000 shares on November 7, 2014 for $6.0 million; and 33,333 shares on December 28, 2014 for $10.0 million. The proceeds of the initial $10.0 million investment were used to retire the Ten Lords, Ltd. note payable of $5.9 million maturing in December 2013 with the remainder used for general corporate purposes. The proceeds of the $1.4 million investment were used to satisfy a portion of the EarlyBirdCapital, Inc. Award (the “Award”). See Note 11. Commitments and Contingencies. As a result of the Award, the Company was not able to satisfy one of the conditions to closing of the $1.4 million Series A Preferred purchase. Although Flexpoint agreed to waive this condition at the closing, for any subsequent closing of the Series A Preferred, the Company will need to seek a waiver of the failure of this condition from Flexpoint. The November 7, 2014 $6.0 million proceeds were used as partial consideration for the acquisition of ACI and the proceeds of the December 28, 2014 $10.0 million investment were used to redeem the Secured Convertible Promissory Notes that matured on December 31, 2014. | |
The Series A Preferred is convertible into shares of common stock. Any holder of Series A Preferred may at any time convert such holder’s shares of Series A Preferred into that number of shares of common stock equal to the number of shares of Series A Preferred being converted multiplied by $300 and divided by the then-applicable conversion price, initially $3.00. The conversion price of the Series A Preferred is subject to downward adjustment upon the occurrence of certain events. | |
Under the Securities Purchase Agreement, the Company agreed to sell to Flexpoint, and Flexpoint agreed to purchase, upon satisfaction of certain conditions, up to 133,333 shares of Series A Preferred for an aggregate purchase price of up to $40.0 million. The Company’s obligation to issue and sell, and Flexpoint’s obligation to purchase, the Series A Preferred is divided into three separate tranches: Tranche A, Tranche B and Tranche C. Tranche A consisted of $10.0 million of shares of Series A Preferred that was issued on October 11, 2013. Tranche B consisted of up to $10.0 million of shares of Series A Preferred, which Flexpoint was obligated to purchase, subject to satisfaction or waiver of certain conditions, from the Company if the Company was able to consummate a redemption any time after December 1, 2014 and prior to December 29, 2014 of the Notes. The Series A Preferred under Tranche B was issued on December 28, 2014. Tranche C consists of up to $20.0 million of shares of Series A Preferred ($12.6 million remaining available at March 31, 2015, which Flexpoint has the option to purchase at any time until the third anniversary of the Initial Closing. The shares of Series A Preferred issuable with respect to Tranche A, Tranche B and Tranche C all have a purchase price of $300 per share. | |
The Series A Preferred has an initial liquidation preference of $600 per share (subject to adjustment for any stock split, stock dividend or other similar proportionate reduction or increase of the authorized number of shares of common stock) and will rank senior to the common stock with respect to distributions of assets upon the Company’s liquidation, dissolution or winding up. Holders of Series A Preferred will have the right to request redemption of any shares of Series A Preferred issued at least five years prior to the date of such request by delivering written notice to the Company at the then applicable liquidation value per share, unless holders of a majority of the outstanding Series A Preferred elect to waive such redemption request on behalf of all holders of Series A Preferred. | |
On May 5, 2014, the Company issued 2,565 shares of Series A-1 Preferred to Wellington for an aggregate of $769,500, less certain agreed-upon reimbursable expenses of Wellington, pursuant to a Securities Purchase Agreement dated May 1, 2014. Additionally, the Company issued 1,350 shares of Series A-1 Preferred to Wellington on November 20, 2014 for $405,000, and 2,250 shares on December 31, 2014 for $675,000. Under the Securities Purchase Agreement, the Company agreed to sell to Wellington, upon the satisfaction of certain conditions, up to 9,000 shares of Series A-1 Preferred at a purchase price of $300 per share for an aggregate purchase price of up to $2.7 million. The proceeds of the total investment to date of $1.85 million by Wellington will be used for general corporate purposes. The Series A-1 Preferred will be convertible into shares of the Company’s common stock or, in certain circumstances, Series A-2 Convertible Preferred Stock, par value $0.001 per share (“Series A-2 Preferred”). The Series A-1 Preferred can be converted into that number of shares of common stock equal to the number of shares of Series A-1 Preferred being converted multiplied by $300 and divided by the then-applicable conversion price, which initially will be $3.00. The conversion price of the series A-1 Preferred is subject to downward adjustment upon the occurrence of certain events as defined in the Securities Purchase Agreement. Additionally, Wellington will have the option, but not the obligation, to purchase up to the number of shares of Series A-1 Preferred equal to 6.75% of the cumulative number of shares of Series A Preferred purchased by Flexpoint. | |
The Series A-1 Preferred will have an initial liquidation preference of $600 per share and will rank senior to the Company’s common stock and pari passu with the Series A Preferred owned by Flexpoint with respect to distributions of assets upon the Company’s liquidation, dissolution or winding up. Notwithstanding the above, no holder of the Series A-1 Preferred can convert if, as a result of such conversion, such holder would beneficially own 9.9% or more of the Company’s common stock. If at any time, no shares of Series A Preferred remain outstanding and shares of Series A-1 Preferred remain outstanding because of the limitation in the preceding sentence, all shares of Series A-1 Preferred shall automatically convert into shares of Series A-2 Preferred at a 1:1 ratio. Upon the occurrence of an Event of Noncompliance, as defined in the Securities Purchase Agreement, the holders of a majority of the Series A-1 Preferred may demand immediate redemption of all or a portion of the Series A-1 Preferred at the then-applicable liquidation value. | |
The Company considered the guidance of ASC Topic 480, Distinguishing Liabilities from Equity, and ASC Topic 815, Derivatives, in determining the accounting treatment for its convertible preferred stock instruments. The Company considered the economic characteristics and the risks of the host contract based on the stated and implied substantive terms and features of the instruments; including, but not limited to, its redemption features, voting rights, and conversions rights; and determined that the terms of the preferred stock were more akin to an equity instrument than a debt instrument. The shares of Series A Preferred and Series A-1 Preferred are subject to redemption, at the option of the holder, on or after the fifth anniversary of their original purchase. Accordingly, the convertible preferred stock has been classified as temporary equity in the Company’s Consolidated Balance Sheets. | |
Upon issuance of the 33,333 shares of the Series A Preferred, the Company recorded as a reduction to the Series A Preferred and as Additional Paid-In Capital a beneficial conversion feature of $1.5 million. The beneficial conversion feature represents the difference between the effective conversion price and the fair value of the Series A Preferred as of the commitment date. There was no beneficial conversion feature upon the 2014 issuances of Series A Preferred to Flexpoint and Series A-1 Preferred to Wellington as a result of the price of the Company’s common stock at the dates of the closings being below the conversion price of the preferred stock. The Company accounts for the beneficial conversion feature, the liquidation preference, and the issuance costs related to the Series A Preferred and Series A-1 Preferred using the effective interest method by accreting such amounts to its Series A Preferred and Series A-1 Preferred from the date of issuance to the earliest date of redemption as a reduction to its total permanent equity within the Company’s Consolidated Statement of Changes in Stockholders’ Equity as a charge to Additional Paid-In Capital. Any accretion recorded during the periods presented are also shown as a reduction to the income available to common stockholders in the Company’s Consolidated Statements of Operations when presenting basic and dilutive per share information. Accretion for the three months ended March 31, 2015 and 2014 was $1.2 million and $509,000, respectively. | |
Upon the occurrence of an Event of Noncompliance, the holders of a majority of the Series A Preferred may demand immediate redemption of all or a portion of the Series A Preferred at the then-applicable liquidation value. Such holders may also exercise a right to have the holders of the Series A Preferred elect a majority of the Board by increasing the size of the Board and filling such vacancies. Such right to control a minimum majority of the Board would exist for so long as the Event of Noncompliance was continuing. An “Event of Noncompliance” shall have occurred if: i) the Company fails to make any required redemption payment with respect to the Series A Preferred; ii) the Company breaches the Securities Purchase Agreement after the Initial Closing, and such breach has not been cured with thirty days after receipt of notice thereof; iii) the Company or any subsidiary makes an assignment for the benefit of creditors, admits its insolvency or is the subject of an order, judgment or decree adjudicating such entity as insolvent, among other similar actions; iv) a final judgment in excess of $5.0 million is rendered against the Company or any subsidiary that is not discharged within 60 days thereafter; or v) an event of default has occurred under the Secured Convertible Note Agreement, the Loan and Security Agreement, dated as of December 28, 2012 by and among ADC, PTFS and Metro Bank, or the Loan and Security Agreement dated as of November 7, 2014 by and among ACI and Metro Bank, and such event of default has not been cured within thirty days after receipt of notice thereof. | |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Stockholders' Equity Note [Abstract] | ||||||||
Stockholders' Equity Note Disclosure [Text Block] | Note 9. Stockholders’ Equity | |||||||
Common Stock | ||||||||
On January 30, 2014, the Company issued 1,396 shares of common stock with a fair market value of approximately $6,000, as additional compensation to a consultant for services rendered. | ||||||||
On March 28, 2014, the Company entered into a Securities Purchase Agreement (the “Common Stock SPA”) with each of Bipin C. Shah, its Chairman and Chief Executive Officer, and C. Nicholas Antich, the President of JetPay Payroll Services. Pursuant to the Common Stock SPA, on April 4, 2014, the Company received gross aggregate proceeds of $1.0 million, prior to issuance costs of $25,000, and issued an aggregate of 333,333 shares of common stock to Messrs. Shah and Antich. The proceeds were used to satisfy a portion of the EBC award. | ||||||||
On November 7, 2014, the Company issued 2,000,000 shares of the Company’s common stock in connection with the acquisition of ACI. See Note 3. Business Acquisition. | ||||||||
Preferred Stock | ||||||||
The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. | ||||||||
As of March 31, 2015 and December 31, 2014, there were no shares of preferred stock issued or outstanding other than the Series A Preferred issued to Flexpoint and Series A-1 Preferred issued to Wellington described above. | ||||||||
Stock-Based Compensation | ||||||||
ASC Topic 718, Compensation-Stock Compensation, requires compensation expense for the grant-date fair value of share-based payments to be recognized over the requisite service period. | ||||||||
At a meeting of the Company’s stockholders held on July 31, 2013 (the “Meeting”), the Company’s stockholders approved the adoption of the Company’s 2013 Stock Incentive Plan (the “Plan”). The Company granted options to purchase 200,000 shares of common stock under the Plan during the three months ended March 31, 2015, all at an exercise price of $3.00 per share and options to purchase 40,000 shares of common stock during the three months ended March 31, 2014, all at an exercise price of $3.00 per share. The grant date fair value of the options granted during the three months ended March 31, 2015 and 2014 were determined to be approximately $232,300 and $34,600, respectively, using the Black-Scholes option pricing model. Aggregated stock-based compensation expense for the three months ended March 31, 2015 and 2014 was $78,000 and $80,000, respectively. Unrecognized compensation expense as of March 31, 2015 relating to non-vested common stock options was approximately $767,000 and is expected to be recognized through 2019. During the three months ended March 31, 2015, no options have been exercised and 93,334 options have been forfeited. | ||||||||
The fair values of the Company’s options were estimated at the dates of grant using a Black-Scholes option pricing model with the following weighted average assumptions: | ||||||||
For the Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Expected term (years) | 6.25 | 6.25 | ||||||
Risk-free interest rate | 1.56% | 2.10% | ||||||
Volatility | 44.80% | 44.90% | ||||||
Dividend yield | 0% | 0% | ||||||
Expected term: The Company’s expected term is based on the period the options are expected to remain outstanding. The Company estimated this amount utilizing the “Simplified Method” in that the Company does not have sufficient historical experience to provide a reasonable basis to estimate an expected term. | ||||||||
Risk-free interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Note with a similar term on the date of the grant. | ||||||||
Volatility: The Company calculates the volatility of the stock price based on historical value and corresponding volatility of the Company’s peer group stock price for a period consistent with the stock option expected term. | ||||||||
Dividend yield: The Company uses a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future. | ||||||||
A summary of stock option activity for the three months ended March 31, 2015 and the year ended December 31, 2014 are presented below: | ||||||||
Weighted Average | ||||||||
Number of Options | Exercise Price | |||||||
Outstanding at December 31, 2013 | 1,000,000 | $ | 3.03 | |||||
Granted | 445,000 | $ | 3 | |||||
Forfeited | -43,750 | $ | 3.04 | |||||
Exercised | - | $ | - | |||||
Outstanding at December 31, 2014 | 1,401,250 | $ | 3.02 | |||||
Granted | 200,000 | $ | 3 | |||||
Forfeited | -93,334 | $ | 3 | |||||
Exercised | - | $ | - | |||||
Outstanding at March 31, 2015 | 1,507,916 | $ | 3.02 | |||||
Exercisable at March 31, 2015 | 498,324 | $ | 3.05 | |||||
The weighted average remaining life of options outstanding at March 31, 2015 was 8.99 years. The aggregate intrinsic value of the exercisable options at March 31, 2015 was $0. | ||||||||
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Note 10. Income Taxes |
The Company recorded income tax expense of $58,000 and $52,000 for the three months ended March 31, 2015 and 2014, respectively. Income tax expense reflects the recording of state income taxes. The effective tax rates are approximately (35.8)% and (3.9)% for the three months ended March 31, 2015 and 2014, respectively. The effective rate differs from the federal statutory rate for each period, primarily due to state and local income taxes and changes to the valuation allowance. | |
JetPay, LLC is subject to and pays the Texas Margin Tax which is considered to be an income tax in accordance with the provisions of the Income Taxes Topic in FASB, ASC and the associated interpretations. There are no significant temporary differences associated with the Texas Margin Tax. | |
As of December 31, 2014, the Company had cumulative U.S. federal and state net operating loss carryovers (“NOLs”) of approximately $12.8 million. These NOLs, if not utilized, expire at various times through 2034. In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company’s NOLs may be subject to an annual limitation in the event of a change in control. Management will be performing a preliminary evaluation as to whether a change in control has taken place. | |
In assessing the realization of deferred tax assets, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, Management believes that significant uncertainty exists with respect to future realization of the deferred tax assets, and has, therefore, increased its valuation allowance against deferred tax assets by $65,000 for the three months ended March 31, 2015 and $550,000 for the three months ended March 31, 2014, with a total valuation allowance of approximately $7.6 million at March 31, 2015, representing the amount of its deferred income tax assets in excess of the Company’s deferred income tax liabilities. The deferred tax liability related to goodwill that is amortizable for tax purposes (“Intangibles”) will not reverse until such time, if any, that the goodwill, which is considered to be an asset with an indefinite life for financial reporting purposes, becomes impaired or sold. Due to the uncertain timing of this reversal, the temporary difference cannot be considered as future taxable income for purposes of determining a valuation allowance. Therefore, the deferred tax liability related to tax deductible goodwill Intangibles cannot be considered when determining the ultimate realization of deferred tax assets. | |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | Note 11. Commitments and Contingencies |
On or about March 13, 2012, a merchant of JetPay, LLC, Direct Air, a charter travel company, abruptly ceased operations and filed for bankruptcy. Under United States Department of Transportation requirements, all charter travel company customer charges for travel are to be deposited into an escrow account in a bank under a United States Department of Transportation escrow program, and not released to the charter travel company until the travel has been completed. In the case of Direct Air, such funds had historically been deposited into such United States Department of Transportation escrow account at Valley National Bank in New Jersey, and continued to be deposited through the date Direct Air ceased operations. At the time Direct Air ceased operations, according to Direct Air’s bankruptcy trustee, there should have been in excess of $31.0 million in the escrow account. Instead there was approximately $1.0 million. As a result, Merrick Bank (“Merrick”), JetPay, LLC’s sponsor with respect to this particular merchant, incurred chargebacks in excess of $25.0 million. Merrick maintains insurance through a Chartis Insurance Policy for chargeback losses that names Merrick as the primary insured. The policy has a limit of $25.0 million and a deductible of $250,000. Merrick has sued Chartis Insurance (“Chartis”) for payment under the claim. Under an agreement between Merrick and JetPay, LLC, JetPay, LLC may be obligated to indemnify Merrick for losses realized from such chargebacks that Merrick is unable to recover from other parties. JetPay, LLC recorded a loss for all chargebacks in excess of $25.0 million, a $250,000 deductible on a related insurance policy and $487,000 of legal fees charged against JetPay, LLC’s cash reserve account by Merrick, totaling $1.9 million in 2012, as well as an additional $597,000 in legal fees charged against JetPay, LLC’s cash reserve account by Merrick through June 30, 2013. In December 2013, Merrick, in addition to its suit against Chartis, also filed suit against Valley National Bank as escrow agent. In February 2015, JetPay joined that suit, along with American Express. JetPay, LLC has received correspondence from Merrick of its intention to seek recovery for all unrecovered chargebacks and related costs, but JetPay, LLC is currently not a party to any litigation from Merrick regarding this matter. Merrick and JetPay, LLC have entered into a forbearance agreement pertaining to the Direct Air chargeback issue. The Direct Air situation has also caused other unexpected expenses, such as higher professional fees and fees for chargeback processing. Additionally, pursuant to the terms of its agreement with Merrick, Merrick has forced JetPay, LLC to maintain increased cash reserves in order to provide additional security for any obligations arising from the Direct Air situation. Merrick continues to hold approximately $4.4 million of total reserves related to the Direct Air matter as of March 31, 2015. The cash reserve balance was reduced by approximately $600,000 during the year ended December 31, 2014 to settle a lawsuit involving the Company and Merrick with MSC Cruise Lines, including certain legal fees claimed and deducted from the reserve by Merrick in connection with settling the matter, as more fully described below. These reserves are recorded in Other Assets. | |
On August 7, 2013, JetPay Merchant Services, LLC (“JPMS”), a wholly owned subsidiary of JetPay, LLC and indirect wholly owned subsidiary of the Company, together with WLES, L.P., (collectively, the “Plaintiffs”), filed suit in the United States District Court for the Northern District of Texas, Dallas Division, against Merrick, Royal Group Services, LTD, LLC and Gregory Richmond (collectively, the “Defendants”). The suit alleges that Merrick and Gregory Richmond (an agent of Royal Group Services) represented to JPMS that insurance coverage was arranged through Chartis Specialty Insurance Company to provide coverage for JPMS against potential chargeback losses related to certain of JPMS’s merchant customers, including Southern Sky Air Tours, d/b/a Direct Air. The complaint alleges several other causes of action against the Defendants, including violation of state insurance codes, negligence, fraud, breach of duty and breach of contract. Also, in August 2013, JPMS, JetPay, LLC, and JetPay ISO filed the second amendment to a previously filed complaint against Merrick in the United States District Court for the District of Utah, adding to its initial complaint several causes of action related to actions Merrick allegedly took during JetPay, LLC’s transition to a new sponsoring bank in June 2013. Additionally, subsequent to this transition, Merrick invoiced the Company for legal fees incurred by Merrick totaling approximately $2.9 million. The Company does not believe it has a responsibility to reimburse Merrick for these legal fees and intends to vigorously dispute these charges. Accordingly, the Company has not recorded an accrual for these legal fees as of March 31, 2015. | |
As partial protection against any potential losses related to Direct Air, the Company required that, upon closing of the Completed Transactions, 3,333,333 shares of our common stock that was to be paid to WLES as part of the JetPay, LLC acquisition be placed into an escrow account with JPMorgan Chase (“Chase”) as the trustee. The Escrow Agreement for the account names Merrick, the Company, and WLES as parties. If JetPay, LLC suffers any liability to Merrick as a result of the Direct Air matter, these shares are to be used in partial or full payment for any such liability, with any remaining shares delivered to WLES. If JetPay, LLC is found to have any liability to Merrick because of this issue, and these shares do not have sufficient value to fully cover such liability, the Company may be responsible for this JetPay, LLC liability. On February 3, 2014, the Company received notice that Merrick had requested Chase to release the 3,333,333 shares in the escrow account. Both JetPay and WLES informed Chase that they did not agree to the release, and the shares remain in escrow. | |
On January 16, 2013, the Company received notice that EarlyBirdCapital, Inc. (“EBC”) had commenced arbitration proceedings (the “Claim”) against the Company with the International Centre for Dispute Resolution (the “ICDR”). The Claim alleged that the Company breached a Letter Agreement, dated as of May 9, 2011, with EBC by failing to pay EBC a cash fee of $2.07 million and reimburse EBC for certain expenses upon the closing of the Company’s initial business combination, which was consummated on December 28, 2012. As a result of such breach, EBC sought the cash fee plus interest and attorney’s fees and expenses. In November 2013, the ICDR held arbitration proceedings with respect to the Claim. On March 3, 2014, the ICDR rendered its decision and ordered the Company to pay the cash fee of $2.07 million plus interest, attorney’s fees and expenses of approximately $740,000 within 30 days of the decision (the “Award”). The Company accrued $2,136,000 relating to this matter as of December 31, 2012 and an additional $675,000 was recorded as SG&A expenses in the fourth quarter of 2013 for the legal fees and interest costs awarded to EBC as part of the Award. In order to satisfy a portion of the Award, the Company entered into the Common Stock SPA. Pursuant to the Common Stock SPA, on April 4, 2014, the Company received aggregate proceeds of $1.0 million and issued an aggregate of 333,333 shares of common stock to Messrs. Shah and Antich. Additionally, on April 14, 2014, the Company issued 4,667 shares of Series A Preferred to Flexpoint for an aggregate of $1.4 million under the Securities Purchase Agreement. See Note 8. Redeemable Convertible Preferred Stock. The Company used the proceeds from the sale of common stock, the proceeds from the closing of the Series A Preferred to Flexpoint, and existing cash of $411,000 to fully satisfy its obligations to EBC pursuant to the Award. | |
On August 23, 2013, the Company received notice that JPMS was a party in a lawsuit brought by MSC Cruise Lines, a former customer. Merrick was a co-defendant in the lawsuit. MSC Cruise Lines claimed approximately $2.0 million in damages and alleges that JPMS breached its agreement with MSC by charging fees not specified in the agreement. The Company reached a settlement on the matter on July 31, 2014. Accordingly, the Company has recorded an expense of $600,000 for the year ended December 31, 2014, representing the settlement to MSC Cruise Lines and certain legal fees claimed by Merrick in connection with settling the suit. The settlement, including the Merrick legal fees, was satisfied by a deduction from the Merrick reserve account recorded in Other Assets as described above. | |
In December 2013, the Company settled a lawsuit with M&A Ventures in which it agreed to pay $400,000, with $100,000 paid in 2013 and the reminder in installments throughout 2014. The Company recorded the $400,000 settlement within SG&A expense for the three months ended December 31, 2013. | |
In December 2012, BCC Merchant Solutions, a former customer of JetPay, LLC filed a suit against JetPay, LLC, Merrick Bank, and Trent Voigt in the Northern District of Texas, Dallas Division, for $1.9 million, alleging that the parties by their actions, had cost BCC significant expense and lost customer revenue. The Company believes that the basis of the suit regarding JetPay, LLC is groundless and intends to defend it vigorously. Accordingly, the Company has not recorded an accrual for any potential loss related to this matter as of March 31, 2015. | |
The Company is a party to various other legal proceedings related to its ordinary business activities. In the opinion of the Company’s management, none of these proceedings are material in relation to our results of operations, liquidity, cash flows, or financial condition. | |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Note 12. Related Party Transactions |
On June 7, 2013, the Company issued an unsecured promissory note to Trent Voigt, Chief Executive Officer of JetPay, LLC, in the amount of $491,693. The note matures on September 30, 2016, as extended, and bears interest at an annual rate of 4% with interest expense of $4,850 recorded in each of the three months ended March 31, 2015 and 2014. The transaction was approved upon resolution and review by the Company’s Audit Committee of the terms of the note to ensure that such terms were no less favorable to the Company than those that would be available with respect to such transactions from unaffiliated third parties. | |
JetPay Payroll Services’ headquarters are located in Center Valley, Pennsylvania and consist of approximately 22,500 square feet leased from C. Nicholas Antich and Carol A. Antich. Mr. Antich is the President of ADC. The rent is currently approximately $43,426 per month with annual 4% increases, on a net basis. The office lease has an initial 10-year term expiring May 31, 2016. Rent expense under this lease was $129,140 for each of the three months ended March 31, 2015 and 2014. | |
JetPay Payment Services retains a backup center in Sunnyvale, Texas consisting of 1,600 square feet, rented for approximately $3,000 per month from JT Holdings, an entity controlled by Trent Voigt, Chief Executive Officer of JetPay, LLC. The terms of the lease are commercial. Rent expense was $9,000 for each of the three months ended March 31, 2015 and 2014. | |
The above transactions with respect to JetPay Payroll Services and JetPay Payment Services were approved prior to the Completed Transactions. Going forward, all related party transactions with respect to such entities will be reviewed and approved by the Company’s Audit Committee to ensure that the terms of such transactions are no less favorable to the Company than those that would be available with respect to such transactions from unaffiliated third parties. | |
In connection with the closing of the JetPay, LLC acquisition, the Company entered into a Note and Indemnity Side Agreement with JP Merger Sub, LLC, WLES and Trent Voigt (the “Note and Indemnity Side Agreement”) dated as of December 28, 2012. Pursuant to the Note and Indemnity Side Agreement, the Company agreed to issue a promissory note in the amount of $2,331,369 in favor of WLES. Interest accrues on amounts due under the note at a rate of 5% per annum, and is payable quarterly. Interest expense was $29,142 for each of the three months ended March 31, 2015 and 2014. The note can be prepaid in full or in part at any time without penalty. As partial consideration for offering the note, the Company and JP Merger Sub, LLC agreed to waive certain specified indemnity claims against WLES and Mr. Voigt to the extent the losses under such claims do not exceed $2,331,369. | |
On August 22, 2013, JetPay, LLC entered into a Master Service Agreement with JetPay Solutions, LTD, a United Kingdom based entity 75% owned by WLES, an entity owned by Trent Voigt. The Company initiated transaction business under this agreement beginning in April 2014 with $105,000 of revenue earned from JetPay Solutions, LTD for the three months ended March 31, 2015. | |
On March 28, 2014, the Company entered into the Common Stock SPA with each of Bipin C. Shah, its Chairman and Chief Executive Officer, and C. Nicholas Antich, the President of JetPay Payroll Services. Pursuant to the Common Stock SPA, on April 4, 2014, the Company received aggregate proceeds of $1.0 million and issued an aggregate of 333,333 shares of common stock to Messrs. Shah and Antich. The proceeds were used to satisfy a portion of the EBC award. | |
On October 31, 2014, following the unanimous consent of the Company’s Audit Committee, the Company entered into a letter agreement with WLES, an entity owned by Trent Voigt, that governs the distribution of any proceeds received in connection with the Direct Air matter. The Letter Agreement provides that subject to certain exceptions, after each of the Company and WLES receive out-of-pocket expenses and chargeback losses incurred subsequent to the consummation of the Completed Transactions and prior to the consummation of the Completed Transactions, respectively, each of the parties will share in any proceeds received pro rata. | |
Segments
Segments | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||
Segment Reporting Disclosure [Text Block] | Note 13. Segments | |||||||||||||
The Company currently operates in two business segments, the JetPay Payment Processing Segment, consisting of JetPay Payment Services and JetPay Strategic Partners, an end-to-end processor of credit and debit card and ACH payment transactions for both businesses with a focus on those processing internet transactions and recurring billings, as well as traditional retailers and service providers, and the JetPay Payroll Segment, consisting of JetPay Payroll Services, a full-service payroll and related payroll tax payment processor. | ||||||||||||||
Segment operating results are presented below (in thousands). The results reflect revenues and expenses directly related to each segment. The activity within the JetPay Card Services division was not material through March 31, 2015 and 2014, and accordingly was included in Corporate in the tables below. The Company does not evaluate performance or allocate resources based on segment asset data, and therefore, such information is not presented. | ||||||||||||||
For the Three Months Ended March 31, 2015 | ||||||||||||||
JetPay | JetPay | |||||||||||||
Payment Processing | Payroll | General/ Corporate | Total | |||||||||||
Processing revenues | $ | 7,088 | $ | 3,747 | $ | 9 | $ | 10,844 | ||||||
Cost of processing revenues | 4,529 | 1,897 | 30 | 6,456 | ||||||||||
Selling, general and administrative expenses | 1,752 | 1,147 | 483 | 3,382 | ||||||||||
Change in fair value of contingent consideration liability | - | - | 11 | 11 | ||||||||||
Amortization of intangibles and depreciation | 531 | 345 | 1 | 877 | ||||||||||
Other expenses (income) | 99 | 63 | 118 | 280 | ||||||||||
Income (loss) before income taxes | $ | 177 | $ | 295 | $ | -634 | $ | -162 | ||||||
Total property and equipment, net | $ | 640 | $ | 548 | $ | 37 | $ | 1,225 | ||||||
Property and equipment additions | $ | 75 | $ | 39 | $ | 1 | $ | 115 | ||||||
Intangible assets and goodwill | $ | 49,310 | $ | 18,574 | $ | - | $ | 67,884 | ||||||
Total segment assets | $ | 74,457 | $ | 80,202 | $ | 2,506 | $ | 157,165 | ||||||
For the Three Months Ended March 31, 2014 | ||||||||||||||
JetPay | ||||||||||||||
JetPay Payment Processing | Payroll | General/ Corporate | Total | |||||||||||
Processing revenues | $ | 4,603 | $ | 3,566 | $ | - | $ | 8,169 | ||||||
Cost of processing revenues | 2,946 | 1,740 | 2 | 4,688 | ||||||||||
Selling, general and administrative expenses | 995 | 1,001 | 779 | 2,775 | ||||||||||
Amortization of intangibles and depreciation | 320 | 342 | 1 | 663 | ||||||||||
Other (income) expenses | -2 | 76 | 1,303 | 1,377 | ||||||||||
Income (loss) before income taxes | $ | 344 | $ | 407 | $ | -2,085 | $ | -1,334 | ||||||
Total property and equipment, net | $ | 584 | $ | 646 | $ | 2 | $ | 1,232 | ||||||
Property and equipment additions | $ | 40 | $ | 43 | $ | - | $ | 83 | ||||||
Intangible assets and goodwill | $ | 33,722 | $ | 19,695 | $ | - | $ | 53,417 | ||||||
Total segment assets | $ | 53,650 | $ | 94,704 | $ | 2,455 | $ | 150,809 | ||||||
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Note 14. Subsequent Events |
On May 6, 2015 ADC and PTFS, as borrowers, and JetPay Corporation, ACI Merchant Systems, LLC and JetPay, LLC, collectively as loan parties, entered into a First Amendment and Joinder Agreement to the Loan and Security Agreement dated December 28, 2012 and a Revolving Credit Note (the “Note”) dated May 6, 2015 with Metro Bank, as the lender. The Note provides a $1.0 million revolving credit facility that matures on May 6, 2017 and that accrues interest at the rate of the Wall Street Journal Prime rate plus 1.00%, with a floor of 4.25%. The Note is guaranteed by the borrowers and loan parties and is secured by all assets of ADC, PTFS, and ACI, a pledge by the Company of its ownership interest in ADC and ACI, as well as a $1.0 million negative pledge on the stock of JetPay, LLC. On May 6, 2015, the proceeds of the $1.0 million Note, along with $650,000 of current cash and cash equivalents, were used to partially fund the $2.0 million deferred consideration liability due to the stockholders of ADC. Additionally, on May 6, 2015, the Company issued an unsecured promissory note to C. Nicholas Antich, Chief Executive Officer and President of ADC, and Carol A. Antich in the amount of $350,000 to satisfy the remaining balance of the $2.0 million deferred consideration. The promissory note matures on May 6, 2017, and bears interest at an annual rate of 4%. The promissory note was approved upon resolution and review by the Company’s Audit Committee of the terms of the promissory note to ensure that such terms were no less favorable to the Company than those that would be available with respect to such transactions from unaffiliated third parties. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||
Use of Estimates, Policy [Policy Text Block] | Use of Estimates | |||||||||||||
The accompanying financial statements have been prepared in accordance with U.S. GAAP and pursuant to the accounting and disclosure rules and regulations of the SEC. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of the Company’s financial statements. Such estimates include, but are not limited to, the value of purchase consideration of acquisitions; valuation of accounts receivable, reserves for chargebacks, goodwill, intangible assets, and other long-lived assets; legal contingencies; and assumptions used in the calculation of stock-based compensation and in the calculation of income taxes. Actual results may differ from these estimates under different assumptions or conditions. | ||||||||||||||
Revenue Recognition, Deferred Revenue [Policy Text Block] | Revenue Recognition and Deferred Revenue | |||||||||||||
The Company recognizes revenue in general when the following criteria have been met: persuasive evidence of an arrangement exists, a customer contract or purchase order exists and the fees are fixed and determinable, no significant obligations remain and collection of the related receivable is reasonably assured. Allowances for chargebacks, discounts and other allowances are estimated and recorded concurrent with the recognition of revenue and are primarily based on historic rates. | ||||||||||||||
Revenues from the Company’s credit and debit card processing operations are recognized in the period services are rendered as the Company processes credit and debit card transactions for its merchant customers or for merchant customers of its Independent Sales Organization (“ISO”) clients. The majority of the Company’s revenue within its credit and debit card processing business is comprised of transaction-based fees, which typically constitute a percentage of dollar volume processed, or a fee per transaction processed. In the case where the Company is only the processor of transactions, it charges transaction fees only and records these fees as revenues. In the case of merchant contracts or contracts with ISOs for whom it processes credit and debit card transactions for the ISO’s merchant customers, revenue is primarily comprised of fees charged to the merchant, as well as a percentage of the processed sale transaction. The Company’s contracts in most instances involve three parties: the Company, the merchant, and the sponsoring bank. Under certain of these sales arrangements, the Company’s sponsoring bank collects the gross revenue from the merchants, pays the interchange fees and assessments to the credit card associations, collects their fees and pays the Company a net residual payment representing the Company’s fee for the services provided. Accordingly, under these arrangements, the Company records the revenue net of interchange, credit card association assessments and fees and the sponsoring bank’s fees. Under the majority of the Company’s sales arrangements, the Company is billed directly for certain fees by the credit card associations and the processing bank. In this instance, revenues and cost of revenues include the credit card association fees and assessments and the sponsoring bank’s fees which are billed to the Company and for which it assumes credit risk. In all instances, the Company recognizes processing revenues net of interchange fees, which are assessed to its merchant and ISO merchant customers on all processed transactions. Interchange rates and fees are not controlled by the Company. The Company effectively functions as a clearing house collecting and remitting interchange fee settlement on behalf of issuing banks, debit networks, credit card associations and their processing customers. Additionally, the Company’s direct merchant customers have the liability for any charges properly reversed by the cardholder. In the event, however, that the Company is not able to collect such amount from the merchants due to merchant fraud, insolvency, bankruptcy or any other reason, it may be liable for any such reversed charges. The Company requires cash deposits, guarantees, letters of credit and other types of collateral from certain merchants to minimize any such contingent liability, and it also utilizes a number of systems and procedures to manage merchant risk. | ||||||||||||||
Revenues from the Company’s payroll processing operations are recognized in the period services are rendered and earned under service arrangements with clients where service fees are fixed or determinable and collectability is reasonably assured. Certain processing services are provided under annual service arrangements with revenue recognized over the service period based on when the efforts and costs are expended. The Company’s service revenue is largely attributable to payroll-related processing services where the fees are based on a fixed amount per processing period or a fixed amount per processing period plus a fee per employee or transaction processed. The revenue earned from delivery service for the distribution of certain client payroll checks and reports is included in processing revenue, and the costs for delivery are included in selling, general, and administrative expenses on the Consolidated Statements of Operations. | ||||||||||||||
Interest on funds held for clients is earned primarily on funds that are collected from clients before due dates for payroll tax administration services and for employee payment services, and invested until remittance to the applicable tax or regulatory agencies or client employee. These collections from clients are typically remitted from 1 to 30 days after receipt, with some items extending to 90 days. The interest earned on these funds is included in total revenue on the Consolidated Statements of Operations because the collecting, holding, and remitting of these funds are critical components of providing these services. | ||||||||||||||
Contingent Liability Reserve Estimate, Policy [Policy Text Block] | Reserve for Chargeback Losses | |||||||||||||
Disputes between a cardholder and a merchant periodically arise as a result of, among other things, cardholder dissatisfaction with merchandise quality or merchant services. Such disputes may not be resolved in the merchant’s favor. In these cases, the transaction is “charged back” to the merchant, which means the purchase price is refunded to the customer through the merchant’s bank and charged to the merchant. If the merchant has inadequate funds, JetPay, LLC must bear the credit risk for the full amount of the transaction. JetPay, LLC evaluates the risk for such transactions and estimates the potential loss for chargebacks based primarily on historical experience and records a loss reserve accordingly. JetPay, LLC believes its reserve for chargeback losses is adequate to cover both the known probable losses and the incurred but not yet reported losses at the balance sheet dates. Chargeback reserves totaling $304,000 and $306,000 were recorded as of March 31, 2015 and December 31, 2014, respectively. | ||||||||||||||
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments | |||||||||||||
The carrying amounts of financial instruments, including cash and cash equivalents, restricted cash, settlement processing assets and liabilities, accounts receivable, prepaid expenses and other current assets, funds held for clients, other assets, accounts payable and accrued expenses, deferred revenue, other current liabilities and client fund obligations, approximated fair value as of the balance sheet dates presented, because of the relatively short maturity dates on these instruments. The carrying amounts of the financing arrangements approximate fair value as of the balance sheet dates presented, because interest rates on these instruments approximate market interest rates after consideration of stated interest rates, anti-dilution protection and associated warrants. | ||||||||||||||
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentration of Credit Risk | |||||||||||||
Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, settlement processing assets and funds held for clients. The Company’s cash and cash equivalents are deposited with major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount. | ||||||||||||||
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents | |||||||||||||
The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. | ||||||||||||||
Receivables, Policy [Policy Text Block] | Accounts Receivable | |||||||||||||
The Company’s accounts receivable are due from its merchant credit card and its payroll customers. Credit is extended based on the evaluation of customers’ financial condition and, generally, collateral is not required. Payment terms vary and amounts due from customers are stated in the financial statements net of an allowance for doubtful accounts. Accounts which are outstanding longer than the payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivables when they are deemed uncollectible. | ||||||||||||||
Unsettled Merchant Accounts [Policy Text Block] | Settlement Processing Assets and Obligations | |||||||||||||
Funds settlement refers to the process of transferring funds for sales and credits between card issuers and merchants. Depending on the type of transaction, either the credit card interchange system or the debit network is used to transfer the information and funds between the sponsoring bank and card issuing bank to complete the link between merchants and card issuers. In certain of our processing arrangements, merchant funding primarily occurs after the sponsoring bank receives the funds from the card issuer through the card networks, creating a net settlement obligation on the Company’s balance sheet. In a limited number of other arrangements, the sponsoring bank funds the merchants before it receives the net settlement funds from the card networks, creating a net settlement asset on the Company’s balance sheet. Additionally, certain of the Company’s sponsoring banks collect the gross revenue from the merchants, pay the interchange fees and assessments to the credit card associations, collect their fees for processing and pay the Company a net residual payment representing the Company’s fees for the services. In these instances, the Company does not reflect the related settlement processing assets and obligations in its Consolidated Balance Sheet. | ||||||||||||||
Timing differences in processing credit and debit card and ACH transactions, as described above, interchange expense collection, merchant reserves, sponsoring bank reserves, and exception items result in settlement processing asset and obligations. Settlement processing assets consist primarily of our receivable from merchants for the portion of the discount fee related to reimbursement of the interchange expense, our receivable from the processing bank for transactions we have funded merchants in advance of receipt of card association funding, merchant reserves held, sponsoring bank reserves and exception items, such as customer chargeback amounts receivable from merchants. Settlement processing obligations consist primarily of merchant reserves, our liability to the processing bank for transactions for which we have received funding from the members but have not funded merchants and exception items. | ||||||||||||||
Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment | |||||||||||||
Property and equipment acquired in the Company’s recent business acquisitions have been recorded at estimated fair value. The Company records all other property and equipment acquired in the normal course of business at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets, which are generally as follows: leasehold improvements – shorter of economic life or initial term of the related lease; machinery and equipment – 5 to 15 years; and furniture and fixtures – 5 to 10 years. Significant additions or improvements extending assets’ useful lives are capitalized; normal maintenance and repair costs are expensed as incurred. | ||||||||||||||
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | Goodwill | |||||||||||||
Goodwill represents the premium paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company’s business combinations. The Company performs a goodwill impairment test on at least an annual basis. Application of the goodwill impairment test requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the businesses, the useful life over which cash flows will occur and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. The Company conducts its annual goodwill impairment test as of December 31 of each year or more frequently if indicators of impairment exist. The Company periodically analyzes whether any such indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a sustained significant decline in our stock price and market capitalization, a significant adverse change in legal factors or in the business climate, unanticipated competition and/or slower expected growth rates, adverse actions or assessments by a regulator, among others. The Company compares the fair value of its reporting unit to its respective carrying value, including related goodwill. Future changes in the industry could impact the results of future annual impairment tests. The Company’s annual goodwill impairment testing indicated there was no impairment as of December 31, 2014. There can be no assurance that future tests of goodwill impairment will not result in impairment charges. | ||||||||||||||
Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block] | Identifiable Intangible Assets | |||||||||||||
Identifiable intangible assets consist primarily of customer relationships, software costs, and tradenames. Certain tradenames are considered to have indefinite lives, and as such, are not subject to amortization. These assets are tested for impairment using undiscounted cash flow methodology annually and whenever there is an impairment indicator. Estimating future cash flows requires significant judgment and projections may vary from cash flows eventually realized. Several impairment indicators are beyond the Company’s control, and determining whether or not they will occur cannot be predicted with any certainty. Customer relationships, tradenames, and software costs are amortized on a straight-line basis over their respective assigned estimated useful lives. | ||||||||||||||
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Impairment of Long–Lived Assets | |||||||||||||
The Company periodically reviews the carrying value of its long-lived assets held and used at least annually or when events and circumstances warrant such a review. If significant events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable, the Company performs a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. Cash flow projections are sometimes based on a group of assets, rather than a single asset. If cash flows cannot be separately and independently identified for a single asset, the Company determines whether impairment has occurred for the group of assets for which it can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, it measures any impairment by comparing the fair value of the asset group to its carrying value. If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset or asset group, impairment in the amount of the difference is recorded. The Company’s annual testing indicated there was no impairment as of December 31, 2014. | ||||||||||||||
Convertible Preferred Stock [Policy Text Block] | Convertible Preferred Stock | |||||||||||||
The Company accounts for the redemption premium, beneficial conversion feature and issuance costs on its Convertible Preferred Stock using the effective interest method, accreting such amounts to its Convertible Preferred Stock from the date of issuance to the earliest date of redemption. | ||||||||||||||
Share-Based Compensation [Policy Text Block] | Share-Based Compensation | |||||||||||||
The Company expenses employee share-based payments under ASC Topic 718, Compensation-Stock Compensation, which requires compensation cost for the grant-date fair value of share-based payments to be recognized over the requisite service period. The Company estimates the grant date fair value of the share-based awards issued in the form of options using the Black-Scholes option pricing model. | ||||||||||||||
Earnings Per Share, Policy [Policy Text Block] | Loss Per Share | |||||||||||||
Basic loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. The dilutive effect of the conversion option in the Flexpoint Series A Preferred and the Wellington Series A-1 Preferred of 9,133,300 and 616,500 shares of common stock, respectively, at March 31, 2015, and the effect of 498,324 exercisable stock options granted under the Company’s Stock Incentive Plan at March 31, 2015 have been excluded from the loss per share calculation for the three months ended March 31, 2015 in that the assumed conversion of these options would be anti-dilutive. As to the three months ended March 31, 2014, the dilutive effect of the conversion option in the $10 million Secured Convertible Promissory Notes Payable (the “Notes”) of 3,333,333 shares, the effect of the conversion option in the Flexpoint Series A Preferred of 3,333,333 shares of common stock, and the effect of 197,916 exercisable stock options granted under the Company’s Stock Incentive Plan at March 31, 2014 have been excluded from the loss per share calculation in that the assumed conversion of these options would be anti-dilutive. | ||||||||||||||
Derivatives, Policy [Policy Text Block] | Derivative Financial Instruments | |||||||||||||
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company does review the terms of the convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound derivative instrument. | ||||||||||||||
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges recorded within other expenses (income), using the effective interest method. | ||||||||||||||
Fair Value Measurement, Policy [Policy Text Block] | Fair value measurements | |||||||||||||
The Company accounts for fair value measurements in accordance with ASC Topic No. 820, Fair Value Measurements and Disclosures, (“ASC Topic 820”) which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. | ||||||||||||||
ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC Topic 820 are described below: | ||||||||||||||
Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |||||||||||||
Level 2 | Applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. | |||||||||||||
Level 3 | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). | |||||||||||||
The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by ASC Topic 820, assets and liabilities are classified in their entirety based on the level of input that is significant to the fair value measurement. | ||||||||||||||
Fair Value at March 31, 2015 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
(in thousands) | ||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | - | $ | - | ||||||
Contingent consideration | $ | 1,251 | $ | - | $ | - | $ | 1,251 | ||||||
Totals | $ | 1,251 | $ | - | $ | - | $ | 1,251 | ||||||
Fair Value at December 31, 2014 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
(in thousands) | ||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | - | $ | - | ||||||
Contingent consideration | $ | 1,240 | $ | - | $ | - | $ | 1,240 | ||||||
Totals | $ | 1,240 | $ | - | $ | - | $ | 1,240 | ||||||
The following table sets forth a summary of the change in fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis: | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2015 | 2014 | |||||||||||||
(in thousands) | ||||||||||||||
Beginning Balance | $ | 1,240 | $ | 1,230 | ||||||||||
Change in fair value of derivative liability | - | 50 | ||||||||||||
Change in fair value of contingent cash consideration | 11 | - | ||||||||||||
Totals | $ | 1,251 | $ | 1,280 | ||||||||||
Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the financial instrument. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting and finance department, which reports to the Chief Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting and finance department with support from the Company’s outside consultants which are approved by the Chief Financial Officer. Level 3 financial liabilities consist of a derivative liability and contingent consideration related to the JetPay, LLC acquisition for which there are no current markets such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy will be analyzed each period based on changes in estimates or assumptions and recorded as appropriate. | ||||||||||||||
The Level 3 financial liabilities are the result of recording the Completed Transactions, the ACI acquisition and related debt instruments as more fully described below. | ||||||||||||||
In connection with the debt proceeds received under the $10 million Convertible Promissory Notes (the “Notes”), the Company recorded a derivative liability of $2.1 million on its Consolidated Balance Sheet at December 28, 2012 related to the conversion feature embedded in the Notes. The fair value of the derivative liability was classified within Level 3 of the fair value hierarchy because it was valued using pricing models that incorporate management assumptions that cannot be corroborated with observable market data. The fair value at March 31, 2015 of $0 was the result of the notes being paid in full on December 31, 2014. The change in fair value of this derivative liability of $50,000 for the three months ended March 31, 2014 was recorded within other expenses (income) in the Company’s Consolidated Statements of Operations. | ||||||||||||||
In addition to the consideration paid upon closing of the JetPay, LLC acquisition, WLES, L.P. (“WLES”), through December 28, 2017, is entitled to receive 833,333 shares of common stock if the trading price of the common stock is at least $8.00 per share for any 20 trading days out of a 30 trading day period and $5.0 million in cash if the trading price of the common stock is at least $9.50 per share for any 20 trading days out of a 30 trading day period. This contingent consideration was valued at $1.54 million at the date of acquisition based on utilization of option pricing models and was recorded as a non-current liability for $700,000 and as additional paid-in capital for $840,000 at December 31, 2012. The stock-based component value of $840,000 recorded at December 28, 2012 (the JetPay, LLC acquisition date), remains unchanged at December 31, 2014 as a result of this component being recorded as equity. The fair value at March 31, 2015 of the cash-based contingent consideration, valued at $1, was determined using a binomial option pricing model. The following assumptions were utilized in the March 2015 calculations: risk free interest rate: 0.81%; dividend yield: 0%; term of contingency of 2.76 years; and volatility: 22.3%. | ||||||||||||||
The fair value of the common stock was derived from the per share price of recent sales of the common stock at the valuation date. Management determined that the results of its valuation were reasonable. The expected life represents the remaining contractual term of the derivative. The volatility rate was developed based on analysis of the historical volatility rates of similarly situated companies (using a number of observations that was at least equal to or exceeded the number of observations in the life of the derivative financial instrument at issue). The risk free interest rates were obtained from publicly available U.S. Treasury yield curve rates. The dividend yield is zero because the Company has not paid dividends and does not expect to pay dividends in the foreseeable future. | ||||||||||||||
In addition to the consideration paid upon closing of the ACI acquisition, the previous unitholders are entitled to receive up to an additional $500,000 if certain net revenue goals are achieved through October 31, 2016. This contingent consideration was valued at $400,000 at the date of acquisition and $410,000 at March 31, 2015 based on utilization of a Monte Carlo simulation to estimate the variance and relative risk of achieving future net revenue growth and discounting the associated cash consideration payments at their present values using a credit-risk adjusted discount rate of 16.0%. The key assumptions in applying the Monte Carlo simulation included expected net revenue growth rates, the expected standard deviation and serial correlation of expected net revenue growth rates as well as a normal distribution assumption. | ||||||||||||||
The Company uses either a binomial option pricing model or the Black-Scholes option valuation model to value Level 3 financial liabilities at inception and on subsequent valuation dates. These models incorporate transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as volatility. A significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement. | ||||||||||||||
As of March 31, 2015, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy. | ||||||||||||||
In accordance with the provisions of ASC Topic 815, Derivatives and Hedging Activities, the Company presented its derivative liability at fair value on its Consolidated Balance Sheets, with the corresponding change in fair value recorded in the Company’s Consolidated Statement of Operations for the applicable reporting periods. | ||||||||||||||
Income Tax, Policy [Policy Text Block] | Income taxes | |||||||||||||
The Company accounts for income taxes under ASC Topic 740, Income Taxes (“ASC Topic 740”). ASC Topic 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carryovers. Deferred income tax expense (benefit) represents the change during the period in the deferred income tax assets and deferred income tax liabilities. In establishing the provision for income taxes and determining deferred income tax assets and liabilities, the Company makes judgments and interpretations based on enacted laws, published tax guidance and estimates of future earnings. ASC Topic 740 additionally requires a valuation allowance to be established when, based on available evidence, it is more likely than not that some portion or the entire deferred income tax asset will not be realized. | ||||||||||||||
ASC Topic 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company is required to file income tax returns in the United States (federal) and in various state and local jurisdictions. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions and deductions would be sustained upon examination and does not anticipate any adjustments that would result in material changes to its financial position. | ||||||||||||||
The Company’s policy for recording interest and penalties associated with unrecognized tax benefits is to record such interest and penalties as interest expense and as a component of selling, general and administrative expense, respectively. There were no amounts accrued for penalties or interest as of or during the three months ended March 31, 2015 and 2014. Management does not expect any significant changes in its unrecognized tax benefits in the next year. | ||||||||||||||
Subsequent Events, Policy [Policy Text Block] | Subsequent Events | |||||||||||||
Management evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the review, management did not identify any recognized or non-recognized subsequent events which would have required an adjustment or disclosure in the financial statements, other than those disclosed in Note 14. Subsequent Events. See Note 14. Subsequent Events below. | ||||||||||||||
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements | |||||||||||||
On February 18, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-02 Consolidation (Topic 810): Amendments to the Consolidation Analysis that amends the current consolidation guidance. The amendments affect both the variable interest entity and voting interest entity consolidation models. The new guidance is effective for the Company beginning January 1, 2016, with early adoption permitted. This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. | ||||||||||||||
On April 7, 2015, the FASB issued ASU No. 2015-03 Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of related debt liability, consistent with debt discounts. Under current accounting standards, such costs are recorded as an asset. The new guidance is effective for the Company beginning January 1, 2016, with early adoption permitted. This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. | ||||||||||||||
Business_Acquisition_Tables
Business Acquisition (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Business Combinations [Abstract] | |||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The allocation of the ACI purchase price and the estimated fair market values of the ACI assets acquired and liabilities assumed are shown below (in thousands): | ||||
Cash | $ | 250 | |||
Accounts receivable | 521 | ||||
Prepaid expenses and other assets | 46 | ||||
Property and equipment, net | 27 | ||||
Goodwill | 10,594 | ||||
Identifiable intangible assets | 6,460 | ||||
Total assets acquired | 17,898 | ||||
Accounts payable and accrued expenses | 601 | ||||
Total liabilities assumed | 601 | ||||
Net assets acquired | $ | 17,297 | |||
Condensed Income Statement [Table Text Block] | The pro forma results do not include any anticipated cost savings or other effects of the planned integration of these entities, and are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the date indicated, or which may result in the future. | ||||
Unaudited Pro Forma Results of Operations | |||||
Three Months Ended March 31, 2014 | |||||
(in thousands) | |||||
Revenues | $ | 9,579 | |||
Operating income | $ | 328 | |||
Net loss | $ | -1,258 | |||
Net loss applicable to common stockholders | $ | -1,979 | |||
Net loss per share applicable to common stockholders | $ | -0.15 | |||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||
Fair Value, Liabilities Measured On Recurring Basis [Table Text Block] | The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by ASC Topic 820, assets and liabilities are classified in their entirety based on the level of input that is significant to the fair value measurement. | |||||||||||||
Fair Value at March 31, 2015 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
(in thousands) | ||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | - | $ | - | ||||||
Contingent consideration | $ | 1,251 | $ | - | $ | - | $ | 1,251 | ||||||
Totals | $ | 1,251 | $ | - | $ | - | $ | 1,251 | ||||||
Fair Value at December 31, 2014 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
(in thousands) | ||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | - | $ | - | ||||||
Contingent consideration | $ | 1,240 | $ | - | $ | - | $ | 1,240 | ||||||
Totals | $ | 1,240 | $ | - | $ | - | $ | 1,240 | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The following table sets forth a summary of the change in fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis: | |||||||||||||
Three Months Ended March 31, | ||||||||||||||
2015 | 2014 | |||||||||||||
(in thousands) | ||||||||||||||
Beginning Balance | $ | 1,240 | $ | 1,230 | ||||||||||
Change in fair value of derivative liability | - | 50 | ||||||||||||
Change in fair value of contingent cash consideration | 11 | - | ||||||||||||
Totals | $ | 1,251 | $ | 1,280 | ||||||||||
Property_and_Equipment_net_of_1
Property and Equipment, net of Accumulated Depreciation (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Property, Plant and Equipment [Table Text Block] | March 31, | December 31, | ||||||
2015 | 2014 | |||||||
(in thousands) | ||||||||
Leasehold improvements | $ | 388 | $ | 384 | ||||
Equipment | 838 | 811 | ||||||
Furniture and fixtures | 266 | 252 | ||||||
Computer software | 143 | 121 | ||||||
Vehicles | 203 | 182 | ||||||
Assets in progress | 171 | 152 | ||||||
Total property and equipment | 2,009 | 1,902 | ||||||
Less: accumulated depreciation | -784 | -676 | ||||||
Property and equipment, net | $ | 1,225 | $ | 1,226 | ||||
Accounts_Payable_and_Accrued_E1
Accounts Payable and Accrued Expenses (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Accrued Expenses and Other Current Liabilities [Table Text Block] | March 31, | December 31, | ||||||
Accounts payable and accrued expenses consist of the following (in thousands): | 2015 | 2014 | ||||||
Trade accounts payable | $ | 1,959 | $ | 1,828 | ||||
ACH clearing liability | 1,596 | 2,146 | ||||||
Accrued compensation | 1,319 | 1,233 | ||||||
Accrued agent commissions | 1,095 | 758 | ||||||
Related party payables | 93 | 70 | ||||||
Other | 2,944 | 3,118 | ||||||
Total | $ | 9,006 | $ | 9,153 | ||||
LongTerm_Debt_Notes_Payable_an1
Long-Term Debt, Notes Payable and Capital Lease Obligations (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Schedule of Long-term Debt Instruments [Table Text Block] | Long-term debt, notes payable and capital lease obligations consist of the following: | |||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
(in thousands) | ||||||||
Term loan payable to Metro Bank (or “Metro”), interest rate of 4.0% payable in monthly principal payments of $107,143 plus interest, maturing December 28, 2019, collateralized by the assets and equity interests of AD Computer Corporation and Payroll Tax Filing Services, Inc. | $ | 6,104 | $ | 6,425 | ||||
Term loan payable to Metro Bank, interest rate of 5.25% payable in monthly principal payments of $104,167 plus interest, maturing November 7, 2021, collateralized by the assets and equity interests of ACI Merchant Systems, LLC. | 7,500 | 7,500 | ||||||
Unsecured promissory note payable to WLES, interest rate of 5.0% payable quarterly, note principal due on December 31, 2017. Note amount excludes unamortized fair value discount of $511,878 and $552,424 at March 31, 2015 and December 31, 2014, respectively. See Note 12. Related Party Transactions. | 1,819 | 1,779 | ||||||
Unsecured promissory notes payable to stockholders, interest rate of 4% payable at maturity, note principal due September 30, 2016. See Note 12. Related Party Transactions. | 492 | 492 | ||||||
Capital lease obligations related to computer equipment at JetPay, LLC, interest rate of 5.55%, due in monthly lease payments of $4,114, maturing in May 2017, collateralized by equipment. | 140 | 154 | ||||||
Various other debt instruments related to vehicles at ADC. | 14 | 16 | ||||||
16,069 | 16,366 | |||||||
Less current portion | -1,884 | -1,571 | ||||||
$ | 14,185 | $ | 14,795 | |||||
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Stockholders' Equity Note [Abstract] | ||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The fair values of the Company’s options were estimated at the dates of grant using a Black-Scholes option pricing model with the following weighted average assumptions: | |||||||
For the Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Expected term (years) | 6.25 | 6.25 | ||||||
Risk-free interest rate | 1.56% | 2.10% | ||||||
Volatility | 44.80% | 44.90% | ||||||
Dividend yield | 0% | 0% | ||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | A summary of stock option activity for the three months ended March 31, 2015 and the year ended December 31, 2014 are presented below: | |||||||
Weighted Average | ||||||||
Number of Options | Exercise Price | |||||||
Outstanding at December 31, 2013 | 1,000,000 | $ | 3.03 | |||||
Granted | 445,000 | $ | 3 | |||||
Forfeited | -43,750 | $ | 3.04 | |||||
Exercised | - | $ | - | |||||
Outstanding at December 31, 2014 | 1,401,250 | $ | 3.02 | |||||
Granted | 200,000 | $ | 3 | |||||
Forfeited | -93,334 | $ | 3 | |||||
Exercised | - | $ | - | |||||
Outstanding at March 31, 2015 | 1,507,916 | $ | 3.02 | |||||
Exercisable at March 31, 2015 | 498,324 | $ | 3.05 | |||||
Segments_Tables
Segments (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | The Company does not evaluate performance or allocate resources based on segment asset data, and therefore, such information is not presented. | |||||||||||||
For the Three Months Ended March 31, 2015 | ||||||||||||||
JetPay | JetPay | |||||||||||||
Payment Processing | Payroll | General/ Corporate | Total | |||||||||||
Processing revenues | $ | 7,088 | $ | 3,747 | $ | 9 | $ | 10,844 | ||||||
Cost of processing revenues | 4,529 | 1,897 | 30 | 6,456 | ||||||||||
Selling, general and administrative expenses | 1,752 | 1,147 | 483 | 3,382 | ||||||||||
Change in fair value of contingent consideration liability | - | - | 11 | 11 | ||||||||||
Amortization of intangibles and depreciation | 531 | 345 | 1 | 877 | ||||||||||
Other expenses (income) | 99 | 63 | 118 | 280 | ||||||||||
Income (loss) before income taxes | $ | 177 | $ | 295 | $ | -634 | $ | -162 | ||||||
Total property and equipment, net | $ | 640 | $ | 548 | $ | 37 | $ | 1,225 | ||||||
Property and equipment additions | $ | 75 | $ | 39 | $ | 1 | $ | 115 | ||||||
Intangible assets and goodwill | $ | 49,310 | $ | 18,574 | $ | - | $ | 67,884 | ||||||
Total segment assets | $ | 74,457 | $ | 80,202 | $ | 2,506 | $ | 157,165 | ||||||
For the Three Months Ended March 31, 2014 | ||||||||||||||
JetPay | ||||||||||||||
JetPay Payment Processing | Payroll | General/ Corporate | Total | |||||||||||
Processing revenues | $ | 4,603 | $ | 3,566 | $ | - | $ | 8,169 | ||||||
Cost of processing revenues | 2,946 | 1,740 | 2 | 4,688 | ||||||||||
Selling, general and administrative expenses | 995 | 1,001 | 779 | 2,775 | ||||||||||
Amortization of intangibles and depreciation | 320 | 342 | 1 | 663 | ||||||||||
Other (income) expenses | -2 | 76 | 1,303 | 1,377 | ||||||||||
Income (loss) before income taxes | $ | 344 | $ | 407 | $ | -2,085 | $ | -1,334 | ||||||
Total property and equipment, net | $ | 584 | $ | 646 | $ | 2 | $ | 1,232 | ||||||
Property and equipment additions | $ | 40 | $ | 43 | $ | - | $ | 83 | ||||||
Intangible assets and goodwill | $ | 33,722 | $ | 19,695 | $ | - | $ | 53,417 | ||||||
Total segment assets | $ | 53,650 | $ | 94,704 | $ | 2,455 | $ | 150,809 | ||||||
Organization_and_Business_Oper1
Organization and Business Operations (Details Textual) (USD $) | 3 Months Ended | ||||
Mar. 31, 2015 | Dec. 31, 2014 | Dec. 28, 2014 | Nov. 07, 2014 | Apr. 14, 2014 | |
Long-Term Debt, Current Maturities | $1,884,000 | $1,571,000 | |||
Preferred Stock, Shares Issued | 0 | 0 | |||
Preferred Stock, Value, Issued | 0 | 0 | 10,000,000 | 6,000,000 | 1,400,000 |
Preferred Stock, Par or Stated Value Per Share | $0.00 | $0.00 | |||
Series A Preferred Stock [Member] | |||||
Preferred Stock, Shares Issued | 33,333 | ||||
Preferred Stock, Value, Issued | 1,400,000 | ||||
Flexpoint [Member] | Series A-1 Convertible Preferred Stock [Member] | |||||
Preferred Stock, Shares Issued | 91,333 | ||||
Preferred Stock, Value, Issued | 27,400,000 | ||||
Preferred Stock, Par or Stated Value Per Share | $0.00 | ||||
Flexpoint [Member] | Series A Preferred Stock [Member] | |||||
Preferred Stock, Value, Issued | 12,600,000 | ||||
Wellington [Member] | Series A-1 Preferred stock [Member] | |||||
Preferred Stock, Shares Issued | 6,165 | ||||
Preferred Stock, Value, Issued | 1,850,000 | ||||
Preferred Stock Value Reserved for Future Issuance | 850,000 | ||||
Preferred Stock, Par or Stated Value Per Share | $0.00 | ||||
Wellington [Member] | Series A-1 Preferred stock [Member] | Acquisition-related Costs [Member] | |||||
Preferred Stock, Value, Issued | 13,450,000 | ||||
Subsequent Event [Member] | |||||
Secured Convertible Debt Repayable, Amount | 2,000,000 | ||||
Long-Term Debt, Current Maturities | 2,600,000 | ||||
Subsequent Event [Member] | Adc [Member] | |||||
Deferred Consideration Due | $1,200,000 |
Business_Acquisition_Details
Business Acquisition (Details) (USD $) | Mar. 31, 2015 |
In Thousands, unless otherwise specified | |
Cash | $250 |
Accounts receivable | 521 |
Prepaid expenses and other assets | 46 |
Property and equipment, net | 27 |
Goodwill | 10,594 |
Identifiable intangible assets | 6,460 |
Total assets acquired | 17,898 |
Accounts payable and accrued expenses | 601 |
Total liabilities assumed | 601 |
Net assets acquired | $17,297 |
Business_Acquisition_Details_1
Business Acquisition (Details 1) (Consolidated Entities [Member], USD $) | 3 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 |
Consolidated Entities [Member] | |
Revenues | $9,579 |
Operating income | 328 |
Net loss | -1,258 |
Net loss applicable to common stockholders | ($1,979) |
Net loss per share applicable to common stockholders | ($0.15) |
Business_Acquisition_Details_T
Business Acquisition (Details Textual) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | ||
Nov. 07, 2014 | Mar. 31, 2015 | Apr. 10, 2016 | Apr. 10, 2015 | Dec. 31, 2014 | |
Payments to Acquire Businesses, Gross | $6,000,000 | $11,000,000 | |||
Accounts Receivable, Net, Current | 1,646,000 | 2,634,000 | |||
WLES [Member] | |||||
Stock Issued During Period, Shares, Acquisitions | 833,333 | ||||
Stock Issued During Period, Value, Acquisitions | 5,000,000 | ||||
ACI [Member] | |||||
Business Acquisition Contingent Consideration Potential Cash Receipt | 410,000 | ||||
Payments to Acquire Businesses, Gross | 2,400,000 | ||||
Stock Issued During Period, Shares, Acquisitions | 2,000,000 | ||||
Stock Issued During Period, Value, Acquisitions | 3,700,000 | ||||
Business Acquisitions Purchase Price Allocation Current Assets Cash And Cash Equivalents | 250,000 | ||||
Business Acquisitions Purchase Price Allocation Current Assets Prepaid Expense And Other Assets | 46,000 | ||||
Business Acquisitions Purchase Price Allocation Noncurrent Assets | 27,000 | ||||
Business Acquisition Purchase Price Allocation Funds | 601,000 | ||||
Business Acquisitions Purchase Price Allocation Goodwill Amount | 17,100,000 | ||||
Business Acquisitions Purchase Price Allocation Amortizable Intangible Assets | 10,600,000 | ||||
Accounts Receivable, Net, Current | 521,000 | ||||
Deferred Consideration Or To Be Paid To Acquire Business | 2,170,000 | ||||
Rate Of Discount On Fair Value Of Future Payments | 16.00% | ||||
Maximum Amount Of Consideration Right On Net Revenue | 500,000 | ||||
Amount Of Tax Obligations To Be Paid | 50,000 | ||||
Business Combination, Consideration Transferred | 400,000 | ||||
ACI [Member] | Scenario, Forecast [Member] | |||||
Payments to Acquire Businesses, Gross | 1,200,000 | 1,200,000 | |||
ACI [Member] | Customer Relationships [Member] | |||||
Business Acquisitions Purchase Price Allocation Amortizable Intangible Assets | 6,300,000 | ||||
Business Acquisitions Purchase Price Allocation Assigned Life | 8 years 6 months | ||||
ACI [Member] | Trade Names [Member] | |||||
Business Acquisitions Purchase Price Allocation Amortizable Intangible Assets | 60,000 | ||||
Business Acquisitions Purchase Price Allocation Assigned Life | 3 years | ||||
ACI [Member] | Software [Member] | |||||
Business Acquisitions Purchase Price Allocation Amortizable Intangible Assets | $100,000 | ||||
Business Acquisitions Purchase Price Allocation Assigned Life | 2 years |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Derivative liabilities | $0 | $0 |
Contingent consideration | 1,251,000 | 1,240,000 |
Totals | 1,251,000 | 1,240,000 |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative liabilities | 0 | 0 |
Contingent consideration | 0 | 0 |
Totals | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Derivative liabilities | 0 | 0 |
Contingent consideration | 0 | 0 |
Totals | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Derivative liabilities | 0 | 0 |
Contingent consideration | 1,251,000 | 1,240,000 |
Totals | $1,251,000 | $1,240,000 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 1) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Change in fair value of derivative liability | $0 | $50 |
Change in fair value of contingent cash consideration | 11 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Beginning balance | 1,240 | 1,230 |
Change in fair value of derivative liability | 0 | 50 |
Change in fair value of contingent cash consideration | 11 | 0 |
Totals | $1,251 | $1,280 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details Textual) (USD $) | 1 Months Ended | 3 Months Ended | |||
Dec. 28, 2012 | Mar. 31, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2012 | |
Reserve for Losses and Loss Adjustment Expenses | 304,000 | $306,000 | |||
Shares Issuable Upon Conversion Debt Instrument 1 | 3,333,333 | ||||
Derivative Liability, Fair Value, Net | 2,100,000 | 50,000 | |||
Contingent consideration | 1,251,000 | 1,240,000 | |||
Share Price | 9.5 | ||||
Business Acquisition Contingent Consideration Potential Cash Receipt | 0 | ||||
Anti-Dilutive Securities Effect On Basic Earnings Per Share Secured Convertible Notes | 197,916 | ||||
Proceeds from Convertible Debt | 10,000,000 | 10,000,000 | |||
Series A Preferred Stock [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 9,133,300 | ||||
Dilutive Securities Effect On Basic Earnings Per Share Secured Convertible Notes | 3,333,333 | ||||
Employee Stock Option [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 498,324 | ||||
Common Stock [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 616,500 | ||||
Machinery and Equipment [Member] | Maximum [Member] | |||||
Property, Plant and Equipment, Useful Life | 15 years | ||||
Machinery and Equipment [Member] | Minimum [Member] | |||||
Property, Plant and Equipment, Useful Life | 5 years | ||||
Furniture and Fixtures [Member] | Maximum [Member] | |||||
Property, Plant and Equipment, Useful Life | 10 years | ||||
Furniture and Fixtures [Member] | Minimum [Member] | |||||
Property, Plant and Equipment, Useful Life | 5 years | ||||
Wles [Member] | |||||
Fair Value Assumptions, Risk Free Interest Rate | 0.81% | ||||
Fair Value Assumptions, Expected Dividend Rate | 0.00% | ||||
Fair Value Assumptions, Expected Term | 2 years 9 months 4 days | ||||
Fair Value Assumptions, Expected Volatility Rate | 22.30% | ||||
Common stock issued for acquisitions (in shares) | 833,333 | ||||
Contingent consideration | 1 | 1,540,000 | |||
Business Combination, Contingent Consideration, Liability, Noncurrent | 840,000 | 840,000 | |||
Share Price | 8 | ||||
Stock Issued During Period, Value, Acquisitions | 5,000,000 | ||||
Business Acquisition Contingent Consideration Potential Cash Receipt | 700,000 | ||||
ACI [Member] | |||||
Common stock issued for acquisitions (in shares) | 2,000,000 | ||||
Contingent consideration | 410,000 | ||||
Stock Issued During Period, Value, Acquisitions | 3,700,000 | ||||
Rate Of Discount On Fair Value Of Future Payments | 16.00% | ||||
Business Combination, Consideration Transferred | 400,000 | ||||
Maximum Amount Of Consideration Right On Net Revenue | 500,000 |
Property_and_Equipment_net_of_2
Property and Equipment, net of Accumulated Depreciation (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |||
Total property and equipment | $2,009 | $1,902 | |
Less: Accumulated depreciation | -784 | -676 | |
Property and equipment, net | 1,225 | 1,226 | 1,232 |
Leasehold improvements [Member] | |||
Total property and equipment | 388 | 384 | |
Equipment [Member] | |||
Total property and equipment | 838 | 811 | |
Furniture and Fixtures [Member] | |||
Total property and equipment | 266 | 252 | |
Computer Software [Member] | |||
Total property and equipment | 143 | 121 | |
Vehicles [Member] | |||
Total property and equipment | 203 | 182 | |
Assets in progress [Member] | |||
Total property and equipment | $171 | $152 |
Property_and_Equipment_net_of_3
Property and Equipment, net of Accumulated Depreciation (Details Textual) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Depreciation expenses | $109 | $103 | |
Property, Plant and Equipment, Net | 1,225 | 1,232 | 1,226 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 784 | 676 | |
Computer Equipment [Member] | |||
Property, Plant and Equipment, Net | 148 | ||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $23 |
Accounts_Payable_and_Accrued_E2
Accounts Payable and Accrued Expenses (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Trade accounts payable | $1,959 | $1,828 |
ACH clearing liability | 1,596 | 2,146 |
Accrued compensation | 1,319 | 1,233 |
Accrued agent commissions | 1,095 | 758 |
Related party payables | 93 | 70 |
Other | 2,944 | 3,118 |
Total | $9,006 | $9,153 |
LongTerm_Debt_Notes_Payable_an2
Long-Term Debt, Notes Payable and Capital Lease Obligations (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations, Including Current Maturities | $16,069 | $16,366 |
Less current portion | -1,884 | -1,571 |
Long-term Debt and Capital Lease Obligations | 14,185 | 14,795 |
Successor [Member] | Metro Bank [Member] | AD Computer [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations, Including Current Maturities | 6,104 | 6,425 |
Successor [Member] | Metro Bank [Member] | ACI Merchant Systems [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations, Including Current Maturities | 7,500 | 7,500 |
Successor [Member] | WLES [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations, Including Current Maturities | 1,819 | 1,779 |
Successor [Member] | StockHolders [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations, Including Current Maturities | 492 | 492 |
Successor [Member] | JetPay, LLC, [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations, Including Current Maturities | 140 | 154 |
Successor [Member] | JetPay And ADC [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations, Including Current Maturities | $14 | $16 |
LongTerm_Debt_Notes_Payable_an3
Long-Term Debt, Notes Payable and Capital Lease Obligations (Details Textual) (USD $) | 0 Months Ended | 3 Months Ended | |
6-May-15 | Mar. 31, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months | 1,900,000 | ||
Long-term Debt, Maturities, Repayments of Principal in Year Two | 3,100,000 | ||
Long-term Debt, Maturities, Repayments of Principal in Year Three | 4,900,000 | ||
Long-term Debt, Maturities, Repayments of Principal in Year Four | 2,500,000 | ||
Long-term Debt, Maturities, Repayments of Principal in Year Five | 2,200,000 | ||
Long-term Debt, Maturities, Repayments of Principal after Year Five | 2,000,000 | ||
Subsequent Event [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Maturity Date | 6-May-17 | ||
Successor [Member] | Stockholders [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Maturity Date | 30-Sep-16 | ||
Debt Instrument, Interest Rate, Effective Percentage | 4.00% | ||
Wles [Member] | Successor [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Maturity Date | 31-Dec-17 | ||
Debt Instrument, Unamortized Discount | 511,878 | 552,424 | |
Debt Instrument, Interest Rate, Effective Percentage | 5.00% | ||
Jetpay [Member] | Successor [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Maturity Date | 31-May-17 | ||
Debt Instrument On Unamortized Discount and Derivative Liability | 4,114 | ||
Debt Instrument, Interest Rate, Effective Percentage | 5.55% | ||
Loan And Security Agreement One [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Maturity Date | 28-Dec-19 | ||
Debt Instrument, Interest Rate, Effective Percentage | 4.00% | ||
Equal Monthly Installments | 107,143 | ||
Loan And Security Agreement Two [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Maturity Date | 7-Nov-21 | ||
Debt Instrument, Interest Rate, Effective Percentage | 5.25% | ||
Equal Monthly Installments | 104,167 |
Redeemable_Convertible_Preferr1
Redeemable Convertible Preferred Stock (Details Textual) (USD $) | 0 Months Ended | 1 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | ||
Nov. 07, 2014 | Dec. 28, 2014 | Apr. 14, 2014 | Mar. 31, 2015 | Dec. 31, 2013 | Mar. 31, 2014 | Nov. 20, 2014 | Dec. 31, 2014 | Oct. 11, 2013 | 5-May-14 | 1-May-14 | |
Stock Issued During Period, Shares, New Issues | 20,000 | 33,333 | 4,667 | ||||||||
Preferred Stock, Value, Issued | $6,000,000 | $10,000,000 | $1,400,000 | $0 | $0 | ||||||
Preferred Stock, Shares Issued | 0 | 0 | |||||||||
Noncompliance Event Description | An Event of Noncompliance shall have occurred if: i) the Company fails to make any required redemption payment with respect to the Series A Preferred; ii) the Company breaches the Securities Purchase Agreement after the Initial Closing, and such breach has not been cured with thirty days after receipt of notice thereof; iii) the Company or any subsidiary makes an assignment for the benefit of creditors, admits its insolvency or is the subject of an order, judgment or decree adjudicating such entity as insolvent, among other similar actions; iv) a final judgment in excess of $5.0 million is rendered against the Company or any subsidiary that is not discharged within 60 days thereafter; or v) an event of default has occurred under the Secured Convertible Note Agreement, the Loan and Security Agreement, dated as of December 28, 2012 by and among ADC, PTFS and Metro Bank, or the Loan and Security Agreement dated as of November 7, 2014 by and among ACI and Metro Bank, and such event of default has not been cured within thirty days after receipt of notice thereof. | ||||||||||
Adjustments To Additional Paid In Capital Convertible Preferred Stock | 1,500,000 | ||||||||||
Stock Issued During Period, Value, New Issues | 1,400,000 | ||||||||||
Payments to Acquire Businesses, Gross | 6,000,000 | 11,000,000 | |||||||||
Repayments of Convertible Debt | 10,000,000 | ||||||||||
Ten Lords Ltd [Member] | |||||||||||
Repayments of Notes Payable | 5,900,000 | ||||||||||
Wellington [Member] | Securities Purchase Agreement [Member] | |||||||||||
Preferred Stock, Conversion Basis | The Series A-1 Preferred will be convertible into shares of the Companys common stock or, in certain circumstances, Series A-2 Convertible Preferred Stock, par value $0.001 per share (Series A-2 Preferred). The Series A-1 Preferred can be converted into that number of shares of common stock equal to the number of shares of Series A-1 Preferred being converted multiplied by $300 and divided by the then-applicable conversion price, which initially will be $3.00. | ||||||||||
Flexpoint Securities Purchase Agreement [Member] | |||||||||||
Sale of Stock, Price Per Share | $300 | ||||||||||
Series A Preferred Stock [Member] | |||||||||||
Preferred Stock, Conversion Basis | The Series A Preferred is convertible into shares of common stock. Any holder of Series A Preferred may at any time convert such holders shares of Series A Preferred into that number of shares of common stock equal to the number of shares of Series A Preferred being converted multiplied by $300 and divided by the then-applicable conversion price, initially $3.00. The conversion price of the Series A Preferred is subject to downward adjustment upon the occurrence of certain events. | ||||||||||
Preferred Stock, Value, Issued | 1,400,000 | ||||||||||
Preferred Stock, Liquidation Preference Per Share | $600 | ||||||||||
Preferred Stock, Shares Issued | 33,333 | ||||||||||
Percentage Of Beneficially Own | 9.90% | ||||||||||
Adjustments to Additional Paid in Capital, Increase in Carrying Amount of Redeemable Preferred Stock | 1,200,000 | 509,000 | |||||||||
Series A Preferred Stock [Member] | Flexpoint [Member] | |||||||||||
Preferred Stock, Value, Issued | 12,600,000 | ||||||||||
Series A Preferred Stock [Member] | Wellington [Member] | |||||||||||
Stock Issued During Period, Shares, New Issues | 1,350 | ||||||||||
Series A Preferred Stock [Member] | Wellington [Member] | Securities Purchase Agreement [Member] | |||||||||||
Stock Issued During Period, Shares, New Issues | 2,250 | ||||||||||
Stock Issued During Period, Value, New Issues | 405,000 | 675,000 | |||||||||
Series A Preferred Stock [Member] | Flexpoint Securities Purchase Agreement [Member] | |||||||||||
Stock Issued During Period, Shares, New Issues | 33,333 | ||||||||||
Maximum Number Of Shares To Be Sold | 133,333 | ||||||||||
Maximum Number Of Shares To Be Sold Value | 40,000,000 | ||||||||||
Initial Proceeds From Sale Of Trading Securities | 10,000,000 | ||||||||||
Tranche A [Member] | Flexpoint Securities Purchase Agreement [Member] | Ten Lords Ltd [Member] | |||||||||||
Preferred Stock, Value, Issued | 10,000,000 | 10,000,000 | |||||||||
Tranche B [Member] | Flexpoint Securities Purchase Agreement [Member] | |||||||||||
Preferred Stock, Value, Issued | 10,000,000 | ||||||||||
Tranche C [Member] | |||||||||||
Preferred Stock, Value, Issued | 12,600,000 | ||||||||||
Tranche C [Member] | Flexpoint Securities Purchase Agreement [Member] | |||||||||||
Preferred Stock, Value, Issued | 20,000,000 | ||||||||||
Series A-1 Preferred stock [Member] | Flexpoint [Member] | Securities Purchase Agreement [Member] | |||||||||||
Percentage Of Cumulative Number Of Shares | 6.75% | ||||||||||
Series A-1 Preferred stock [Member] | Wellington [Member] | |||||||||||
Preferred Stock, Value, Issued | 1,850,000 | ||||||||||
Preferred Stock, Shares Issued | 6,165 | ||||||||||
Series A-1 Preferred stock [Member] | Wellington [Member] | Securities Purchase Agreement [Member] | |||||||||||
Preferred Stock, Value, Issued | 769,500 | $2,700,000 | |||||||||
Preferred Stock, Shares Issued | 2,565 | 9,000 |
Stockholders_Equity_Details
Stockholders' Equity (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Expected term (years) | 6 years 3 months | 6 years 3 months |
Risk-free interest rate | 1.56% | 2.10% |
Volatility | 44.80% | 44.90% |
Dividend Yield | 0.00% | 0.00% |
Stockholders_Equity_Details_1
Stockholders' Equity (Details 1) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Outstanding Opening - Number of Options (in shares) | 1,401,250 | 1,000,000 |
Granted - Number of Options (in shares) | 200,000 | 445,000 |
Forfeited - Number of Options (in shares) | -93,334 | -43,750 |
Exercised - Number of Options (in shares) | 0 | 0 |
Outstanding Ending - Number of Options (in shares) | 1,507,916 | 1,401,250 |
Exercisable - Number of Options (in shares) | 498,324 | |
Outstanding Opending - Weighted Average Exercise Price (in dollars per share) | $3.02 | $3.03 |
Granted - Weighted Average Exercise Price (in dollars per share) | $3 | $3 |
Forfeited - Weighted Average Exercise Price (in dollars per share) | $3 | $3.04 |
Exercised - Weighted Average Exercise Price (in dollars per share) | $0 | $0 |
Outstanding Ending - Weighted Average Exercise Price (in dollars per share) | $3.02 | $3.02 |
Exercisable - Weighted Average Exercise Price (in dollars per share) | $3.05 |
Shareholders_Equity_Details_Te
Shareholders' Equity (Details Textual) (USD $) | 0 Months Ended | 1 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended |
Nov. 07, 2014 | Dec. 28, 2014 | Apr. 14, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Apr. 04, 2014 | Jan. 30, 2014 | Mar. 31, 2014 | |
Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 | ||||||
Preferred Stock, Par or Stated Value Per Share | $0.00 | $0.00 | ||||||
Common stock, shares issued | 13,863,823 | 13,863,823 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 200,000 | 445,000 | ||||||
Share-based Goods and Nonemployee Services Transaction, Valuation Method, Expected Dividend Rate | 0.00% | |||||||
Stock Issued During Period, Value, New Issues | $1,400,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $3.05 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | 93,334 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 8 years 11 months 26 days | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | 0 | |||||||
Stock Issued During Period, Shares, New Issues | 20,000 | 33,333 | 4,667 | |||||
Common Stock SPA [Member] | ||||||||
Common stock, shares issued | 333,333 | |||||||
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | 25,000 | |||||||
Proceeds from Issuance of Common Stock | 1,000,000 | |||||||
Stock Issued During Period, Shares, New Issues | 333,333 | |||||||
ACI [Member] | ||||||||
Stock Issued During Period, Shares, Acquisitions | 2,000,000 | |||||||
Consultant Service [Member] | ||||||||
Common stock, shares issued | 1,396 | |||||||
Stock Issued During Period, Value, New Issues | 6,000 | |||||||
Stock Incentive Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 200,000 | 40,000 | ||||||
Stock Issued During Period, Value, Stock Options Exercised | 232,300 | 34,600 | ||||||
Allocated Share-based Compensation Expense | 78,000 | 80,000 | ||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $767,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $3 | $3 |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Deferred Tax Assets, Operating Loss Carryforwards, State and Local | $12,800,000 | ||
Deferred Tax Assets, Valuation Allowance | 7,600,000 | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | -35.80% | -3.90% | |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | 65,000 | 550,000 | |
Operating Loss Carryforward Expiration Date | 2034 | ||
Income Tax Expense (Benefit) | $58,000 | $52,000 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details Textual) (USD $) | 0 Months Ended | 3 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 3 Months Ended | |||
Apr. 04, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Aug. 23, 2013 | Dec. 31, 2014 | Mar. 03, 2014 | Oct. 11, 2013 | Dec. 28, 2012 | Feb. 03, 2014 | Jun. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Apr. 14, 2014 | |
Commitments and Contingencies [Line Items] | |||||||||||||
Escrow Amount Before Direct Air Bankruptcy Filing | $31,000,000 | ||||||||||||
Escrow Amount After Direct Air Bankruptcy Filing | 1,000,000 | ||||||||||||
Stock Issued During Period, Shares, Issued for Services | 333,333 | ||||||||||||
Selling, General and Administrative Expense | 3,382,000 | 2,775,000 | |||||||||||
Common Stock SPA [Member] | |||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||
Proceeds from Issuance of Common Stock | 1,000,000 | ||||||||||||
MSC Cruine Lines [Member] | |||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||
Loss Contingency, Damages Sought, Value | 2,000,000 | ||||||||||||
Litigation Settlement, Expense | 600,000 | ||||||||||||
Series A Preferred Stock [Member] | Flexpoint [Member] | |||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||
Additional Issuance Of Preferred Stock Shares | 4,667 | ||||||||||||
Additional Issuance Of Preferred Stock Amount | 1,400,000 | ||||||||||||
Early Bird Capital Inc [Member] | |||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||
Fees and Commissions | 2,070,000 | ||||||||||||
Payments for Legal Settlements | 411,000 | ||||||||||||
Interest Expense, Other | 740,000 | ||||||||||||
Accrued Liabilities, Current | 2,136,000 | ||||||||||||
Selling, General and Administrative Expense | 675,000 | ||||||||||||
Merrick Bank [Member] | |||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||
Merchant Chargeback's | 25,000,000 | ||||||||||||
Loss Contingency, Loss in Period | 25,000,000 | ||||||||||||
Legal Fees | 597,000 | 1,900,000 | |||||||||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in shares) | 3,333,333 | ||||||||||||
Legal Fees and Interest Costs | 2,900,000 | 487,000 | |||||||||||
Increase (Decrease) in Restructuring Reserve | 600,000 | ||||||||||||
Cash Reserve Deposit Required and Made | 4,400,000 | ||||||||||||
Jetpay [Member] | |||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||
Litigation Settlement, Amount | 1,900,000 | ||||||||||||
Jp Morgan Chase [Member] | Common Stock [Member] | |||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in shares) | 3,333,333 | ||||||||||||
M and A Ventures [Member] | |||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||
Litigation Settlement, Amount | 400,000 | ||||||||||||
Payments for Legal Settlements | 100,000 | ||||||||||||
Litigation Settlement, Expense | 400,000 | ||||||||||||
Chartis Insurance [Member] | |||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||
Deductible Policy Amount | $250,000 |
Related_Party_Transactions_Det
Related Party Transactions (Details Textual) (USD $) | 3 Months Ended | 0 Months Ended | ||||||
Mar. 31, 2015 | Mar. 31, 2014 | 6-May-15 | Jun. 07, 2013 | Apr. 04, 2014 | Dec. 31, 2014 | Dec. 28, 2012 | Aug. 22, 2013 | |
Related Party Transaction [Line Items] | ||||||||
Common Stock, Shares, Issued | 13,863,823 | 13,863,823 | ||||||
Revenues | $10,844,000 | $8,169,000 | ||||||
Note and Indemnity Side Agreement [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | |||||||
Debt Instrument, Face Amount | 2,331,369 | |||||||
Interest Expense, Related Party | 29,142 | 29,142 | ||||||
Indemnity Claim Loss Waived Amount | 2,331,369 | |||||||
Jet Pay Solutions Ltd [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Business Acquisition, Percentage of Voting Interests Acquired | 75.00% | |||||||
Subsequent Event [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Debt Instrument, Maturity Date | 6-May-17 | |||||||
Jt Holdings [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Payments for Rent | 9,000 | 9,000 | ||||||
Trent Voigt [Member] | Promissory Note [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | |||||||
Debt Instrument, Face Amount | 491,693 | |||||||
Interest Expense, Related Party | 4,850 | 4,850 | ||||||
Debt Instrument, Maturity Date | 30-Sep-16 | |||||||
Jetpay [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Revenues | 105,000 | |||||||
Common Stock SPA [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Common Stock, Shares, Issued | 333,333 | |||||||
Proceeds from Issuance of Common Stock | 1,000,000 | |||||||
JetPay Payroll Service [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Area of Land | 22,500 | |||||||
Operating Leases, Rent Expense | 129,140 | 129,140 | ||||||
Monthly Rent Expense | 43,426 | |||||||
Lease Rent Annual Increase Percentage | 4.00% | |||||||
Lease Term | 10 years | |||||||
JetPay Payment Services [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Area of Land | 1,600 | |||||||
Monthly Rent Expense | $3,000 |
Segments_Details
Segments (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Segment Reporting Information [Line Items] | |||
Processing revenues | $10,844 | $8,169 | |
Cost of processing revenues | 6,456 | 4,688 | |
Selling, general and administrative expenses | 3,382 | 2,775 | |
Change in fair value of contingent consideration liability | 11 | 0 | |
Amortization of intangibles and depreciation | 877 | 663 | |
Other expenses (income) | 280 | 1,377 | |
Income (loss) before income taxes | -162 | -1,334 | |
Total property and equipment, net | 1,225 | 1,232 | 1,226 |
Property and equipment additions | 115 | 83 | |
Intangible assets and goodwill | 67,884 | 53,417 | |
Total segment assets | 157,165 | 150,809 | 144,402 |
Payment Processing [Member] | |||
Segment Reporting Information [Line Items] | |||
Processing revenues | 7,088 | 4,603 | |
Cost of processing revenues | 4,529 | 2,946 | |
Selling, general and administrative expenses | 1,752 | 995 | |
Change in fair value of contingent consideration liability | 0 | ||
Amortization of intangibles and depreciation | 531 | 320 | |
Other expenses (income) | 99 | -2 | |
Income (loss) before income taxes | 177 | 344 | |
Total property and equipment, net | 640 | 584 | |
Property and equipment additions | 75 | 40 | |
Intangible assets and goodwill | 49,310 | 33,722 | |
Total segment assets | 74,457 | 53,650 | |
Payroll Service [Member] | |||
Segment Reporting Information [Line Items] | |||
Processing revenues | 3,747 | 3,566 | |
Cost of processing revenues | 1,897 | 1,740 | |
Selling, general and administrative expenses | 1,147 | 1,001 | |
Change in fair value of contingent consideration liability | 0 | ||
Amortization of intangibles and depreciation | 345 | 342 | |
Other expenses (income) | 63 | 76 | |
Income (loss) before income taxes | 295 | 407 | |
Total property and equipment, net | 548 | 646 | |
Property and equipment additions | 39 | 43 | |
Intangible assets and goodwill | 18,574 | 19,695 | |
Total segment assets | 80,202 | 94,704 | |
General/Corporate [Member] | |||
Segment Reporting Information [Line Items] | |||
Processing revenues | 9 | 0 | |
Cost of processing revenues | 30 | 2 | |
Selling, general and administrative expenses | 483 | 779 | |
Change in fair value of contingent consideration liability | 11 | ||
Amortization of intangibles and depreciation | 1 | 1 | |
Other expenses (income) | 118 | 1,303 | |
Income (loss) before income taxes | -634 | -2,085 | |
Total property and equipment, net | 37 | 2 | |
Property and equipment additions | 1 | 0 | |
Intangible assets and goodwill | 0 | 0 | |
Total segment assets | $2,506 | $2,455 |
Subsequent_Events_Details_Text
Subsequent Events (Details Textual) (Subsequent Event [Member], USD $) | 0 Months Ended |
6-May-15 | |
Subsequent Event [Line Items] | |
Debt Instrument, Maturity Date | 6-May-17 |
Proceeds from Issuance of Debt | $1,000,000 |
Deferred Long-term Liability Charges | 2,000,000 |
Cash and Cash Equivalents [Member] | |
Subsequent Event [Line Items] | |
Proceeds from Issuance of Debt | 650,000 |
Promissory Note [Member] | |
Subsequent Event [Line Items] | |
Debt Instrument, Maturity Date | 6-May-17 |
Debt Instrument, Interest Rate, Effective Percentage | 4.00% |
Unsecured Promissory Note [Member] | |
Subsequent Event [Line Items] | |
Unsecured Debt | 350,000 |
Revolving Credit Note [Member] | |
Subsequent Event [Line Items] | |
Long-term Debt, Gross | 1,000,000 |
Debt Instrument, Description of Variable Rate Basis | Wall Street Journal Prime rate plus 1.00%, with a floor of 4.25% |
ACI Merchant Systems, LLC [Member] | |
Subsequent Event [Line Items] | |
Long-term Debt, Gross | $1,000,000 |