Filed 15 May 19

Document And Entity Information

Document And Entity Information - shares3 Months Ended
Mar. 31, 2019May 10, 2019
Document And Entity Information
Entity Registrant NamePAYMENT DATA SYSTEMS INC
Entity Central Index Key0001088034
Trading Symbolpyds
Current Fiscal Year End Date--12-31
Entity Filer CategorySmaller Reporting Company
Entity Current Reporting StatusYes
Entity Common Stock, Shares Outstanding (in shares)16,899,874
Document Type10-Q
Document Period End DateMar. 31,
2019
Document Fiscal Year Focus2019
Document Fiscal Period FocusQ1
Amendment Flagfalse

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)Mar. 31, 2019Dec. 31, 2018
Current assets:
Cash and cash equivalents $ 4,465,718 $ 2,695,177
Accounts receivable, net1,134,767 1,214,355
Settlement processing assets35,173,205 44,139,861
Prepaid expenses and other241,569 101,722
Notes receivable, net108,750 108,750
Current assets before merchant reserves41,124,009 48,259,865
Merchant reserves11,297,894 12,645,803
Total current assets52,421,903 60,905,668
Property and equipment, net1,849,035 1,932,660
Other assets:
Intangibles, net3,426,427 3,676,427
Deferred tax asset1,394,000 1,394,000
Operating lease right-of-use assets2,616,128
Other assets320,831 306,757
Total other assets7,757,386 5,377,184
Total assets62,028,324 68,215,512
Current liabilities:
Accounts payable220,375 308,178
Accrued expenses1,957,044 1,388,196
Operating lease liabilities, current portion184,570
Settlement processing obligations35,173,205 44,139,861
Deferred revenues5,000 20,000
Current liabilities before merchant reserve obligations37,540,194 45,856,235
Merchant reserve obligations11,297,894 12,645,803
Total current liabilities48,838,088 58,502,038
Non-current liabilities:
Operating lease liabilities, non-current portion2,564,923
Deferred rent0 79,748
Total liabilities51,403,011 58,581,786
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at March 31, 2019 (unaudited) and December 31, 2018, respectively0 0
Common stock, $0.001 par value, 200,000,000 shares authorized; 17,961,132 and 17,129,680 issued, and 16,863,222 and 16,043,630 outstanding at March 31, 2019 (unaudited) and December 31, 2018, respectively186,392 185,561
Additional paid-in capital76,429,299 74,568,627
Treasury stock, at cost; 1,097,910 and 1,086,050 shares at March 31, 2019 (unaudited) and December 31, 2018, respectively(1,835,368)(1,813,546)
Deferred compensation(6,045,880)(6,270,675)
Accumulated deficit(58,109,130)(57,036,241)
Total stockholders’ equity10,625,313 9,633,726
Total liabilities and stockholders’ equity $ 62,028,324 $ 68,215,512

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parentheticals) - $ / sharesMar. 31, 2019Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares)10,000,000 10,000,000
Preferred stock, shares outstanding (in shares)0 0
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares)200,000,000 200,000,000
Common stock, shares issued (in shares)17,961,132 17,129,680
Common stock, shares outstanding (in shares)16,863,222 16,043,630
Treasury stock, shares (in shares)1,097,910 1,086,050

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)3 Months Ended
Mar. 31, 2019Mar. 31, 2018
Income Statement [Abstract]
Revenues $ 6,588,032 $ 5,843,665
Cost of services5,252,301 4,572,758
Gross profit1,335,731 1,270,907
Selling, general and administrative:
Stock-based compensation283,408 374,378
Other expenses1,661,739 1,498,651
Depreciation and amortization486,548 458,663
Total selling, general and administrative expenses2,431,695 2,331,692
Operating (loss)(1,095,964)(1,060,785)
Other income and (expense):
Interest income23,074 11,521
Other income (expense)1 (1,542)
Other income and (expense), net23,075 9,979
(Loss) before income taxes(1,072,889)(1,050,806)
Income taxes0 0
Net (loss) $ (1,072,889) $ (1,050,806)
Basic (loss) per common share (in dollars per share) $ (0.09) $ (0.09)
Diluted (loss) per common share (in dollars per share) $ (0.09) $ (0.09)
Weighted average common shares outstanding
Basic (in shares)12,621,857 12,026,622
Diluted (in shares)12,621,857 12,026,622

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)3 Months Ended
Mar. 31, 2019Mar. 31, 2018
Operating activities:
Net (loss) $ (1,072,889) $ (1,050,806)
Adjustments to reconcile net (loss) to net cash (used) by operating activities:
Depreciation236,548 208,662
Amortization250,000 250,001
Non-cash stock based compensation283,408 374,378
Amortization of warrant costs8,985 0
Changes in current assets and current liabilities:
Accounts receivable79,588 77,518
Prepaid expenses and other(139,847)(192,569)
Operating lease right-of-use assets(2,616,128)
Other assets(14,074)(25,125)
Accounts payable and accrued expenses481,045 (74,161)
Operating lease liabilities2,749,493
Merchant reserves(1,347,909)102,765
Deferred revenue(15,000)90,250
Deferred rent(79,748)0
Net cash (used) by operating activities(1,196,528)(239,087)
Investing activities:
Purchases of property and equipment(152,923)(29,502)
Net cash (used) by investing activities(152,923)(29,502)
Financing activities:
Proceeds from public offering, net of expenses1,793,905 0
Purchases of treasury stock(21,822)(956,134)
Net cash provided (used) by financing activities1,772,083 (956,134)
Change in cash, cash equivalents and merchant reserves422,632 (1,224,723)
Cash, cash equivalents and merchant reserves, beginning of period15,340,980 19,778,022
Cash, cash equivalents and merchant reserves, end of period15,763,612 18,553,299
Supplemental disclosure of cash flow information:
Interest0 0
Income taxes $ 0 $ 0

Consolidated Statement of Chang

Consolidated Statement of Changes in Stockholders' Equity - USD ($)TotalPrivate PlacementCommon StockCommon StockPrivate PlacementAdditional Paid - In CapitalAdditional Paid - In CapitalPrivate PlacementTreasury StockDeferred CompensationAccumulated Deficit
Beginning balance (in shares) at Dec. 31, 201716,874,235
Beginning balance at Dec. 31, 2017 $ 13,123,353 $ 186,299 $ 74,041,083 $ (831,059) $ (7,012,544) $ (53,260,426)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under equity incentive plan (in shares)68,889
Issuance of common stock under equity incentive plan147,300 $ 69 147,231
Deferred compensation amortization227,078 227,078
Purchase of treasury stock(956,134)(956,134)
Net (loss)(1,050,806)(1,050,806)
Ending balance (in shares) at Mar. 31, 201816,943,124
Ending balance at Mar. 31, 201811,490,791 $ 186,368 74,188,314 (1,787,193)(6,785,466)(54,311,232)
Beginning balance (in shares) at Dec. 31, 201817,129,680
Beginning balance at Dec. 31, 20189,633,726 $ 185,561 74,568,627 (1,813,546)(6,270,675)(57,036,241)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock, public offering (shares)769,230
Issuance of common stock, public offering $ 1,793,905 $ 769 $ 1,793,136
Issuance of common stock under equity incentive plan (in shares)62,222
Issuance of common stock under equity incentive plan58,613 $ 62 58,551
Warrant compensation costs8,985 8,985
Deferred compensation amortization224,795 224,795
Purchase of treasury stock(21,822)(21,822)
Net (loss)(1,072,889)(1,072,889)
Ending balance (in shares) at Mar. 31, 201917,961,132
Ending balance at Mar. 31, 2019 $ 10,625,313 $ 186,392 $ 76,429,299 $ (1,835,368) $ (6,045,880) $ (58,109,130)

Basis of Presentation

Basis of Presentation3 Months Ended
Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of PresentationBasis of Presentation The accompanying unaudited interim condensed consolidated financial statements of Payment Data Systems, Inc. and its subsidiaries (the “Company”) have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, the accompanying interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position, results of operations and cash flows for such periods. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2018 , as filed with the Securities and Exchange Commission on March 27, 2019. Results of operations for interim periods are not necessarily indicative of results that may be expected for any other interim periods or the full fiscal year. Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition: Revenue consists primarily of fees generated through the electronic processing of payment transactions and related services. Revenue is recognized during the period in which the transactions are processed or when the related services are performed. The Company complies with ASC 606-10 and reports revenues as gross as a principal versus net as an agent. Although some of the Company's processing agreements vary with respect to specific credit risks, the Company has determined for each agreement it is acting in the principal role. Merchants may be charged for these processing services at a bundled rate based on a percentage of the dollar amount of each transaction and, in some instances, additional fees are charged for each transaction. Certain merchant customers are charged a flat fee per transaction, while others may also be charged miscellaneous fees, including fees for chargebacks or returns, monthly minimums, and other miscellaneous services. Revenues derived from electronic processing of credit, debit, and prepaid card transactions that are authorized and captured through third-party networks are reported gross of amounts paid to sponsor banks as well as interchange and assessments paid to credit card associations. Sales taxes billed are reported directly as a liability to the taxing authority and are not included in revenue. Deferred Revenues: The Company records deferred revenues when it receives payments or issues invoices in advance of transferring control of promised goods or services to a customer. The advance consideration received from a customer is deferred until the Company provides the customer that product or service. At March 31, 2019 and December 31, 2018, respectively, the deferred revenues totaled $5,000 and $20,000 . Cash and Cash Equivalents: Cash and cash equivalents includes cash and other money market instruments. The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents. Merchant Reserves: The Company has merchant reserve requirements associated with Automated Clearing House ("ACH") transactions. The merchant reserve assets are carried on the Company's balance sheet with a corresponding liability. Merchant Reserves are set for each merchant. Funds are collected from each merchant and held as collateral to minimize contingent liabilities associated with any losses that may occur under the merchant agreement. While this cash is not restricted in its use, the Company believes that designating this cash to collateralize Merchant Reserves strengthens our fiduciary standing with the Company's member sponsors and is in accordance with the guidelines set by the card networks. The reconciliation of cash and cash equivalents to cash, cash equivalents and merchant reserves is as follows for each period presented: March 31, 2019 March 31, 2018 Beginning cash, cash equivalents and merchant reserves: Cash and cash equivalents 2,695,177 4,800,554 Merchant reserves 12,645,803 14,977,468 Total $ 15,340,980 $ 19,778,022 Ending cash, cash equivalents and merchant reserves: Cash and cash equivalents 4,465,718 3,473,066 Merchant reserves 11,297,894 15,080,233 Total $ 15,763,612 $ 18,553,299 Allowance for Estimated Losses: The Company maintains an allowance for estimated doubtful accounts receivable resulting from the inability or failure of the Company’s customers to make required payments. The Company determines the allowance for estimated doubtful accounts receivable losses based on an account-by-account review, taking into consideration such factors as the age of the outstanding balance, historical pattern of collections and financial condition of the customer. Past losses incurred by the Company due to bad debts have been within its expectations. If the financial conditions of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make contractual payments, additional allowances might be required. Estimates for doubtful account losses are variable based on the volume of transactions processed and could increase or decrease accordingly. At March 31, 2019 and December 31, 2018 , the Company’s allowance for estimated doubtful accounts was $50,575 and $55,212 , respectively. Accounting for Internal Use Software: The Company capitalizes the costs associated with software being developed or obtained for internal use when both the preliminary project stage is completed and it is probable that computer software being developed will be completed and placed-in service. Capitalized costs include only (i) external direct costs of materials and services consumed in developing or obtaining internal-use software, (ii) payroll and other related costs for employees who are directly associated with and who devote time to the internal-use software project, and (iii) interest costs incurred, when material, while developing internal-use software. The Company ceases capitalization of such costs no later than the point at which the project is substantially complete and ready for its intended purpose. In the three months ended March 31, 2019 and March 31, 2018 , the Company capitalized $140,043 and $15,878 , respectively of such costs. Valuation of Long-Lived and Intangible Assets: The Company assesses the impairment of long-lived and intangible assets at least annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important, which could trigger an impairment review, include the following: significant under performance relative to historical or projected future cash flows; significant changes in the manner of use of the assets or the strategy of the overall business; and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured as the excess of the assets’ carrying value over the estimated fair value. No impairment losses were recorded in 2018 or during the three months ended March 31, 2019 . Management is not aware of any impairment changes that may currently be required; however, the Company cannot predict the occurrence of events that might adversely affect the reported values in the future. Reserve for Processing Losses: If, due to insolvency or bankruptcy of one of the Company’s merchant customers, or for any other reason, the Company is not able to collect amounts from its credit card, ACH or prepaid customers that have been properly "charged back" by the customer, or if a prepaid cardholder incurs a negative balance, the Company must bear the credit risk for the full amount of the transaction. The Company may require cash deposits and other types of collateral from certain merchants to minimize any such risk. In addition, the Company utilizes multiple systems and procedures to manage merchant risk. ACH, prepaid and credit card merchant processing loss reserves are primarily determined by performing a historical analysis of the Company’s loss experience and considering other factors that could affect that experience in the future, such as the types of transactions processed and nature of the merchant relationship with its consumers and the Company’s relationship with the Company’s prepaid card holders. This reserve amount is subject to the risk that actual losses may be greater than the Company’s estimates. The Company has not incurred any significant processing losses to date. Estimates for processing losses are variable based on the volume of transactions processed and could increase or decrease accordingly. At March 31, 2019 and December 31, 2018 , the Company’s reserve for processing losses was $407,153 and $374,153 , respectively. Recently Adopted Accounting Pronouncements: In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and a subsequent amendment to the standard in March 2016, ASU 2016-08, Revenue from Contracts with Customers, Principal versus Agent Consideration (Reporting Revenue Gross versus Net). The original standard provides guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognizes revenue to 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. The amendment to the standard clarifies implementation guidance on principal versus agent considerations. Adoption of the new standards is effective for reporting periods beginning after December 15, 2017, with early adoption not permitted. The Company has adopted the provisions of this new standard beginning January 1, 2018. The Company functions as the merchant of record and has primary responsibility for providing end-to-end payment processing services for its clients. The customers of the Company contract with the Company for all credit card processing services including transaction authorization, settlement, dispute resolution, security and risk management solutions, reporting and other value-added services. As such, the Company is the primary obligor in these transactions and is solely responsible for all processing costs, including interchange fees. Further, the Company sets prices as it deems reasonable for each merchant. The gross fees the Company collects are intended to cover the interchange, assessments and other processing fees and include the Company's margin on transactions processed. For these reasons, the Company is the principal obligor in the contractual relationship with its customers and therefor, the Company records its revenues, including interchange and assessments on a gross basis. The Company's existing revenue recognition process remains intact, and the Company will continue to record revenues at the gross amount billed due to the Company's primary responsibility for providing end-to-end payment processing services for its clients. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash , which requires that the reconciliation of the beginning of period and the end of period amounts shown in the statement of cash flows include restricted cash and restricted cash equivalents. If restricted cash is presented separately from cash and cash equivalents on the balance sheet, companies will be required to reconcile the amounts presented on the statement of cash flows to the amounts on the balance sheet. This guidance is required to be applied retrospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. As required, the Company applied the provisions of ASU 2016-18 as of January 1, 2018. As a result, the change in restricted cash has been included in the change in cash, cash equivalents and merchant reserves. Operating Leases Right-of use Assets and Operating Lease Liabilities: In February 2016, the FASB issued, "Leases (Topic 842)." This update requires that a lessee recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing it right to use the underlying asset for the lease term. For leases with terms of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities. Similar to current guidance, the update continues to differentiate between finance leases and operating leases, however this distinction now primarily relates to differences in the manner of expense recognition over time and in the classification of lease payments in the statement of cash flows. The updated guidance leaves the accounting for leases by lessors largely unchanged from existing GAAP. The guidance became effective for the Company on January 1, 2019. As a lessee, this standard primarily impacted its accounting for leased facilities and office equipment, for which the Company recognized right of use assets of $2,688,412 and a corresponding lease liability of $2,775,259 on the Company's consolidated balance sheet on January 1, 2019. The Company adopted these provisions on January 1, 2019 using the optional transition method that permits the Company to apply the new disclosure requirements in 2019 and continue to present comparative period information as required under FASB ASC Topic 840, "Leases." The Company did not have a cumulative-effect adjustment to the opening balance of retained earnings at the date of adoption. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed it to exclude leases with an initial term of 12 months or less from the right-of-use assets and liabilities. Adoption of the standards had no impact on the Company's results of operations or liquidity. If the Company determines that an arrangement is or contains a lease, the Company recognizes a right-of-use (ROU) asset and lease liability at the commencement date of the lease. ROU assets represent it's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation which expands the scope of current guidance to include all share-based payment arrangements related to the acquisition of goods or services from both non-employees and employees. The guidance is effective for the Company for all fiscal years beginning after December 15, 2018. The adoption of the new standard did not result in a change to the previously presented financial statements. Accounting standards that have been issued or proposed by the FASB, the SEC or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Leases

Leases3 Months Ended
Mar. 31, 2019
Leases [Abstract]
LeasesLeases The Company leases facilities and office equipment under various operating leases, which generally are expected to be renewed or replaced by other leases. For the three-month periods ended March 31, 2019 and 2018, operating lease expense totaled $103,522 and $71,839 , respectively. Maturities of lease liabilities are as follows at March 31, 2019. March 31, 2019 Operating Leases 2019 (Remaining 9 months) $ 226,743 2020 336,301 2021 336,644 2022 344,554 2023 350,915 Thereafter 1,823,669 Total minimum lease payments $ 3,418,826 Less imputed interest $ (669,333 ) Total lease liabilities $ 2,749,493

Note Receivable

Note Receivable3 Months Ended
Mar. 31, 2019
Receivables [Abstract]
Note ReceivableNote Receivable Under a loan and security agreement dated February 2, 2016, the Company loaned a principal amount of $200,000 to C2Go, Inc. with an interest rate of 10% per annum for a term of 18 months. The loan was secured by a first lien on all assets of C2Go. C2Go defaulted under the note by failing to repay the loan plus interest on August 2, 2017. On December 7, 2017, the Company entered into a note purchase and settlement agreement with C2Go and Mercury Investment Partners LLC. Pursuant to the note purchase and settlement agreement, Mercury Investment Partners agreed to purchase the note and the rights secured by the security agreement with all rights and obligations and to pay to a sum of $200,000 in three installments. The first installment of $50,000 was paid on December 7, 2017. The second installment of $50,000 was due on April 30, 2018, and the remaining amount of $100,000 was due on October 31, 2018. In return, the Company agreed to waive all interest due and payable under the terms of the C2Go loan. Mercury Investment Partners has not paid the amount due April 30, 2018 or the amount due on October 31, 2018. The Company issued a letter of default. The Company agreed to extend the due date of the $50,000 payment due April 30, 2018 to May 16, 2018. $5,000 of the $50,000 due was received on July 5, 2018. On or about August 14, 2018, a notice of default was sent to Mercury Investment Partners. Mercury Investment Partners did not respond to the letter or make payment in full to the Company. On September 4, 2018, the Company filed suit against Mercury Investment Partners in Bexar County District Court. The default judgment against Mercury Investment Partners was granted on December 21, 2018. The Company retained the services of legal counsel represent the Company in collecting on the judgment. Counsel is preparing the documents to domesticate the Texas judgment. There are no assurances that the Company will be able to recover the remaining $145,000 principal and there are no assurances there will be any assets for the Company to recover from its lien on all the assets of C2Go if payment in full of the obligation is not made. Due to the uncertainty of the situation and “more likely than not” recognition threshold, the Company recorded a $72,500 loss reserve on the note receivable for the periods from June 30, 2018 through September 30, 2018. Given the granting of the default judgment in Texas and the steps underway by legal counsel to domesticate the Texas judgment, the loss reserve was reduced to $36,250 from December 31, 2018 through March 31, 2019 reflecting a "more likely than not" recognition threshold.

Accrued Expenses

Accrued Expenses3 Months Ended
Mar. 31, 2019
Payables and Accruals [Abstract]
Accrued ExpensesAccrued Expenses Accrued expenses consisted of the following balances: March 31, 2019 December 31, 2018 Accrued commissions $ 246,601 $ 243,317 Reserve for merchant losses 407,153 374,153 Other accrued expenses 1,037,027 582,720 Accrued taxes 82,852 80,888 Accrued salaries 183,411 107,118 Total accrued expenses $ 1,957,044 $ 1,388,196

Stockholders' Equity

Stockholders' Equity3 Months Ended
Mar. 31, 2019
Equity [Abstract]
Stockholders' EquityStockholders' Equity Stock Warrants : On August 21, 2018, the Company issued University Fancards, LLC a warrant to purchase 150,000 shares of the Company's common stock. 30,000 warrants vested immediately upon the date on which the first financial transaction was processed on a card account issued under the prepaid agreement, which occurred on October 5, 2018. 120,000 warrants vest annually over 4 years in 30,000 warrant increments beginning on July 31, 2019 and becoming fully vested on July 31, 2022. The exercise price for the 30,000 warrants that vested immediately on October 5, 2018 was $1.80 per share. The exercise price for the remaining 120,000 warrants will be the lesser of $2.00 per share or one hundred and twenty percent ( 120% ) of the market price of the Company's common stock on the vesting date of the warrant. The warrants were valued using the Black-Scholes option pricing model. Assumptions used were as follows: (i) the fair value of the underlying stock was $0.94 for the 30,000 warrants and $0.90 for the 120,000 warrants; (ii) the risk-free interest rate is 2.77% ; (iii) the contractual life is 5 years; (iv) the dividend yield of 0% ; and (v) the volatility is 64.6% . The fair value of the warrants amounted to $135,764 and will be amortized over the life of the warrants as a reduction of revenues. The reduction of revenues recorded for the quarter ended March 31, 2019 was $8,985 . There were no stock warrants issued as of March 31, 2018.

Net (Loss) Per Share

Net (Loss) Per Share3 Months Ended
Mar. 31, 2019
Earnings Per Share [Abstract]
Net (Loss) Per ShareNet (Loss) Per Share Basic (loss) per share (EPS) was computed by dividing net (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted EPS differs from basic EPS due to the assumed conversion of potentially dilutive awards and options that were outstanding during the period. The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for net (loss) for the three months ended March 31, 2019 and March 31, 2018 . Three Months Ended March 31, 2019 2018 Numerator: Numerator for basic and diluted (loss) per share, net income (loss) available to common shareholders $ (1,072,889 ) $ (1,050,806 ) Denominator: Denominator for basic (loss) per share, weighted average shares outstanding 12,621,857 12,026,622 Effect of dilutive securities — — Denominator for diluted earnings per share, adjust weighted average shares and assumed conversion 12,621,857 12,026,622 Basic (loss) per common share $ (0.09 ) $ (0.09 ) Diluted (loss) per common share and common share equivalent $ (0.09 ) $ (0.09 ) The awards and options to purchase shares of common stock that were outstanding at March 31, 2019 and March 31, 2018 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows: Three Months Ended March 31, 2019 2018 Anti-dilutive awards and options 3,874,935 3,877,750

Income Taxes

Income Taxes3 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]
Income TaxesIncome Taxes Deferred tax assets and liabilities are recorded based on the difference between financial reporting and tax basis of assets and liabilities and are measured by the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Deferred tax assets are computed with the presumption that they will be realizable in future periods when taxable income is generated. Predicting the ability to realize these assets in future periods requires judgment by management. U.S. generally accepted accounting principles prescribe a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Income tax benefits that meet the “more likely than not” recognition threshold should be recognized. Goodwill is amortized over 15 years for tax purposes. The Company has recognized a deferred tax asset of approximately $1.4 million and has recorded a valuation allowance of approximately $8.9 million to reduce the other deferred tax assets. The Company reviews the assessment of the deferred tax asset and valuation allowance on an annual basis or more often when events indicate a change to the valuation allowance may be warranted. At December 31, 2018, the Company had available net operating loss carryforwards of approximately $45.3 million , which expire beginning in the year 2022. Approximately $0.1 million of the total net operating loss carryforward is subject to an IRS Section 382 limitation from 1999. Management is not aware of any tax positions that would have a significant impact on the Company’s financial position.

Related Party Transactions

Related Party Transactions3 Months Ended
Mar. 31, 2019
Related Party Transactions [Abstract]
Related Party TransactionsRelated Party Transactions Louis Hoch During the three months ended March 31, 2019 and the year ended December 31, 2018 , the Company purchased a total of $843 and $9,476 , respectively, of corporate imprinted sportswear and caps from Angry Pug Sportswear. Louis Hoch, the Company’s President and Chief Executive Officer, is a 50% owner of Angry Pug Sportswear. Miguel Chapa and Louis Hoch During the three months ended March 31, 2019 and the year ended December 31, 2018 , the Company received $1,334 and $26,709 , respectively, in revenue from Lush Rooftop. Miguel Chapa, a member of the Company’s Board of Directors, is an owner of Lush Rooftop. Louis Hoch, the Company’s President and Chief Executive Officer, is also a minority owner in Lush Rooftop. During the three months ended March 31, 2019 and the year ended December 31, 2018 , the Company received $3,072 and $4,525 in revenue from BLVD Bar and Lounge. Miguel Chapa, a member of the Company's Board of Directors, is an owner in BLVD Bar and Lounge. Louis Hoch, the Company’s President and Chief Executive Officer, is also an owner in BLVD Bar and Lounge. Directors and Officers On January 6, 2019, the Company repurchased 11,860 of common stock at a closing price on January 6, 2019 of $1.84 per share from Tom Jewell, the Company's Chief Financial Officer to cover taxes due. On January 8, 2018 and January 9, 2018, the Company repurchased 397,845 shares for $956,128 in a private transaction at the closing prices on January 8, 2018 and January 9, 2018 from officers, employees and director's to cover the respective employees', officers' and directors' share of taxes for shares that vested on that day, as approved by the Audit Committee and the Board of Directors on the same day, with the respective officers and directors recusing themselves. In particular, the Company repurchased the following shares from Named Executive Officers and directors: • Michael Long (Chairman of the Board): 158,476 shares valued at $2.40 per share or total of $380,342 ; • Louis Hoch (President and Chief Executive Officer): 158,476 shares valued at $2.40 per share or total of $380,342 ; and • Tom Jewell (Chief Financial Officer): 13,060 shares valued at $2.50 per share or total of $32,650 .

Legal Proceedings

Legal Proceedings3 Months Ended
Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Legal ProceedingsLegal Proceedings Under a loan and security agreement dated February 2, 2016, the Company loaned a principal amount of $200,000 to C2Go, Inc. with an interest rate of 10% per annum for a term of 18 months. The loan was secured by a first lien on all assets of C2Go. C2Go defaulted under the note by failing to repay the loan plus interest on August 2, 2017. On December 7, 2017, the Company entered into a note purchase and settlement agreement with C2Go and Mercury Investment Partners LLC. Pursuant to the note purchase and settlement agreement, Mercury Investment Partners agreed to purchase the note and the rights secured by the security agreement with all rights and obligations and to pay to us a sum of $200,000 in three installments. The first installment of $50,000 was paid on December 7, 2017. The second installment of $50,000 was due on April 30, 2018, and the remaining amount of $100,000 was due on October 31, 2018. In return, the Company agreed to waive all interest due and payable under the terms of the C2Go loan. Mercury Investment Partners has not paid the amount due April 30, 2018 or the amount due on October 31, 2018. The Company issued a letter of default. The Company agreed to extend the due date of the $50,000 payment due April 30, 2018 to May 16, 2018. $5,000 of the $50,000 due was received on July 5, 2018. On or about August 14, 2018, a notice of default was sent to Mercury Investment Partners. Mercury Investment Partners did not respond to the letter or make payment in full. On September 4, 2018, FiCentive filed suit against Mercury Investment Partners in Bexar County District Court. The court granted a default judgment against Mercury Investment Partners on December 21, 2018. The Company is taking steps to domesticate the Texas judgment and to collect its debt. There are no assurances that the Company will be able to recover the remaining $145,000 principal, and there are no assurances there will be any assets for the Company to recover from our lien on all the assets of C2Go if payment in full of the obligation is not made. Due to the uncertainty of the situation and “more likely than not” recognition threshold, we recorded a $72,500 loss reserve on the note receivable from June 30, 2018 through September 30, 2018. Given the granting of the default judgment in Texas and the steps underway by legal counsel to domesticate the Texas judgment, the loss reserve has been reduced to $36,250 from December 31, 2018 through March 31, 2019 reflecting a "more likely than not" recognition threshold. Aside from the lawsuit described above, the Company may be involved in legal matters arising in the ordinary course of business from time to time. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is or could become involved in litigation will not have a material adverse effect on its business, financial condition or results of operations.

Basis of Presentation (Policies

Basis of Presentation (Policies)3 Months Ended
Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of PresentationBasis of Presentation The accompanying unaudited interim condensed consolidated financial statements of Payment Data Systems, Inc. and its subsidiaries (the “Company”) have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, the accompanying interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position, results of operations and cash flows for such periods. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2018 , as filed with the Securities and Exchange Commission on March 27, 2019. Results of operations for interim periods are not necessarily indicative of results that may be expected for any other interim periods or the full fiscal year.
Use of EstimatesUse of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue RecognitionRevenue Recognition: Revenue consists primarily of fees generated through the electronic processing of payment transactions and related services. Revenue is recognized during the period in which the transactions are processed or when the related services are performed. The Company complies with ASC 606-10 and reports revenues as gross as a principal versus net as an agent. Although some of the Company's processing agreements vary with respect to specific credit risks, the Company has determined for each agreement it is acting in the principal role. Merchants may be charged for these processing services at a bundled rate based on a percentage of the dollar amount of each transaction and, in some instances, additional fees are charged for each transaction. Certain merchant customers are charged a flat fee per transaction, while others may also be charged miscellaneous fees, including fees for chargebacks or returns, monthly minimums, and other miscellaneous services. Revenues derived from electronic processing of credit, debit, and prepaid card transactions that are authorized and captured through third-party networks are reported gross of amounts paid to sponsor banks as well as interchange and assessments paid to credit card associations. Sales taxes billed are reported directly as a liability to the taxing authority and are not included in revenue.
Deferred RevenueDeferred Revenues: The Company records deferred revenues when it receives payments or issues invoices in advance of transferring control of promised goods or services to a customer. The advance consideration received from a customer is deferred until the Company provides the customer that product or service.
Cash and Cash EquivalentsCash and Cash Equivalents: Cash and cash equivalents includes cash and other money market instruments. The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents.
Merchant ReservesMerchant Reserves: The Company has merchant reserve requirements associated with Automated Clearing House ("ACH") transactions. The merchant reserve assets are carried on the Company's balance sheet with a corresponding liability. Merchant Reserves are set for each merchant. Funds are collected from each merchant and held as collateral to minimize contingent liabilities associated with any losses that may occur under the merchant agreement. While this cash is not restricted in its use, the Company believes that designating this cash to collateralize Merchant Reserves strengthens our fiduciary standing with the Company's member sponsors and is in accordance with the guidelines set by the card networks.
Allowance for Estimated LossesAllowance for Estimated Losses: The Company maintains an allowance for estimated doubtful accounts receivable resulting from the inability or failure of the Company’s customers to make required payments. The Company determines the allowance for estimated doubtful accounts receivable losses based on an account-by-account review, taking into consideration such factors as the age of the outstanding balance, historical pattern of collections and financial condition of the customer. Past losses incurred by the Company due to bad debts have been within its expectations. If the financial conditions of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make contractual payments, additional allowances might be required. Estimates for doubtful account losses are variable based on the volume of transactions processed and could increase or decrease accordingly.
Accounting for Internal Use SoftwareAccounting for Internal Use Software: The Company capitalizes the costs associated with software being developed or obtained for internal use when both the preliminary project stage is completed and it is probable that computer software being developed will be completed and placed-in service. Capitalized costs include only (i) external direct costs of materials and services consumed in developing or obtaining internal-use software, (ii) payroll and other related costs for employees who are directly associated with and who devote time to the internal-use software project, and (iii) interest costs incurred, when material, while developing internal-use software. The Company ceases capitalization of such costs no later than the point at which the project is substantially complete and ready for its intended purpose.
Valuation of Long-Lived and Intangible AssetsValuation of Long-Lived and Intangible Assets: The Company assesses the impairment of long-lived and intangible assets at least annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important, which could trigger an impairment review, include the following: significant under performance relative to historical or projected future cash flows; significant changes in the manner of use of the assets or the strategy of the overall business; and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured as the excess of the assets’ carrying value over the estimated fair value. No impairment losses were recorded in 2018 or during the three months ended March 31, 2019 . Management is not aware of any impairment changes that may currently be required; however, the Company cannot predict the occurrence of events that might adversely affect the reported values in the future.
Reserve for Processing LossesReserve for Processing Losses: If, due to insolvency or bankruptcy of one of the Company’s merchant customers, or for any other reason, the Company is not able to collect amounts from its credit card, ACH or prepaid customers that have been properly "charged back" by the customer, or if a prepaid cardholder incurs a negative balance, the Company must bear the credit risk for the full amount of the transaction. The Company may require cash deposits and other types of collateral from certain merchants to minimize any such risk. In addition, the Company utilizes multiple systems and procedures to manage merchant risk. ACH, prepaid and credit card merchant processing loss reserves are primarily determined by performing a historical analysis of the Company’s loss experience and considering other factors that could affect that experience in the future, such as the types of transactions processed and nature of the merchant relationship with its consumers and the Company’s relationship with the Company’s prepaid card holders. This reserve amount is subject to the risk that actual losses may be greater than the Company’s estimates. The Company has not incurred any significant processing losses to date. Estimates for processing losses are variable based on the volume of transactions processed and could increase or decrease accordingly.
Recently Adopted Accounting PronouncementsRecently Adopted Accounting Pronouncements: In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and a subsequent amendment to the standard in March 2016, ASU 2016-08, Revenue from Contracts with Customers, Principal versus Agent Consideration (Reporting Revenue Gross versus Net). The original standard provides guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognizes revenue to 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. The amendment to the standard clarifies implementation guidance on principal versus agent considerations. Adoption of the new standards is effective for reporting periods beginning after December 15, 2017, with early adoption not permitted. The Company has adopted the provisions of this new standard beginning January 1, 2018. The Company functions as the merchant of record and has primary responsibility for providing end-to-end payment processing services for its clients. The customers of the Company contract with the Company for all credit card processing services including transaction authorization, settlement, dispute resolution, security and risk management solutions, reporting and other value-added services. As such, the Company is the primary obligor in these transactions and is solely responsible for all processing costs, including interchange fees. Further, the Company sets prices as it deems reasonable for each merchant. The gross fees the Company collects are intended to cover the interchange, assessments and other processing fees and include the Company's margin on transactions processed. For these reasons, the Company is the principal obligor in the contractual relationship with its customers and therefor, the Company records its revenues, including interchange and assessments on a gross basis. The Company's existing revenue recognition process remains intact, and the Company will continue to record revenues at the gross amount billed due to the Company's primary responsibility for providing end-to-end payment processing services for its clients. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash , which requires that the reconciliation of the beginning of period and the end of period amounts shown in the statement of cash flows include restricted cash and restricted cash equivalents. If restricted cash is presented separately from cash and cash equivalents on the balance sheet, companies will be required to reconcile the amounts presented on the statement of cash flows to the amounts on the balance sheet. This guidance is required to be applied retrospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. As required, the Company applied the provisions of ASU 2016-18 as of January 1, 2018. As a result, the change in restricted cash has been included in the change in cash, cash equivalents and merchant reserves. Operating Leases Right-of use Assets and Operating Lease Liabilities: In February 2016, the FASB issued, "Leases (Topic 842)." This update requires that a lessee recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing it right to use the underlying asset for the lease term. For leases with terms of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities. Similar to current guidance, the update continues to differentiate between finance leases and operating leases, however this distinction now primarily relates to differences in the manner of expense recognition over time and in the classification of lease payments in the statement of cash flows. The updated guidance leaves the accounting for leases by lessors largely unchanged from existing GAAP. The guidance became effective for the Company on January 1, 2019. As a lessee, this standard primarily impacted its accounting for leased facilities and office equipment, for which the Company recognized right of use assets of $2,688,412 and a corresponding lease liability of $2,775,259 on the Company's consolidated balance sheet on January 1, 2019. The Company adopted these provisions on January 1, 2019 using the optional transition method that permits the Company to apply the new disclosure requirements in 2019 and continue to present comparative period information as required under FASB ASC Topic 840, "Leases." The Company did not have a cumulative-effect adjustment to the opening balance of retained earnings at the date of adoption. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed it to exclude leases with an initial term of 12 months or less from the right-of-use assets and liabilities. Adoption of the standards had no impact on the Company's results of operations or liquidity. If the Company determines that an arrangement is or contains a lease, the Company recognizes a right-of-use (ROU) asset and lease liability at the commencement date of the lease. ROU assets represent it's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation which expands the scope of current guidance to include all share-based payment arrangements related to the acquisition of goods or services from both non-employees and employees. The guidance is effective for the Company for all fiscal years beginning after December 15, 2018. The adoption of the new standard did not result in a change to the previously presented financial statements. Accounting standards that have been issued or proposed by the FASB, the SEC or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Basis of Presentation (Tables)

Basis of Presentation (Tables)3 Months Ended
Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of cash and cash equivalentsThe reconciliation of cash and cash equivalents to cash, cash equivalents and merchant reserves is as follows for each period presented: March 31, 2019 March 31, 2018 Beginning cash, cash equivalents and merchant reserves: Cash and cash equivalents 2,695,177 4,800,554 Merchant reserves 12,645,803 14,977,468 Total $ 15,340,980 $ 19,778,022 Ending cash, cash equivalents and merchant reserves: Cash and cash equivalents 4,465,718 3,473,066 Merchant reserves 11,297,894 15,080,233 Total $ 15,763,612 $ 18,553,299
Restrictions on cash and cash equivalentsThe reconciliation of cash and cash equivalents to cash, cash equivalents and merchant reserves is as follows for each period presented: March 31, 2019 March 31, 2018 Beginning cash, cash equivalents and merchant reserves: Cash and cash equivalents 2,695,177 4,800,554 Merchant reserves 12,645,803 14,977,468 Total $ 15,340,980 $ 19,778,022 Ending cash, cash equivalents and merchant reserves: Cash and cash equivalents 4,465,718 3,473,066 Merchant reserves 11,297,894 15,080,233 Total $ 15,763,612 $ 18,553,299

Leases (Tables)

Leases (Tables)3 Months Ended
Mar. 31, 2019
Leases [Abstract]
Schedule of maturities of lease liabilitiesMaturities of lease liabilities are as follows at March 31, 2019. March 31, 2019 Operating Leases 2019 (Remaining 9 months) $ 226,743 2020 336,301 2021 336,644 2022 344,554 2023 350,915 Thereafter 1,823,669 Total minimum lease payments $ 3,418,826 Less imputed interest $ (669,333 ) Total lease liabilities $ 2,749,493

Accrued Expenses (Tables)

Accrued Expenses (Tables)3 Months Ended
Mar. 31, 2019
Payables and Accruals [Abstract]
Schedule of accrued expensesAccrued expenses consisted of the following balances: March 31, 2019 December 31, 2018 Accrued commissions $ 246,601 $ 243,317 Reserve for merchant losses 407,153 374,153 Other accrued expenses 1,037,027 582,720 Accrued taxes 82,852 80,888 Accrued salaries 183,411 107,118 Total accrued expenses $ 1,957,044 $ 1,388,196

Net (Loss) Per Share (Tables)

Net (Loss) Per Share (Tables)3 Months Ended
Mar. 31, 2019
Earnings Per Share [Abstract]
Schedule of the numerators and the denominators of the basic and diluted per share computations for net (loss)The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for net (loss) for the three months ended March 31, 2019 and March 31, 2018 . Three Months Ended March 31, 2019 2018 Numerator: Numerator for basic and diluted (loss) per share, net income (loss) available to common shareholders $ (1,072,889 ) $ (1,050,806 ) Denominator: Denominator for basic (loss) per share, weighted average shares outstanding 12,621,857 12,026,622 Effect of dilutive securities — — Denominator for diluted earnings per share, adjust weighted average shares and assumed conversion 12,621,857 12,026,622 Basic (loss) per common share $ (0.09 ) $ (0.09 ) Diluted (loss) per common share and common share equivalent $ (0.09 ) $ (0.09 )
Schedule of the awards and options to purchase shares of common stock that were outstandingThe awards and options to purchase shares of common stock that were outstanding at March 31, 2019 and March 31, 2018 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows: Three Months Ended March 31, 2019 2018 Anti-dilutive awards and options 3,874,935 3,877,750

Basis of Presentation (Details)

Basis of Presentation (Details) - USD ($)3 Months Ended12 Months Ended
Mar. 31, 2019Mar. 31, 2018Dec. 31, 2018Jan. 01, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Deferred revenues $ 5,000 $ 20,000
Allowance for estimated doubtful accounts50,575 55,212
Capitalized computer software, additions140,043 $ 15,878
Asset impairment charges0 0
Reserve for processing losses407,153 $ 374,153
Operating lease right-of-use assets2,616,128 $ 2,688,412
Operating lease, liability $ 2,749,493 $ 2,775,259

Basis of Presentation - Reconci

Basis of Presentation - Reconciliation of Cash and Cash Equivalents to Cash, Cash Equivalents and Merchant Reserves (Details) - USD ($)Mar. 31, 2019Dec. 31, 2018Mar. 31, 2018Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents $ 4,465,718 $ 2,695,177 $ 3,473,066 $ 4,800,554
Merchant reserves11,297,894 12,645,803 15,080,233 14,977,468
Total $ 15,763,612 $ 15,340,980 $ 18,553,299 $ 19,778,022

Leases (Details)

Leases (Details) - USD ($)3 Months Ended
Mar. 31, 2019Mar. 31, 2018Jan. 01, 2019
Leases [Abstract]
Operating lease expense $ 103,522
Operating lease expense $ 71,839
Operating Lease Liabilities, Payments Due [Abstract]
2019 (Remaining 9 months)226,743
2020336,301
2021336,644
2022344,554
2023350,915
Thereafter1,823,669
Total minimum lease payments3,418,826
Less imputed interest(669,333)
Total lease liabilities $ 2,749,493 $ 2,775,259

Note Receivable (Details)

Note Receivable (Details)Dec. 07, 2017USD ($)installmentFeb. 02, 2016USD ($)Mar. 31, 2019USD ($)Dec. 31, 2018USD ($)Oct. 31, 2018USD ($)Sep. 30, 2018USD ($)Jul. 05, 2018USD ($)May 16, 2018USD ($)Apr. 30, 2018USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable, net $ 108,750 $ 108,750
C2Go Loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable, net $ 200,000
Notes receivable, stated interest rate10.00%
Notes receivable, term18 months
C2Go Loan | Defaults of Mutual Loan and Security Agreement | Settled Litigation | FiCentive, Inc. V. C2Go, Inc.
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amount awarded from other party $ 200,000
Number of installments | installment3
Gain related to litigation settlement $ 50,000
Unrecorded amount145,000 $ 100,000 $ 50,000 $ 50,000
Former gain contingency, recognized in current period $ 5,000
Loss reserve $ 36,250 $ 72,500

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($)Mar. 31, 2019Dec. 31, 2018
Payables and Accruals [Abstract]
Accrued commissions $ 246,601 $ 243,317
Reserve for merchant losses407,153 374,153
Other accrued expenses1,037,027 582,720
Accrued taxes82,852 80,888
Accrued salaries183,411 107,118
Total accrued expenses $ 1,957,044 $ 1,388,196

Stockholders' Equity (Details)

Stockholders' Equity (Details) - USD ($)Aug. 21, 2018Mar. 31, 2019Oct. 05, 2018Aug. 31, 2018Mar. 31, 2018
Class of Warrant or Right, Common Stock
Class of Warrant or Right [Line Items]
Number of securities called by warrants (in shares)150,000
Warrants and rights outstanding $ 135,764
Warrants outstanding, reduction of revenue during period $ 8,985
Warrant issued (in shares)0
Class of Warrant or Right, Common Stock, Tranche One
Class of Warrant or Right [Line Items]
Number of securities called by warrants (in shares)30,000 30,000
Exercise price of warrants (in dollars per share) $ 1.80
Class of Warrant or Right, Common Stock, Tranche Two through Five
Class of Warrant or Right [Line Items]
Number of securities called by warrants (in shares)120,000
Warrants, term4 years
Exercise price of warrants, maximum percentage of market price of common stock120.00%
Class of Warrant or Right, Common Stock, Tranche Two through Five | Maximum
Class of Warrant or Right [Line Items]
Exercise price of warrants (in dollars per share) $ 2
Class of Warrant or Right, Common Stock, Tranche Two
Class of Warrant or Right [Line Items]
Number of securities called by warrants (in shares)30,000
Class of Warrant or Right, Common Stock, Tranche Three
Class of Warrant or Right [Line Items]
Number of securities called by warrants (in shares)30,000
Class of Warrant or Right, Common Stock, Tranche Four
Class of Warrant or Right [Line Items]
Number of securities called by warrants (in shares)30,000
Class of Warrant or Right, Common Stock, Tranche Five
Class of Warrant or Right [Line Items]
Number of securities called by warrants (in shares)30,000
Measurement Input, Share Price | Class of Warrant or Right, Common Stock, Tranche One
Class of Warrant or Right [Line Items]
Warrants, measurement input0.94
Measurement Input, Share Price | Class of Warrant or Right, Common Stock, Tranche Two through Five
Class of Warrant or Right [Line Items]
Warrants, measurement input0.90
Measurement Input, Risk Free Interest Rate | Class of Warrant or Right, Common Stock
Class of Warrant or Right [Line Items]
Warrants, measurement input0.0277
Measurement Input, Expected Term | Class of Warrant or Right, Common Stock
Class of Warrant or Right [Line Items]
Warrants, measurement input5
Measurement Input, Expected Dividend Rate | Class of Warrant or Right, Common Stock
Class of Warrant or Right [Line Items]
Warrants, measurement input0
Measurement Input, Price Volatility | Class of Warrant or Right, Common Stock
Class of Warrant or Right [Line Items]
Warrants, measurement input0.646

Net (Loss) Per Share - Earnings

Net (Loss) Per Share - Earnings per Share Numerator and Denominator (Details) - USD ($)3 Months Ended
Mar. 31, 2019Mar. 31, 2018
Numerator:
Numerator for basic and diluted (loss) per share, net income (loss) available to common shareholders $ (1,072,889) $ (1,050,806)
Denominator:
Denominator for basic (loss) per share, weighted average shares outstanding (in shares)12,621,857 12,026,622
Effect of dilutive securities (in shares)0 0
Denominator for diluted earnings per share, adjust weighted average shares and assumed conversion (in shares)12,621,857 12,026,622
Basic (loss) per common share (in dollars per share) $ (0.09) $ (0.09)
Diluted (loss) per common share and common share equivalent (in dollars per share) $ (0.09) $ (0.09)

Net (Loss) Per Share - Antidilu

Net (Loss) Per Share - Antidilutive Securities Excluded from Calculation of EPS (Details) - shares3 Months Ended
Mar. 31, 2019Mar. 31, 2018
Earnings Per Share [Abstract]
Anti-dilutive awards and options (in shares)3,874,935 3,877,750

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2019Dec. 31, 2018
Income Tax Disclosure [Abstract]
Goodwill amortization period15 years
Deferred tax assets, net $ 1.4
Deferred tax assets, valuation allowance $ 8.9
Operating loss carryforwards $ 45.3
Portion subject to an IRS Section 382 limitation from 1999
Income Tax Contingency [Line Items]
Operating loss carryforwards, limitations on use, amount $ 0.1

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)Jan. 06, 2019Jan. 09, 2018Mar. 31, 2019Mar. 31, 2018Dec. 31, 2018
Related Party Transaction [Line Items]
Revenues $ 6,588,032 $ 5,843,665
Treasury stock, value, acquired21,822 $ 956,134
Louis Hoch
Related Party Transaction [Line Items]
Treasury stock acquired (in shares)158,476
Treasury stock acquired, average cost per share (in dollars per share) $ 2.40
Treasury stock, value, acquired $ 380,342
Louis Hoch | Ownership of Angry Pug Sportswear
Related Party Transaction [Line Items]
Purchases from related party $ 843 $ 9,476
Ownership percentage50.00%
Miguel Chapa | Ownership of Lush Rooftop
Related Party Transaction [Line Items]
Revenues $ 1,334 26,709
Miguel Chapa | Ownership of BLVD Bar and Lounge
Related Party Transaction [Line Items]
Revenues $ 3,072 $ 4,525
Tom Jewell
Related Party Transaction [Line Items]
Treasury stock acquired (in shares)11,860 13,060
Treasury stock acquired, average cost per share (in dollars per share) $ 1.84 $ 2.50
Treasury stock, value, acquired $ 32,650
Officers, Employees and Directors
Related Party Transaction [Line Items]
Treasury stock acquired (in shares)397,845
Treasury stock, value, acquired $ 956,128
Michael Long
Related Party Transaction [Line Items]
Treasury stock acquired (in shares)158,476
Treasury stock acquired, average cost per share (in dollars per share) $ 2.40
Treasury stock, value, acquired $ 380,342

Legal Proceedings (Details)

Legal Proceedings (Details)Dec. 07, 2017USD ($)installmentFeb. 02, 2016USD ($)Mar. 31, 2019USD ($)Dec. 31, 2018USD ($)Oct. 31, 2018USD ($)Sep. 30, 2018USD ($)Jul. 05, 2018USD ($)May 16, 2018USD ($)Apr. 30, 2018USD ($)
Loss Contingencies [Line Items]
Notes receivable, net $ 108,750 $ 108,750
C2Go Loan
Loss Contingencies [Line Items]
Notes receivable, net $ 200,000
Notes receivable, stated interest rate10.00%
Notes receivable, term18 months
C2Go Loan | Defaults of Mutual Loan and Security Agreement | FiCentive, Inc. V. C2Go, Inc. | Settled Litigation
Loss Contingencies [Line Items]
Amount awarded from other party $ 200,000
Number of installments | installment3
Gain related to litigation settlement $ 50,000
Unrecorded amount145,000 $ 100,000 $ 50,000 $ 50,000
Former gain contingency, recognized in current period $ 5,000
Loss reserve $ 36,250 $ 72,500