UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE
January 13, 2020
Via Email
Richard House Jr.
Chief Executive Officer
FlexShopper, Inc.
901 Yamato Road, Suite 260
Boca Raton, Florida 33431
Re: FlexShopper, Inc.
Schedule TO-I filed on January 6, 2020
File No. 005-83480
Dear Mr. House:
The staff in the Office of Mergers and Acquisitions has reviewed the
filing listed above,
and we have the comments set forth below. All defined terms used herein have
the same
meaning as in the Offer Letter attached as Exhibit (a)(1)(A) to the Schedule
TO-I. In some of
our comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to this letter by amending your filing, by providing
the requested
information or by advising us when you will provide the requested response.
If you do not
believe our comments apply to your facts and circumstances or do not believe
an amendment is
appropriate, please tell us why in your response.
After reviewing any amendment to your filing and the information you
provide in
response to these comments, we may have additional comments.
Schedule TO-I
Item 7. Source and Amount of Funds or Other Consideration
1. Please revise the disclosure under Item 7(a) of the Schedule TO-I to
state the specific
source(s) of the funds used to pay the expenses of the Offer. See Item
1007(a) of
Regulation M-A.
Exhibit (a)(1)(A) Offer Letter
General
2. We note your disclosure that the Shares issuable in the Offer will
constitute about 20% of
the Company's outstanding common shares. Please explain in your response
letter why a
shareholder vote is not required to approve the issuance, pursuant to
NASDAQ rules.
3. We note your disclosure throughout the Offer Letter that the Company
entered into
Exchange Agreements with Holders of at least 50.1% of the outstanding
Public Warrants,
pursuant to which the Holders agreed to exchange their Public Warrants
for Shares on the
same terms as the Offer. In your response letter, please tell us how many
holders of
Public Warrants are subject to the Exchange Agreements and their
relationship to the
Company (if any) other than as holders of those securities. We note the
disclosure that
four such holders were officer and directors of the Company; to the
extent that the other
holders that entered into the Exchange Agreements are not affiliated with
the Company,
please tell us how you solicited them.
4. Please refer to the preceding comment. We note your disclosure throughout
the Offer
Letter that such Holders have "agreed to exchange" their Public Warrants
for Shares
pursuant to the Exchange Agreements. We further note, however, that
Section 2 of the
Exchange Agreement requires the Company to cause the transfer agent to
deliver to the
Holder the Shares pursuant to the exchange within two business days after
the execution
and delivery of the Exchange Agreement. Please revise your disclosures
throughout the
Offer Letter to indicate whether such Holders' Public Warrants (including
the 3.8% held
by the Company's directors) have actually been exchanged for Shares
pursuant to the
Exchange Agreements and the date of any such exchange. Please make also
any
conforming changes to the similar disclosures in the other exhibits to
the Schedule TO-I.
5. You state that the Offer "relates to the Public Warrants issued pursuant
to the
Prospectus." However, the all-holders provisions of Rule 13e-4(f)(8)(i)
require that the
Offer be open to all holders of warrants of this class traded under the
symbol FPAYW.
Please advise in your response letter whether there are other warrants of
the same class
than those issued "pursuant to the Prospectus."
6. We note the following statement on page iv of the Offer Letter: "We are
not making the
Offer to, and will not accept any tendered Public Warrants from, Public
Warrant holders
in any jurisdiction where it would be illegal to do so." While offer
materials need not be
disseminated into jurisdictions where it is impermissible to do so,
please revise this
statement to remove the implication that tendered Public Warrants will
not be accepted
from all holders, wherever located. Refer to Rule 13e-4(f)(8)(i) and
Section II.G.1 of
Securities Exchange Act Release No. 58597 (September 19, 2008).
Alternatively, please
revise the statement to limit the restriction to only U.S. states instead
of all jurisdictions
to conform to the regulatory text in Rule 13e-4(f)(9)(ii). Please also
make any
conforming changes to the similar statement in the letter attached as
Exhibit (a)(1)(E) to
the Schedule TO-I.
Summary, pages 1-3
7. You have included a condition that will be triggered by "any general
suspension of, or
limitation on prices for, trading in securities in U.S. securities or
financial markets."
Please revise to explain what would be considered a limitation on prices
for securities in
U.S. securities or financial markets. Please also make any conforming
changes to
condition 4(a) in the section titled "Conditions; Termination; Waivers;
Extensions;
Amendments" on page 14 of the Offer Letter.
8. We note the following statement: "[W]e may assert one or more of the
conditions
regardless of the circumstances giving rise to any such conditions." The
Offer may not
be terminated at any time for any reason, such as the action or inaction
by the Company,
without the Offer potentially constituting an illusory offer in
contravention of Section
14(e). Please revise this language to make clear that the Company may
only terminate
the Offer pursuant to objectively determinable offer conditions specified
in Offer. Please
also make any conforming changes to the similar language in the section
titled
"Conditions; Termination; Waivers; Extensions; Amendments" on page 14 of
the Offer
Letter.
9. We note the following statement: "The determination by us as to whether
any condition
has been satisfied shall be conclusive and binding on all parties."
Please revise this
statement to include a qualifier indicating that the Holders are not
foreclosed from
challenging your determination in a court of competent jurisdiction.
Please also make
any conforming changes to the similar language in the section titled
"Conditions;
Termination; Waivers; Extensions; Amendments" on page 14 of the Offer
Letter.
10. We note the following statement: "The failure by us at any time to
exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each
such right shall
be deemed a continuing right which may be asserted at any time and from
time to time
prior to the Expiration Date." This statement suggests you may become
aware that an
Offer condition has been triggered or otherwise has become incapable of
being satisfied,
yet the Offer may proceed without you making a disclosure. As stated
elsewhere in the
Offer Letter, however, you must amend the Offer to disclose material
changes. To the
extent you becomes aware of any condition being "triggered" that would
enable you to
terminate the Offer or otherwise cancel your obligation to accept
tenders, and you elect to
proceed with the Offer anyway, we view that decision as being a waiver
of the condition.
If a material condition is waived, a material change has occurred to the
Offer requiring
revised disclosure and (potentially) an extension of the Offer. Please
revise this
disclosure to correct this inconsistency with respect to your stated
understanding of your
planned treatment of material changes. Please also make any conforming
changes to the
similar language in the section titled "Conditions; Termination;
Waivers; Extensions;
Amendments" on page 14 of the Offer Letter.
Price Range of Shares and Public Warrants, pages 11-12
11. Please refer to the table indicating the implied Public Warrant value at
various
hypothetical stock prices. Although the lead-in language to that table
indicates that the
implied Public Warrant value is calculated by multiplying the prices per
Share by the
exchange ratio (i.e., 0.62), it appears that the values in the "Implied
Public Warrant
Value" column were calculated by multiplying the values in the "Price
per Share"
column by 0.55. Please revise such values or advise us as to why such
values are correct.
Forward-Looking Statements; Risk Factors, pages 16-18
12. Please revise to clarify that the safe-harbor protections for
forward-looking statements in
the Private Securities Litigation Reform Act do not apply to statements
made in
connection with a tender offer.
13. Refer to the disclosure in the last paragraph on page 17. Expand the
discussion to more
fully explain the nature of the potential conflicts faced by your
officers and directors as a
result of the Offer.
Exhibit (a)(1)(B) Letter of Transmittal
14. We note the following statement on page 5 of the Letter of Transmittal:
"[T]he
undersigned hereby . . . waives any and all other rights with respect to
such Public
Warrants and releases and discharges the Company from any and all claims
the
undersigned may have now, or may have in the future, arising out of, or
related to, such
Public Warrants." Please revise this statement to comply with Section
29(a) of the
Securities Exchange Act of 1934.
* * *
We remind you that the registrant and its management are responsible
for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Please direct any questions to Valian Afshar, Special Counsel, at (202)
551-8729, or me,
at (202) 551-3263.
Sincerely,
/s/ Christina
Chalk
Christina Chalk
Senior Special
Counsel
Office of Mergers
and Acquisitions
cc: Spencer G. Feldman, Esq. (via email)
Olshan Frome Wolosky LLP
