FlexShopper, Inc. Reports First Quarter 2022 Financial Results

<< Back

BOCA RATON, Fla., May 12, 2022 (GLOBE NEWSWIRE) -- FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper”), a leading national online lease-to-own (“LTO”) retailer and LTO payment solution provider, today announced its financial results for the quarter ended March 31, 2022.

Results for Quarter Ended March 31, 2022 vs. Quarter Ended March 31, 2021:

  • Total fundings increased 1% to $21.2 million from $21.0 million consisting of gross lease originations decreasing 22.0% to $16.3 million from $20.9 million and loan participations up ~5000% from $97 thousand to $4.9 million

  • Total net lease revenues and fees decreased 15.2% to $27.8 million from $32.8 million

  • Total net loan revenues and fees increased 3,576.4% to $1.2 million from $32 thousand

  • Gross profit decreased 8.7% to $9.4 million from $10.3 million

  • Adjusted EBITDA1 decreased to $(40.3) thousand compared to $2.4 million

  • Net loss of $2.4 million compared with net income of $1.2 thousand

  • Net loss attributable to common stockholders of $(3.0) million, or $(0.14) per diluted share, compared to net loss attributable to common stockholders of $(608) thousand, or $(0.03) per diluted share

¹Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under “Non-GAAP Measures”.

First Quarter 2022 Highlights and Recent Developments

  • Retail partner rollouts expanding. Finished the quarter with over 1,300 active storefronts and expected to increase by an additional 1,000 by 3Q
  • Installment loan participations are growing steadily. Supplementing rent-to-own with an installment loan product has allowed expansion in a vertical with a similar customer base.

FlexShopper Chairman of the Board, Howard Dvorkin, FlexShopper CFO, Russ Heiser and FlexShopper COO, John Davis will discuss the Company’s recent quarter, including financial and operating results, and strategic outlook on the Company’s earnings conference call and webcast.

Conference Call Details
Date: Friday, May 13, 2022
Time: 9:00 a.m. Eastern Time

Participant Dial-In Numbers:
Domestic callers: (877) 407-2988
International callers: (412) 902-0038

Access by Webcast

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://event.choruscall.com/mediaframe/webcast.html?webcastid=TfEbUnTh. An audio replay of the call will be archived on the Company’s website.

FLEXSHOPPER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

    For the three months ended
March 31,
 
    2022     2021  
Revenues:            
Lease revenues and fees, net   $ 27,766,312     $ 32,751,331  
Loan revenues and fees, net of changes in fair value     1,188,924       32,339  
Total revenues     28,955,236       32,783,670  
                 
Costs and expenses:                
Cost of lease revenues, consisting of depreciation and impairment of lease merchandise     19,160,611       22,463,556  
Loan origination costs and fees     425,513       63,397  
Marketing     2,014,115       1,832,740  
Salaries and benefits     2,964,442       2,909,319  
Operating expenses     5,673,202       4,114,424  
Total costs and expenses     30,237,883       31,383,436  
                 
Operating (loss)/income     (1,282,647 )     1,400,234  
                 
Interest expense including amortization of debt issuance costs     1,958,068       1,398,997  
Income before income taxes     (3,240,715 )     1,237  
Income taxes     (859,780 )     -  
Net (loss)/income     (2,380,935 )     1,237  
                 
Dividends on Series 2 Convertible Preferred Shares     609,777       609,772  
Net loss attributable to common and Series 1 Convertible Preferred shareholders   $ (2,990,712 )   $ (608,535 )
                 
Basic and diluted loss per common share:                
Basic and diluted   $ (0.14 )   $ (0.03 )
                 
WEIGHTED AVERAGE COMMON SHARES:                
Basic and diluted     21,547,069       21,369,904  

The accompanying notes are an integral part of these condensed consolidated statements.

FLEXSHOPPER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

    March 31,     December 31,  
    2022     2021  
    (unaudited)        
ASSETS            
CURRENT ASSETS:            
Cash   $ 4,319,701     $ 5,094,642  
Accounts receivable, net     29,537,940       26,338,883  
Loans receivable     7,137,503       3,560,108  
Prepaid expenses     932,019       957,527  
Lease merchandise, net     36,597,829       40,942,112  
Total current assets     78,524,992       76,893,272  
                 
Property and equipment, net     8,423,894       7,841,206  
Other assets, net     76,809       77,578  
Total assets   $ 87,025,695     $ 84,812,056  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
CURRENT LIABILITIES:                
Accounts payable   $ 4,816,837     $ 7,982,180  
Accrued payroll and related taxes     665,024       391,078  
Promissory notes to related parties, net of $0 at 2022 and net of $1,274 at 2021 of unamortized issuance costs, including accrued interest     225,127       1,053,088  
Accrued expenses     1,579,036       2,987,646  
Lease liability - current portion     181,197       172,732  
Total current liabilities     7,467,221       12,586,724  
                 
Loan payable under credit agreement to beneficial shareholder, net of $450,679 at 2022 and $413,076 at 2021 of unamortized issuance costs and current portion     55,699,321       50,061,924  
Promissory notes to related parties, net of current portion     7,750,000       3,750,000  
Deferred income tax liability     178,160       495,166  
Lease liabilities net of current portion     1,726,023       1,774,623  
Total liabilities     72,820,725       68,668,437  
                 
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 21,605,234 shares at March 31, 2022 and 21,442,278 shares at December 31, 2021     2,161       2,144  
Additional paid in capital     39,002,386       38,560,117  
Accumulated deficit     (47,603,237 )     (45,222,302 )
Total stockholders’ equity     14,204,970       16,143,619  
    $ 87,025,695     $ 84,812,056  

FLEXSHOPPER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2022 and 2021
(unaudited)

    2022     2021  
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net (loss)/income   $ (2,380,935 )   $ 1,237  
Adjustments to reconcile net (loss)/income to net cash used in operating activities:                
Depreciation and impairment of lease merchandise     19,160,611       22,463,556  
Other depreciation and amortization     937,062       651,396  
Amortization of debt issuance costs     50,603       91,703  
Compensation expense related to stock-based compensation and warrants     305,229       593,186  
Provision for doubtful accounts     11,831,117       8,833,349  
Interest in kind added to promissory notes balance     170,765       9,098  
Deferred income tax     (317,006 )     -  
Net changes in the fair value of loans receivable     523,424       16,993  
Changes in operating assets and liabilities:                
Accounts receivable     (15,030,174 )     (9,727,764 )
Loans receivable     (4,100,819 )     (118,417 )
Prepaid expenses and other     25,658       (53,683 )
Lease merchandise     (14,816,328 )     (18,961,999 )
Security deposits     -       4,280  
Lease Liabilities     (2,511 )     (1,033 )
Accounts payable     (3,165,343 )     (4,781,405 )
Accrued payroll and related taxes     273,946       208,230  
Accrued expenses     (1,405,958 )     208,266  
Net cash used in operating activities     (7,940,659 )     (563,007 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchases of property and equipment, including capitalized software costs and data costs     (1,553,810 )     (734,122 )
Net cash used in investing activities     (1,553,810 )     (734,122 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Proceeds from loan payable under credit agreement     6,800,000       3,500,000  
Repayment of loan payable under credit agreement     (1,125,000 )     (3,910,000 )
Debt issuance related costs     (86,931 )     (526,565 )
Proceeds from exercise of stock options     137,057       12,912  
Proceeds from promissory notes, net of fees     3,000,000       -  
Principal payment under finance lease obligation     (2,796 )     (1,833 )
Repayment of instalment loan     (2,802 )     (2,802 )
Net cash provided by/used in financing activities     8,719,528       (928,288 )
                 
DECREASE IN CASH     (774,941 )     (2,225,417 )
                 
CASH, beginning of period   $ 5,094,642     $ 8,541,232  
                 
CASH, end of period   $ 4,319,701     $ 6,315,815  

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 inventory), 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 three months ended March 31, 2022 and 2021 were as follows:

    Three months ended
March 31,
             
    2022     2021     $ Change     % Change  
Adjusted EBITDA:                        
Net (loss)/income   $ (2,380,935 )   $ 1,237     $ (2,382,172 )     (192,576.6 )
Income taxes     (859,780 )     -       (859,780 )        
Amortization of debt issuance costs     50,603       91,703       (41,100 )     (44.8 )
Other amortization and depreciation     937,062       651,396       285,666       43.9  
Interest expense     1,907,465       1,307,294       600,171       45.9  
Stock-based compensation     305,229       380,264       (75,035 )     (19.7 )
Product/ infrastructure expenses     -       10,000       (10,000 )        
Adjusted EBITDA   $ (40,356 )   $ 2,441,894     $ (2,482,250 )     (101.7 )

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, LLC, a wholly owned subsidiary of FlexShopper, Inc. (FPAY), is a financial and technology company that provides brand name electronics, home furnishings and other durable goods to consumers on a lease-to-own (LTO) basis through its e-commerce marketplace (www.FlexShopper.com) as well as its patented and patent pending systems. FlexShopper also provides LTO technology platforms to retailers and e-retailers to facilitate transactions with consumers that want to acquire their products, but do not have sufficient cash or credit. FlexShopper approves consumers utilizing its proprietary consumer screening model, collects from consumers under an LTO contract and funds the LTO transactions by paying merchants for the goods.

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 during the holiday season, 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 limited operating history, limited cash and history of losses; 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.


Primary Logo

Source: FlexShopper, Inc.


Search Investor Relations