FlexShopper, Inc. Reports 2023 Fourth Quarter and Year End Financial Results

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BOCA RATON, Fla., April 01, 2024 (GLOBE NEWSWIRE) -- FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper”), a leading national online lease-to-own (“LTO”) retailer and payment solution provider for underserved consumers, today announced its financial results for the quarter ended December 31, 2023.

Results for Quarter Ended December 31, 2023, vs. Quarter Ended December 31, 2022:

  • Total fundings increased 12.0% to $35.4 million from $31.6 million  
  • Total net lease and loan revenues and fees increased 40.9% to $30.3 million from $21.5 million  
  • Gross profit increased 315.8% to $15.8 million from $3.8 million  
  • Adjusted EBITDA1 increased by $12.0 million to $8.1 million from ($3.9) million  
  • Operating income of $5.6 million compared with operating loss of $5.5 million  
  • Net loss attributable to common stockholders of $(715) thousand, or $(0.03) per diluted share, compared to net income attributable to common stockholders of $6.0 million, or $0.27 per diluted share

Results for Twelve Months Ended December 31, 2023, vs. Twelve Months Ended December 31, 2022:

  • Total fundings increased 7.7% to $120.4 million from $111.8 million  
  • Total net lease and loan revenues and fees increased 3.4% to $117.0 million from $113.1 million  
  • Gross profit increased 47.4% to $54.7 million from $37.1 million  
  • Adjusted EBITDA1 increased by $23.7 million to $23.2 million compared to ($0.5) million  
  • Operating income of $13.7 million compared with operating loss of $6.3 million  
  • Net loss attributable to common stockholders of $8.3 million, or $(0.51) per diluted share, compared to net income attributable to common stockholders of $9.9 million, or $0.44 per diluted share
¹ Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under “Non-GAAP Measures”.
   

Subsequent Events:

On March 27, 2024, FlexShopper refinanced all the obligations under the 2015 Credit Agreement owed to the Administrative Agent and the lenders, and all liens held by any of the lenders or the Administrative Agent, were discharged and released. The Administrative Agent, the lenders and FlexShopper terminated the 2015 Credit Agreement.

On March 27, 2024, FlexShopper, through a wholly owned subsidiary (“Borrower”), entered into a new credit agreement (the “2024 Credit Agreement”) with Computershare Trust Company, National Association, as paying agent, various lenders from time to time party thereto and Powerscourt Investment 50, LP, an affiliate of Waterfall Asset Management, LLC, as administrative agent and lender (“Lender”). The Borrower is permitted to borrow funds under the 2024 Credit Agreement based on the Company’s cash on hand and the Amortized Order Value of its Eligible Leases (as defined in the 2024 Credit Agreement), less certain deductions described in the 2024 Credit Agreement. Under the terms of the 2024 Credit Agreement, subject to the satisfaction of certain conditions, the Borrower may borrow up to $150,000,000 from the Lender until the Commitment Termination Date and must repay all borrowed amounts one year thereafter, on the date that is 12 months following the Commitment Termination Date (unless such amounts become due or payable on an earlier date pursuant to the terms of the Credit Agreement). The Commitment Termination Date is April 1, 2026. The Company granted a security interest to the Lender in certain leases and loans as collateral under the 2024 Credit Agreement. The interest rate charged on amounts borrowed is SOFR plus 9% per annum.

The 2024 Credit Agreement includes customary events of default, including, among others, failures to make payment of principal and interest, deficiencies in the borrowing base, and bankruptcy events.

Conference Call and Webcast Details

Conference call

Date: Tuesday, April 2, 2024
Time: 8:30 a.m. Eastern Time
Participant Dial-In Numbers:

Domestic callers: (877) 407-2988
International callers: +1 (201) 389-0923

Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=gSrwUmm0

The call will also be simultaneously webcast over the Internet via the “Investor” section of the Company’s website at www.flexshopper.com or by clicking on the conference call link:

https://hd.choruscall.com/InComm/?callme=true&passcode=13730035&h=true&info=company&r=true&B=6

An audio replay of the call will be archived on the Company’s website.

 
FLEXSHOPPER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
  For the years ended
December 31,		  
  2023     2022  
           
Revenues:          
Lease revenues and fees, net $ 91,943,729     $ 105,936,072  
Loan revenues and fees, net of changes in fair value   25,031,278       7,120,101  
Total revenues   116,975,007       113,056,173  
               
Costs and expenses:              
Depreciation and impairment of lease merchandise   56,288,128       72,556,431  
Loan origination costs and fees   6,007,598       3,384,013  
Marketing   7,620,795       11,031,695  
Salaries and benefits   12,499,099       10,991,477  
Operating expenses   24,547,729       21,395,767  
Net change in fair value of promissory note related to acquisition   (3,678,689 )     -  
Total costs and expenses   103,284,660       119,359,383  
               
Operating income/ (loss)   13,690,347       (6,303,210 )
               
Gain on bargain purchase   -       14,461,274  
Interest expense including amortization of debt issuance costs   (18,913,773 )     (11,161,396 )
Loss before income taxes   (5,223,426 )     (3,003,332 )
Benefit from income taxes   989,809       16,635,051  
Net (loss)/ income   (4,233,617 )     13,631,719  
               
Dividends on Series 2 Convertible Preferred Shares   4,103,638       3,730,580  
Net (loss)/ income attributable to common and Series 1 Convertible Preferred shareholders $ (8,337,255 )   $ 9,901,139  
               
Basic and diluted (loss)/ income per common share:              
Basic $ (0.51 )   $ 0.45  
Diluted $ (0.51 )   $ 0.44  
               
WEIGHTED AVERAGE COMMON SHARES:              
Basic   16,260,349       21,646,896  
Diluted   16,260,349       22,425,354  
               


FLEXSHOPPER, INC.
CONSOLIDATED BALANCE SHEETS
 
  December 31,     December 31,  
  2023     2022  
           
ASSETS          
CURRENT ASSETS:          
Cash $ 4,413,130     $ 6,051,713  
Restricted cash   -       121,636  
Lease receivables, net   44,795,090       35,540,043  
Loan receivables at fair value   35,794,290       32,932,504  
Prepaid expenses and other assets   3,300,677       3,489,136  
Lease merchandise, net   29,131,440       31,550,441  
Total current assets   117,434,627       109,685,473  
               
Property and equipment, net   9,308,859       8,086,862  
Right of use asset, net   1,237,010       1,406,270  
Intangible assets, net   13,391,305       15,162,349  
Other assets, net   2,175,215       1,934,728  
Deferred tax asset, net   12,943,361       12,013,828  
Total assets $ 156,490,377     $ 148,289,510  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY              
CURRENT LIABILITIES:              
Accounts payable $ 7,139,848     $ 6,511,943  
Accrued payroll and related taxes   578,197       310,820  
Promissory notes to related parties, including accrued interest   198,624       1,209,455  
Accrued expenses   3,972,397       3,988,093  
Lease liability - current portion   245,052       208,001  
Total current liabilities   12,134,118       12,228,312  
Loan payable under credit agreement to beneficial shareholder, net of unamortized issuance costs of $70,780 at December 31,2023 and $352,252 at December 31,2022   96,384,220       80,847,748  
Promissory notes to related parties, net of unamortized issuance costs of $649,953 at December 31, 2023 and $0 at December 31, 2022, and net of current portion   10,100,047       10,750,000  
Promissory note related to acquisition, net of discount of $1,165,027 at December 31, 2022   -       3,158,471  
Loan payable under Basepoint credit agreement, net of unamortized issuance costs of $92,963 at December 31, 2023   7,319,641       -  
Purchase consideration payable related to acquisition   -       8,703,684  
Lease liabilities, net of current portion   1,321,578       1,566,622  
Total liabilities   127,259,604       117,254,837  
               
STOCKHOLDERS’ EQUITY              
Series 1 Convertible Preferred Stock, $0.001 par value - authorized 250,000 shares, issued and outstanding 170,332 shares at $5.00 stated value   851,660       851,660  
Series 2 Convertible Preferred Stock, $0.001 par value - authorized 25,000 shares, issued and outstanding 21,952 shares at $1,000 stated value   21,952,000       21,952,000  
Common stock, $0.0001 par value- authorized 40,000,000 shares, issued and outstanding 21,752,304 shares at December 31, 2023 and 21,750,804 shares at December 31, 2022   2,176       2,176  
Treasury shares, at cost- 164,029 shares at 2023   (166,757 )     -  
Additional paid in capital   42,415,894       39,819,420  
Accumulated deficit   (35,824,200 )     (31,590,583 )
Total stockholders’ equity   29,230,773       31,034,673  
  $ 156,490,377     $ 148,289,510  
               


FLEXSHOPPER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2023 and 2022
 
  2023     2022  
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net (loss)/ income $ (4,233,617 )   $ 13,631,719  
Adjustments to reconcile net (loss)/ income to net cash used in operating activities:              
Depreciation and impairment of lease merchandise   56,288,128       72,556,431  
Other depreciation and amortization   7,881,110       4,769,614  
Amortization of debt issuance costs   571,538       228,843  
Amortization of discount on the promissory note related to acquisition   236,952       19,747  
Compensation expense related to stock-based compensation   1,677,708       997,830  
Provision for doubtful accounts   42,505,647       57,420,480  
Interest in kind added to promissory notes balance   -       155,093  
Deferred income tax   (929,533 )     (17,282,364 )
Net change in fair value of promissory note related to acquisiton   (3,678,689 )     -  
Gain on bargain purchase   -       (14,461,274 )
Net changes in the fair value of loan receivables at fair value   (10,217,854 )     9,559,979  
Changes in operating assets and liabilities, net of effects of acquisition:              
Lease receivables   (51,760,694 )     (67,487,369 )
Loan receivables at fair value   7,356,068       (25,612,049 )
Prepaid expenses and other assets   177,169       (1,670,836 )
Lease merchandise   (53,869,127 )     (63,164,760 )
Purchase consideration payable related to acquisition   208,921       164,102  
Promissory note related to acquisition   283,266       -  
Lease liabilities   (30,268 )     (14,488 )
Accounts payable   627,905       (1,976,844 )
Accrued payroll and related taxes   267,377       (80,258 )
Accrued expenses   (26,527 )     1,009,468  
Net cash used in operating activities   (6,664,520 )     (31,236,936 )
               
CASH FLOWS FROM INVESTING ACTIVITIES              
Cash acquired in business combination   -       2,938,355  
Purchases of property and equipment, including capitalized software costs   (6,335,276 )     (6,498,115 )
Purchases of data costs   (1,225,983 )     (1,640,885 )
Net cash used in investing activities   (7,561,259 )     (5,200,645 )
               
CASH FLOWS FROM FINANCING ACTIVITIES              
Proceeds from loan payable under credit agreement   18,050,000       36,455,000  
Repayment of loan payable under credit agreement   (2,795,000 )     (5,730,000 )
Repayment of loan payable under Basepoint credit agreement   (1,500,000 )     -  
Repayment of promissory notes to related parties   (1,000,000 )     -  
Debt issuance related costs   (115,403 )     (166,745 )
Proceeds from exercise of stock options   1,185       261,505  
Proceeds from promissory notes to related parties   -       7,000,000  
Principal payment under finance lease obligation   (8,465 )     (11,184 )
Repayment of purchase consideration payable related to acquisition   -       (283,266 )
Repayment of installment loan   -       (9,022 )
Purchases of Treasury Stock   (166,757 )     -  
Net cash provided by financing activities   12,465,560       37,516,288  
               
(DECREASE)/ INCREASE IN CASH and RESTRICTED CASH   (1,760,219 )     1,078,707  
               
CASH and RESTRICTED CASH, beginning of period   6,173,349       5,094,642  
               
CASH and RESTRICTED CASH, end of period $ 4,413,130     $ 6,173,349  
               
Supplemental cash flow information:              
Interest paid $ 17,337,292     $ 10,289,334  
Due date extension of warrants $ 917,581     $ -  
Noncash investing and financing activities              
Acquisition of loan receivables at fair value $ -     $ 13,320,326  
Acquisition of property and equipment   -       136,249  
Acquisition of intangible assets   -       15,307,894  
Acquisition of purchase consideration payable related to acquisition   -       8,539,582  
Acquisition of accounts payable   -       506,607  
Acquisition of deferred tax liability   -       4,773,370  
Issuance of promissory note related to acquisition   -       3,421,991  
               

Non-GAAP Measures

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

Adjusted EBITDA represents net income before interest, stock-based compensation, taxes, depreciation (other than depreciation of leased merchandise), amortization, and one-time or non-recurring items. We believe that Adjusted EBITDA provides us with an understanding of one aspect of earnings before the impact of investing and financing charges and income taxes.

Key performance metrics for the years ended December 31, 2023 and 2022 were as follows:

  2023     2022     $ Change     % Change  
Adjusted EBITDA:                      
Net (loss)/ income $ (4,233,617 )   $ 13,631,719     $ (17,865,336 )     (131.1 )
Income taxes   (989,809 )     (16,635,051 )     15,645,242       (94.0 )
Amortization of debt issuance costs   571,538       228,843       342,695       149.8  
Amortization of discount on the promissory note related to acquisition   236,952       19,746       217,206       1,100.0  
Other amortization and depreciation   7,881,110       4,769,614       3,111,496       65.2  
Interest expense   18,105,282       10,912,808       7,192,474       65.9  
Stock-based compensation   1,677,708       997,830       679,878       68.1  
Gain on bargain purchase   -       (14,461,274 )     14,461,274          
Adjusted EBITDA $ 23,249,164     $ (535,765 )   $ 23,784,929       (4,439.4 )
                               

The Company refers to Adjusted EBITDA in the above table as the Company uses this measure to evaluate operating performance and to make strategic decisions about the Company. Management believes that Adjusted EBITDA provides relevant and useful information which is widely used by analysts, investors and competitors in its industry in assessing performance.

About FlexShopper

FlexShopper, Inc. (FPAY) is a financial technology company that provides electronics, home furnishings and other durable goods to underserved consumers on a lease-to-own (LTO) basis through its patented e-commerce marketplace (www.FlexShopper.com). FlexShopper also provides LTO and loan technology platforms to a growing number of retailers and e-retailers to facilitate transactions with consumers without access to traditional financing.

Forward-Looking Statements

All statements in this release that are not based on historical fact are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “seek,” “intend,” “plan,” “goal,” “estimate,” “anticipate,” or other comparable terms. Examples of forward-looking statements include, among others, statements we make regarding expectations of lease originations, the expansion of our lease-to-own program; expectations concerning our partnerships with retail partners; investments in, and the success of, our underwriting technology and risk analytics platform; our ability to collect payments due from customers; expected future operating results and expectations concerning our business strategy. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including, among others, the following: our ability to obtain adequate financing to fund our business operations in the future; the failure to successfully manage and grow our FlexShopper.com e-commerce platform; our ability to maintain compliance with financial covenants under our credit agreement; our dependence on the success of our third-party retail partners and our continued relationships with them; our compliance with various federal, state and local laws and regulations, including those related to consumer protection; the failure to protect the integrity and security of customer and employee information; and the other risks and uncertainties described in the Risk Factors and in Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q. The forward-looking statements made in this release speak only as of the date of this release, and FlexShopper assumes no obligation to update any such forward-looking statements to reflect actual results or changes in expectations, except as otherwise required by law.

Contact:

FlexShopper, Inc.
Investor Relations
ir@flexshopper.com 

FlexShopper, Inc.


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Source: FlexShopper, Inc.