FlexShopper, Inc. Reports Third Quarter 2023 Financial Results

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BOCA RATON, Fla., Nov. 14, 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 September 30, 2023.

Results for Quarter Ended September 30, 2023, vs. Quarter Ended September 30, 2022:

  • Total fundings increased 10.7% to $28.9 million from $26.1 million consisting of gross lease originations decreasing 10.8% from $15.7 to $14.0 million, loan participations decreasing 99.3% from $10.4 million to $77 thousand, and loan originations increasing from $0 to $14.8 million  
  • Total net lease and loan revenues and fees increased 20.3% to $31.4 million from $26.1 million  
  • Gross profit increased 164.1% to $16.9 million from $6.4 million  
  • Adjusted EBITDA1 increased 389.7 to $8.4 million compared to ($2.9) million  
  • Net income of 940 thousand compared with net loss of $6.3 million  
  • Net loss attributable to common stockholders of $(129) thousand, or $(0.01) per diluted share, compared to net loss attributable to common stockholders of ($6.9) million, or ($0.32) per diluted share

Results for Nine Months Ended September 30, 2023, vs. Nine Months Ended September 30, 2022:

  • Total fundings increased 6.0% to $85.0 million from $80.2 million consisting of gross lease originations decreasing 19.3% from $51.9 million to $41.9 million, loan participations decreased 98.6% from $28.3 million to $397 thousand, and loan originations increasing from $0 to $42.7 million  
  • Total net lease and loan revenues and fees decreased 5.3% to $86.7 million from $91.6 million  
  • Gross profit increased 16.8% to $38.9 million from $33.3 million  
  • Adjusted EBITDA1 increased 344.1% to $15.1 million compared to $3.4 million  
  • Net loss of $4.6 million compared with net income of $5.7 million  
  • Net loss attributable to common stockholders of $7.6 million, or $(0.35) per diluted share, compared to net income attributable to common stockholders of $3.9 million, or $0.17 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: Wednesday November 15, 2023
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=As6vTenB

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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

    For the three months ended
September  30,
    For the nine months ended
September  30,
 
    2023     2022     2023     2022  
                         
Revenues:                        
Lease revenues and fees, net   $ 21,082,199     $ 24,512,086     $ 68,703,201     $ 82,746,874  
Loan revenues and fees, net of changes in fair value     10,304,247       1,629,365       18,001,057       8,897,964  
Total revenues     31,386,446       26,141,451       86,704,258       91,644,838  
                                 
Costs and expenses:                                
Depreciation and impairment of lease merchandise     13,061,958       18,746,897       42,893,163       56,114,813  
Loan origination costs and fees     1,389,107       1,027,097       4,878,158       2,256,838  
Marketing     1,671,137       2,393,185       4,258,904       8,178,120  
Salaries and benefits     3,231,100       2,820,033       8,933,998       8,799,395  
Operating expenses     6,080,725       5,702,800       17,666,366       17,124,288  
Total costs and expenses     25,434,027       30,690,012       78,630,589       92,473,454  
                                 
Operating income/ (loss)     5,952,419       (4,548,561 )     8,073,669       (828,616 )
                                 
Interest expense including amortization of debt issuance costs     (4,746,801 )     (3,030,142 )     (13,846,685 )     (7,336,048 )
Income/ (loss) before income taxes     1,205,618       (7,578,703 )     (5,773,016 )     (8,164,664 )
(Loss)/ benefit from income taxes     (265,517 )     1,298,269       1,185,247       13,892,516  
Net income/ (loss)     940,101       (6,280,434 )     (4,587,769 )     5,727,852  
                                 
Dividends on Series 2 Convertible Preferred Shares     (1,069,456 )     (609,778 )     (3,034,182 )     (1,829,332 )
Net (loss)/ income attributable to common and Series 1 Convertible Preferred shareholders   $ (129,355 )     (6,890,212 )     (7,621,951 )     3,898,520  
                                 
Basic and diluted (loss)/ income per common share:                                
Basic   $ (0.01 )   $ (0.32 )   $ (0.35 )   $ 0.18  
Diluted   $ (0.01 )   $ (0.32 )   $ (0.35 )   $ 0.17  
                                 
WEIGHTED AVERAGE COMMON SHARES:                                
Basic     21,716,852       21,681,853       21,740,027       21,611,879  
Diluted     21,716,852       21,681,853       21,740,027       22,403,447  


FLEXSHOPPER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

    September 30,     December 31,  
    2023     2022  
    (Unaudited)        
ASSETS            
CURRENT ASSETS:            
Cash   $ 5,732,483     $ 6,051,713  
Restricted cash     5,326       121,636  
Lease receivables, net     41,421,040       35,540,043  
Loan receivables at fair value     31,679,882       32,932,504  
Prepaid expenses and other assets     2,839,591       3,489,136  
Lease merchandise, net     23,596,608       31,550,441  
Total current assets     105,274,930       109,685,473  
                 
Property and equipment, net     9,011,047       8,086,862  
Right of use asset, net     1,281,918       1,406,270  
Intangible assets, net     13,833,595       15,162,349  
Other assets, net     1,809,511       1,934,728  
Deferred tax asset, net     13,206,051       12,013,828  
Total assets   $ 144,417,052     $ 148,289,510  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
CURRENT LIABILITIES:                
Accounts payable   $ 4,010,544     $ 6,511,943  
Accrued payroll and related taxes     603,838       310,820  
Promissory notes to related parties, including accrued interest     192,009       1,209,455  
Accrued expenses     2,834,954       3,988,093  
Lease liability - current portion     236,628       208,001  
Total current liabilities     7,877,973       12,228,312  
Loan payable under credit agreement to beneficial shareholder, net of unamortized issuance costs of $141,148 at September 30, 2023 and $352,252 at December 31, 2022     86,063,852       80,847,748  
Promissory notes to related parties, net of unamortized issuance costs of $764,651 at September 30, 2023 and $0 at December 31, 2022 and net of current portion     9,985,349       10,750,000  
Promissory note related to acquisition, net of discount of $987,313 at September 30, 2023 and $1,165,027 at December 31, 2022     3,191,272       3,158,471  
Loan payable under Basepoint credit agreement, net of unamortized issuance costs of $102,580 at September 30, 2023     7,310,025       -  
Purchase consideration payable related to acquisition     -       8,703,684  
Lease liabilities, net of current portion     1,386,769       1,566,622  
Total liabilities     115,815,240       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 September 30, 2023 and 21,750,804 shares at December 31, 2022     2,176       2,176  
Treasury shares, at cost – 100,775 shares at September 30, 2023     (100,225 )     -  
Additional paid in capital     42,074,553       39,819,420  
Accumulated deficit     (36,178,352 )     (31,590,583 )
Total stockholders’ equity     28,601,812       31,034,673  
    $ 144,417,052     $ 148,289,510  


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 September 30, 2023, and 2022 are as follows:

    Three months ended
September 30,
             
    2023     2022     $ Change     % Change  
Gross Profit:                        
Gross lease billings and fees   $ 31,266,666     $ 38,580,116     $ (7,313,450 )     (19.0 )
Provision for doubtful accounts     (10,038,122 )     (15,075,109 )     5,036,987       (33.4 )
Gain  / (loss) on sale of lease receivables     (146,345 )     1,007,079       (1,153,424 )     (114.5 )
Net lease billing and fees   $ 21,082,199     $ 24,512,086     $ (3,429,887 )     (14.0 )
Loan revenues and fees     3,208,920       6,025,786       (2,816,866 )     (46.7 )
Net changes in the fair value of loans receivable     7,095,327       (4,396,421 )     11,491,748       (261.4 )
Net loan revenues   $ 10,304,247     $ 1,629,365     $ 8,674,882       532.4  
Total revenues   $ 31,386,446     $ 26,141,451     $ 5,244,995       20.1  
Depreciation and impairment of lease merchandise     (13,061,958 )     (18,746,897 )     5,684,939       (30.3 )
Loans origination costs and fees     (1,389,107 )     (1,027,097 )     (362,010 )     35.2  
Gross profit   $ 16,935,381     $ 6,367,457     $ 10,567,924       166.0  
Gross profit margin     54 %     24 %                


    Three months ended
September 30,
             
    2023     2022     $ Change     % Change  
Adjusted EBITDA:                        
Net income/ (loss)   $ 940,101     $ (6,280,434 )   $ 7,220,535       (115.0 )
Income taxes     265,517       (1,298,269 )     1,563,786       (120.5 )
Amortization of debt issuance costs     194,682       56,283       138,399       245.9  
Amortization of discount on the promissory note related to acquisition     59,238       -       59,238          
Other amortization and depreciation     1,964,229       1,244,267       719,962       57.9  
Interest expense     4,492,881       2,973,859       1,519,022       51.1  
Stock-based compensation     471,819       387,298       84,521       21.8  
Adjusted EBITDA   $ 8,388,467     $ (2,916,996 )   $ 11,305,463       (387.6 )


Key performance metrics for the nine months ended September 30, 2023 and 2022 are as follows:

    Nine months ended
September 30,
             
    2023     2022     $ Change     % Change  
Gross Profit:                  
Gross lease billings and fees   $ 98,023,406     $ 117,774,390     $ (19,750,984 )     (16.8 )
Provision for doubtful accounts     (32,123,950 )     (42,639,102 )     10,515,152       (24.7 )
Gain on sale of lease receivables     2,803,745       7,611,586       (4,807,841 )     (63.2 )
Net lease billing and fees   $ 68,703,201     $ 82,746,874     $ (14,043,673 )     (17.0 )
Loan revenues and fees     11,742,778       10,836,534       906,244       8.4  
Net changes in the fair value of loans receivable     6,258,279       (1,938,570 )     8,196,849       (422.8 )
Net loan revenues   $ 18,001,057     $ 8,897,964     $ 9,103,093       102.4  
Total revenues   $ 86,704,258     $ 91,644,838     $ (4,940,580 )     (5.4 )
Depreciation and impairment of lease merchandise     (42,893,163 )     (56,114,813 )     13,221,650       (23.6 )
Loans origination costs and fees     (4,878,158 )     (2,256,838 )     (2,621,320 )     116.2  
Gross profit   $ 38,932,937     $ 33,273,187     $ 5,659,750       17.0  
Gross profit margin     45 %     36 %                


    Nine months ended
September 30,
             
    2023     2022     $ Change     % Change  
Adjusted EBITDA:                        
Net (loss)/ income   $ (4,587,769 )   $ 5,727,852     $ (10,315,621 )     (180.1 )
Income taxes     (1,185,247 )     (13,892,516 )     12,707,269       (91.5 )
Amortization of debt issuance costs     376,857       163,169       213,688       131.0  
Amortization of discount on the promissory note related to acquisition     177,714       -       177,714          
Other amortization and depreciation     5,674,931       3,303,590       2,371,341       71.8  
Interest expense     13,292,114       7,172,879       6,119,235       85.4  
Stock-based compensation     1,336,367       950,003       386,364       40.7  
Adjusted EBITDA   $ 15,084,967     $ 3,424,977     $ 11,659,990       340.4  

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.