UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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CURRENT REPORT ON FORM 8-K
FlexShopper, Inc. (the “Company”)
November 14, 2023
Item 2.02. Results of Operations and Financial Condition.
FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper”), a leading national online lease-to-own (“LTO”) retailer and payment solution provider for underserved consumes, today announced its financial results for the quarter ended September 30, 2023. 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 14, 2023. | |
| 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 14, 2023 | By: | /s/ H. Russell Heiser, Jr. |
| H. Russell Heiser, Jr. | ||
| Chief Executive Officer | ||
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Exhibit 99.1
FlexShopper, Inc. Reports Third Quarter 2023 Financial Results
BOCA RATON, Fla., November 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.
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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, | |||||||||||||||
| 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 | ||||||||||||
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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 | |||||
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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 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 | ) | |||||||
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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.
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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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