FlexShopper, Inc. Reports 2024 First Quarter and Year End Financial Results

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BOCA RATON, Fla., May 13, 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 March 31, 2024.

Results for Quarter Ended March 31, 2024, vs. Quarter Ended March 31, 2023:

  • Total fundings decreased 1.1% to $26.0 million from $26.3 million

  • Total revenues increased 10.1% to $33.9 million from $30.8 million

  • Gross profit increased 30.9% to $17.8 million from $13.6 million

  • Adjusted EBITDA1 increased by $1.2 million to $7.6 million from $6.4 million

  • Operating income increased 19.0% to $5.0 million from $4.2 million

  • Net loss attributable to common stockholders of $(1.3) million, or $(0.06) per diluted share, compared to net loss attributable to common stockholders of $(1.2) million, or $(0.06) per diluted share

  • Core earnings1 increased 64.7% to a gain of $354 thousand from a gain of $215 thousand

Conference Call and Webcast Details

Conference call

Date: Tuesday, May 14, 2024
Time: 8:00 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=rigoYWk3

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.

1 Adjusted EBITDA and core earnings are a non-GAAP financial measure. Refer to the definition and reconciliation of these measures under “Non-GAAP Measures”.


 
FLEXSHOPPER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
  For the three months ended
March 31,		  
  2024     2023  
Revenues:          
Lease revenues and fees, net $ 25,833,736     $ 24,714,158  
Loan revenues and fees, net of changes in fair value   7,331,277       6,071,617  
Retail revenues   779,860       -  
Total revenues   33,944,873       30,785,775  
               
Costs and expenses:              
Depreciation and impairment of lease merchandise   14,685,863       15,345,788  
Loan origination costs and fees   821,827       1,833,627  
Cost of retail revenues   611,204       -  
Marketing   1,765,572       1,099,189  
Salaries and benefits   4,083,918       2,726,890  
Operating expenses   6,932,507       5,627,708  
Total costs and expenses   28,900,891       26,633,202  
               
Operating income   5,043,982       4,152,573  
               
Interest expense including amortization of debt issuance costs   5,315,094       4,531,327  
Loss before income taxes   (271,112 )     (378,754 )
Benefit from income taxes   56,933       148,539  
Net loss   (214,179 )     (230,215 )
               
Dividends on Series 2 Convertible Preferred Shares   1,069,456       972,233  
Net loss attributable to common and Series 1 Convertible Preferred shareholders $ (1,283,635 )   $ (1,202,448 )
               
Basic and diluted loss per common share:              
Basic $ (0.06 )   $ (0.06 )
Diluted $ (0.06 )   $ (0.06 )
WEIGHTED AVERAGE COMMON SHARES:              
Basic   21,586,019       21,751,304  
Diluted   21,586,019       21,751,304  


 
FLEXSHOPPER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
  March 31,
2024		     December 31,
2023		  
  (unaudited)        
ASSETS          
CURRENT ASSETS:          
Cash $ 5,593,750     $ 4,413,130  
Lease receivables, net   49,316,032       44,795,090  
Loan receivables at fair value   39,457,230       35,794,290  
Prepaid expenses and other assets   3,308,255       3,300,677  
Lease merchandise, net   25,896,510       29,131,440  
Total current assets   123,571,777       117,434,627  
               
Property and equipment, net   9,588,238       9,308,859  
Right of use asset, net   1,190,482       1,237,010  
Intangible assets, net   12,948,971       13,391,305  
Other assets, net   2,313,988       2,175,215  
Deferred tax asset, net   13,000,294       12,943,361  
Total assets $ 162,613,750     $ 156,490,377  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY              
CURRENT LIABILITIES:              
Accounts payable $ 3,370,054     $ 7,139,848  
Accrued payroll and related taxes   700,208       578,197  
Promissory notes to related parties, including accrued interest   198,398       198,624  
Accrued expenses   4,498,602       3,972,397  
Lease liability - current portion   253,936       245,052  
Total current liabilities   9,021,198       12,134,118  
Loan payable under credit agreement to beneficial shareholder, net of unamortized issuance costs of $1,500,000 at March 31, 2024 and $70,780 at December 31, 2023   105,566,690       96,384,220  
Promissory notes to related parties, net of unamortized issuance cost of $535,256 at March 31, 2024 and $649,953 at December 31, 2023, and net of current portion   10,214,744       10,100,047  
Loan payable under Basepoint credit agreement, net of unamortized issuance costs of $83,347 at March 31, 2024 and $92,963 at December 31, 2023   7,329,258       7,319,641  
Lease liabilities, net of current portion   1,254,239       1,321,578  
Total liabilities   133,386,129       127,259,604  
               
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 March 31, 2024 and 21,752,304 shares at December 31, 2023   2,176       2,176  
Treasury shares, at cost - 169,447 shares at March 31, 2024 and 164,029 shares at December 31, 2023   (172,855 )     (166,757 )
Additional paid in capital   42,633,019       42,415,894  
Accumulated deficit   (36,038,379 )     (35,824,200 )
Total stockholders’ equity   29,227,621       29,230,773  
  $ 162,613,750     $ 156,490,377  


 
FLEXSHOPPER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2024 and 2023
(unaudited)
 
  2024     2023  
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss $ (214,179 )   $ (230,215 )
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities:              
Depreciation and impairment of lease merchandise   14,685,863       15,345,788  
Other depreciation and amortization   2,315,487       1,826,157  
Amortization of debt issuance costs   195,095       70,367  
Amortization of discount on the promissory note related to acquisition   -       59,239  
Compensation expense related to stock-based compensation   217,125       420,748  
Provision for doubtful accounts   9,484,049       11,238,415  
Interest in kind added to promissory notes balance   -       1,351  
Deferred income tax   (56,933 )     (148,539 )
Net changes in the fair value of loans receivables at fair value   (4,211,396 )     (984,652 )
Changes in operating assets and liabilities:              
Lease receivables   (14,004,991 )     (12,852,307 )
Loans receivables at fair value   548,456       4,599,208  
Prepaid expenses and other assets   (19,349 )     576,689  
Lease merchandise   (11,450,933 )     (10,703,452 )
Purchase consideration payable related to acquisition   -       141,275  
Lease liabilities   (9,665 )     (6,032 )
Accounts payable   (3,769,794 )     (2,668,765 )
Accrued payroll and related taxes   122,011       254,550  
Accrued expenses   525,976       (1,340,486 )
Net cash (used in)/provided by operating activities   (5,643,178 )     5,599,339  
               
CASH FLOWS FROM INVESTING ACTIVITIES              
Purchases of property and equipment, including capitalized software costs   (1,815,091 )     (1,753,800 )
Purchases of data costs   (464,441 )     (169,082 )
Net cash used in investing activities   (2,279,532 )     (1,922,882 )
               
CASH FLOWS FROM FINANCING ACTIVITIES              
Proceeds from loan payable under credit agreement   10,611,690       2,750,000  
Repayment of loan payable under credit agreement   -       (2,575,000 )
Debt issuance related costs   (1,500,000 )     -  
Proceeds from exercise of stock options   -       1,185  
Principal payment under finance lease obligation   (2,262 )     (2,526 )
Repayment of purchase consideration payable related to acquisition   -       (153,938 )
Purchases of treasury stock   (6,098 )     -  
Net cash provided by financing activities   9,103,330       19,721  
               
INCREASE IN CASH   1,180,620       3,696,178  
               
CASH, beginning of period   4,413,130       6,173,349  
               
CASH, end of period $ 5,593,750     $ 9,869,527  
               
Supplemental cash flow information:              
Interest paid $ 5,057,635     $ 3,867,982  


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.

Core earnings represents the GAAP net earnings/ (loss) adjusted for “special items” that we view as extraordinary, unusual, or non-recurring in nature or which we believe do not reflect our core business activities.

Key performance metrics for the three months ended March 31, 2024 and 2023 are as follows:

  Three months ended
March 31,		              
  2024     2023     $ Change     % Change  
Adjusted EBITDA:                      
Net loss $ (214,179 )   $ (230,215 )   $ 16,036       (7.0 )
Income taxes   (56,933 )     (148,539 )     91,606       (61.7 )
Amortization of debt issuance costs   195,095       70,367       124,728       177.3  
Amortization of discount on the promissory note related to acquisition   -       59,239       (59,239 )     (100.0 )
Other amortization and depreciation   2,315,487       1,826,157       489,330       26.8  
Interest expense   5,119,999       4,401,721       718,278       16.3  
Stock-based compensation   217,125       420,748       (203,623 )     (48.4 )
Adjusted EBITDA $ 7,576,594     $ 6,399,478     $ 1,177,116       18.4  


  Three months ended
March 31,		              
  2024     2023     $ Change     % Change  
Core earnings:                      
GAAP results- Net loss $ (214,179 )   $ (230,215 )   $ 16,036       (7.0 )
Acquired intangible assets amortization   442,334       442,334       -       -  
Non recurring employment expenses   126,144       2,826       123,318       4,364.7  
Non-GAAP adjusted results- Core earnings $ 354,299     $ 214,945     $ 139,354       64.8  


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.

The Company refers to Core earnings in the above table as the Company uses this additional measurement to assist our executive team in comparing our performance on a more consistent basis for purposes of business decision-making by removing the impact of certain items management believes do not directly reflect our core operations.

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.