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FlexShopper, Inc. Reports First Quarter 2022 Financial Results

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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

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.

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.

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 

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 

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.

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.


FlexShopper Inc

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About FPAY

flexshopper, llc, a wholly owned subsidiary of flexshopper, inc. (nsdq: fpay) is a financial and technology company that provides brand name durable goods to consumers on a lease-to-own (lto) basis through its ecommerce marketplace (www.flexshopper.com ) and patent pending lto payment method. flexshopper also provides lto technology platforms to retailers and e-tailers to enter into transactions with consumers that want to obtain durable goods, but do not have sufficient cash or credit. flexshopper also funds the lto transactions by paying merchants for the goods and collecting from consumers under an lto contract. flexshopper offers consumers three distinct ways of obtaining brand name durable goods on an lto basis: 1) at flexshopper's lto e-commerce marketplace, www.flexshopper.com, consumers can choose from over 80,000 different items including electronics, white goods, furniture, musical instruments, and equipment. 2) on third-party e-commerce sites featuring flexshopper's lto paym