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FlexShopper, Inc. Reports 2022 Fourth Quarter and Year End Financial Results

FlexShopper, Inc.
FlexShopper, Inc.

BOCA RATON, Fla., April 24, 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 and fiscal year ended December 31, 2022.

Results for Quarter Ended December 31, 2022 vs. Quarter Ended December 31, 2021:

  • Total fundings increased 11.3% to $33.1 million from $29.7 million consisting of gross lease originations decreasing from $26.9 to $23.2 million, loan participations increasing ~52.5% from $2.9 million to $4.4 million, and loan originations increasing from $0 to $5.5 million

  • Total net lease and loan revenues, including the changes in fair value of loan receivables, decreased 31.1% to $21.4 million from $31.1 million

  • Gross profit decreased 68.5% to $3.8 million from $12.2 million

  • Adjusted EBITDA1 decreased to $(4.0) million compared to $2.0 million

  • Net income of $7.9 million compared with net income of $633 thousand. Net income for the quarter ended December 31, 2022 includes a gain on bargain purchase for $14.5 million and a benefit from income taxes for $2.7 million

  • Net income attributable to common and Series 1 Convertible Preferred shareholders of $6.0 million, or $0.27 per diluted share, compared to $23.5 thousand, or $0.00 per diluted share

Results for Twelve Months Ended December 31, 2022, vs. Twelve Months Ended December 31, 2021:

  • Total fundings increased 28.9% to $111.8 million from $86.7 million consisting of gross lease originations decreasing from $83.4 to $75.1 million, loan participations increasing from $3.3 million to $31.2 million and loan originations increasing from $0 to $5.5 million

  • Total net lease and loan revenues, including the changes in fair value of loan receivables, decreased 9.9% to $113.1 million from $125.4 million

  • Gross profit decreased 19.7% to $37.1 million from $46.2 million

  • Adjusted EBITDA1 decreased to $(0.5) million compared to $11.4 million

  • Net income increased to $13.6 million compared with net income of $3.3 million. Net income for the year ended December 31, 2022 includes a gain on bargain purchase for $14.5 million and a benefit from income taxes for $16.6 million

  • Net income attributable to common and Series 1 Convertible Preferred shareholders increased to $9.9 million, or $0.44 per diluted share, compared to $0.8 million, or $0.04 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”.

Operational Highlight:

  • In December, FlexShopper purchased the assets of Revolution Financial, Inc. The purchase facilitated the launch of a brick and mortar, direct origination model for loans to underserved consumers in 11 states. There are currently 100 locations with plans to expand, via revenue share agreements, to additional locations.

Conference Call and Webcast Details

Conference call

Date: Tuesday. April 25, 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=CqIR0Ahy

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=CqIR0Ahy

An audio replay of the call will be archived on the Company’s website.



FLEXSHOPPER, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

For the years ended
December 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

Lease revenues and fees, net

 

$

105,936,072

 

 

$

124,505,432

 

Loan revenues and fees, net of changes in fair value

 

 

7,120,101

 

 

 

921,324

 

Total revenues

 

 

113,056,173

 

 

 

125,426,756

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Depreciation and impairment of lease merchandise

 

 

72,556,431

 

 

 

78,669,393

 

Loan origination costs and fees

 

 

3,384,013

 

 

 

508,493

 

Marketing

 

 

11,031,695

 

 

 

9,129,062

 

Salaries and benefits

 

 

10,991,477

 

 

 

11,489,208

 

Operating expenses

 

 

21,395,767

 

 

 

18,265,781

 

Total costs and expenses

 

 

119,359,383

 

 

 

118,061,937

 

 

 

 

 

 

 

 

 

 

Operating (loss)/ income

 

 

(6,303,210

)

 

 

7,364,819

 

 

 

 

 

 

 

 

 

 

Gain on extinguishment of debt

 

 

-

 

 

 

1,931,825

 

Gain on bargain purchase

 

 

14,461,274

 

 

 

-

 

Interest expense including amortization of debt issuance costs

 

 

(11,161,396

)

 

 

(5,238,560

)

(Loss)/income before income taxes

 

 

(3,003,332

)

 

 

4,058,084

 

Benefit /(expense) from income taxes

 

 

16,635,051

 

 

 

(785,310

)

Net income

 

 

13,631,719

 

 

 

3,272,774

 

 

 

 

 

 

 

 

 

 

Dividends on Series 2 Convertible Preferred Shares

 

 

3,730,580

 

 

 

2,439,099

 

Net income attributable to common and Series 1 Convertible Preferred shareholders

 

$

9,901,139

 

 

$

833,675

 

 

 

 

 

 

 

 

 

 

Basic and diluted income per common share:

 

 

 

 

 

 

 

 

Basic

 

$

0.45

 

 

$

0.04

 

Diluted

 

$

0.44

 

 

$

0.04

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES:

 

 

 

 

 

 

 

 

Basic

 

 

21,646,896

 

 

 

21,387,960

 

Diluted

 

 

22,425,354

 

 

 

23,227,964

 



FLEXSHOPPER, INC.

CONSOLIDATED BALANCE SHEETS

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash

 

$

6,051,713

 

 

$

4,986,559

 

Restricted cash

 

 

121,636

 

 

 

108,083

 

Lease receivables, net

 

 

35,540,043

 

 

 

25,473,154

 

Loan receivables at fair value

 

 

32,932,504

 

 

 

3,560,108

 

Prepaid expenses and other assets

 

 

3,489,136

 

 

 

1,823,256

 

Lease merchandise, net

 

 

31,550,441

 

 

 

40,942,112

 

Total current assets

 

 

109,685,473

 

 

 

76,893,272

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

8,086,862

 

 

 

5,490,434

 

Right of use asset, net

 

 

1,406,270

 

 

 

1,553,330

 

Intangible assets, net

 

 

15,162,349

 

 

 

4,960

 

Other assets, net

 

 

1,934,728

 

 

 

870,060

 

Deferred tax asset, net

 

 

12,013,828

 

 

 

-

 

Total assets

 

$

148,289,510

 

 

$

84,812,056

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

6,511,943

 

 

$

7,982,180

 

Accrued payroll and related taxes

 

 

310,820

 

 

 

391,078

 

Promissory notes to related parties, net of $0 at 2022 and $1,274 at 2021 of unamortized issuance costs, including accrued interest

 

 

1,209,455

 

 

 

1,053,088

 

Accrued expenses

 

 

3,988,093

 

 

 

2,987,646

 

Lease liability - current portion

 

 

208,001

 

 

 

172,732

 

Total current liabilities

 

 

12,228,312

 

 

 

12,586,724

 

Loan payable under credit agreement to beneficial shareholder, net of $352,252 at 2022 and $413,076 at 2021 of unamortized issuance costs

 

 

80,847,748

 

 

 

50,061,924

 

Promissory notes to related parties, net of current portion

 

 

10,750,000

 

 

 

3,750,000

 

Promissory note related to acquisition, net of $1,165,027 discount at 2022

 

 

3,158,471

 

 

 

-

 

Purchase consideration payable related to acquisition

 

 

8,703,684

 

 

 

-

 

Deferred income tax liability

 

 

-

 

 

 

495,166

 

Lease liabilities net of current portion

 

 

1,566,622

 

 

 

1,774,623

 

Total liabilities

 

 

117,254,837

 

 

 

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 December 31, 2022 and 21,442,278 shares at December 31, 2021

 

 

2,176

 

 

 

2,144

 

Additional paid in capital

 

 

39,819,420

 

 

 

38,560,117

 

Accumulated deficit

 

 

(31,590,583

)

 

 

(45,222,302

)

Total stockholders’ equity

 

 

31,034,673

 

 

 

16,143,619

 

 

 

$

148,289,510

 

 

$

84,812,056

 



FLEXSHOPPER, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2022 and 2021

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

13,631,719

 

 

$

3,272,774

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and impairment of lease merchandise

 

 

72,556,431

 

 

 

78,669,393

 

Other depreciation and amortization

 

 

4,769,614

 

 

 

2,875,902

 

Amortization of debt issuance costs

 

 

228,843

 

 

 

220,816

 

Amortization of discount on the promissory note related to acquisition

 

 

19,747

 

 

 

-

 

Compensation expense related to stock-based compensation and warrants

 

 

997,830

 

 

 

1,648,627

 

Provision for doubtful accounts

 

 

57,420,480

 

 

 

40,342,618

 

Gain on sale of lease receivables

 

 

8,821,106

 

 

 

-

 

Interest in kind added to promissory notes balance

 

 

155,093

 

 

 

9,460

 

Deferred income tax

 

 

(17,282,364

)

 

 

495,166

 

Gain on debt extinguishment

 

 

-

 

 

 

(1,931,825

)

Gain on bargain purchase

 

 

(14,461,274

)

 

 

-

 

Net changes in the fair value of loan receivables at fair value

 

 

9,559,979

 

 

 

(248,984

)

Changes in operating assets and liabilities, net of effects of acquisition:

 

 

 

 

 

 

 

 

Lease receivables

 

 

(76,308,475

)

 

 

(56,738,233

)

Loan receivables at fair value

 

 

(25,612,049

)

 

 

(3,221,679

)

Prepaid expenses and other assets

 

 

(1,665,880

)

 

 

(87,394

)

Lease merchandise

 

 

(63,164,760

)

 

 

(76,789,165

)

Security deposits

 

 

(4,956

)

 

 

(8,338

)

Purchase consideration payable related to acquisition

 

 

164,102

 

 

 

-

 

Lease liabilities

 

 

(14,488

)

 

 

(5,811

)

Accounts payable

 

 

(1,976,844

)

 

 

74,561

 

Accrued payroll and related taxes

 

 

(80,258

)

 

 

(165,461

)

Accrued expenses

 

 

1,009,468

 

 

 

331,542

 

Net cash used in operating activities

 

 

(31,236,936

)

 

 

(11,256,031

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Cash acquired in business combination

 

 

2,938,355

 

 

 

-

 

Purchases of property and equipment, including capitalized software costs

 

 

(6,498,115

)

 

 

(4,065,384

)

Purchases of data costs

 

 

(1,640,885

)

 

 

(884,160

)

Net cash used in investing activities

 

 

(5,200,645

)

 

 

(4,949,544

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from loan payable under credit agreement

 

 

36,455,000

 

 

 

19,850,000

 

Repayment of loan payable under credit agreement

 

 

(5,730,000

)

 

 

(6,575,000

)

Debt issuance related costs

 

 

(166,745

)

 

 

(565,273

)

Proceeds from exercise of stock options

 

 

261,505

 

 

 

68,172

 

Proceeds from promissory notes to related parties

 

 

7,000,000

 

 

 

-

 

Principal payment under finance lease obligation

 

 

(11,184

)

 

 

(7,707

)

Repayment of purchase consideration payable related to acquisition

 

 

(283,266

)

 

 

-

 

Repayment of installment loan

 

 

(9,022

)

 

 

(11,207

)

Net cash provided by financing activities

 

 

37,516,288

 

 

 

12,758,985

 

 

 

 

 

 

 

 

 

 

INCREASE / (DECREASE) IN CASH and RESTRICTED CASH

 

 

1,078,707

 

 

 

(3,446,590

)

 

 

 

 

 

 

 

 

 

CASH and RESTRICTED CASH, beginning of period

 

 

5,094,642

 

 

 

8,541,232

 

 

 

 

 

 

 

 

 

 

CASH and RESTRICTED CASH, end of period

 

$

6,173,349

 

 

$

5,094,642

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Interest paid

 

$

10,289,334

 

 

$

4,945,690

 

Noncash investing and financing activities

 

 

 

 

 

 

 

 

Acquisition of loan receivables at fair value

 

$

13,320,326

 

 

$

-

 

Acquisition of property and equipment

 

 

136,249

 

 

 

-

 

Acquisition of intangible assets

 

 

15,307,894

 

 

 

-

 

Acquisition of purchase consideration payable related to acquisition

 

 

8,539,582

 

 

 

-

 

Acquisition of accounts payable

 

 

506,607

 

 

 

-

 

Acquisition of deferred tax liability

 

 

4,773,370

 

 

 

-

 

Issuance of promissory note related to acquisition

 

 

3,421,991

 

 

 

-

 


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 years ended December 31, 2022 and 2021 were as follows:

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

13,631,719

 

 

$

3,272,774

 

 

$

10,358,945

 

 

 

316.5

 

Income taxes

 

 

(16,635,051

)

 

 

785,310

 

 

 

(17,420,361

)

 

 

(2,218.3

)

Amortization of debt issuance costs

 

 

228,843

 

 

 

220,816

 

 

 

8,027

 

 

 

3.6

 

Other amortization and depreciation

 

 

4,769,614

 

 

 

2,875,902

 

 

 

1,893,712

 

 

 

65.8

 

Interest expense

 

 

10,932,553

 

 

 

5,017,744

 

 

 

5,914,809

 

 

 

117.9

 

Stock-based compensation

 

 

997,830

 

 

 

1,125,819

 

 

 

(127,989

)

 

 

(11.4

)

Product/infrastructure expenses

 

 

-

 

 

 

10,000

 

 

 

(10,000

)

 

 

 

 

Gain on debt extinguishment

 

 

-

 

 

 

(1,931,825

)

 

 

1,931,825

 

 

 

 

 

Gain on bargain purchase

 

 

(14,461,274

)

 

 

-

 

 

 

(14,461,274

)

 

 

 

 

Adjusted EBITDA

 

$

(535,766

)

 

$

11,376,540

 

 

$

(11,912,306

)

 

 

(104.7

)


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, 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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