FlexShopper, Inc. Reports First Quarter 2023 Financial Results

BOCA RATON, Fla., May 11, 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 March 31, 2023.

Results for Quarter Ended March 31, 2023 vs. Quarter Ended March 31, 2022:

	●	Total fundings increased 29.2% to $27.4 million from $21.2 million consisting of gross lease originations decreasing from $16.3 to $13.2 million, loan participations decreased ~96.2% from $4.9 million to $0.2 million, and loan originations increasing from $0 to $14.0 million
	●	Total net lease and loan revenues and fees increased 6.3% to $30.8 million from $28.9 million
	●	Gross profit increased 45.2% to $13.6 million from $9.4 million
	●	Adjusted EBITDA1 increased to $6.4 million compared to $(40.3) thousand
	●	Net loss of $230.2 thousand compared with net loss of $2.4 million
	●	Net loss attributable to common stockholders of $(1.2) million, or $(0.06) per diluted share, compared to net loss attributable to common stockholders of $(3.0) million, or $(0.14) 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: Monday, May 15, 2023

Time: 8:30 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=G5YRTvWe 

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=G5YRTvWe

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 March 31,
		2023				2022
Revenues:
Lease revenues and fees, net		$	24,714,158			$	27,766,312
Loan revenues and fees, net of changes in fair value			6,071,617				1,188,924
Total revenues			30,785,775				28,955,236
Costs and expenses:
Depreciation and impairment of lease merchandise			15,345,788				19,160,611
Loan origination costs and fees			1,833,627				425,513
Marketing			1,099,189				2,014,115
Salaries and benefits			2,726,890				2,964,442
Operating expenses			5,627,708				5,673,202
Total costs and expenses			26,633,202				30,237,883
Operating income/ (loss)			4,152,573				(1,282,647	)
Interest expense including amortization of debt issuance costs			4,531,327				1,958,068
Loss before income taxes			(378,754	)			(3,240,715	)
Benefit from income taxes			148,539				859,780
Net loss			(230,215	)			(2,380,935	)
Dividends on Series 2 Convertible Preferred Shares			972,233				609,777
Net loss attributable to common and Series 1 Convertible Preferred shareholders		$	(1,202,448	)		$	(2,990,712	)
Basic and diluted loss per common share:
Basic		$	(0.06	)		$	(0.14	)
Diluted		$	(0.06	)		$	(0.14	)
WEIGHTED AVERAGE COMMON SHARES:
Basic			21,751,304				21,547,069
Diluted			21,751,304				21,547,069

FLEXSHOPPER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

		March 31,				December 31,
		2023				2022
ASSETS
CURRENT ASSETS:
Cash		$	9,861,646			$	6,051,713
Restricted cash			7,881				121,636
Lease receivables, net			37,153,935				35,540,043
Loan receivables at fair value			29,317,948				32,932,504
Prepaid expenses and other assets			2,912,447				3,489,136
Lease merchandise, net			26,908,105				31,550,441
Total current assets			106,161,962				109,685,473
Property and equipment, net			8,677,314				8,086,862
Right of use asset, net			1,366,235				1,406,270
Intangible assets, net			14,719,290				15,162,349
Other assets, net			1,884,060				1,934,728
Deferred tax asset, net			12,162,368				12,013,828
Total assets		$	144,971,229			$	148,289,510
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$	3,843,178			$	6,511,943
Accrued payroll and related taxes			565,370				310,820
Promissory notes to related parties, including accrued interest			1,210,806				1,209,455
Accrued expenses			2,647,608				3,988,093
Lease liability - current portion			217,862				208,001
Total current liabilities			8,484,824				12,228,312
Loan payable under credit agreement to beneficial shareholder, net of $281,884 at 2023 and $352,252 at 2022 of unamortized issuance costs			81,093,116				80,847,748
Promissory notes to related parties, net of current portion			10,750,000				10,750,000
Promissory note related to acquisition, net of discount of $1,105,789 at 2023 and $1,165,027 at 2022			3,063,771				3,158,471
Purchase consideration payable related to acquisition			8,844,959				8,703,684
Lease liabilities net of current portion			1,508,168				1,566,622
Total liabilities			113,744,838				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 March 31, 2023 and 21,750,804 shares at December 31, 2022			2,176				2,176
Additional paid in capital			40,241,353				39,819,420
Accumulated deficit			(31,820,798	)			(31,590,583	)
Total stockholders' equity			31,226,391				31,034,673
		$	144,971,229			$	148,289,510

FLEXSHOPPER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2023 and 2022

(unaudited)

		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(230,215	)		$	(2,380,935	)
Adjustments to reconcile net loss to net cash provided by/ (used in) operating activities:
Depreciation and impairment of lease merchandise			15,345,788				19,160,611
Other depreciation and amortization			1,826,157				937,062
Amortization of debt issuance costs			70,367				50,603
Amortization of discount on the promissory note related to acquisition			59,239				-
Compensation expense related to stock-based compensation			420,748				305,229
Provision for doubtful accounts			11,238,415				11,831,117
Interest in kind added to promissory notes balance			1,351				170,765
Deferred income tax			(148,539	)			(317,006	)
Net changes in the fair value of loans receivables at fair value			(984,652	)			523,424
Changes in operating assets and liabilities:
Lease receivables			(12,852,307	)			(15,655,280	)
Loans receivables at fair value			4,599,208				(4,100,819	)
Prepaid expenses and other assets			576,689				650,764
Lease merchandise			(10,703,452	)			(14,816,328	)
Purchase consideration payable related to acquisition			141,275				-
Lease liabilities			(6,032	)			(2,511	)
Accounts payable			(2,668,765	)			(3,165,343	)
Accrued payroll and related taxes			254,550				273,946
Accrued expenses			(1,340,486	)			(1,405,958	)
Net cash provided by/ (used in) operating activities			5,599,339				(7,940,659	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, including capitalized software costs			(1,753,800	)			(1,260,755	)
Purchases of data costs			(169,082	)			(293,055	)
Net cash used in investing activities			(1,922,882	)			(1,553,810	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan payable under credit agreement			2,750,000				6,800,000
Repayment of loan payable under credit agreement			(2,575,000	)			(1,125,000	)
Debt issuance related costs			-				(86,931	)
Proceeds from exercise of stock options			1,185				137,057
Proceeds from promissory notes to related parties			-				3,000,000
Principal payment under finance lease obligation			(2,526	)			(2,796	)
Repayment of purchase consideration payable related to acquisition			(153,938	)			-
Repayment of installment loan			-				(2,802	)
Net cash provided by financing activities			19,721				8,719,528
INCREASE / (DECREASE) IN CASH and RESTRICTED CASH			3,696,178				(774,941	)
CASH and RESTRICTED CASH, beginning of period			6,173,349				5,094,642
CASH and RESTRICTED CASH, end of period		$	9,869,527			$	4,319,701
Supplemental cash flow information:
Interest paid		$	3,867,982			$	1,679,296

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 March 31, 2023 and 2022 are as follows:

		Three months ended March 31,
		2023				2022				$ Change				% Change
Gross Profit:
Gross lease billings and fees		$	34,255,083			$	39,597,429			$	(5,342,346	)			(13.5	)
Provision for doubtful accounts			(11,238,415	)			(11,831,117	)			592,702				(5.0	)
Gain on sale of lease receivables			1,697,490				-				1,697,490
Net lease billing and fees		$	24,714,158			$	27,766,312			$	(3,052,154	)			(11.0	)
Loan revenues and fees			5,086,965				1,712,348				3,374,617				197.1
Net changes in the fair value of loans receivable			984,652				(523,424	)			1,508,076				(288.1	)
Net loan revenues		$	6,071,617			$	1,188,924			$	4,882,693				410.7
Total revenues		$	30,785,775			$	28,955,236			$	1,830,539				6.3
Depreciation and impairment of lease merchandise			(15,345,788	)			(19,160,611	)			3,814,823				(19.9	)
Loans origination costs and fees			(1,833,627	)			(425,513	)			(1,408,114	)			330.9
Gross profit		$	13,606,360			$	9,369,112			$	4,237,248				45.2
Gross profit margin			44	%			32	%

		Three months ended March 31,
		2023				2022				$ Change				% Change
Adjusted EBITDA:
Net loss		$	(230,215	)		$	(2,380,935	)		$	2,150,720				(90.3	)
Income taxes			(148,539	)			(859,780	)			711,241				(82.7	)
Amortization of debt issuance costs			70,367				50,603				19,764				39.1
Amortization of discount on the promissory note related to acquisition			59,239				-				59,239
Other amortization and depreciation			1,826,157				937,062				889,095				94.9
Interest expense			4,401,721				1,907,465				2,494,256				130.8
Stock-based compensation			420,748				305,229				115,519				37.8
Adjusted EBITDA		$	6,399,478			$	(40,356	)		$	6,439,834				(15,957.6	)

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, 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

[email protected]

FlexShopper, Inc.