GlobeNewswire Inc | May 10, 2021 04:15PM EDT

May 10, 2021

Q1 2021 Net Revenues Up 32.7% to $31.9 million

Lease Merchandise, net, Up 31.4% at March 31, 2021 Compared With Prior Year

BOCA RATON, Fla., May 10, 2021 (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, 2021, highlighted by continued growth in lease activity from repeat customers, along with new customer additions.

Results for Quarter Ended March 31, 2021 vs. Quarter Ended March 31, 2020:

-- Total net revenues and fees increased 31.9% to $32.7 million from $24.8 million

-- Originated 39,299 gross leases, up 8.7% from 36,153; average origination value increased to $532 from $475

-- Gross lease originations increased $3.7 million, or 21.7%, to $20.9 million from $17.2 million

-- Gross profit increased 28% to $10.3 million from $8.0 million

-- Net income of $1.2 thousand compared with net income of $51.6 thousand

-- Net loss attributable to common stockholders of $(608) thousand, or $(0.03) per diluted share, compared to net loss attributable to common stockholders of $(1.3) million, or $(0.06) per diluted share

-- Adjusted EBITDA1 increased to $2.4 million compared to $2.0 million

-- Lease merchandise, net, increase 31.4% to $39.3 from $29.9 million

Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under Non-GAAP Measures.

First Quarter 2021 Highlights and Recent Developments

-- Pilot program with a national retailer continues to expand from one state to four states. As noted in the Companys Q4 2020 earnings release, FlexShoppers payment option was due to roll-out to three additional states as of March 15th. This further roll-out has resulted in FlexShopper now being available in over 300 storefronts with this retail partner.

-- Digital advertising rates continue to support an aggressive marketing stance.Through the first quarter, FlexShopper continued to invest in digital marketing programs as the company was able to attract customers at its targeted acquisition cost.

-- Origination growth through Q1 2021. The Company previously announced origination growth of 23% in January and February combined, compared with the same two-month period in 2020. Overall Q1 2021 originations grew 21.7%, while average origination value increased to $532 from $475.

-- Repeat customer trends continue to be favorable. During the first quarter, the Company originated $8.2 million from existing customers compared with $7.3 million repeat customer leases in the first quarter of 2020.

-- Pre-marketing EBITDA continues to demonstrate growth. Excluding marketing expense, which is the Companys most significant variable expense category, pre-marketing EBITDA for Q1 was $4.2 million, up from $3 million in the prior year quarter.

-- Net lease merchandise up compared with prior year.Representing the value of actual goods on which customers are due to make lease payments, Net Lease Merchandise grew 31.4% to $39.3 million at March 31, 2020, compared with $29.9 million a year ago

Rich House, CEO, stated, Our first quarter was generally in-line with our expectations. Through the fall of 2020 and into early 2021, we saw solid growth in our originations and those leases helped drive the top line growth we enjoyed in the first quarter. Those customers have also exhibited payment behavior at, or better, than expected, with government stimulus programs helping many customers who may have been delinquent get caught up. We have also commented on our recent calls that stimulus programs enacted during 2020 led to an increase in early payoff activity and this round of stimulus has been no exception. Our focus remains on recycling that capital, with an emphasis on driving repeat customer activity, which is our most profitable business.

Mr. House continued, On our fourth quarter call we noted that our pilot program with a national retailer was due to expand to four states from one in mid-March and that rollout has gone well. We are now in over 300 stores with this retail partner and seeing good adoption of our FlexShopper payment option at the store level. We are confident this success will translate into further expansion with this partner over the balance of the year. We are also very active in looking to add additional retail partners and expect that the broader national trend toward ending pandemic restrictions will help accelerate our retail channel activity.

Additionally, Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition of this measure under Non-GAAP Measures.

Conference Call DetailsDate: Tuesday, May 11, 2021Time: 9:00 a.m. Eastern Time

Participant Dial-In Numbers:Domestic callers: (877) 407-3944International callers: (412) 902-0038

Access by Webcast

The call will also be simultaneously webcast over the Internet via the Investor section of the Companys website at www.flexshopper.com or by clicking on the conference call link: https://78449.themediaframe.com/dataconf/productusers/fpay/mediaframe/44878/indexl.html. An audio replay of the call will be archived on the Companys website.

FLEXSHOPPER, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)

For the three months ended March31, 2021 2020 Revenues: Lease revenues and fees, net $ 31,104,664 $ 23,697,705 Lease merchandise sold 1,679,006 1,145,042 Total revenues 32,783,670 24,842,747 Costs and expenses: Cost of lease revenues, consisting ofdepreciation and impairment of lease 21,200,510 16,196,949 merchandiseCost of lease merchandise sold 1,326,443 630,781 Marketing 1,832,740 1,031,145 Salaries and benefits 2,909,319 2,548,869 Operating expenses 4,114,424 3,171,692 Total costs and expenses 31,383,436 23,579,436 Operating income 1,400,234 1,263,311 Interest expense including amortization of 1,398,997 1,211,626 debt issuance costsNet income 1,237 51,685 Dividends on Series 2 Convertible 609,772 609,717 Preferred SharesDeemed dividend from exchange offer of - 713,212 warrantsNet loss attributable to common $ (608,535 ) $ (1,271,244 )shareholders Basic and diluted (loss) per common share: Basic and diluted $ (0.03 ) $ (0.06 ) WEIGHTED AVERAGE COMMON SHARES: Basic and diluted 21,369,904 19,903,435

FLEXSHOPPER, INC.CONSOLIDATED BALANCE SHEETS

March31, December31, 2021 2020 (unaudited) ASSETS CURRENT ASSETS: Cash $ 6,315,815 $ 8,541,232 Accounts receivable, net 11,028,554 10,032,714 Prepaid expenses 923,093 869,081 Lease merchandise, net 39,320,781 42,822,340 Total current assets 57,588,243 62,265,367 PROPERTY AND EQUIPMENT, net 5,945,497 5,911,696 OTHER ASSETS, net 67,267 72,316 Total assets $ 63,601,007 $ 68,249,379 LIABILITIES AND STOCKHOLDERS? EQUITY CURRENT LIABILITIES: Accounts payable $ 3,126,214 $ 7,907,619 Accrued payroll and related taxes 560,332 352,102 Current portion of promissory notes torelated parties, net $8,276 at 2020 of 59,811 4,815,546 unamortized issuance costs, including accruedinterestCurrent portion of promissory note ? PaycheckProtection Program, including accrued 1,291,951 1,184,952 interestAccrued expenses 2,866,607 2,646,800 Lease liability - current portion 148,301 160,726 Total current liabilities 8,053,216 17,067,745 Loan payable under credit agreement tobeneficial shareholder, net of $499,661 at 36,290,339 37,134,009 2021 and $61,617 at 2020 of unamortizedissuance costs and current portionPromissory notes to related parties, net of$5,093 at 2021 of unamortized issuance costs 4,744,904 - and current portionPromissory note ? Paycheck Protection 639,510 741,787 Program, net of current portionAccrued payroll and related taxes net of 204,437 204,437 current portionLease liabilities net of current portion 1,907,220 1,947,355 Total liabilities 51,839,626 57,095,333 STOCKHOLDERS? EQUITY Series 1 Convertible Preferred Stock, $0.001par value - authorized 250,000 shares, issued 851,660 851,660 and outstanding 170,332 shares at $5.00stated valueSeries 2 Convertible Preferred Stock, $0.001par value - authorized 25,000 shares, issued 21,952,000 21,952,000 and outstanding 21,952 shares at $1,000stated valueCommon stock, $0.0001 par value- authorized40,000,000 shares, issued and outstanding 2,138 2,136 21,375,945 shares at 2021 and 21,359,945shares at 2020Additional paid in capital 37,449,422 36,843,326 Accumulated deficit (48,493,839 ) (48,495,076 )Total stockholders? equity 11,761,381 11,154,046 $ 63,601,007 $ 68,249,379

FLEXSHOPPER, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFor the three months ended March 31, 2021 and 2020(unaudited)

2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,237 $ 51,685 Adjustments to reconcile net income tonet cash provided by (used in) operating activities:Depreciation and impairment of lease 21,200,510 16,196,949 merchandiseOther depreciation and amortization 651,394 460,013 Amortization of debt issuance costs 91,703 94,346 Compensation expense related to issuance 593,186 215,814 of stock options and warrantsProvision for doubtful accounts 8,833,349 7,682,927 Interest in kind added to promissory 9,098 141,038 notes balanceChangesin operating assets and liabilities:Accounts receivable (9,829,189 ) (7,870,539 )Prepaid expenses and other (53,683 ) (87,873 )Lease merchandise (17,698,951 ) (15,032,521 )Security deposits 4,280 2,943 Lease Liabilities (1,033 ) 100,014 Accounts payable (4,781,405 ) (1,406,398 )Accrued payroll and related taxes 208,230 (220,263 )Accrued expenses 208,271 230,394 Net cash provided by (used in) operating (563,003 ) 558,529 activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment, (734,122 ) (646,414 )including capitalized software costsNet cash used in investing activities (734,122 ) (646,414 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loan payable under credit 3,500,000 1,900,000 agreementRepayment of loan payable under credit (3,910,000 ) (3,353,000 )agreementDebt issuance related costs (526,565 ) - Proceeds from exercise of warrants - 131,250 Proceeds from exercise of stock options 12,912 - Principal payment under finance lease (1,833 ) (1,515 )obligationRepayment of installment loan (2,802 ) (2,802 )Net cash used in financing activities (928,290 ) (1,326,067 ) DECREASE IN CASH (2,225,417 ) (1,413,952 ) CASH, beginning of period $ 8,541,232 $ 6,868,472 CASH, end of period $ 6,315,815 $ 5,454,520

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, 2021 and 2020 were as follows:

Three months ended March 31, 2021 2020 $ Change % Change Adjusted EBITDA:Net income $ 1,237 $ 51,685 $ (50,448 ) (97.6 )Amortization 91,704 94,345 (2,641 ) (2.8 )of debt costsOtheramortization 651,396 460,013 191,383 41.6 anddepreciationInterest 1,307,293 1,117,281 190,012 17.0 expenseStock 380,264 171,815 208,449 121.3 compensationProduct/infrastructure 10,000 104,664 (94,664 ) (90.4 )expensesAdjusted $ 2,441,894 $ 1,999,803 $ 442,091 22.1 EBITDA

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. These statements include the Companys financial guidance for fiscal year 2019. 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 Managements 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:

Jeremy HellmanVice PresidentThe Equity Group212-836-9626jhellman@equityny.com

FlexShopper, Inc.Investor Relationsir@flexshopper.com

FlexShopper, Inc.