BOCA RATON, Fla., Aug. 06, 2018 (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 June 30, 2018, highlighted by record second quarter revenue results.
Results for Three Months Ended June 30, 2018 vs. Three Months Ended June 30,
2017:
- Total revenues increased 14.3% from $16.7 million to $19.1 million
- Lease originations increased from 16,722 to 23,488 or 40%
- Net loss increased to $2.0 million compared to a net loss of $1.6 million
- Net loss attributable to common shareholders increased to $2.6 million or $0.48 per diluted
share compared to $2.1 million or $.40 per diluted share
Results for Six Months Ended June 30, 2018 vs. Six Months Ended June 30,
2017:
- Total revenues increased 14.4% from $34.1 million to $39.0 million
- Lease originations increased from 35,238 to 45,559 or 29%
- Net loss increased to $4.3 million compared to a net loss of $2.6 million
- Net loss attributable to common shareholders increased to $5.5 million or $1.03 per diluted
share compared to $3.7 million or $0.70 per diluted share
- Adjusted Gross Profit¹ increased 13.5% from $7.3 million to $8.3 million
- Adjusted EBITDA¹ was ($1.3) million compared to ($0.7) million
¹Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures. Refer to the definitions
and reconciliations of these measures under “Non-GAAP Measures”.
Other Highlights and Recent Developments
- Company launched its largest retail rollout to 726 retail stores, accelerating its B2B2C business.
- Received a Notice of Allowance from the United States Patent and Trademark Office (USPTO) for its patent
application directed to a system that enables e-commerce servers the ability to complete LTO transactions through their
e-commerce websites.
- Launched jewelry on FlexShopper.com featuring a selection of 30,000 items from Overstock; we believe this could be
a significant growth opportunity.
Brad Bernstein, CEO, stated, “We are pleased to report another quarter of continued revenue growth and achieving
significant milestones, including our largest national retail rollout encompassing 726 locations. The retail rollout has been
executed quickly and seamlessly utilizing our mobile application that requires no integration into the retailer’s point of sale
system. With this rollout we are excited to see our B2B2C business accelerate. We anticipate additional retail adoption with this
“integrationless” methodology. In addition, our online B2C business remains strong, posting 40.5% lease origination growth for the
quarter. Much of this growth is attributable to our digital marketing channel which we continue to expand with its increasing
efficiency. Lastly, in connection to our LTO Payment Method at checkout on e-commerce websites, we received a notice of allowance
from the United States Patent and Trademark Office (USPTO) for our patent application directed to a system that enables e-commerce
servers the ability to complete LTO transactions through their e-commerce websites. We believe this patent will constitute a
significant differentiator for us in the LTO industry.”
We are exploring various financing options to provide additional equity capital to continue to grow our
business. For further information, please refer to our Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on August 6, 2018.
Conference Call Details
| Date: |
|
Tuesday, August 7, 2018 |
| Time: |
|
3:00 p.m. Eastern Time |
| |
|
|
| Participant Dial-In Numbers: |
|
|
| Domestic callers: |
|
(877) 407-3944 |
| 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: http://flexshopper.equisolvewebcast.com/q2-2018. An audio replay of the call will be
archived on the Company’s website.
| |
| FLEXSHOPPER, INC. |
| CONSOLIDATED STATEMENTS OF
OPERATIONS |
| (unaudited) |
| |
|
|
|
|
|
|
|
|
For the three months ended
June 30, |
|
|
For the six months ended
June 30, |
|
| |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| Lease revenues and fees |
|
$ |
18,588,477 |
|
|
$ |
16,363,033 |
|
|
$ |
37,925,373 |
|
|
$ |
33,313,925 |
|
| Lease merchandise sold |
|
|
487,830 |
|
|
|
324,227 |
|
|
|
1,102,348 |
|
|
|
814,952 |
|
| Total revenues |
|
|
19,076,307 |
|
|
|
16,687,260 |
|
|
|
39,027,721 |
|
|
|
34,128,877 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of lease revenues, consisting of depreciation and impairment of lease
merchandise |
|
|
8,987,412 |
|
|
|
8,126,839 |
|
|
|
19,395,158 |
|
|
|
16,587,622 |
|
| Cost of lease merchandise sold |
|
|
324,705 |
|
|
|
226,310 |
|
|
|
658,468 |
|
|
|
535,928 |
|
| Provision for doubtful accounts |
|
|
5,483,487 |
|
|
|
4,759,879 |
|
|
|
10,658,805 |
|
|
|
9,675,629 |
|
| Marketing |
|
|
1,260,237 |
|
|
|
818,609 |
|
|
|
2,429,187 |
|
|
|
1,630,791 |
|
| Salaries and benefits |
|
|
2,031,788 |
|
|
|
1,898,005 |
|
|
|
4,211,164 |
|
|
|
3,666,157 |
|
| Operating expenses |
|
|
1,918,246 |
|
|
|
1,869,317 |
|
|
|
3,957,184 |
|
|
|
3,542,969 |
|
| Total costs and expenses |
|
|
20,005,875 |
|
|
|
17,698,959 |
|
|
|
41,309,966 |
|
|
|
35,639,096 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating loss |
|
|
(929,568 |
) |
|
|
(1,011,699 |
) |
|
|
(2,282,245 |
) |
|
|
(1,510,219 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense including amortization of debt issuance costs |
|
|
1,045,338 |
|
|
|
551,304 |
|
|
|
1,979,005 |
|
|
|
1,107,295 |
|
| Net loss |
|
|
(1,974,906 |
) |
|
|
(1,563,003 |
) |
|
|
(4,261,250 |
) |
|
|
(2,617,514 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends on Series 2 Convertible Preferred Shares |
|
|
604,824 |
|
|
|
560,236 |
|
|
|
1,208,504 |
|
|
|
1,109,036 |
|
| Net loss attributable to common shareholders |
|
$ |
(2,579,730 |
) |
|
|
(2,123,239 |
) |
|
|
(5,469,754 |
) |
|
|
(3,726,550 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(0.48 |
) |
|
$ |
(0.40 |
) |
|
$ |
(1.03 |
) |
|
$ |
(0.70 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| WEIGHTED AVERAGE COMMON SHARES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
|
5,368,390 |
|
|
|
5,290,670 |
|
|
|
5,331,445 |
|
|
|
5,288,975 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| FLEXSHOPPER, INC. |
| CONSOLIDATED BALANCE SHEETS |
| |
|
|
|
|
|
|
| |
|
June 30, |
|
|
December 31, |
|
| |
|
2018 |
|
|
2017 |
|
| |
|
(unaudited) |
|
|
|
|
| ASSETS |
|
|
|
|
|
|
| CURRENT ASSETS: |
|
|
|
|
|
|
| Cash |
|
$ |
2,055,948 |
|
|
$ |
4,968,915 |
|
| Accounts receivable, net |
|
|
4,104,683 |
|
|
|
4,259,468 |
|
| Prepaid expenses |
|
|
382,758 |
|
|
|
321,035 |
|
| Lease merchandise, net |
|
|
17,806,583 |
|
|
|
21,415,322 |
|
| Total current assets |
|
|
24,349,972 |
|
|
|
30,964,740 |
|
| |
|
|
|
|
|
|
|
|
| PROPERTY AND EQUIPMENT, net |
|
|
3,073,049 |
|
|
|
2,948,164 |
|
OTHER ASSETS, net |
|
94,185 |
|
|
95,722 |
|
| |
|
|
|
|
|
|
|
|
| |
|
$ |
27,517,206 |
|
|
$ |
34,008,626 |
|
| |
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
| CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
| Current portion of loan payable under credit agreement to beneficial
shareholder net of $449,226 at 2018 and $118,404 at 2017 of unamortized issuance costs |
|
$ |
14,402,123 |
|
|
$ |
14,094,096 |
|
| Accounts payable |
|
|
4,513,971 |
|
|
|
7,702,145 |
|
| Accrued payroll and related taxes |
|
|
365,514 |
|
|
|
404,346 |
|
| Promissory notes |
|
|
3,500,000 |
|
|
|
- |
|
| Accrued expenses |
|
|
767,921 |
|
|
|
786,095 |
|
| Total current liabilities |
|
|
23,549,529 |
|
|
|
22,986,682 |
|
| |
|
|
|
|
|
|
|
|
| Loan payable under credit agreement to beneficial shareholder net of
$40,839 at June 30, 2018 and $39,468 at Dec 31, 2017 of unamortized issuance costs and current portion |
|
|
1,309,284 |
|
|
|
4,698,032 |
|
| Total liabilities |
|
|
24,858,813 |
|
|
|
27,684,714 |
|
| |
|
|
|
|
|
|
|
|
| STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
| Series 1 Convertible Preferred Stock, $0.001 par value- authorized
250,000 shares, issued and outstanding 239,405 shares at $5.00 stated value |
|
|
1,197,025 |
|
|
|
1,197,025 |
|
| 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 15,000,000 shares, issued
and outstanding 5,469,501 shares as of 2018 and 5,294,501 as of 2017 |
|
|
547 |
|
|
|
529 |
|
| Additional paid in capital |
|
|
23,041,404 |
|
|
|
22,445,691 |
|
| Accumulated deficit |
|
|
(43,532,583 |
) |
|
|
(39,271,333 |
) |
| Total stockholders’ equity |
|
|
2,658,393 |
|
|
|
6,323,912 |
|
| |
|
$ |
27,517,206 |
|
|
$ |
34,008,626 |
|
| |
|
|
|
|
|
|
|
|
| |
| FLEXSHOPPER, INC. |
| CONSOLIDATED STATEMENTS OF CASH
FLOWS |
| For the six months ended June 30, 2018 and
2017 |
| (unaudited) |
| |
|
|
|
|
|
|
| |
|
2018 |
|
|
2017 |
|
| CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
| Net loss |
|
$ |
(4,261,250 |
) |
|
$ |
(2,617,514 |
) |
| Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: |
|
|
|
|
|
|
|
|
| Depreciation and impairment of lease merchandise |
|
|
19,395,158 |
|
|
|
16,587,622 |
|
| Other depreciation and amortization |
|
|
1,191,510 |
|
|
|
1,002,644 |
|
| Compensation expense related to issuance of stock options |
|
|
72,481 |
|
|
|
42,211 |
|
| Provision for doubtful accounts |
|
|
10,658,805 |
|
|
|
9,675,629 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Accounts receivable |
|
|
(10,504,020 |
) |
|
|
(9,885,543 |
) |
| Prepaid expenses and other |
|
|
(60,167 |
) |
|
|
(110,749 |
) |
| Lease merchandise |
|
|
(15,786,419 |
) |
|
|
(11,532,939 |
) |
| Security deposits |
|
|
- |
|
|
|
(5,928 |
) |
| Accounts payable |
|
|
(3,188,174 |
) |
|
|
(1,337,021 |
) |
| Accrued payroll and related taxes |
|
|
(38,832 |
) |
|
|
(25,312 |
) |
| Accrued expenses |
|
|
108,198 |
|
|
|
80,570 |
|
| Net cash (used in) provided by operating activities |
|
|
(2,412,710 |
) |
|
|
1,873,670 |
|
| |
|
|
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
| Purchases of property and equipment, including capitalized software
costs |
|
|
(1,021,551 |
) |
|
|
(979,562 |
) |
| Net cash (used in) investing activities |
|
|
(1,021,551 |
) |
|
|
(979,562 |
) |
| |
|
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
| Proceeds from exercise of stock options |
|
|
- |
|
|
|
15,000 |
|
| Proceeds from exercise of warrants |
|
|
1,750 |
|
|
|
- |
|
| Proceeds from promissory notes |
|
|
3,465,000 |
|
|
|
- |
|
| Proceeds from loan payable under credit agreement |
|
|
3,550,000 |
|
|
|
- |
|
| Repayment of loan payable under credit agreement |
|
|
(6,420,852 |
) |
|
|
(788,207 |
) |
| Repayment of installment loan |
|
|
(5,604 |
) |
|
|
- |
|
| Debt issuance related costs |
|
|
(69,000 |
) |
|
|
- |
|
| Net cash provided by (used in) financing activities |
|
|
521,294 |
|
|
|
(773,207 |
) |
| |
|
|
|
|
|
|
|
|
| (DECREASE)/INCREASE IN CASH |
|
|
(2,912,967 |
) |
|
|
120,901 |
|
| |
|
|
|
|
|
|
|
|
| CASH, beginning of period |
|
|
4,968,915 |
|
|
|
5,412,495 |
|
| |
|
|
|
|
|
|
|
|
| CASH, end of period |
|
$ |
2,055,948 |
|
|
$ |
5,533,396 |
|
| |
|
|
|
|
|
|
|
|
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.
| |
Six Months ended June 30, |
|
|
|
|
|
| Adjusted Gross Profit |
2018 |
|
2017 |
|
$ Change |
% Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net revenues |
$ |
39,027,721 |
|
|
$ |
34,128,877 |
|
|
$ |
4,898,844 |
|
14.4 |
| Less: provision for doubtful accounts |
|
10,658,805 |
|
|
|
9,675,629 |
|
|
|
983,176 |
|
10.2 |
| Cost of merchandise sold |
|
658,468 |
|
|
|
535,928 |
|
|
|
122,540 |
|
22.9 |
| Adjusted net revenues |
|
27,710,448 |
|
|
|
23,917,320 |
|
|
|
3,793,128 |
|
15.9 |
| Less: Cost of lease revenue and merchandise sold |
|
19,395,158 |
|
|
|
16,587,622 |
|
|
|
2,807,536 |
|
16.9 |
| Adjusted gross profit |
$ |
8,315,290 |
|
|
$ |
7,329,698 |
|
|
$ |
985,592 |
|
13.5 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net revenues as a percentage of cost of lease revenue |
|
143 |
% |
|
|
144 |
% |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Six Months ended June 30, |
|
|
|
|
| Adjusted EBITDA |
2018 |
|
2017 |
|
$ Change |
|
% Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
$ |
(4,261,250 |
) |
|
$ |
(2,617,514 |
) |
|
$ |
1,643,736 |
|
(62.8 |
) |
| Add back: depreciation (excluding leased inventory), amortization, |
|
|
|
|
|
|
|
|
|
|
|
|
|
| interest and stock-based compensation |
|
2,949,690 |
|
|
|
1,915,341 |
|
|
|
1,034,349 |
|
54.0 |
|
| Adjusted EBITDA |
$ |
(1,311,560 |
) |
|
$ |
(702,173 |
) |
|
$ |
609,387 |
|
(86.8 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
We refer to Adjusted Gross Profit and Adjusted EBITDA in the above tables as we use these measures to evaluate
our operating performance and make strategic decisions about the Company. Management believes that Adjusted Gross Profit and
Adjusted EBITDA provide relevant and useful information which is widely used by analysts, investors and competitors in our industry
in assessing performance.
Adjusted Gross Profit represents GAAP revenue less the provision for doubtful accounts and cost of leased
inventory and inventory sold. Adjusted Gross Profit provides us with an understanding of the results from the primary operations of
our business. We use Adjusted Gross Profit to evaluate our period-over-period operating performance. This measure may be useful to
an investor in evaluating the underlying operating performance of our business.
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) and patent pending LTO payment method. 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
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 file 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:
Jeremy Hellman
Senior Associate
The Equity Group
212-836-9626
jhellman@equityny.com
FlexShopper, Inc.
Investor Relations
ir@flexshopper.com
FlexShopper, Inc.
