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 December 31, 2023.
Results for Quarter Ended December 31,
2023, vs. Quarter Ended December 31, 2022:
- Total fundings increased 12.0% to $35.4 million from $31.6
million
- Total net lease and loan revenues and fees increased 40.9% to
$30.3 million from $21.5 million
- Gross profit increased 315.8% to $15.8 million from $3.8
million
- Adjusted EBITDA1 increased by $12.0 million to $8.1 million
from ($3.9) million
- Operating income of $5.6 million compared with operating loss
of $5.5 million
- Net loss attributable to common stockholders of $(715)
thousand, or $(0.03) per diluted share, compared to net income
attributable to common stockholders of $6.0 million, or $0.27 per
diluted share
Results for Twelve Months Ended December
31, 2023, vs. Twelve Months Ended December 31, 2022:
- Total fundings increased 7.7% to $120.4 million from $111.8
million
- Total net lease and loan revenues and fees increased 3.4% to
$117.0 million from $113.1 million
- Gross profit increased 47.4% to $54.7 million from $37.1
million
- Adjusted EBITDA1 increased by $23.7 million to $23.2 million
compared to ($0.5) million
- Operating income of $13.7 million compared with operating loss
of $6.3 million
- Net loss attributable to common stockholders of $8.3 million,
or $(0.51) per diluted share, compared to net income attributable
to common stockholders of $9.9 million, or $0.44 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”. |
|
|
Subsequent Events:
On March 27, 2024, FlexShopper refinanced all
the obligations under the 2015 Credit Agreement owed to the
Administrative Agent and the lenders, and all liens held by any of
the lenders or the Administrative Agent, were discharged and
released. The Administrative Agent, the lenders and FlexShopper
terminated the 2015 Credit Agreement.
On March 27, 2024, FlexShopper, through a wholly
owned subsidiary (“Borrower”), entered into a new credit agreement
(the “2024 Credit Agreement”) with Computershare Trust Company,
National Association, as paying agent, various lenders from time to
time party thereto and Powerscourt Investment 50, LP, an affiliate
of Waterfall Asset Management, LLC, as administrative agent and
lender (“Lender”). The Borrower is permitted to borrow funds under
the 2024 Credit Agreement based on the Company’s cash on hand and
the Amortized Order Value of its Eligible Leases (as defined in the
2024 Credit Agreement), less certain deductions described in the
2024 Credit Agreement. Under the terms of the 2024 Credit
Agreement, subject to the satisfaction of certain conditions, the
Borrower may borrow up to $150,000,000 from the Lender until the
Commitment Termination Date and must repay all borrowed amounts one
year thereafter, on the date that is 12 months following the
Commitment Termination Date (unless such amounts become due or
payable on an earlier date pursuant to the terms of the Credit
Agreement). The Commitment Termination Date is April 1, 2026. The
Company granted a security interest to the Lender in certain leases
and loans as collateral under the 2024 Credit Agreement. The
interest rate charged on amounts borrowed is SOFR plus 9% per
annum.
The 2024 Credit Agreement includes customary
events of default, including, among others, failures to make
payment of principal and interest, deficiencies in the borrowing
base, and bankruptcy events.
Conference Call and Webcast Details
Conference call
Date: Tuesday, April 2, 2024Time: 8:30 a.m. Eastern
TimeParticipant Dial-In Numbers:
Domestic callers: (877) 407-2988International callers: +1 (201)
389-0923
Webcast:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=gSrwUmm0
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.
|
FLEXSHOPPER, INC.CONSOLIDATED STATEMENTS
OF OPERATIONS |
|
|
For the years endedDecember
31, |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
Lease revenues and fees, net |
$ |
91,943,729 |
|
|
$ |
105,936,072 |
|
Loan revenues and fees, net of
changes in fair value |
|
25,031,278 |
|
|
|
7,120,101 |
|
Total revenues |
|
116,975,007 |
|
|
|
113,056,173 |
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
Depreciation and impairment of
lease merchandise |
|
56,288,128 |
|
|
|
72,556,431 |
|
Loan origination costs and
fees |
|
6,007,598 |
|
|
|
3,384,013 |
|
Marketing |
|
7,620,795 |
|
|
|
11,031,695 |
|
Salaries and benefits |
|
12,499,099 |
|
|
|
10,991,477 |
|
Operating expenses |
|
24,547,729 |
|
|
|
21,395,767 |
|
Net change in fair value of
promissory note related to acquisition |
|
(3,678,689 |
) |
|
|
- |
|
Total costs and
expenses |
|
103,284,660 |
|
|
|
119,359,383 |
|
|
|
|
|
|
|
|
|
Operating income/
(loss) |
|
13,690,347 |
|
|
|
(6,303,210 |
) |
|
|
|
|
|
|
|
|
Gain on bargain purchase |
|
- |
|
|
|
14,461,274 |
|
Interest expense including
amortization of debt issuance costs |
|
(18,913,773 |
) |
|
|
(11,161,396 |
) |
Loss before income taxes |
|
(5,223,426 |
) |
|
|
(3,003,332 |
) |
Benefit from income taxes |
|
989,809 |
|
|
|
16,635,051 |
|
Net (loss)/
income |
|
(4,233,617 |
) |
|
|
13,631,719 |
|
|
|
|
|
|
|
|
|
Dividends on Series 2
Convertible Preferred Shares |
|
4,103,638 |
|
|
|
3,730,580 |
|
Net (loss)/ income
attributable to common and Series 1 Convertible Preferred
shareholders |
$ |
(8,337,255 |
) |
|
$ |
9,901,139 |
|
|
|
|
|
|
|
|
|
Basic and diluted
(loss)/ income per common share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.51 |
) |
|
$ |
0.45 |
|
Diluted |
$ |
(0.51 |
) |
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON
SHARES: |
|
|
|
|
|
|
|
Basic |
|
16,260,349 |
|
|
|
21,646,896 |
|
Diluted |
|
16,260,349 |
|
|
|
22,425,354 |
|
|
|
|
|
|
|
|
|
FLEXSHOPPER, INC.CONSOLIDATED BALANCE
SHEETS |
|
|
December 31, |
|
|
December 31, |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
Cash |
$ |
4,413,130 |
|
|
$ |
6,051,713 |
|
Restricted cash |
|
- |
|
|
|
121,636 |
|
Lease receivables, net |
|
44,795,090 |
|
|
|
35,540,043 |
|
Loan receivables at fair
value |
|
35,794,290 |
|
|
|
32,932,504 |
|
Prepaid expenses and other
assets |
|
3,300,677 |
|
|
|
3,489,136 |
|
Lease merchandise, net |
|
29,131,440 |
|
|
|
31,550,441 |
|
Total current assets |
|
117,434,627 |
|
|
|
109,685,473 |
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
9,308,859 |
|
|
|
8,086,862 |
|
Right of use asset, net |
|
1,237,010 |
|
|
|
1,406,270 |
|
Intangible assets, net |
|
13,391,305 |
|
|
|
15,162,349 |
|
Other assets, net |
|
2,175,215 |
|
|
|
1,934,728 |
|
Deferred tax asset, net |
|
12,943,361 |
|
|
|
12,013,828 |
|
Total assets |
$ |
156,490,377 |
|
|
$ |
148,289,510 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
Accounts payable |
$ |
7,139,848 |
|
|
$ |
6,511,943 |
|
Accrued payroll and related
taxes |
|
578,197 |
|
|
|
310,820 |
|
Promissory notes to related
parties, including accrued interest |
|
198,624 |
|
|
|
1,209,455 |
|
Accrued expenses |
|
3,972,397 |
|
|
|
3,988,093 |
|
Lease liability - current
portion |
|
245,052 |
|
|
|
208,001 |
|
Total current liabilities |
|
12,134,118 |
|
|
|
12,228,312 |
|
Loan payable under credit
agreement to beneficial shareholder, net of unamortized issuance
costs of $70,780 at December 31,2023 and $352,252 at December
31,2022 |
|
96,384,220 |
|
|
|
80,847,748 |
|
Promissory notes to related
parties, net of unamortized issuance costs of $649,953 at December
31, 2023 and $0 at December 31, 2022, and net of current
portion |
|
10,100,047 |
|
|
|
10,750,000 |
|
Promissory note related to
acquisition, net of discount of $1,165,027 at December 31,
2022 |
|
- |
|
|
|
3,158,471 |
|
Loan payable under Basepoint
credit agreement, net of unamortized issuance costs of $92,963 at
December 31, 2023 |
|
7,319,641 |
|
|
|
- |
|
Purchase consideration payable
related to acquisition |
|
- |
|
|
|
8,703,684 |
|
Lease liabilities, net of
current portion |
|
1,321,578 |
|
|
|
1,566,622 |
|
Total liabilities |
|
127,259,604 |
|
|
|
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 December 31, 2023 and 21,750,804 shares at
December 31, 2022 |
|
2,176 |
|
|
|
2,176 |
|
Treasury shares, at cost-
164,029 shares at 2023 |
|
(166,757 |
) |
|
|
- |
|
Additional paid in
capital |
|
42,415,894 |
|
|
|
39,819,420 |
|
Accumulated deficit |
|
(35,824,200 |
) |
|
|
(31,590,583 |
) |
Total stockholders’
equity |
|
29,230,773 |
|
|
|
31,034,673 |
|
|
$ |
156,490,377 |
|
|
$ |
148,289,510 |
|
|
|
|
|
|
|
|
|
FLEXSHOPPER, INC.CONSOLIDATED STATEMENTS
OF CASH FLOWSFor the years ended December 31, 2023
and 2022 |
|
|
2023 |
|
|
2022 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
|
Net (loss)/ income |
$ |
(4,233,617 |
) |
|
$ |
13,631,719 |
|
Adjustments to reconcile net
(loss)/ income to net cash used in operating activities: |
|
|
|
|
|
|
|
Depreciation and impairment of
lease merchandise |
|
56,288,128 |
|
|
|
72,556,431 |
|
Other depreciation and
amortization |
|
7,881,110 |
|
|
|
4,769,614 |
|
Amortization of debt issuance
costs |
|
571,538 |
|
|
|
228,843 |
|
Amortization of discount on
the promissory note related to acquisition |
|
236,952 |
|
|
|
19,747 |
|
Compensation expense related
to stock-based compensation |
|
1,677,708 |
|
|
|
997,830 |
|
Provision for doubtful
accounts |
|
42,505,647 |
|
|
|
57,420,480 |
|
Interest in kind added to
promissory notes balance |
|
- |
|
|
|
155,093 |
|
Deferred income tax |
|
(929,533 |
) |
|
|
(17,282,364 |
) |
Net change in fair value of
promissory note related to acquisiton |
|
(3,678,689 |
) |
|
|
- |
|
Gain on bargain purchase |
|
- |
|
|
|
(14,461,274 |
) |
Net changes in the fair value
of loan receivables at fair value |
|
(10,217,854 |
) |
|
|
9,559,979 |
|
Changes in operating assets
and liabilities, net of effects of acquisition: |
|
|
|
|
|
|
|
Lease receivables |
|
(51,760,694 |
) |
|
|
(67,487,369 |
) |
Loan receivables at fair value |
|
7,356,068 |
|
|
|
(25,612,049 |
) |
Prepaid expenses and other assets |
|
177,169 |
|
|
|
(1,670,836 |
) |
Lease merchandise |
|
(53,869,127 |
) |
|
|
(63,164,760 |
) |
Purchase consideration payable related to acquisition |
|
208,921 |
|
|
|
164,102 |
|
Promissory note related to acquisition |
|
283,266 |
|
|
|
- |
|
Lease liabilities |
|
(30,268 |
) |
|
|
(14,488 |
) |
Accounts payable |
|
627,905 |
|
|
|
(1,976,844 |
) |
Accrued payroll and related taxes |
|
267,377 |
|
|
|
(80,258 |
) |
Accrued expenses |
|
(26,527 |
) |
|
|
1,009,468 |
|
Net cash used in operating
activities |
|
(6,664,520 |
) |
|
|
(31,236,936 |
) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Cash acquired in business
combination |
|
- |
|
|
|
2,938,355 |
|
Purchases of property and
equipment, including capitalized software costs |
|
(6,335,276 |
) |
|
|
(6,498,115 |
) |
Purchases of data costs |
|
(1,225,983 |
) |
|
|
(1,640,885 |
) |
Net cash used in investing
activities |
|
(7,561,259 |
) |
|
|
(5,200,645 |
) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Proceeds from loan payable
under credit agreement |
|
18,050,000 |
|
|
|
36,455,000 |
|
Repayment of loan payable
under credit agreement |
|
(2,795,000 |
) |
|
|
(5,730,000 |
) |
Repayment of loan payable
under Basepoint credit agreement |
|
(1,500,000 |
) |
|
|
- |
|
Repayment of promissory notes
to related parties |
|
(1,000,000 |
) |
|
|
- |
|
Debt issuance related
costs |
|
(115,403 |
) |
|
|
(166,745 |
) |
Proceeds from exercise of
stock options |
|
1,185 |
|
|
|
261,505 |
|
Proceeds from promissory notes
to related parties |
|
- |
|
|
|
7,000,000 |
|
Principal payment under
finance lease obligation |
|
(8,465 |
) |
|
|
(11,184 |
) |
Repayment of purchase
consideration payable related to acquisition |
|
- |
|
|
|
(283,266 |
) |
Repayment of installment
loan |
|
- |
|
|
|
(9,022 |
) |
Purchases of Treasury
Stock |
|
(166,757 |
) |
|
|
- |
|
Net cash provided by financing
activities |
|
12,465,560 |
|
|
|
37,516,288 |
|
|
|
|
|
|
|
|
|
(DECREASE)/ INCREASE IN CASH
and RESTRICTED CASH |
|
(1,760,219 |
) |
|
|
1,078,707 |
|
|
|
|
|
|
|
|
|
CASH and RESTRICTED CASH,
beginning of period |
|
6,173,349 |
|
|
|
5,094,642 |
|
|
|
|
|
|
|
|
|
CASH and RESTRICTED CASH, end
of period |
$ |
4,413,130 |
|
|
$ |
6,173,349 |
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
Interest paid |
$ |
17,337,292 |
|
|
$ |
10,289,334 |
|
Due date extension of
warrants |
$ |
917,581 |
|
|
$ |
- |
|
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, 2023
and 2022 were as follows:
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
% Change |
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/ income |
$ |
(4,233,617 |
) |
|
$ |
13,631,719 |
|
|
$ |
(17,865,336 |
) |
|
|
(131.1 |
) |
Income taxes |
|
(989,809 |
) |
|
|
(16,635,051 |
) |
|
|
15,645,242 |
|
|
|
(94.0 |
) |
Amortization of debt issuance
costs |
|
571,538 |
|
|
|
228,843 |
|
|
|
342,695 |
|
|
|
149.8 |
|
Amortization of discount on
the promissory note related to acquisition |
|
236,952 |
|
|
|
19,746 |
|
|
|
217,206 |
|
|
|
1,100.0 |
|
Other amortization and
depreciation |
|
7,881,110 |
|
|
|
4,769,614 |
|
|
|
3,111,496 |
|
|
|
65.2 |
|
Interest expense |
|
18,105,282 |
|
|
|
10,912,808 |
|
|
|
7,192,474 |
|
|
|
65.9 |
|
Stock-based compensation |
|
1,677,708 |
|
|
|
997,830 |
|
|
|
679,878 |
|
|
|
68.1 |
|
Gain on bargain purchase |
|
- |
|
|
|
(14,461,274 |
) |
|
|
14,461,274 |
|
|
|
|
|
Adjusted EBITDA |
$ |
23,249,164 |
|
|
$ |
(535,765 |
) |
|
$ |
23,784,929 |
|
|
|
(4,439.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
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
Relationsir@flexshopper.com
FlexShopper, Inc.
FlexShopper (NASDAQ:FPAY)
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