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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): November 10, 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”)

 

November 10, 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 September 30, 2022. 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 November 10, 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: November 10, 2022 By: /s/ Richard House, Jr.
    Richard House, Jr.
    Chief Executive Officer

  

 

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Exhibit 99.1

 

 

 

FlexShopper, Inc. Reports Third Quarter 2022 Financial Results

 

BOCA RATON, Fla., November 10, 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 September 30, 2022.

 

Results for Quarter Ended September 30, 2022 vs. Quarter Ended September 30, 2021:

 

 

Total fundings increased 60.1% to $25.8 million from $16.1 million consisting of gross lease originations decreasing from $15.9 to $15.7 million and loan participations up ~4,350% from $226 thousand to $10.1 million

 

  Total net lease revenues and fees decreased 20.3% to $24.5 million from $30.7 million

 

  Total net loan revenues and fees increased 1,249% to $1.6 million from $121 thousand

 

  Gross profit decreased 49.8% to $6.4 million from $12.7 million

 

  Adjusted EBITDA1 decreased to $(2.9) million compared to $4.8 million

 

  Net loss of $(6.3) million compared with net income of $1.7 million

 

  Net loss attributable to common stockholders of $(6.9) million, or $(0.32) per diluted share, compared to net income attributable to common stockholders of $1.1 million, or $0.05 per diluted share

  

Results for Nine Months Ended September 30, 2022 vs. Nine Months Ended September 30, 2021:

 

 

Total fundings increased 38.3% to $78.9 million from $57.0 million consisting of gross lease originations decreasing from $56.6 to $51.9 million and loan participations up ~6,753% from $395 thousand to $27.0 million

 

  Total net lease revenues and fees decreased 12.1% to $82.7 million from $94.2 million

 

  Total net loan revenues and fees increased 4,864% to $8.9 million from $179 thousand

 

  Gross profit decreased 2.2% to $33.3 million from $34.0 million

 

  Adjusted EBITDA1 decreased to $3.4 million compared to $9.4 million

 

  Net income of $5.7 million compared with net income of $2.6 million

 

  Net income attributable to common stockholders of $3.9 million, or $0.17 per diluted share, compared to net income attributable to common stockholders of $810 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”.

 

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“FlexShopper is feeling the same headwind on consumer demand experienced by both traditional retailers and our peers in this challenging economic environment. As a result, we are observing a decline in response rates and approval rates which has created a gap in our near-term earnings. Despite the decrease in the online marketplace business, our retail partnership channel and repeat volume continue to grow in this environment.” said Richard House, CEO of FlexShopper. 

 

FlexShopper CEO, Richard House, 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 and Webcast Details

 

Conference call

 

Date: Friday, November 11, 2022

Time: 9:30 a.m. Eastern Time

 

Participant Dial-In Numbers:

 

Domestic callers: (877) 407-2988

International callers: (201) 389-0923

 

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=Fpl90J10

 

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
September 30,
   For the nine months ended
September 30,
 
   2022   2021   2022   2021 
                 
Revenues:                
Lease revenues and fees, net  $24,512,086   $30,740,119   $82,746,874   $94,153,920 
Loan revenues and fees, net of changes in fair value   1,629,365    120,816    8,897,964    179,238 
Total revenues   26,141,451    30,860,935    91,644,838    94,333,158 
                     
Costs and expenses:                    
Cost of lease revenues and merchandise sold   18,746,897    18,005,170    56,114,813    59,959,590 
Loan origination costs and fees   1,027,097    166,805    2,256,838    341,989 
Marketing   2,393,185    1,824,402    8,178,120    5,571,237 
Salaries and benefits   2,820,033    2,672,864    8,799,395    8,329,188 
Operating expenses   5,702,800    4,325,825    17,124,288    13,654,038 
Total costs and expenses   30,690,012    26,995,066    92,473,454    87,856,042 
                     
Operating (loss)/ income   (4,548,561)   3,865,869    (828,616)   6,477,116 
                     
Gain on extinguishment of debt   -    -    -    1,931,825 
Interest expense including amortization of debt issuance costs   (3,030,142)   (1,233,617)   (7,336,048)   (3,855,014)
(Loss)/income before income taxes   (7,578,703)   2,632,252    (8,164,664)   4,553,927 
Benefit /(expense) from income taxes   1,298,269    (936,229)   13,892,516    (1,914,473)
Net (loss)/ income   (6,280,434)   1,696,023    5,727,852    2,639,454 
                     
Dividends on Series 2 Convertible Preferred Shares   609,778    609,777    1,829,332    1,829,322 
Net income/(loss) attributable to common and Series 1 Convertible Preferred shareholders  $(6,890,212)   1,086,246    3,898,520    810,132 
                     
Basic and diluted income/(loss) per common share:                    
Basic  $(0.32)  $0.05   $0.18   $0.04 
Diluted  $(0.32)  $0.05   $0.17   $0.03 
                     
WEIGHTED AVERAGE COMMON SHARES:                    
Basic   21,681,853    21,383,647    21,611,879    21,377,978 
Diluted   21,681,853    23,577,179    22,403,447    23,682,265 

 

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FLEXSHOPPER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   September 30,   December 31, 
   2022   2021 
   (unaudited)     
ASSETS        
CURRENT ASSETS:        
Cash  $5,274,219   $4,986,559 
Restricted cash   481,867    108,083 
Lease receivables, net   33,425,123    25,473,154 
Loan receivables at fair value   26,591,546    3,560,108 
Prepaid expenses and other assets   1,478,800    1,823,256 
Lease merchandise, net   30,652,824    40,942,112 
Total current assets   97,904,379    76,893,272 
           
Property and equipment, net   7,416,249    5,490,434 
Right of use asset, net   1,445,159    1,553,330 
Other assets, net   1,726,443    875,020 
Deferred tax asset, net   13,607,949    - 
Total assets  $122,100,179   $84,812,056 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Accounts payable  $3,875,469   $7,982,180 
Accrued payroll and related taxes   703,465    391,078 
Promissory notes to related parties, net of $0 at 2022 and $1,274 at 2021 of unamortized issuance costs, including accrued interest   1,182,585    1,053,088 
Accrued expenses   3,243,570    2,987,646 
Lease liability - current portion   198,853    172,732 
Total current liabilities   9,203,942    12,586,724 
           
Loan payable under credit agreement to beneficial shareholder, net of $338,113 at 2022 and $413,076 at 2021 of unamortized issuance costs   77,261,887    50,061,924 
Promissory notes to related parties, net of current portion   10,750,000    3,750,000 
Deferred income tax liability   178,160    495,166 
Lease liabilities net of current portion   1,623,211    1,774,623 
Total liabilities   99,017,200    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 21,750,804 shares at September 30, 2022 and 21,442,278 shares at December 31, 2021   2,176    2,144 
Additional paid in capital   39,771,593    38,560,117 
Accumulated deficit   (39,494,450)   (45,222,302)
Total stockholders’ equity   23,082,979    16,143,619 
   $122,100,179   $84,812,056 

 

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FLEXSHOPPER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2022 and 2021

(unaudited)

 

   2022   2021 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income  $5,727,852   $2,639,454 
Adjustments to reconcile net income to net cash (used in)/ provided by operating activities:          
Depreciation and impairment of lease merchandise   56,114,813    59,959,590 
Other depreciation and amortization   3,303,591    2,032,811 
Amortization of debt issuance costs   163,169    177,647 
Compensation expense related to stock-based compensation and warrants   950,003    1,417,699 
Provision for doubtful accounts   42,639,102    30,566,352 
Proceeds from sale of lease receivables   7,611,586    - 
Interest in kind added to promissory notes balance   128,223    9,460 
Deferred income tax   (13,924,955)   700,199 
Gain on debt extinguishment   -    (1,931,825)
Net changes in the fair value of loan receivables at fair value   1,938,570    54,236 
Changes in operating assets and liabilities:          
Lease receivables   (58,202,657)   (39,915,536)
Loan receivables at fair value   (24,970,008)   (490,995)
Prepaid expenses and other assets   344,766    (80,795)
Lease merchandise   (45,825,525)   (50,470,104)
Security deposits   (4,956)   (8,338)
Lease liabilities   (8,732)   (2,595)
Accounts payable   (4,106,711)   (4,563,434)
Accrued payroll and related taxes   312,387    277,774 
Accrued expenses   264,019    788,228 
Net cash (used in)/ provided by operating activities   (27,545,463)   1,159,828 
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchases of property and equipment, including capitalized software costs   (4,855,150)   (2,998,044)
Purchases of data costs   (1,220,722)   (461,379)
Net cash used in investing activities   (6,075,872)   (3,459,424)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from loan payable under credit agreement   32,855,000    4,000,000 
Repayment of loan payable under credit agreement   (5,730,000)   (6,575,000)
Debt issuance related costs   (86,932)   (529,608)
Proceeds from exercise of stock options   261,505    24,988 
Proceeds from promissory notes   7,000,000    - 
Principal payment under finance lease obligation   (8,388)   (5,684)
Repayment of installment loan   (8,406)   (8,406)
Net cash provided by/(used in) financing activities   34,282,779    (3,093,710)
           
INCREASE / (DECREASE) IN CASH and RESTRICTED CASH   661,444    (5,393,306)
           
CASH and RESTRICTED CASH, beginning of period   5,094,642    8,541,232 
           
CASH and RESTRICTED CASH, end of period  $5,756,086   $3,147,926 
           
Supplemental cash flow information:          
Interest paid  $6,828,663   $3,702,949 

 

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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 and nine months ended September 30, 2022 and 2021 were as follows:

 

   Three months ended
September 30,
         
   2022   2021   $ Change   % Change 
Adjusted EBITDA:                
Net (loss)/income  $(6,280,434)  $1,696,023   $(7,976,457)   (470.3)
Income taxes   (1,298,269)   936,229    (2,234,498)   (238.7)
Amortization of debt issuance costs   56,283    43,067    13,216    30.7 
Other amortization and depreciation   1,244,267    708,762    535,505    75.6 
Interest expense   2,973,859    1,190,550    1,783,309    149.8 
Stock-based compensation   387,298    265,407    121,891    45.9 
Adjusted EBITDA  $(2,916,996)  $4,840,038   $(7,757,034)   (160.3)

 

   Nine months ended
September 30,
         
   2022   2021   $ Change   % Change 
Adjusted EBITDA:                
Net income  $5,727,852   $2,639,454   $3,088,398    117.0 
Income taxes   (13,892,516)   1,914,473    (15,806,989)   (825.7)
Amortization of debt issuance costs   163,169    177,647    (14,478)   (8.1)
Other amortization and depreciation   3,303,590    2,032,811    1,270,779    62.5 
Interest expense   7,172,879    3,677,367    3,495,512    95.1 
Stock-based compensation   950,003    894,892    55,111    6.2 
Product/ infrastructure expenses   -    10,000    (10,000)     
Gain on debt extinguishment   -    (1,931,825)   1,931,825    - 
Adjusted EBITDA  $3,424,977   $9,414,819   $(5,989,842)   (63.6)

 

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, 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 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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