Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 23, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Excel Corp | |
Entity Central Index Key | 1,512,890 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 96,759,070 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 250,562 | $ 362,130 |
Accounts receivable | 958,194 | 1,016,141 |
Prepaid expenses | 22,300 | 43,074 |
Other current assets | $ 179,580 | 83,545 |
Current assets held for sale | 167,406 | |
Total current assets | $ 1,410,636 | 1,672,296 |
Other Assets | ||
Fixed assets, net of depreciation | 169,207 | 184,960 |
Goodwill | 7,914,269 | 7,914,269 |
Note receivable | 675,000 | 675,000 |
Equity investment | 204,790 | 164,790 |
Residual portfolios | 2,419,705 | 2,505,164 |
Other long term assets | $ 510,677 | 593,893 |
Other assets held for sale | 302,898 | |
Total other assets | $ 11,893,648 | 12,340,974 |
Total assets | 13,304,284 | 14,013,270 |
Current Liabilities | ||
Accounts payable | 767,969 | 1,374,878 |
Accrued compensation | 1,732,907 | 1,508,531 |
Other accrued liabilities | 1,058,934 | 839,308 |
Notes payable - current portion | 9,014,711 | $ 8,984,544 |
Accrued costs of disposal of discontinued operations | 550,000 | |
Total current liabilities | 13,124,521 | $ 12,707,261 |
Long-term liabilities | ||
Notes payable - long term portion | 93,616 | 226,733 |
Other long term liabilities | 722,170 | 41,692 |
Total long-term liabilities | $ 815,786 | $ 268,425 |
Commitments and contingencies | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred stock, value | ||
Common stock, $.0001 par value, 200,000,000 shares authorized 96,759,070 and 98,259,070 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively. | $ 9,676 | $ 9,826 |
Additional paid-in capital | 4,725,868 | 4,428,391 |
Accumulated deficit | (5,372,027) | (3,400,633) |
Total stockholders' equity (deficit) | (636,023) | 1,037,584 |
Total Liabilities and Stockholders' Equity (Deficit) | $ 13,304,284 | $ 14,013,270 |
Series A Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred stock, value | ||
Total stockholders' equity (deficit) | ||
Series B Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred stock, value | $ 460 | |
Total stockholders' equity (deficit) |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 96,759,070 | 98,259,070 |
Common stock, shares outstanding | 96,759,070 | 98,259,070 |
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 2 | 2 |
Preferred stock, shares outstanding | 2 | 2 |
Series B Preferred Stock | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 4,600,000 | 0 |
Preferred stock, shares outstanding | 4,600,000 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues | ||
Transaction and processing fees | $ 3,965,853 | $ 1,153,709 |
Merchant cash advance revenue and other | 53,805 | |
Total revenues | 4,019,658 | $ 1,153,709 |
Costs and expenses | ||
Processing and servicing costs | 2,010,009 | |
Salaries and wages | 975,835 | $ 374,752 |
Other selling general and administrative expenses | 488,922 | 243,988 |
Total costs and expenses | 3,474,766 | 618,740 |
Income from operations | 544,892 | 534,969 |
Interest expense | 328,616 | 78,904 |
Net income from continuing operations before income taxes | 216,276 | 456,065 |
Income tax expense (benefit) | ||
Current | 80,022 | 168,744 |
Deferred | $ (80,022) | $ (168,744) |
Income tax expense (benefit) | ||
Net income from continuing operations | $ 216,276 | $ 456,065 |
Loss from discontinued operations, net of tax | (1,347,029) | $ (980,005) |
Loss on disposal of operations | (840,641) | |
Net loss | $ (1,971,394) | $ (523,940) |
Net income (loss) per share | ||
Basic & diluted, continuing operations | $ 0.002 | $ 0.005 |
Basic & Diluted, discontinued operations | (0.022) | (0.010) |
Basic & Diluted, Total | $ (0.020) | $ (0.005) |
Weighted Average Shares Outstanding | ||
Basic & Diluted | 97,055,773 | 97,259,070 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating activities: | ||
Net loss | $ (1,971,394) | $ (523,940) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 136,118 | 20,934 |
Stock based compensation | 67,787 | $ 67,788 |
Income in investment accounted for under the equity method | (40,000) | |
Loss on disposal of operations | 840,641 | |
Decrease (increase) | ||
Accounts receivable | $ 185,539 | $ 34,975 |
Inventory | $ 3,258 | |
Other current assets | $ (96,035) | |
Prepaid expenses | 19,918 | $ 28,655 |
Other long term assets | 89,642 | 2,291 |
Increase (decrease) | ||
Accounts payable | (606,909) | 148,039 |
Accrued compensation | 224,376 | (25,493) |
Other accrued liabilities | 219,626 | 199,772 |
Other long-term liabilities | 697,575 | 3,463 |
Net cash used in operating activities | (233,114) | (40,258) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (5,504) | (77,805) |
Net cash used in investing activities | $ (5,504) | (77,805) |
Cash flows from financing activities: | ||
Issuance of notes | $ 100,000 | |
Issuance of preferred stock | $ 230,000 | |
Note and debt payments | (102,950) | $ (174,249) |
Net cash provided by (used in) financing activities | 127,050 | (74,249) |
Net decrease in cash | (111,568) | (192,312) |
Cash - Beginning | 362,130 | 326,788 |
Cash - Ending | 250,562 | 134,476 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | $ 328,616 | $ 78,904 |
Organization and Operations
Organization and Operations | 3 Months Ended |
Mar. 31, 2016 | |
Organization and Operations [Abstract] | |
ORGANIZATION AND OPERATIONS | 1. ORGANIZATION AND OPERATIONS Excel Corporation (the “Company”) was organized on November 13, 2010 as a Delaware corporation. The Company has three wholly owned subsidiaries, Excel Business Solutions, Inc., Payprotec Oregon, LLC (d/b/a Securus Payments), (“Securus”), and eVance Processing Inc. (“eVance”). On February 17, 2014 the Company entered into a Securities Exchange Agreement (the “SEA”) with Securus, Mychol Robirds and Steven Lemma, to purchase 90% of the membership interests of Securus and its subsidiary Securus Consultants, LLC. On April 21, 2014 the Company completed the acquisition of 100% of Securus pursuant to the SEA and through a Securities Exchange Agreement (“E-Cig Agreement) with E-Cig Ventures LLC. Prior to the acquisition of Securus in April of 2014, we were considered a developmental stage company as defined by FASB ASC 915-205-45-6. With the acquisition of Securus, we ceased to be a development stage company. On November 30, 2015, eVance entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Calpian, Inc. (“Calpian”), Calpian Residual Acquisition, LLC (“CRA”) and Calpian Commerce, Inc., a wholly owned subsidiary of Calpian (“CCI,” and collectively with Calpian and CRA, the “Sellers”). Pursuant to the Purchase Agreement, eVance acquired substantially all of the U.S. assets and operations of the Sellers. In consideration for the acquired assets, eVance assumed certain of the Sellers’ liabilities, including an aggregate of $8,279,916 of notes payable and certain of the Sellers’ outstanding contractual obligations. On April 30, 2016, Securus entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Chyp LLC (“Chyp”). In connection with the Purchase Agreement, Chyp executed a three year preferred marketing agreement with eVance. Chyp acquired substantially all of the operations of Securus including its sales and marketing operations located in Portland Oregon and West Palm Beach Florida. Securus retained its approximately 5,000 merchants and related merchant processing residual portfolio. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods. These unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Reclassification Certain prior period amounts have been reclassified to conform to the current period’s presentation. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements [Abstract] | |
FAIR VALUE MEASUREMENTS | 3. FAIR VALUE MEASUREMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic No. 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as described below: Level 1: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly. Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other than quoted prices such as interest rates. Level 3: Level 3 inputs are unobservable inputs. The following required disclosure of the estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The methods and assumptions used to estimate the fair values of each class of financial instruments are as follows: Cash and Cash Equivalents, Accounts Receivable, Other Receivables, Inventory, Accounts Payable, Accrued Compensation, Other Accrued Liabilities, and Income Taxes Payable. The items are generally short-term in nature, and accordingly, the carrying amounts reported on the consolidated balance sheets are reasonable approximations of their fair values. Note Receivable, Other Long Term Assets, Notes Payable, and Other Long Term Liabilities. The carrying amounts approximate the fair value as the notes bear interest rates that are consistent with current market rates. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2016 | |
Recent Accounting Pronouncements [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 4. RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers Topic 606 (“ASU 2014-09”) which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Revenue recorded under ASU 2014-09 will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for the Company’s fiscal year beginning January 1, 2018 and early adoption is not permitted. Management does not expect the adoption of this guidance to have a material impact on the Company’s financial statements. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 supersedes the previous leases standard, Leases (Topic 840). The standard is effective on January 1, 2019, with early adoption permitted. The Company is currently evaluating the potential effect of this standard on its consolidated financial statements. Accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2016 | |
Discontinued Operations [Abstract] | |
DISCONTINUED OPERATIONS | 5. DISCONTINUED OPERATIONS On April 30, 2016, Securus entered into the Purchase Agreement with Chyp. In connection with the Purchase Agreement, Chyp executed a three year preferred marketing agreement with eVance. Chyp acquired substantially all of the operations of Securus including its sales and marketing operations located in Portland Oregon and West Palm Beach Florida. Securus retained its approximately 5,000 merchants and related merchant processing residual portfolio. Securus also retained substantially all of its liabilities, including but not limited to, its note payable with Blue Acre Ventures, trade payables as well as liabilities to merchants. Pursuant to the Purchase Agreement, Securus will provide financial assistance to Chyp in the form of a forgivable loan to support the transition of Securus’ operations to Chyp. Securus will advance Chyp $75,000 per month for six months and $50,000 in the seventh and eighth months for a total of $550,000. Accordingly, Chyp has executed a $550,000 promissory note (the “Chyp Note”) in favor of the Securus. The Chyp Note bears an interest rate of 12% per annum with both the principal and interest due on May 1, 2017. If Chyp is in material compliance with this Purchase Agreement and related agreements for a period of 12 months, Securus will forgive the Chyp Note. Securus will also reimburse Chyp for commissions payable to Chyp employees and agents on Securus’ residual portfolio as if those agents and employees were still employed by Securus. Chyp is owned by Steven Lemma and Mychol Robirds who are former executives of Securus. We accounted for the sale of the Securus operations to Chyp in accordance with ASC 205-20-45-1 and have classified the assets and operations sold to Chyp as discontinued operations. The Company recorded loss on disposal of $840,641 related to the transaction. The charge includes a $290,641 write-off of the net assets acquired by Chyp and $550,000 for the financial assistance to be provided to Chyp during 2016. A summary of results of discontinued operations is as follows: Quarter Ended 2016 2015 Revenues $ 1,683,135 $ 800,281 Operating expenses (3,030,164 ) (1,780,286 ) Pre-tax loss from discontinued operations (1,347,029 ) (980,005 ) Income tax benefit - - Loss from discontinued operations, net of tax $ (1,347,029 ) $ (980,005 ) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
INCOME TAXES | 6. INCOME TAXES The Company accounts for income taxes in accordance with FASB Accounting Standards Codification Topic 740-10 which requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards. At March 31, 2016 and March 31, 2015, the Company had available unused operating loss carryforwards of $2,685,954 and $2,232,683, respectively, which generated a deferred tax benefits of $993,803 and $826,093, respectively. The Company had a 100% valuation allowance on the deferred tax assets at March 31, 2016. The Company’s provision for income taxes for the three months ended March 31, 2016 and 2015 consists of the following: Three months Ended Three months Ended Income Tax Expense CONTINUING OPERATIONS DISCONTINUED OPERATIONS TOTAL CONTINUING OPERATIONS DISCONTINUED OPERATIONS TOTAL Current $ 80,022 $ (809,438 ) $ (729,416 ) $ 168,744 $ (362,602 ) $ (193,858 ) Deferred (80,022 ) 809,438 729,416 (168,744 ) 362,602 193,858 Total $ - $ - $ - $ - $ - $ - The Company accounts for uncertainties in income taxes in accordance with FASB ASC Topic 740 “Accounting for Uncertainty in Income Taxes”. The Company has determined that there are no significant uncertain tax positions requiring recognition in its financial statements. In the event the Company is assessed for interest and/or penalties by taxing authorities, such assessed amounts will be classified in the financial statements as income tax expense. Tax years 2013 through 2015 remain subject to examination by Federal and state taxing authorities. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity [Abstract] | |
STOCKHOLDERS' EQUITY | 7. STOCKHOLDERS’ EQUITY On April 21, 2014 the Company issued two shares of Series A Preferred Stock to the two previous members of Securus. As long as a former member holds at least 9,000,000 shares of the Company’s common stock, then the member has the right to exchange his share of preferred stock for a 24.5% share of the membership interests of Securus upon a change of control in Securus (as defined). In connection with the transaction with Chyp on April 30, 2016, the Company acquired the two shares of Series A Preferred Stock. On November 30, 2015, in connection with its acquisition of the U.S. assets and operations of Calpian Inc., the Company issued warrants to purchase an aggregate of 5,452,458 shares of the Company’s common stock at an exercise price of $0.05 per share, subject to adjustments. The warrants expire on November 30, 2025. We estimate the fair value of warrants and stock options when issued or vested using the Black-Scholes options pricing model and subsequent changes in fair value are not recognized. Option pricing models require the input of highly subjective assumptions. We determined, using the Black-Scholes options pricing model, that these warrants have no current value, based on a maturity date of 5 years, a risk-free interest rate of 2.230%, and a calculated volatility rate of 8.530%, using historical stock prices of the Company. On June 1, 2015, the Company issued 2,000,000 shares of its Common Stock to an executive in connection with the executive’s employment and the use of certain trade names and brands owned by the executive. 500,000 shares vested upon grant and an additional 500,000 shares were scheduled to vest on June 1, 2016, June 1, 2017, and June 1, 2018. The Company terminated the executive’s employment in January 2016, and the shares subject to vesting (1,500,000) were forfeited. The executive is currently disputing the forfeiture of these shares. On March 18, 2016, the Company issued 2,300,000 Shares of Series B Convertible Preferred Stock (“Series B Shares”) to each of Thomas A. Hyde Jr. and Robert L. Winspear (each a “Holder” and collectively the “Holders”) at a price of $0.05 per share pursuant to subscription agreements between the Company and the Holders. Mr. Hyde is the President, Chief Executive Officer and a Director of the Company. Mr. Winspear is the Chief Financial Officer of the Company. The Series B Shares are convertible into shares of the Company’s common stock par value $0.0001 (“Common Stock”) on a ratio of 1-to-1, subject to adjustment for stock splits and stock dividends. The Series B Shares rank senior to the Common Stock and other preferred shares and carry a liquidation preference of $.05 per share. Holders of the Series B Shares are entitled to receive dividends declared on the Company’s Common Stock on an as converted basis. Each Series B Share entitles the Holder thereof to 20 votes per share on all matters subject to voting by holders of the Company’s Common Stock. The issuance of a total of 4,600,000 shares of Series B Shares, entitles the Holders thereof to vote a combined 92,000,000 shares. Under the terms of the Series B Shares, the Company has the right to require a Holder to convert the Series B Shares into Common Stock at any time after the Holder resigns, is terminated or otherwise ceases to be an officer of the Company. In addition, the Company has the right at any time after July 18, 2016 to repurchase and retire all but not less than all of the Series B Preferred Stock for $0.05 per share provided that it gives notice to the Holder of the Company’s intent to redeem the shares and the Holder does not elect to convert the Series B Shares into Common Stock in lieu of the redemption. In connection with the issuance of the Series B Shares, the Company and the Holders executed a Stockholders Agreement (the “Agreement”) whereby the Holders agreed to not to initiate directly or indirectly any stockholder vote or action, by written consent or otherwise, to increase the size or structure of the Company’s board of directors or remove any existing director, nor initiate directly or indirectly any stockholder vote or action by written consent or otherwise, to affect Holders’ executive compensation, bonus criteria and amounts, or other similar action. The Holders also agreed to convert the Series B Shares immediately upon termination, whether voluntary or involuntary, or upon their resignation for any reason. |
Acquisition Of Subsidiary
Acquisition Of Subsidiary | 3 Months Ended |
Mar. 31, 2016 | |
Acquisition of Subsidiary [Abstract] | |
ACQUISITION OF SUBSIDIARY | 8 . ACQUISITION OF SUBSIDIARY Pro Forma Financial Information The information that follows provides supplemental information about pro forma revenues and net income (loss) attributable to the Company as if the acquisition of Calpian’s US assets had been consummated as of January 1, 2015. Such information is unaudited and is based on estimates and assumptions which the Company believes are reasonable. These results are not necessarily indicative of the consolidated statements of operations in future periods or the results that would have actually been realized had the Company and Calpian been a combined entity during 2015. Selected Pro Forma Financial Information Excel Calpian US Operations Pro Forma Revenues $ 1,153,709 $ 4,487,397 $ 5,641,106 Net income attributable to the Company $ (523,940 ) $ 901,492 $ 377,552 Net loss attributable to the Company per common share - basic and diluted $ (0.005 ) $ 0.009 $ 0.004 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2016 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 9 . PROPERTY AND EQUIPMENT Property and equipment consists of the following as of March 31, 2016 and December 31, 2015: March 31, December 31, Computer software $ 44,319 $ 35,595 Equipment 124,730 123,074 Furniture & fixtures 33,336 33,336 Leasehold improvements 3,471 3,471 Total cost 205,856 195,476 Less accumulated depreciation and amortization (36,649 ) (10,516 ) Property and equipment – net $ 169,207 $ 184,960 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2016 | |
Leases [Abstract] | |
LEASES | 10 . LEASES The Company executed a lease for its corporate offices in Irving Texas. The lease began on November 1, 2014 and has a term of 63 months with monthly payments ranging from $0 to $6,428. eVance leases its Georgia office facilities under an operating lease expiring in June 2016. Monthly lease payments range from $2,248 to $7,295 throughout the term of the lease. Total rent expense for the three months ended March 31, 2016 was $132,623, compared to $100,524 for the three months ended March 31, 2015. The future minimum lease payments required under long-term operating leases as of March 31, 2016 are as follows: 2016 $ 78,062 2017 74,270 2018 75,648 2019 and after 83,454 Total $ 311,434 |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Contingencies [Abstract] | |
CONTINGENCIES | 11 . CONTINGENCIES On December 23, 2015, a former employee filed a complaint against Securus alleging, among other things, interference with the Oregon Family Leave Act and unlawful employment practices. The former employee is seeking $500,000 in economic and non-economic damages. The Company intends to defend the matter vigorously. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2016 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | 12. NOTES PAYABLE The following summarizes the Company’s current outstanding notes payable: March 31, December 31, Note payable to BAV, due in monthly installments of $48,333 through May 2017, including simple interest at 15%, secured by the Company’s residual portfolio $ 578,411 $ 681,361 Note payable to SME Funding LLC, due December 1,2016, bearing simple interest at 12%, secured by the Company’s residual portfolio 500,000 500,000 Notes payable due December 1, 2016, bearing interest at 12%, secured by the assets of eVance 8,029,916 8,029,916 Total 9,108,327 9,211,277 Less current portion (9,014,711 ) (8,984,544 ) Long-term portion of notes payable $ 93,616 $ 226,733 Future maturities of notes as of March 31, 2016 are as follows: 2016 9,014,711 2017 93,616 Total $ 9,108,327 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 13. RELATED PARTY TRANSACTIONS On February 15, 2016, SME Funding LLC purchased $35,000 of the Company’s residuals for $700,000 cash pursuant to a residual purchase agreement (“RPA”). Under the terms of the RPA, the Company is obliged to maintain the residual at $35,000 for a period of 20 months. In addition, the Company has the right to repurchase the residuals for $770,000 until October 17, 2017. As a result of the repurchase option, the Company accounted for the transaction as a liability and not as a sale. The $700,000 is included in other long term liabilities on the accompanying balance sheet. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS On April 12, 2016, eVance entered into an agreement with the Sellers and a cancellation of securities acknowledgement with one of eVance’s note holders whereby the noteholder cancelled their note in the amount of $720,084 and Calpian issued eVance a note in the amount of $675,000 in exchange for eVance and the Sellers mutually waiving any claims either party has or could have under the Purchase Agreement against one another. The $675,000 note bears simple interest of 12% per annum payable monthly and matures on November 30, 2017. As part of the Purchase Agreement, eVance acquired several residual portfolios including the supporting contracts (residual purchase agreements). eVance, as successor under one of these residual purchase agreements, has sued a third party for breach of contract on the residual purchase agreement between the third party and Seller and has claimed damages in excess of $1,500,000. eVance has agreed to apply any recovery from such litigation (less costs) against the principle balance of the $675,000 note up to a maximum of $675,000. The Company reflected the reduction in the assumed debt by $720,084 as a reduction in goodwill and a reduction in the debt assumed. In addition, the noteholder returned a warrant to purchase 360,042 shares of the Company’s common stock. On April 30, 2016, Securus entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Chyp LLC (“Chyp”). In connection with the Purchase Agreement, Chyp executed a three year preferred marketing agreement with eVance. Chyp acquired substantially all of the operations of Securus including its sales and marketing operations located in Portland Oregon and West Palm Beach Florida. Securus retained its approximately 5,000 merchants and related merchant processing residual portfolio. Securus also retained substantially all of its liabilities, including but not limited to, its note payable with Blue Acre Ventures, trade payables as well as liabilities to merchants. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | 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 (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods. These unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. |
Reclassification | Reclassification Certain prior period amounts have been reclassified to conform to the current period’s presentation. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Discontinued Operations [Abstract] | |
Schedule of discontinued operations | Quarter Ended 2016 2015 Revenues $ 1,683,135 $ 800,281 Operating expenses (3,030,164 ) (1,780,286 ) Pre-tax loss from discontinued operations (1,347,029 ) (980,005 ) Income tax benefit - - Loss from discontinued operations, net of tax $ (1,347,029 ) $ (980,005 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
Schedule of provision for income taxes | Three months Ended Three months Ended Income Tax Expense CONTINUING OPERATIONS DISCONTINUED OPERATIONS TOTAL CONTINUING OPERATIONS DISCONTINUED OPERATIONS TOTAL Current $ 80,022 $ (809,438 ) $ (729,416 ) $ 168,744 $ (362,602 ) $ (193,858 ) Deferred (80,022 ) 809,438 729,416 (168,744 ) 362,602 193,858 Total $ - $ - $ - $ - $ - $ - |
Acquisition Of Subsidiary (Tabl
Acquisition Of Subsidiary (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Acquisition of Subsidiary [Abstract] | |
Schedule of selected proforma financial information | Selected Pro Forma Financial Information Excel Calpian US Operations Pro Forma Revenues $ 1,153,709 $ 4,487,397 $ 5,641,106 Net income attributable to the Company $ (523,940 ) $ 901,492 $ 377,552 Net loss attributable to the Company per common share - basic and diluted $ (0.005 ) $ 0.009 $ 0.004 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Property and Equipment [Abstract] | |
Schedule of property and equipment | March 31, December 31, Computer software $ 44,319 $ 35,595 Equipment 124,730 123,074 Furniture & fixtures 33,336 33,336 Leasehold improvements 3,471 3,471 Total cost 205,856 195,476 Less accumulated depreciation and amortization (36,649 ) (10,516 ) Property and equipment – net $ 169,207 $ 184,960 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Leases [Abstract] | |
Schedule of future minimum lease payments | 2016 $ 78,062 2017 74,270 2018 75,648 2019 and after 83,454 Total $ 311,434 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Notes Payable [Abstract] | |
Schedule of notes payable | March 31, December 31, Note payable to BAV, due in monthly installments of $48,333 through May 2017, including simple interest at 15%, secured by the Company’s residual portfolio $ 578,411 $ 681,361 Note payable to SME Funding LLC, due December 1,2016, bearing simple interest at 12%, secured by the Company’s residual portfolio 500,000 500,000 Notes payable due December 1, 2016, bearing interest at 12%, secured by the assets of eVance 8,029,916 8,029,916 Total 9,108,327 9,211,277 Less current portion (9,014,711 ) (8,984,544 ) Long-term portion of notes payable $ 93,616 $ 226,733 |
Schedule of future maturities | 2016 9,014,711 2017 93,616 Total $ 9,108,327 |
Organization and Operations (De
Organization and Operations (Details) | 3 Months Ended | |||
Mar. 31, 2016Subsidiary | Nov. 30, 2015USD ($) | Feb. 17, 2015 | Apr. 21, 2014 | |
Organization and Operations (Textual) | ||||
Number of wholly owned subsidiaries | Subsidiary | 3 | |||
Membership interest percentage | 90.00% | 100.00% | ||
Notes payable | $ | $ 8,279,916 | |||
Acquisition of sales and marketing operations description | Chyp acquired substantially all of the operations of Securus including its sales and marketing operations located in Portland Oregon and West Palm Beach Florida. Securus retained its approximately 5,000 merchants and related merchant processing residual portfolio. |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Discontinued Operations [Abstract] | ||
Revenues | $ 1,683,135 | $ 800,281 |
Operating expenses | (3,030,164) | (1,780,286) |
Pre-tax loss from discontinued operations | $ (1,347,029) | $ (980,005) |
Income tax benefit | ||
Loss from discontinued operations, net of tax | $ (1,347,029) | $ (980,005) |
Discontinued Operations (Deta29
Discontinued Operations (Details Textual) | 3 Months Ended | |
Mar. 31, 2016USD ($)Merchants | Mar. 31, 2015USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of merchants | Merchants | 5,000 | |
Loss of disposal of operations | $ 840,641 | |
Charges of discontinued operations | $ 550,000 | |
Chyp LlC [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Description of discontinued operations | Pursuant to the Purchase Agreement, Securus will provide financial assistance to Chyp in the form of a forgivable loan to support the transition of Securus' operations to Chyp. Securus will advance Chyp $75,000 per month for six months and $50,000 in the seventh and eighth months for a total of $550,000. Accordingly, Chyp has executed a $550,000 promissory note (the ''Chyp Note'') in favor of the Securus. | |
Percentage of interest rate | 12.00% | |
Charges of discontinued operations | $ 290,641 |
Income Taxes (Details )
Income Taxes (Details ) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Tax Expense | ||
Current | $ 80,022 | $ 168,744 |
Deferred | $ (80,022) | $ (168,744) |
Total | ||
Continuing Operations [Member] | ||
Income Tax Expense | ||
Current | $ 80,022 | $ 168,744 |
Deferred | $ (80,022) | $ (168,744) |
Total | ||
Discontinued Operations [Member] | ||
Income Tax Expense | ||
Current | $ (809,438) | $ (362,602) |
Deferred | $ 809,438 | $ 362,602 |
Total |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Taxes (Textual) | ||
Rate of valuation allowance on the deferred tax benefit | 100.00% | |
Operating loss carryforwards | $ 2,685,954 | $ 2,232,683 |
Deferred tax benefits | $ (80,022) | $ (168,744) |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Jun. 01, 2015 | Nov. 30, 2015 | Mar. 31, 2016 | Mar. 18, 2016 |
Stockholders' Equity (Textual) | ||||
Common stock share issued description | Company issued two shares of Series A Preferred Stock to the two previous members of Securus. | |||
Preferred stock exchange description | As long as a former member holds at least 9,000,000 shares of the Company's common stock, then the member has the right to exchange his share of preferred stock for a 24.5% share of the membership interests of Securus upon a change of control in Securus (as defined). | |||
Fair value of maturity date | 5 years | |||
Fair value of risk-free interest rate | 2.23% | |||
Fair value of volatility rate | 8.53% | |||
Shares issued price per share | $ 0.05 | |||
Thomas A. Hyde, Jr. [Member] | ||||
Stockholders' Equity (Textual) | ||||
Issued shares of Series B Convertible preferred stock | 2,300,000 | |||
Shares issued price per share | $ 0.05 | |||
Preferred stock voting rights | Each Series B Share entitles the Holder thereof to 20 votes per share on all matters subject to voting by holders of the Company's Common Stock. The issuance of a total of 4,600,000 shares of Series B Shares, entitles the Holders thereof to vote a combined 92,000,000 shares. | |||
Stock splits description | The Series B Shares are convertible into shares of the Company's common stock par value $0.0001 (''Common Stock'') on a ratio of 1-to-1, subject to adjustment for stock splits and stock dividends. | |||
Number of options granted | 2,000,000 | |||
Number of options vested | 500,000 | |||
Number of options forfeited | 1,500,000 | |||
Thomas A. Hyde, Jr. [Member] | June 1, 2016 [Member] | ||||
Stockholders' Equity (Textual) | ||||
Number of options vested | 500,000 | |||
Thomas A. Hyde, Jr. [Member] | June 1, 2017 [Member] | ||||
Stockholders' Equity (Textual) | ||||
Number of options vested | 500,000 | |||
Thomas A. Hyde, Jr. [Member] | June 1, 2018 [Member] | ||||
Stockholders' Equity (Textual) | ||||
Number of options vested | 500,000 | |||
Chief Financial Officer [Member] | ||||
Stockholders' Equity (Textual) | ||||
Shares issued price per share | $ 0.05 | |||
Calpian Inc | ||||
Stockholders' Equity (Textual) | ||||
Exercise price | $ 0.05 | |||
Common stock shares issued | 5,452,458 | |||
Warrants expire date | Nov. 30, 2025 |
Acquisition Of Subsidiary (Deta
Acquisition Of Subsidiary (Details) | 3 Months Ended |
Mar. 31, 2015USD ($)$ / shares | |
Pro Forma [Member] | |
Business Acquisition [Line Items] | |
Revenues | $ 5,641,106 |
Net income attributable to the Company | $ 377,552 |
Net loss attributable to the Company per common share - basic and diluted | $ / shares | $ 0.004 |
Excel [Member] | |
Business Acquisition [Line Items] | |
Revenues | $ 1,153,709 |
Net income attributable to the Company | $ (523,940) |
Net loss attributable to the Company per common share - basic and diluted | $ / shares | $ (0.005) |
Calpian US Operations [Member] | |
Business Acquisition [Line Items] | |
Revenues | $ 4,487,397 |
Net income attributable to the Company | $ 901,492 |
Net loss attributable to the Company per common share - basic and diluted | $ / shares | $ 0.009 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 205,856 | $ 195,476 |
Less accumulated depreciation and amortization | (36,649) | (10,516) |
Property and equipment - net | 169,207 | 184,960 |
Computer software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 44,319 | 35,595 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 124,730 | 123,074 |
Furniture & fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 33,336 | 33,336 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 3,471 | $ 3,471 |
Leases (Details)
Leases (Details) | Mar. 31, 2016USD ($) |
Future Minimum Lease Payments | |
2,016 | $ 78,062 |
2,017 | 74,270 |
2,018 | 75,648 |
2019 and after | 83,454 |
Total | $ 311,434 |
Leases (Details Textual)
Leases (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating Loss Carryforwards [Line Items] | ||
Rent expense | $ 132,623 | $ 100,524 |
Operating lease term | 63 months | |
Irving Texas [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating lease expiration date | Nov. 1, 2014 | |
Irving Texas [Member] | Maximum [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Monthly lease payments | $ 6,428 | |
Irving Texas [Member] | Minimum [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Monthly lease payments | $ 0 | |
Georgia [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating lease expiration date | Jun. 30, 2016 | |
Georgia [Member] | Maximum [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Monthly lease payments | $ 7,295 | |
Georgia [Member] | Minimum [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Monthly lease payments | $ 2,248 |
Contingencies (Details)
Contingencies (Details) | 1 Months Ended |
Dec. 23, 2015USD ($) | |
Contingencies (Textual) | |
Seeking damages | $ 500,000 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Notes payable | $ 9,108,327 | $ 9,211,277 |
Less current portion | (9,014,711) | (8,984,544) |
Long-term portion of notes payable | 93,616 | 226,733 |
Secured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | 578,411 | 681,361 |
Secured Debt One [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | 500,000 | 500,000 |
Secured Debt Two [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | $ 8,029,916 | $ 8,029,916 |
Notes Payable (Details 1)
Notes Payable (Details 1) | Mar. 31, 2016USD ($) |
Future maturities of notes | |
2,016 | $ 9,014,711 |
2,017 | 93,616 |
Total | $ 9,108,327 |
Notes Payable (Details Textual)
Notes Payable (Details Textual) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Secured Debt [Member] | |
Notes Payable (Textual) | |
Monthly installments | $ 48,333 |
Interest Rate | 15.00% |
Maturity date for re-purchase | May 31, 2017 |
Secured Debt One [Member] | |
Notes Payable (Textual) | |
Interest Rate | 12.00% |
Maturity date for re-purchase | Dec. 1, 2016 |
Secured Debt Two [Member] | |
Notes Payable (Textual) | |
Interest Rate | 12.00% |
Maturity date for re-purchase | Dec. 1, 2016 |
Related Party Transactions (Det
Related Party Transactions (Details) - SME Funding LLC [Member] - Residual Purchase Agreement [Member] | 1 Months Ended |
Feb. 15, 2016USD ($) | |
Related Party Transactions (Textual) | |
Sale of residual portfolio to SME Funding LLC | $ 35,000 |
Cash from sale of residual portfolio | $ 700,000 |
Residual purchase agreement, Description | Under the terms of the RPA, the Company is obliged to maintain the residual at $35,000 for a period of 20 months. |
Right to repurchase the residuals | $ 770,000 |
Other long term liabilities | $ 700,000 |
Subsequent Events (Details)
Subsequent Events (Details) | Apr. 12, 2016USD ($)shares | Mar. 31, 2016USD ($)Merchants | Dec. 31, 2015USD ($) |
Subsequent Event [Line Items] | |||
Notes payable | $ 9,108,327 | $ 9,211,277 | |
Number of merchants | Merchants | 5,000 | ||
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Litigation amount | $ 675,000 | ||
Damages claim amount | $ 1,500,000 | ||
Subsequent Event [Member] | eVance [Member] | |||
Subsequent Event [Line Items] | |||
Warrant to purchase of common stock | shares | 360,042 | ||
Notes payable | $ 675,000 | ||
Debt instrument rate stated percentage | 12.00% | ||
Debt instrument principal amount | $ 675,000 | ||
Cancelled note | $ 720,084 | ||
Maturity date for re-purchase | Nov. 30, 2017 |