Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 14, 2023

FlexShopper, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-37945	20-5456087
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

901 Yamato Road, Suite 260
Boca Raton, Florida		33431
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (855) 353-9289

(Former Name or Former Address, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		FPAY		The Nasdaq Stock Market LLC

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

	☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

	☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

	☐	Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

CURRENT REPORT ON FORM 8-K

FlexShopper, Inc. (the “Company”)

August 14, 2023

Item 2.02. Results of Operations and Financial Condition.

FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper”), a leading national online lease-to-own (“LTO”) retailer and payment solution provider for underserved consumes, today announced its financial results for the quarter ended June 30, 2023. A copy of the press release is furnished with this report as Exhibit 99.1. Such information, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(a)

Exhibits. The exhibit listed in the following Exhibit Index is filed as part of this current report.

Exhibit No.		Description
99.1		Press Release issued by FlexShopper, Inc. on August 14, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FLEXSHOPPER, INC.

Date: August 14, 2023	By:	/s/ H. Russell Heiser, Jr.
		H. Russell Heiser, Jr.
		Chief Executive Officer

Exhibit 99.1

FlexShopper, Inc. Reports Second Quarter 2023 Financial Results

BOCA RATON, Fla., Aug 14, 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 June 30, 2023.

Results for Quarter Ended June 30, 2023 vs. Quarter Ended June 30, 2022:

	●	Total fundings decreased 11.0% to $27.5 million from $30.9 million consisting of gross lease originations decreasing 32.7% from $19.9 to $13.4 million, loan participations decreasing 99.1% from $11.0 million to $0.1 million, and loan originations increasing from $0 to $14.0 million

	●	Total net lease and loan revenues and fees decreased 32.9% to $24.5 million from $36.5 million

	●	Gross profit decreased 52.0% to $8.4 million from $17.5 million

	●	Adjusted EBITDA¹ decreased 95.3% to $0.3 million compared to 6.4 million

	●	Net loss of $5.3 million compared with net income of $14.4 million

	●	Net loss attributable to common stockholders of $(6.3) million, or $(0.22) per diluted share, compared to net income attributable to common stockholders of $13.8 million, or $0.51 per diluted share

Results for Six Months Ended June 30, 2023 vs. Six Months Ended June 30, 2022:

	●	Total fundings increased 6.8% to $54.9 million from $51.4 million consisting of gross lease originations decreasing 26,5% from $36.2 million to $26.6 million, loan participations decreased 98.0% from $15.2 million to $0.3 million, and loan originations increasing from $0 to $28 million

	●	Total net lease and loan revenues and fees decreased 15.6% to $55.3 million from $65.5 million

	●	Gross profit decreased 18.2.% to $22.0 million from $26.9 million

	●	Adjusted EBITDA¹ increased 6.3% to $6.7 million compared to 6.3 million

	●	Net loss of $5.5 million compared with net income of $12 million

	●	Net loss attributable to common stockholders of $(7.5) million, or $(0.34) per diluted share, compared to net income attributable to common stockholders of $10.8 million, or $0.42 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 August 14, 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=dtM9EZ6E

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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	For the three months ended June 30,						For the six months ended June 30,
	2023			2022			2023			2022

Revenues:
Lease revenues and fees, net	$	22,906,843		$	30,468,476		$	47,621,001		$	58,234,788
Loan revenues and fees, net of changes in fair value		1,625,193			6,079,675			7,696,810			7,268,599
Total revenues		24,532,036			36,548,151			55,317,811			65,503,387

Costs and expenses:
Depreciation and impairment of lease merchandise		14,485,417			18,207,305			29,831,205			37,367,916
Loan origination costs and fees		1,655,424			804,228			3,489,051			1,229,741
Marketing		1,488,578			3,770,820			2,587,767			5,784,935
Salaries and benefits		2,976,008			3,014,920			5,702,898			5,979,362
Operating expenses		5,957,932			5,748,286			11,585,640			11,421,488
Total costs and expenses		26,563,359			31,545,559			53,196,561			61,783,442

Operating (loss)/ income		(2,031,323	)		5,002,592			2,121,250			3,719,945

Interest expense including amortization of debt issuance costs		(4,568,557	)		(2,347,838	)		(9,099,884	)		(4,305,906	)
(Loss)/ income before income taxes		(6,599,880	)		2,654,754			(6,978,634	)		(585,961	)
Benefit from income taxes		1,302,225			11,734,467			1,450,764			12,594,247
Net (loss)/ income		(5,297,655	)		14,389,221			(5,527,870	)		12,008,286

Dividends on Series 2 Convertible Preferred Shares		(992,493	)		(609,777	)		(1,964,726	)		(1,219,554	)
Net (loss)/ income attributable to common and Series 1 Convertible Preferred shareholders	$	(6,290,148	)		13,779,444			(7,492,596	)		10,788,732

Basic and diluted (loss)/ income per common share:
Basic	$	(0.22	)	$	0.63		$	(0.34	)	$	0.49
Diluted	$	(0.22	)	$	0.51		$	(0.34	)	$	0.42

WEIGHTED AVERAGE COMMON SHARES:
Basic		28,923,393			21,605,234			21,751,807			21,576,312
Diluted		28,923,393			27,898,824			21,751,807			28,193,268

FLEXSHOPPER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2023			2022
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	6,372,699		$	6,051,713
Restricted cash		6,285			121,636
Lease receivables, net		39,227,399			35,540,043
Loan receivables at fair value		25,105,046			32,932,504
Prepaid expenses and other assets		3,068,559			3,489,136
Lease merchandise, net		24,597,836			31,550,441
Total current assets		98,377,824			109,685,473

Property and equipment, net		8,830,978			8,086,862
Right of use asset, net		1,324,953			1,406,270
Intangible assets, net		14,276,231			15,162,349
Other assets, net		1,832,175			1,934,728
Deferred tax asset, net		13,471,568			12,013,828
Total assets	$	138,113,729		$	148,289,510

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	4,005,219		$	6,511,943
Accrued payroll and related taxes		299,741			310,820
Promissory notes to related parties, including accrued interest		1,207,798			1,209,455
Accrued expenses		2,386,547			3,988,093
Lease liability - current portion		228,358			208,001
Total current liabilities		8,127,663			12,228,312
Loan payable under credit agreement to beneficial shareholder, net of unamortized issuance costs of $211,516 at June 30, 2023 and $352,252 at December 31, 2022		80,943,484			80,847,748
Promissory notes to related parties, net of unamortized issuance costs of $879,348 at June 30, 2023 and $0 at December 31, 2022 and net of current portion		9,870,652			10,750,000
Promissory note related to acquisition, net of discount of $1,046,551 at June 30, 2023 and $1,165,027 at December 31, 2022		3,133,617			3,158,471
Loan payable under Basepoint credit agreement, net of unamortized issuance costs of $112,197 at June 30, 2023		7,300,408			-
Purchase consideration payable related to acquisition		-			8,703,684
Lease liabilities, net of current portion		1,447,788			1,566,622
Total liabilities		110,823,612			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 June 30, 2023 and 21,750,804 shares at December 31, 2022		2,176			2,176
Additional paid in capital		41,602,734			39,819,420
Accumulated deficit		(37,118,453	)		(31,590,583	)
Total stockholders’ equity		27,290,117			31,034,673
	$	138,113,729		$	148,289,510

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 June 30, 2023 and 2022 are as follows:

	Three months ended June 30,
	2023			2022			$ Change			% Change
Gross Profit:
Gross lease billings and fees	$	32,501,656		$	39,596,845		$	(7,095,189	)		(17.9	)
Provision for doubtful accounts		(10,847,413	)		(15,732,876	)		4,885,463			(31.1	)
Gain on sale of lease receivables		1,252,600			6,604,507			(5,351,907	)		(81.0	)
Net lease billing and fees	$	22,906,843		$	30,468,476		$	(7,561,633	)		(24.8	)
Loan revenues and fees		3,446,893			3,098,400			348,493			11.2
Net changes in the fair value of loans receivable		(1,821,700	)		2,981,275			(4,802,975	)		(161.1	)
Net loan revenues	$	1,625,193		$	6,079,675		$	(4,454,482	)		(73.3	)
Total revenues	$	24,532,036		$	36,548,151		$	(12,016,115	)		(32.9	)
Depreciation and impairment of lease merchandise		(14,485,417	)		(18,207,305	)		3,721,888			(20.4	)
Loans origination costs and fees		(1,655,424	)		(804,228	)		(851,196	)		105.8
Gross profit	$	8,391,195		$	17,536,618		$	(9,145,423	)		(52.2	)
Gross profit margin		34	%		48	%

	Three months ended June 30,
	2023			2022			$ Change			% Change
Adjusted EBITDA:
Net (loss)/ income	$	(5,297,655	)	$	14,389,221		$	(19,686,876	)		(136.8	)
Income taxes		(1,302,225	)		(11,734,467	)		10,432,242			(88.9	)
Amortization of debt issuance costs		111,807			56,283			55,524			98.7
Amortization of discount on the promissory note related to acquisition		59,238			—			59,238
Other amortization and depreciation		1,884,544			1,122,263			762,281			67.9
Interest expense		4,397,513			2,291,555			2,105,958			91.9
Stock-based compensation		443,800			257,476			186,324			72.4
Adjusted EBITDA	$	297,022		$	6,382,331		$	(6,085,309	)		(95.3	)

Key performance metrics for the six months ended June 30, 2023 and 2022 are as follows:

	Six months ended June 30,
	2023			2022			$ Change			% Change
Gross Profit:
Gross lease billings and fees	$	66,756,740		$	79,194,274		$	(12,437,534	)		(15.7	)
Provision for doubtful accounts		(22,085,828	)		(27,563,993	)		5,478,165			(19.9	)
Gain on sale of lease receivables		2,950,089			6,604,507			(3,654,418	)		(55.3	)
Net lease billing and fees	$	47,621,001		$	58,234,788		$	(10,613,787	)		(18.2	)
Loan revenues and fees		8,533,858			4,810,748			3,723,110			77.4
Net changes in the fair value of loans receivable		(837,048	)		2,457,851			(3,294,899	)		(134.1	)
Net loan revenues	$	7,696,810		$	7,268,599		$	428,211			5.9
Total revenues	$	55,317,811		$	65,503,387		$	(10,185,576	)		(15.5	)
Depreciation and impairment of lease merchandise		(29,831,205	)		(37,367,916	)		7,536,711			(20.2	)
Loans origination costs and fees		(3,489,051	)		(1,229,741	)		(2,259,310	)		183.7
Gross profit	$	21,997,555		$	26,905,730		$	(4,908,175	)		(18.2	)
Gross profit margin		40	%		41	%

	Six months ended June 30,
	2023			2022			$ Change			% Change
Adjusted EBITDA:
Net (loss)/ income	$	(5,527,870	)	$	12,008,286		$	(17,536,156	)		(146.0	)
Income taxes		(1,450,764	)		(12,594,247	)		11,143,483			(88.5	)
Amortization of debt issuance costs		182,174			106,886			75,288			70.4
Amortization of discount on the promissory note related to acquisition		118,476			—			118,174
Other amortization and depreciation		3,710,703			2,059,323			1,651,380			80.2
Interest expense		8,799,234			4,199,020			4,600,214			109.6
Stock-based compensation		864,548			562,705			301,843			53.6
Adjusted EBITDA	$	6,696,501		$	6,341,973		$	354,226			5.6

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

ir@flexshopper.com

FlexShopper, Inc.

Cover	Aug. 14, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 14, 2023
Entity File Number	001-37945
Entity Registrant Name	FlexShopper, Inc.
Entity Central Index Key	0001397047
Entity Tax Identification Number	20-5456087
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	901 Yamato Road
Entity Address, Address Line Two	Suite 260
Entity Address, City or Town	Boca Raton
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33431
City Area Code	855
Local Phone Number	353-9289
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	FPAY
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false