FlexShopper, Inc. Reports First Quarter 2023 Financial Results

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BOCA RATON, Fla., May 11, 2023 (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, 2023.

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

  ● Total fundings increased 29.2% to $27.4 million from $21.2 million consisting of gross lease originations decreasing from $16.3 to $13.2 million, loan participations decreased ~96.2% from $4.9 million to $0.2 million, and loan originations increasing from $0 to $14.0 million
     
  ● Total net lease and loan revenues and fees increased 6.3% to $30.8 million from $28.9 million
     
  ● Gross profit increased 45.2% to $13.6 million from $9.4 million
     
  ● Adjusted EBITDA1 increased to $6.4 million compared to $(40.3) thousand
     
  ● Net loss of $230.2 thousand compared with net loss of $2.4 million
     
  ● Net loss attributable to common stockholders of $(1.2) million, or $(0.06) per diluted share, compared to net loss attributable to common stockholders of $(3.0) million, or $(0.14) 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”.

   
Conference Call and Webcast Details

Conference call

Date: Monday, May 15, 2023
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=G5YRTvWe 

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=G5YRTvWe

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,		  
    2023     2022  
Revenues:            
Lease revenues and fees, net   $ 24,714,158     $ 27,766,312  
Loan revenues and fees, net of changes in fair value     6,071,617       1,188,924  
Total revenues     30,785,775       28,955,236  
                 
Costs and expenses:                
Depreciation and impairment of lease merchandise     15,345,788       19,160,611  
Loan origination costs and fees     1,833,627       425,513  
Marketing     1,099,189       2,014,115  
Salaries and benefits     2,726,890       2,964,442  
Operating expenses     5,627,708       5,673,202  
Total costs and expenses     26,633,202       30,237,883  
                 
Operating income/ (loss)     4,152,573       (1,282,647 )
                 
Interest expense including amortization of debt issuance costs     4,531,327       1,958,068  
Loss before income taxes     (378,754 )     (3,240,715 )
Benefit from income taxes     148,539       859,780  
Net loss     (230,215 )     (2,380,935 )
                 
Dividends on Series 2 Convertible Preferred Shares     972,233       609,777  
Net loss attributable to common and Series 1 Convertible Preferred shareholders   $ (1,202,448 )   $ (2,990,712 )
                 
Basic and diluted loss per common share:                
Basic   $ (0.06 )   $ (0.14 )
Diluted   $ (0.06 )   $ (0.14 )
                 
WEIGHTED AVERAGE COMMON SHARES:                
Basic     21,751,304       21,547,069  
Diluted     21,751,304       21,547,069  


FLEXSHOPPER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

     March 31,       December 31,  
     2023       2022  
             
ASSETS            
CURRENT ASSETS:            
Cash   $ 9,861,646     $ 6,051,713  
Restricted cash     7,881       121,636  
Lease receivables, net     37,153,935       35,540,043  
Loan receivables at fair value     29,317,948       32,932,504  
Prepaid expenses and other assets     2,912,447       3,489,136  
Lease merchandise, net     26,908,105       31,550,441  
Total current assets     106,161,962       109,685,473  
                 
Property and equipment, net     8,677,314       8,086,862  
Right of use asset, net     1,366,235       1,406,270  
Intangible assets, net     14,719,290       15,162,349  
Other assets, net     1,884,060       1,934,728  
Deferred tax asset, net     12,162,368       12,013,828  
Total assets   $ 144,971,229     $ 148,289,510  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
CURRENT LIABILITIES:                
Accounts payable   $ 3,843,178     $ 6,511,943  
Accrued payroll and related taxes     565,370       310,820  
Promissory notes to related parties, including accrued interest     1,210,806       1,209,455  
Accrued expenses     2,647,608       3,988,093  
Lease liability - current portion     217,862       208,001  
Total current liabilities     8,484,824       12,228,312  
Loan payable under credit agreement to beneficial shareholder, net of $281,884 at 2023 and $352,252 at 2022 of unamortized issuance costs     81,093,116       80,847,748  
Promissory notes to related parties, net of current portion     10,750,000       10,750,000  
Promissory note related to acquisition, net of discount of $1,105,789 at 2023 and $1,165,027 at 2022     3,063,771       3,158,471  
Purchase consideration payable related to acquisition     8,844,959       8,703,684  
Lease liabilities net of current portion     1,508,168       1,566,622  
Total liabilities     113,744,838       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 March 31, 2023 and 21,750,804 shares at December 31, 2022     2,176       2,176  
Additional paid in capital     40,241,353       39,819,420  
Accumulated deficit     (31,820,798 )     (31,590,583 )
Total stockholders’ equity     31,226,391       31,034,673  
    $ 144,971,229     $ 148,289,510  


FLEXSHOPPER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2023 and 2022
(unaudited)

    2023     2022  
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net loss   $ (230,215 )   $ (2,380,935 )
Adjustments to reconcile net loss to net cash provided by/ (used in) operating activities:                
Depreciation and impairment of lease merchandise     15,345,788       19,160,611  
Other depreciation and amortization     1,826,157       937,062  
Amortization of debt issuance costs     70,367       50,603  
Amortization of discount on the promissory note related to acquisition     59,239       -  
Compensation expense related to stock-based compensation     420,748       305,229  
Provision for doubtful accounts     11,238,415       11,831,117  
Interest in kind added to promissory notes balance     1,351       170,765  
Deferred income tax     (148,539 )     (317,006 )
Net changes in the fair value of loans receivables at fair value     (984,652 )     523,424  
Changes in operating assets and liabilities:                
Lease receivables     (12,852,307 )     (15,655,280 )
Loans receivables at fair value     4,599,208       (4,100,819 )
Prepaid expenses and other assets     576,689       650,764  
Lease merchandise     (10,703,452 )     (14,816,328 )
Purchase consideration payable related to acquisition     141,275       -  
Lease liabilities     (6,032 )     (2,511 )
Accounts payable     (2,668,765 )     (3,165,343 )
Accrued payroll and related taxes     254,550       273,946  
Accrued expenses     (1,340,486 )     (1,405,958 )
Net cash provided by/ (used in) operating activities     5,599,339       (7,940,659 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchases of property and equipment, including capitalized software costs     (1,753,800 )     (1,260,755 )
Purchases of data costs     (169,082 )     (293,055 )
Net cash used in investing activities     (1,922,882 )     (1,553,810 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Proceeds from loan payable under credit agreement     2,750,000       6,800,000  
Repayment of loan payable under credit agreement     (2,575,000 )     (1,125,000 )
Debt issuance related costs     -       (86,931 )
Proceeds from exercise of stock options     1,185       137,057  
Proceeds from promissory notes to related parties     -       3,000,000  
Principal payment under finance lease obligation     (2,526 )     (2,796 )
Repayment of purchase consideration payable related to acquisition     (153,938 )     -  
Repayment of installment loan     -       (2,802 )
Net cash provided by financing activities     19,721       8,719,528  
                 
INCREASE / (DECREASE) IN CASH and RESTRICTED CASH     3,696,178       (774,941 )
                 
CASH and RESTRICTED CASH, beginning of period     6,173,349       5,094,642  
                 
CASH and RESTRICTED CASH, end of period   $ 9,869,527     $ 4,319,701  
                 
Supplemental cash flow information:                
Interest paid   $ 3,867,982     $ 1,679,296  
                 

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 three months ended March 31, 2023 and 2022 are as follows:

    Three months ended
March 31,		              
    2023     2022     $ Change     % Change  
Gross Profit:                  
Gross lease billings and fees   $ 34,255,083     $ 39,597,429     $ (5,342,346 )     (13.5 )
Provision for doubtful accounts     (11,238,415 )     (11,831,117 )     592,702       (5.0 )
Gain on sale of lease receivables     1,697,490       -       1,697,490          
Net lease billing and fees   $ 24,714,158     $ 27,766,312     $ (3,052,154 )     (11.0 )
Loan revenues and fees     5,086,965       1,712,348       3,374,617       197.1  
Net changes in the fair value of loans receivable     984,652       (523,424 )     1,508,076       (288.1 )
Net loan revenues   $ 6,071,617     $ 1,188,924     $ 4,882,693       410.7  
Total revenues   $ 30,785,775     $ 28,955,236     $ 1,830,539       6.3  
Depreciation and impairment of lease merchandise     (15,345,788 )     (19,160,611 )     3,814,823       (19.9 )
Loans origination costs and fees     (1,833,627 )     (425,513 )     (1,408,114 )     330.9  
Gross profit   $ 13,606,360     $ 9,369,112     $ 4,237,248       45.2  
Gross profit margin     44 %     32 %                


    Three months ended
March 31,		              
    2023     2022     $ Change     % Change  
Adjusted EBITDA:                        
Net loss   $ (230,215 )   $ (2,380,935 )   $ 2,150,720       (90.3 )
Income taxes     (148,539 )     (859,780 )     711,241       (82.7 )
Amortization of debt issuance costs     70,367       50,603       19,764       39.1  
Amortization of discount on the promissory note related to acquisition     59,239       -       59,239          
Other amortization and depreciation     1,826,157       937,062       889,095       94.9  
Interest expense     4,401,721       1,907,465       2,494,256       130.8  
Stock-based compensation     420,748       305,229       115,519       37.8  
Adjusted EBITDA   $ 6,399,478     $ (40,356 )   $ 6,439,834       (15,957.6 )
   

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.