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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): May 12, 2022

 

FlexShopper, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware   001-37945   20-5456087
(State or other jurisdiction   (Commission File Number)   (IRS Employer
of incorporation)       Identification No.)

 

901 Yamato Road, Suite 260    
Boca Raton, Florida   33431
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (855) 353-9289

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which
registered
Common Stock, par value $0.0001 per share   FPAY   The Nasdaq Stock Market LLC

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

 

Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

  

 

 

 

CURRENT REPORT ON FORM 8-K

 

FlexShopper, Inc. (the “Company”)

 

May 12, 2022

 

Item 2.02. Results of Operations and Financial Condition.

 

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, highlighted by growth in net revenue and originations. A copy of the press release is furnished with this report as Exhibit 99.1. Such information, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01. Financial Statements and Exhibits.

 

  (a) Exhibits. The exhibit listed in the following Exhibit Index is filed as part of this current report.

 

Exhibit No.   Description
99.1   Press Release issued by FlexShopper, Inc. on May 12, 2022.
104  

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  FLEXSHOPPER, INC.
   
Date: May 12, 2022 By: /s/ H. Russell Heiser
    H. Russell Heiser
   

Chief Financial Officer

(Principal Financial Officer)

  

 

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Exhibit 99.1

 

 

 

FlexShopper, Inc. Reports First Quarter 2022 Financial Results

 

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

 

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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.

 

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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.

 

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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 

 

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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 

 

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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.

 

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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.

 

 

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