Nevada
|
98-0190072
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
3611 Paesanos Parkway, Suite 300, San Antonio, TX
|
78231
|
(Address of principal executive offices)
|
(Zip Code)
|
Securities registered pursuant to Section 12(b) of the Act:
|
None.
|
|
|
Securities registered pursuant to Section 12(g) of the Act:
|
Common stock, par value $0.001 per share.
|
|
(Title of class)
|
Large accelerated filer [_]
|
Accelerated filer [_]
|
Non-accelerated filer [X]
|
Smaller reporting company [X]
|
|
Emerging Growth company [__]
|
|
Page
|
|
|
Signatures.
|
|
-
|
ACH payments exhibited accelerating growth, increasing 5.7% by number and 6.9% by value from 2016 to 2017.
|
-
|
Card payments continued to show robust growth from 2016 to 2017, collectively increasing 10.1% by number and 8.4% by value. These increases represent an acceleration in overall card payment growth compared with the previously reported 2015 to 2016 and 2012 to 2015 periods.
|
-
|
Since 2016, total card payments - the sum of credit card, non-prepaid debit card and prepaid debit card payments - increased 11.3 billion to reach 123.5 billion payments by number and increased $0.50 trillion to reach $6.48 trillion by value in 2017.
|
-
|
Within card payments, there was a surge in prepaid and non-prepaid debit card payments by number relative to credit card payments from 2016 to 2017, a change from previous reporting periods. Prepaid debit card payments had the highest growth rate, by number, at 10.5%, compared with 10.4% for non-prepaid debit card payments and 9.4% for credit card payments from 2016 to 2017.
|
-
|
Remote payments continued to grow as a share of total general-purpose card payments. The number of remote payments increased 22.8% from 2016 to 2017, compared with in-person payments, which grew 7.2%. Over the same period, the value of remote payments increased 14.8%, compared to in-person payments, which increased 4.4%.
|
-
|
Chip authenticated payments accounted for more than half of the value of in-person general-purpose card payments in 2017. Consistent with the 2015 and 2016 period, in-person chip-authenticated card payments continued to post substantial gains, increasing from 19.0% of all in-person general-purpose card payments by number and 26.4% by value in 2016 to 41.6% by number and 51.5% by value in 2017.
|
•
|
quality of service;
|
•
|
reliability of service;
|
•
|
ability to evaluate, undertake and manage risk;
|
•
|
ability to offer customized technology solutions;
|
•
|
speed in implementing payment processes;
|
•
|
price and other financial terms; and
|
•
|
multi-channel payment capability.
|
akim.bo;
|
|
doctorezpay.com;
|
|
paymentdatasystems.com;
|
akimbocard.com;
|
|
ficentive.com;
|
|
paymentrecovery.com;
|
akimbodeals.com;
|
|
fotogiftcards.com
|
|
paymentrecoverysystems.com;
|
akimbodebit.com;
|
|
givecarmen.com
|
|
paywithceleri.com;
|
akimboit.com;
|
|
gogreenmastercard.com;
|
|
paywithceleri.net;
|
akimbonews.com;
|
|
iremotepay.com;
|
|
pdsadmin.com;
|
akimbonow.com
|
|
iremotepay.net;
|
|
pdsnetwork.com;
|
akimboprepaid.com;
|
|
iremotepayments.com;
|
|
pftapi.com;
|
bill4u.com;
|
|
iremotepayments.net;
|
|
pftgateway.com;
|
billdelivery.com;
|
|
itshotcard.com;
|
|
prepaidload.com;
|
billhelp.com;
|
|
iwanttopaynow.com
|
|
primacard.com;
|
billserv.com;
|
|
kindhand.com;
|
|
securepds.com;
|
billx.com;
|
|
merchantmastercard.com;
|
|
singularbillpay.com;
|
billxpress.com;
|
|
merchantchamp.com;
|
|
singularbillpay.net;
|
britneycard.com;
|
|
merchantchampion.com;
|
|
singularpayments.biz;
|
cardbillpay.com
|
|
mipromesa.com;
|
|
singularpayments.com;
|
carddeposit.com
|
|
myakimbo.com;
|
|
singularpayments.info;
|
carmencard.com;
|
|
nataliecard.com;
|
|
singularpayments.net;
|
celeripay.com;
|
|
newsakimbo.com;
|
|
singularpayments.org;
|
celeripay.net;
|
|
nsfdebit.com;
|
|
stardebit.com;
|
cityofdawson.net;
|
|
omegabill.com;
|
|
stocktelevision.com;
|
clinicpay.com;
|
|
oneflatratemerchantaccount.com;
|
|
streamprepaid.com;
|
creditcardgateway.com;
|
|
parishiltoncard.com;
|
|
streamprepaidcard.com;
|
crpds.com;
|
|
patientpaytoday.com;
|
|
thatshotcard.com;
|
danicacard.com;
|
|
payfacinabox.com;
|
|
viewbill.com;
|
debitmax.com;
|
|
paymentdata.com;
|
|
ybill.com;
|
debitpin.com;
|
|
paymentdata.org;
|
|
zbill.com;
|
debitservice.com;
|
|
|
|
|
|
|
High
|
|
|
Low
|
|
||
2018
|
||||||||
First Quarter
|
|
$
|
3.39
|
|
|
$
|
1.43
|
|
Second Quarter
|
|
$
|
2.09
|
|
|
$
|
1.56
|
|
Third Quarter
|
|
$
|
2.05
|
|
|
$
|
1.57
|
|
Fourth Quarter
|
|
$
|
1.90
|
|
|
$
|
1.38
|
|
2017
|
||||||||
First Quarter
|
|
$
|
2.23
|
|
|
$
|
1.21
|
|
Second Quarter
|
|
$
|
2.65
|
|
|
$
|
1.17
|
|
Third Quarter
|
|
$
|
2.59
|
|
|
$
|
1.19
|
|
Fourth Quarter
|
|
$
|
4.10
|
|
|
$
|
1.35
|
|
|
Period
|
|
(a)
Total number of shares (or units) purchased
|
|
(b)
Average price paid per share (or unit)
|
|
(c)
Total number of shares (or units) purchased as part of publicly announced plans or programs
|
|
(d)
Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
|
||||||
November 1, 2018 to November 30, 2018
|
|
9,494
|
|
|
$
|
1.70
|
|
|
736,574
|
|
|
$
|
1,472,284
|
|
Total
|
|
9,494
|
|
|
|
|
|
|
|
$
|
1,472,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||
ASSETS
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
2,695,177
|
|
|
$
|
4,800,554
|
|
||
Accounts receivable, net
|
|
1,214,355
|
|
|
969,674
|
|
||||
Settlement processing assets
|
|
44,139,861
|
|
|
38,027,984
|
|
||||
Prepaid expenses and other
|
|
101,722
|
|
|
176,945
|
|
||||
Note receivable, net
|
|
108,750
|
|
|
150,000
|
|
||||
Current assets before merchant reserves
|
|
48,259,865
|
|
|
44,125,157
|
|
||||
Merchant reserves
|
|
12,645,803
|
|
|
14,977,468
|
|
||||
Total current assets
|
|
60,905,668
|
|
|
59,102,625
|
|
||||
|
|
|
|
|
||||||
Property and equipment, net
|
|
1,932,660
|
|
|
2,105,186
|
|
||||
|
|
|
|
|
||||||
Other assets:
|
|
|
|
|
|
|
||||
Intangibles, net
|
|
3,676,427
|
|
|
4,676,427
|
|
||||
Deferred tax asset
|
|
1,394,000
|
|
|
1,394,000
|
|
||||
Other assets
|
|
306,757
|
|
|
157,565
|
|
||||
Total other assets
|
|
5,377,184
|
|
|
6,227,992
|
|
||||
|
|
|
|
|
||||||
Total Assets
|
|
$
|
68,215,512
|
|
|
$
|
67,435,803
|
|
||
|
|
|
|
|
||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
||||
Current Liabilities:
|
|
|
|
|
|
|
||||
Accounts payable
|
|
$
|
308,178
|
|
|
$
|
300,736
|
|
||
Accrued expenses
|
|
1,388,196
|
|
|
1,006,262
|
|
||||
Settlement processing obligations
|
|
44,139,861
|
|
|
38,027,984
|
|
||||
Deferred revenues
|
|
20,000
|
|
|
—
|
|
||||
Current liabilities before merchant reserve obligations
|
|
45,856,235
|
|
|
39,334,982
|
|
||||
Merchant reserve obligations
|
|
12,645,803
|
|
|
14,977,468
|
|
||||
Total current liabilities
|
|
58,502,038
|
|
|
54,312,450
|
|
||||
|
|
|
|
|
||||||
Non-current liabilities:
|
|
|
|
|
||||||
Deferred rent
|
|
79,748
|
|
—
|
|
—
|
|
|||
Total liabilities
|
—
|
|
58,581,786
|
|
—
|
|
54,312,450
|
|
||
|
|
|
|
|
||||||
Stockholders' Equity:
|
|
|
|
|
|
|
||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares issued and outstanding in 2018 and 2017
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
||||||
Common stock, $0.001 par value, 200,000,000 shares authorized; 17,129,680 and 16,874,235 issued and 16,043,630 and 16,201,634 outstanding in 2018 and 2017 (see Note 11)
|
|
185,561
|
|
|
186,299
|
|
||||
Additional paid-in capital
|
|
74,568,627
|
|
|
74,041,083
|
|
||||
Treasury stock, at cost; 1,086,050 and 672,601 shares in 2018 and 2017 (see Note 11)
|
|
(1,813,546
|
)
|
|
(831,059
|
)
|
||||
Deferred compensation
|
|
(6,270,675
|
)
|
|
(7,012,544
|
)
|
||||
Accumulated deficit
|
|
(57,036,241
|
)
|
|
(53,260,426
|
)
|
||||
Total stockholders' equity
|
|
9,633,726
|
|
|
13,123,353
|
|
|
|
|
|
|
||||||
Total Liabilities and Stockholders' Equity
|
|
$
|
68,215,512
|
|
|
$
|
67,435,803
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Revenues
|
|
$
|
25,024,124
|
|
|
$
|
14,571,158
|
|
Cost of services
|
|
19,454,611
|
|
|
10,802,932
|
|
||
Gross profit
|
|
5,569,513
|
|
|
3,768,226
|
|
||
|
|
|
|
|
||||
Selling, general and administrative:
|
|
|
|
|
||||
Stock-based compensation
|
|
1,251,779
|
|
|
968,141
|
|
||
Other expenses
|
|
6,216,605
|
|
|
4,378,969
|
|
||
Depreciation and amortization
|
|
1,875,638
|
|
|
1,258,132
|
|
||
Total operating expenses
|
|
9,344,022
|
|
|
6,605,242
|
|
||
|
|
|
|
|
||||
Operating (loss)
|
|
(3,774,509
|
)
|
|
(2,837,016
|
)
|
||
|
|
|
|
|
||||
Other income:
|
|
|
|
|
|
|
||
Interest income
|
|
76,551
|
|
|
100,964
|
|
||
Other income (expense)
|
|
(77
|
)
|
|
1,583
|
|
||
Other income and (expense), net
|
|
76,474
|
|
|
102,547
|
|
||
|
|
|
|
|
||||
(Loss) before income taxes
|
|
(3,698,035
|
)
|
|
(2,734,469
|
)
|
||
Income taxes
|
|
77,780
|
|
|
274,316
|
|
||
|
|
|
|
|
||||
Net (Loss)
|
|
$
|
(3,775,815
|
)
|
|
$
|
(3,008,785
|
)
|
|
|
|
|
|
||||
Earnings (Loss) Per Share
|
|
|
|
|
|
|
||
Basic earnings (loss) per common share:
|
|
$
|
(0.31
|
)
|
|
$
|
(0.33
|
)
|
Diluted earnings (loss) per common share:
|
|
$
|
(0.31
|
)
|
|
$
|
(0.33
|
)
|
Weighted average common shares outstanding (see Note 12)
|
|
|
|
|
|
|
||
Basic
|
|
12,128,816
|
|
|
8,995,883
|
|
||
Diluted
|
|
12,128,816
|
|
|
8,995,883
|
|
|
|
|
|
|
|
Additional Paid - In Capital
|
|
Treasury Stock
|
|
Deferred Compensation
|
|
Accumulated Deficit
|
|
Total Stockholder's Equity
|
|||||||||||||
|
|
Common Stock
|
|
|
|
|
|
||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2016
|
|
12,392,288
|
|
|
$
|
181,818
|
|
|
$
|
63,881,365
|
|
|
$
|
(718,149
|
)
|
|
$
|
(4,082,025
|
)
|
|
$
|
(50,251,641
|
)
|
|
$
|
9,011,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Issuance of common stock, restricted
|
|
20,000
|
|
|
20
|
|
|
40,180
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,200
|
|
||||||
Issuance of common stock, employees, restricted
|
|
1,395,334
|
|
|
1,395
|
|
|
3,082,293
|
|
|
—
|
|
|
(3,083,688
|
)
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock under equity incentive plan
|
|
375,461
|
|
|
375
|
|
|
814,596
|
|
|
—
|
|
|
(630,000
|
)
|
|
—
|
|
|
184,971
|
|
||||||
Issuance of common stock, Singular Payments, LLC acquisition
|
|
1,515,152
|
|
|
1,515
|
|
|
3,498,485
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,500,000
|
|
||||||
Issuance of common stock, public offering
|
|
1,176,000
|
|
|
1,176
|
|
|
2,724,164
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,725,340
|
|
||||||
Deferred compensation amortization
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
783,169
|
|
|
—
|
|
|
783,169
|
|
||||||
Purchase of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(112,910
|
)
|
|
—
|
|
|
—
|
|
|
(112,910
|
)
|
||||||
Net (loss) for the year
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,008,785
|
)
|
|
(3,008,785
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2017
|
|
16,874,235
|
|
|
$
|
186,299
|
|
|
$
|
74,041,083
|
|
|
$
|
(831,059
|
)
|
|
$
|
(7,012,544
|
)
|
|
$
|
(53,260,426
|
)
|
|
$
|
13,123,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Issuance of common stock, restricted
|
|
5,000
|
|
|
5
|
|
|
7,906
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,911
|
|
||||||
Issuance of common stock, employees, restricted
|
|
175,000
|
|
|
175
|
|
|
303,575
|
|
|
—
|
|
|
(303,750
|
)
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock under equity incentive plan
|
|
142,112
|
|
|
142
|
|
|
355,618
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
355,760
|
|
||||||
Reversal of deferred compensation amortization that did not vest
|
|
(66,667
|
)
|
|
(1,060
|
)
|
|
(148,540
|
)
|
|
—
|
|
|
144,075
|
|
|
—
|
|
|
(5,525
|
)
|
||||||
Warrant compensation cost
|
|
—
|
|
|
—
|
|
|
8,985
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,985
|
|
||||||
Deferred compensation amortization
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
901,544
|
|
|
—
|
|
|
901,544
|
|
||||||
Purchase of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(982,487
|
)
|
|
—
|
|
|
—
|
|
|
(982,487
|
)
|
||||||
Net (loss) for the year
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
(3,775,815
|
)
|
|
$
|
(3,775,815
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2018
|
|
17,129,680
|
|
|
$
|
185,561
|
|
|
$
|
74,568,627
|
|
|
$
|
(1,813,546
|
)
|
|
$
|
(6,270,675
|
)
|
|
$
|
(57,036,241
|
)
|
|
$
|
9,633,726
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Operating Activities
|
|
|
|
|
|
|
||
Net (loss)
|
|
$
|
(3,775,815
|
)
|
|
$
|
(3,008,785
|
)
|
Adjustments to reconcile net (loss) to net cash (used) by operating activities:
|
|
|
|
|
|
|
||
Depreciation
|
|
875,638
|
|
|
761,660
|
|
||
Amortization
|
|
1,000,000
|
|
|
496,472
|
|
||
Bad debt expense
|
|
36,250
|
|
|
71,667
|
|
||
Non-cash stock-based compensation
|
|
1,251,779
|
|
|
968,141
|
|
||
Amortization of warrant costs
|
|
8,985
|
|
|
—
|
|
||
Issuance of stock to consultant
|
|
7,911
|
|
|
40,200
|
|
||
Deferred income tax
|
|
—
|
|
|
227,000
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||
Accounts receivable
|
|
(244,681
|
)
|
|
(133,591
|
)
|
||
Prepaid expenses and other
|
|
75,223
|
|
|
(34,916
|
)
|
||
Other assets
|
|
(149,192
|
)
|
|
43,243
|
|
||
Accounts payable and accrued expenses
|
|
389,376
|
|
|
458,632
|
|
||
Merchant reserves
|
|
(2,331,665
|
)
|
|
(826,173
|
)
|
||
Deferred revenue
|
|
20,000
|
|
|
—
|
|
||
Deferred rent
|
|
79,748
|
|
|
—
|
|
||
Net cash (used) by operating activities
|
|
(2,756,443
|
)
|
|
(936,450
|
)
|
||
|
|
|
|
|
||||
Investing Activities
|
|
|
|
|
|
|
||
Purchases of property and equipment
|
|
(703,112
|
)
|
|
(372,337
|
)
|
||
Purchase of Singular Payments, LLC
|
|
—
|
|
|
(900,000
|
)
|
||
Advance to Singular Payments, LLC
|
|
—
|
|
|
(600,000
|
)
|
||
Repayment of note receivable
|
|
5,000
|
|
|
50,000
|
|
||
Net cash (used) by investing activities
|
|
(698,112
|
)
|
|
(1,822,337
|
)
|
||
|
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
|
||
Proceeds from public offering, net of expenses
|
|
—
|
|
|
2,725,340
|
|
||
Purchases of treasury stock
|
|
(982,487
|
)
|
|
(112,910
|
)
|
||
Net cash (used) provided by financing activities
|
|
(982,487
|
)
|
|
2,612,430
|
|
||
|
|
|
|
|
||||
Change in cash, cash equivalents and merchant reserves
|
|
(4,437,042
|
)
|
|
(146,357
|
)
|
||
Cash, cash equivalents and merchant reserves, beginning of year
|
|
19,778,022
|
|
|
19,924,379
|
|
||
|
|
|
|
|
||||
Cash, Cash Equivalents and Merchant Reserves, End of Year
|
|
$
|
15,340,980
|
|
|
$
|
19,778,022
|
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
||
Cash paid during the period for:
|
|
|
|
|
||||
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
Income taxes
|
|
49,000
|
|
|
45,000
|
|
||
Non-cash transactions:
|
|
|
|
|
||||
Issuance of common stock in exchange for purchases of Singular Payments, LLC
|
|
—
|
|
|
3,500,000
|
|
||
Forgiveness of note receivable in exchange for purchase of Singular Payments, LLC
|
|
—
|
|
|
600,000
|
|
||
Issuance of deferred stock compensation
|
|
303,750
|
|
|
3,713,688
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
|
|
|
|
||||
Beginning cash, cash equivalents and merchant reserves:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
4,800,554
|
|
|
$
|
4,120,738
|
|
Merchant reserves
|
|
14,977,468
|
|
|
15,803,641
|
|
||
Total
|
|
$
|
19,778,022
|
|
|
$
|
19,924,379
|
|
|
|
|
|
|
||||
Ending 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
|
|
|
Estimated Fair
|
Estimated Useful
|
||
|
Value
|
Life
|
||
|
|
|
||
Customer list
|
$
|
5,000,000
|
|
5 Years
|
Total
|
$
|
5,000,000
|
|
|
|
2017
|
2016
|
||||
Revenues
|
$
|
22,079,244
|
|
$
|
23,000,000
|
|
Gross Profit
|
4,521,507
|
|
5,146,325
|
|
||
Net (Loss)
|
(3,804,700
|
)
|
(2,568,074
|
)
|
||
Income per share:
|
|
|
||||
Basic
|
$
|
(0.37
|
)
|
$
|
(0.27
|
)
|
Diluted
|
$
|
(0.37
|
)
|
$
|
(0.27
|
)
|
|
|
2018
|
|
2017
|
||||
Software
|
|
$
|
4,340,253
|
|
|
$
|
4,060,964
|
|
Equipment
|
|
856,127
|
|
|
813,000
|
|
||
Furniture and fixtures
|
|
451,779
|
|
|
217,345
|
|
||
Leasehold improvements
|
|
171,616
|
|
|
25,353
|
|
||
Total property and equipment
|
|
5,819,775
|
|
|
5,116,662
|
|
||
Less: accumulated depreciation
|
|
(3,887,115
|
)
|
|
(3,011,476
|
)
|
||
Net property and equipment
|
|
$
|
1,932,660
|
|
|
$
|
2,105,186
|
|
|
|
Balance
Beginning of
Year
|
|
Net Charged to
Costs and
Expenses
|
|
Transfers
|
|
Net Write-Off
|
|
Balance End of
Year
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
|
$
|
61,223
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6,011
|
)
|
|
$
|
55,212
|
|
Reserve for processing losses
|
|
$
|
172,832
|
|
|
24,000
|
|
|
191,450
|
|
|
(14,129
|
)
|
|
$
|
374,153
|
|
|||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
|
$
|
26,556
|
|
|
$
|
71,667
|
|
|
$
|
—
|
|
|
$
|
(37,000
|
)
|
|
$
|
61,223
|
|
Reserve for processing losses
|
|
$
|
172,832
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
172,832
|
|
|
|
2018
|
|
2017
|
||||
Accrued commissions
|
|
$
|
243,317
|
|
|
$
|
331,214
|
|
Reserve for merchant losses
|
|
374,153
|
|
|
172,832
|
|
||
Other accrued expenses
|
|
582,720
|
|
|
387,882
|
|
||
Accrued taxes
|
|
80,888
|
|
|
45,129
|
|
||
Accrued salaries
|
|
107,118
|
|
|
69,205
|
|
||
Total accrued expenses
|
|
$
|
1,388,196
|
|
|
$
|
1,006,262
|
|
|
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
|
|
|
||
Net operating loss carryforwards
|
|
$
|
9,504,000
|
|
|
$
|
8,665,000
|
|
Depreciation and amortization
|
|
494,000
|
|
|
322,000
|
|
||
Non-cash compensation
|
|
270,000
|
|
|
627,000
|
|
||
Other
|
|
28,000
|
|
|
23,000
|
|
||
Valuation Allowance
|
|
(8,902,000
|
)
|
|
(8,243,000
|
)
|
||
Deferred tax asset
|
|
$
|
1,394,000
|
|
|
$
|
1,394,000
|
|
|
|
2018
|
|
2017
|
||||
Current provision:
|
|
|
|
|
|
|
||
Federal
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
|
77,780
|
|
|
47,316
|
|
||
|
|
77,780
|
|
|
47,316
|
|
||
|
|
|
|
|
||||
Deferred provision:
|
|
|
|
|
|
|
||
Federal expense
|
|
—
|
|
|
227,000
|
|
||
|
|
|
|
|
||||
Expense for income taxes
|
|
$
|
77,780
|
|
|
$
|
274,316
|
|
|
|
2018
|
|
2017
|
||||
Income tax expense (benefit) at 21% for 2018 and 34% for 2017
|
|
$
|
(793,000
|
)
|
|
$
|
(1,023,000
|
)
|
Change in valuation allowance
|
|
(659,000
|
)
|
|
4,427,000
|
|
||
Permanent and other differences
|
|
1,452,000
|
|
|
(2,557,000
|
)
|
||
Deferred tax impact of enacted tax rate and law changes
|
|
—
|
|
|
(620,000
|
)
|
||
Alternative minimum tax and state taxes
|
|
77,780
|
|
|
47,316
|
|
||
|
|
|
|
|
||||
Income tax expense (benefit)
|
|
$
|
77,780
|
|
|
$
|
274,316
|
|
Stock Awards
|
|
Shares
|
|
Weighted Average
Exercise Price
|
|
Weighted Average
Contractual
Remaining Life
|
|
Aggregate Intrinsic
Value
|
|||||
Outstanding, December 31, 2017
|
|
5,019,936
|
|
|
$
|
1.98
|
|
|
|
|
|
||
Granted
|
|
175,000
|
|
|
1.74
|
|
|
|
|
|
|||
Vested
|
|
1,253,334
|
|
|
—
|
|
|
|
|
|
|||
Forfeited
|
|
66,667
|
|
|
—
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
Outstanding, December 31, 2018
|
|
3,874,935
|
|
|
$
|
2.27
|
|
|
7.05
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|||||
Expected to Vest after December 31, 2018
|
|
3,874,935
|
|
|
$
|
2.27
|
|
|
7.05
|
|
$
|
—
|
|
|
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
|
|
|
||
Numerator for basic and diluted earnings per share, net (loss) available to common shareholders
|
|
(3,775,815
|
)
|
|
$
|
(3,008,785
|
)
|
|
Denominator:
|
|
|
|
|
|
|
||
Denominator for basic earnings per share, weighted average shares outstanding
|
|
12,128,816
|
|
|
8,995,883
|
|
||
Effect of dilutive securities-stock options and restricted awards
|
|
—
|
|
|
—
|
|
||
Denominator for diluted earnings per share, adjusted weighted average shares and assumed conversion
|
|
12,128,816
|
|
|
8,995,883
|
|
||
Basic (loss) per common share
|
|
$
|
(0.31
|
)
|
|
$
|
(0.33
|
)
|
Diluted (loss) per common share and common share equivalent
|
|
$
|
(0.31
|
)
|
|
$
|
(0.33
|
)
|
|
|
Year Ended
December 31,
|
||||
|
|
2018
|
|
2017
|
||
Anti-dilutive awards and options
|
|
3,850,725
|
|
|
3,595,939
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Articles of Incorporation
(included as exhibit 3.1 to the Form 10-KSB filed March 31, 2006, and incorporated herein by reference).
|
|
|
|
3.2
|
|
Amendment to the Amended and Restated Articles of Incorporation
(included as exhibit A to the Schedule 14C filed April 18, 2007, and incorporated herein by reference).
|
|
|
|
3.3
|
|
Certificate of Change Filed Pursuant to NRS 78.209
(included as exhibit 3.1 to the Form 8-K filed July 23, 2015, and incorporated herein by reference).
|
|
|
|
3.4
|
|
Amended and Restated By-laws
(included as exhibit 3.2 to the Form 10-KSB filed March 31, 2006, and incorporated herein by reference).
|
|
|
|
10.1
|
|
Employment Agreement between the Company and Michael R. Long, dated February 27, 2007
(included as exhibit 10.1 to the Form 8-K filed March 2, 2007, and incorporated herein by reference).
|
|
|
|
10.2
|
|
Employment Agreement between the Company and Louis A. Hoch, dated February 27, 2007
(included as exhibit 10.2 to the Form 8-K filed March 2, 2007, and incorporated herein by reference).
|
|
|
|
10.3
|
|
First Amendment to Employment Agreement between the Company and Michael R. Long, dated November 12, 2009
(included as exhibit 10.15 to the Form 10-Q filed November 16, 2009, and incorporated herein by reference).
|
|
|
|
10.4
|
|
First Amendment to Employment Agreement between the Company and Louis A. Hoch, dated November 12, 2009
(included as exhibit 10.16 to the Form 10-Q filed November 16, 2009, and incorporated herein by reference).
|
|
|
|
10.5
|
|
Second Amendment to Employment Agreement between the Company and Michael R. Long, dated April 12, 2010
(included as exhibit 10.16 to the Form 10-K filed April 15, 2010, and incorporated herein by reference).
|
|
|
|
10.6
|
|
Second Amendment to Employment Agreement between the Company and Louis A. Hoch, dated April 12, 2010
(included as exhibit 10.17 to the Form 10-K filed April 15, 2010, and incorporated herein by reference).
|
|
|
|
10.7
|
|
Bank Sponsorship Agreement between the Company and University National Bank, dated August 29, 2011
(included as exhibit 10.18 to the Form 10-K filed April 3, 2012, and incorporated herein by reference).
|
|
|
|
10.8
|
|
Third Amendment to Employment Agreement between the Company and Michael R. Long, dated January 14, 2011
(included as exhibit 10.19 to the Form 10-K filed April 3, 2012, and incorporated herein by reference).
|
|
|
|
10.9
|
|
Third Amendment to Employment Agreement between the Company and Louis A. Hoch, dated January 14, 2011
(included as exhibit 10.20 to the Form 10-K filed April 3, 2012, and incorporated herein by reference).
|
|
|
|
10.10
|
|
Fourth Amendment to Employment Agreement between the Company and Michael R. Long, dated July 2, 2012
(included as exhibit 10.18 to the Form 10-Q filed August 20, 2012, and incorporated herein by reference).
|
|
|
|
10.11
|
|
Fourth Amendment to Employment Agreement between the Company and Louis A. Hoch, dated July 2, 2012
(included as exhibit 10.19 to the Form 10-Q filed August 20, 2012, and incorporated herein by reference).
|
|
|
|
10.12
|
|
Asset Purchase Agreement between the Company and Akimbo Financial, Inc., dated December 22, 2014
(included as exhibit 10.1 to the Form 8-K filed December 24, 2014, and incorporated herein by reference).
|
|
|
|
10.13
|
|
Bank Sponsorship Agreement between the Company and Metropolitan Commercial Bank, dated December 11, 2014
(included as exhibit 10.26 to the Form 10-K filed March 30, 2015, and incorporated herein by reference).
|
|
|
|
10.14
|
|
Independent Director Agreement between the Company and Miguel A. Chapa, dated April 24, 2015
(included as exhibit 10.29 to the Form 10-Q filed August 14, 2015, and incorporated herein by reference).
|
|
|
|
10.15
|
|
Loan and Security Agreement between C2Go, Inc., as Debtor, and FiCentive, Inc., as Lender, dated February 2, 2016
(included as exhibit 10.1 to the Form 8-K filed February 8, 2016, and incorporated herein by reference).
|
|
|
|
10.16†
|
|
Prepaid Card Marketing and Processing Agreement between FiCentive, Inc. and C2Go, Inc., dated February 2, 2016
(included as exhibit 10.2 to the Form 8-K filed February 8, 2016, and incorporated herein by reference).
|
|
|
|
10.17
|
|
Fifth Amendment to Employment Agreement between the Company and Michael R. Long, dated August 3, 2016
(included as exhibit 10.1 to the Form 8-K filed August 9, 2016, and incorporated herein by reference).
|
|
|
|
10.18
|
|
Fifth Amendment to Employment Agreement between the Company and Louis A. Hoch, dated August 3, 2016
(included as exhibit 10.2 to the Form 8-K filed August 9, 2016, and incorporated herein by reference).
|
|
|
|
10.19
|
|
Sixth Amendment to Employment Agreement between the Company and Michael R. Long, dated September 8, 2016
(included as exhibit 10.1 to the Form 8-K filed September 14, 2016, and incorporated herein by reference).
|
|
|
|
10.20
|
|
Sixth Amendment to Employment Agreement between the Company and Louis A. Hoch, dated September 8, 2016
(included as exhibit 10.2 to the Form 8-K filed September 14, 2016, and incorporated herein by reference).
|
|
|
|
10.21
|
|
Employment Agreement between the Company and Tom Jewell, dated January 6, 2017
(included as exhibit 10.1 to the Form 8-K filed January 6, 2017, and incorporated herein by reference).
|
|
|
|
10.22
|
|
Line of Credit Promissory Note between the Company, as Lender, and Singular Payments, LLC, as Borrower, dated March 7, 2017
(included as exhibit 10.1 to the Form 8-K filed March 13, 2017, and incorporated herein by reference).
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|
|
|
10.23
|
|
Security Agreement between the Company, as Secured Party, and Singular Payments, LLC, as Debtor, dated March 7, 2017
(included as exhibit 10.2 to the Form 8-K filed March 13, 2017, and incorporated herein by reference).
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|
|
|
10.24
|
|
Membership Interest Pledge Agreement between the Company and Vaden Landers , dated March 7, 2017
(included as exhibit 10.3 to the Form 8-K filed March 13, 2017, and incorporated herein by reference).
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|
|
10.25
|
|
Guaranty Agreement between the Company, as Lender, and Vaden Landers, as Guarantor, dated March 7, 2017
(included as exhibit 10.4 to the Form 8-K filed March 13, 2017, and incorporated herein by reference).
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|
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10.26
|
|
Independent Director Agreement between the Company and Steve Huffman, dated November 11, 2016
(included as exhibit 10.41 to the Form 10-K, filed April 6, 2017, and incorporated herein by reference).
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10.27
|
|
Independent Director Agreement between the Company and Brad Rollins, dated May 5, 2017
(included as exhibit 10.1 to the Form 8-K, filed May 11, 2017, and incorporated herein by reference).
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10.28
|
|
Amendment No. 1 to Line of Credit Promissory Note between the Company and Singular Payments, LLC, dated June 6, 2017
(included as exhibit 10.1 to the Form 8-K, filed June 8, 2017, and incorporated herein by reference).
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10.29
|
|
First Amended and Restated Line of Credit Promissory Note between the Company and Singular Payments, LLC, dated August 2, 2017
(included as exhibit 10.1 to the Form 8-K, filed August 7, 2017, and incorporated herein by reference).
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|
10.30†
|
|
Membership Interest Purchase Agreement among the Company, Singular Payments, LLC and Vaden Landers, dated September 1, 2017
(included as exhibit 10.1 to the Form 8-K, filed September 8, 2017, and incorporated herein by reference).
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10.31
|
|
Employment Agreement between the Company and Vaden Landers, dated September 1, 2017
(included as exhibit 10.2 to the Form 8-K, filed September 8, 2017, and incorporated herein by reference).
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|
10.32
|
|
First Amendment to Employment Agreement between the Company and Tom Jewell, dated November 27, 2017
(included as exhibit 10.1 to the Form 8-K, filed November 28, 2017, and incorporated herein by reference).
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|
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10.33
|
|
Placement Agency Agreement between the Company and Maxim Group, LLC, dated December 21, 2017
(included as exhibit 10.1 to the Form 8-K, filed December 22, 2017, and incorporated herein by reference).
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10.34
|
|
Share Purchase Agreement among the Company, CVI Investments, Inc., Hudson Bay Maser Fund Ltd., Special Situations Fund III QP, L.P., Special Situations Private Equity Fund, L.P. and Special Situations Cayman Fund, L.P., dated December 21, 2017
(included as exhibit 10.2 to the Form 8-K, filed December 22, 2017, and incorporated herein by reference).
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10.35
|
|
Settlement Agreement among C2Go. Inc., FiCentive, Inc. and Mercury Investment Partners LLC, dated December 7, 2017
(included as exhibit 10.42 to the Form 10-K filed March 30, 2018, and incorporated herein by reference).
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|
|
10.36
|
|
Lease Agreement between the Company and Blauners Paesanos Parkway LP, dated February 9, 2018
(included as exhibit 10.43 to the Form 10-K filed March 30, 2018, and incorporated herein by reference).
|
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|
10.37
|
|
Lease Agreement between the Company and RP Circle 1 Building, LLC, dated December 11, 2017
(included as exhibit 10.44 to the Form 10-K filed March 30, 2018, and incorporated herein by reference).
|
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|
|
10.38
|
|
Second Amendment to Employment Agreement between the Company and Tom Jewell, dated November 28, 2018
(included as exhibit 10.1 go the Form 8-K filed November 28, 2018, and incorporated herein by reference).
|
|
|
|
10.39
|
|
Placement Agency Agreement between the Company and Maxim Group, LLC, dated February 12, 2019
(included as exhibit 10.1 to the Form 8-K filed February 13, 2019, and incorporated herein by reference).
|
|
|
|
10.40
|
|
Share Purchase Agreement among the Company, Sabby Healthcare Master Fund, Ltd. and Sabby Volatility Warrant Master Fund, Ltd., dated February 12, 2019
(included as exhibit 10.2 to the Form 8-K filed February 13, 2019, and incorporated herein by reference).
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|
|
|
14.1
|
|
Code of Ethics
(included as exhibit 14.1 to the Form 10-Q filed August 14, 2015, and incorporated herein by reference).
|
|
|
|
16.1
|
|
Letter from Ernst and Young LLP to the Securities and Exchange Commission dated February 10, 2004
(included as exhibit 16 to the Form 8-K filed February 11, 2004, and incorporated herein by reference).
|
|
|
|
21.1
|
|
Subsidiaries of the Company
(filed herewith).
|
|
|
|
23.1
|
|
Consent of Akin Doherty Klein & Feuge, P.C.
(filed herewith).
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document (filed herewith).
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document (filed herewith).
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document (filed herewith).
|
|
|
|
†
|
|
Confidential treatment has been granted for portions of this agreement.
|
|
Payment Data Systems, Inc.
|
||
|
|
|
|
Date: March 27, 2019
|
By:
|
/s/ Louis A. Hoch
|
|
|
Louis A. Hoch
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
||
|
|
|
|
Date: March 27, 2019
|
By:
|
/s/ Tom Jewell
|
|
|
Tom Jewell
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
Date: March 27, 2019
|
By:
|
/s/ Michael R. Long
|
|
|
Michael R. Long
|
|
|
|
Chairman of the Board
|
||
|
|
|
|
Date: March 27, 2019
|
By:
|
/s/ Tom Jewell
|
|
|
Tom Jewell
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
||
|
|
|
|
Date: March 27, 2019
|
By:
|
/s/ Louis A. Hoch
|
|
|
Louis A. Hoch
|
|
|
|
President, Chief Executive Officer, and Director (Principal Executive Officer
|
||
|
|
|
|
Date: March 27, 2019
|
By:
|
/s/ Steve Huffman
|
|
|
Steve Huffman
|
|
|
|
Director
|
|
|
|
|
|
|
Date: March 27, 2019
|
By:
|
/s/ Miguel A. Chapa
|
|
|
Miguel A. Chapa
|
|
|
|
Director
|
|
|
|
|
|
|
Date: March 27, 2019
|
By:
|
/s/ Bradley Rollins
|
|
|
Bradley Rollins
|
|
|
|
Director
|
|
/s/ Akin, Doherty, Klein & Feuge, P.C.
|
1.
|
I have reviewed this Annual Report on Form 10-K of Payment Data Systems, Inc. for the year ended December 31, 2018;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
As the registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 27, 2019
|
|
|
|
By:
|
/s/ Louis A. Hoch
Louis A. Hoch
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Payment Data Systems, Inc. for the year ended December 31, 2018;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
As the registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
As the registrant’s certifying officer, I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 27, 2019
|
|
|
|
By:
|
/s/ Tom Jewell
Tom Jewell
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Date: March 27, 2019
|
|
|
|
By:
|
/s/ Louis A. Hoch
Louis A. Hoch
Chief Executive Officer
(Principal Executive Officer)
|
Date: March 27, 2019
|
|
|
|
By:
|
/s/ Tom Jewell
Tom Jewell
Chief Financial Officer
(Principal Financial and Accounting Officer)
|