GlobeNewswire Inc | Aug 10, 2020 04:15PM EDT

August 10, 2020

BOCA RATON, Fla., Aug. 10, 2020 (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, 2020, highlighted by growth in adjusted EBITDA and net revenues.

Results for Quarter Ended June 30, 2020 vs. Quarter Ended June 30, 2019:

-- Net lease revenues and fees increased 15.1% to $22.9 million from $19.9 million -- FlexShopper originated 33,941 gross leases, up 16.0% from 29,252 -- Gross lease originations increased $2.1 million, or 15.8%, to $15.3 million from $13.2 million -- The average origination value remained flat at $452 -- Net loss of $(262) thousand compared with a net loss of $(310) thousand -- Net loss attributable to common stockholders of $(0.9) million, or $(0.04) per diluted share, compared to $(0.9) million, or $(0.05) per diluted share -- Gross profit increased 25.8% to $7.4 million from $5.9 million -- Adjusted EBITDA1 increased to $2.0 million compared to $1.8 million

Results for Six Months Ended June 30, 2020 vs. Six Months Ended June 30, 2019:

-- Net lease revenues and fees increased 11.8% to $46.6 million from $41.7 million -- FlexShopper originated 70,068 gross leases, up 18.3% from 59,245 -- Gross lease originations increased $4.8 million, or 17.3%, to $32.5 million from $27.7 million -- The average origination value decreased to $464 from $467 -- Net loss of $(210) thousand compared with net income of $194 thousand -- Net loss attributable to common stockholders, inclusive of deemed dividend expense of $0.7 million in Q1, of $(2.1) million, or $(0.10) per diluted share, compared to $(1.0) million, or $(0.06) per diluted share -- Gross profit increased 20.0% to $15.4 million from $12.8 million -- Adjusted EBITDA1 remained flat at $4.1 million

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

Second Quarter 2020 Highlights and Recent Developments

-- Growth in originations and net revenues.FlexShopper recorded growth in both gross lease originations and net revenues in the second quarter. Retail partner lease originations saw improvement from COVID-19 restriction-driven lows experienced at the end of Q1/early in Q2 but remained below pre-pandemic levels. -- Payments activity remains firm. As of June 30, 2020, FlexShopper observed an improvement in payments activity by its customers compared to the same period last year. The Company continues to closely monitor payments on a weekly basis and intends to modify its marketing and underwriting as needed. -- Retailer rollouts were delayed due to COVID-19. Previously-planned programs with new retail partners that were originally scheduled for late Q1 and/or Q2 were delayed. Since the end of Q2, the Company has been able to move forward with some of these new programs.

Rich House, CEO, stated, Over the course of the second quarter we saw states progress through phased economic reopenings. As they did so, we followed suit as we felt an increased marketing push would yield a positive return. On our first quarter earnings call we noted that our payment activity had remained firm and that continues to be the case.

Mr. House continued, Our retail partners have seen their store traffic begin to return as states moved through phased reopening of in-person businesses. That has, in turn, led to an increase in leases originated through this channel although activity remains below levels experienced prior to COVID-19. We are now moving forward with new partner trials and rollouts that were delayed earlier in the year.

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

Conference Call DetailsDate: Tuesday , August 11, 2020Time: 9:00 a.m. Eastern Time Participant Dial-In Numbers:Domestic callers: (877) 407-3944International callers: (412) 902-0038

Access by WebcastThe call will also be simultaneously webcast over the Internet via the Investor section of the Companys website at www.flexshopper.comor by clicking on the conference call link: https://78449.themediaframe.com/dataconf/productusers/fpay/mediaframe/37617/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 For the six months ended June 30, June 30, 2020 2019 2020 2019 Revenues: Leaserevenues and $ 22,900,280 $ 19,901,156 $ 46,597,985 $ 41,685,935 fees, netLeasemerchandise 1,629,850 763,184 2,774,892 1,709,802 soldTotal 24,530,130 20,664,340 49,372,877 43,395,737 revenues Costs and expenses:Cost ofleaserevenues,consistingof 15,898,255 14,260,308 32,095,204 29,538,247 depreciationandimpairmentof leasemerchandiseCost oflease 1,291,090 498,838 1,921,871 1,063,845 merchandisesoldMarketing 938,049 314,229 1,969,194 1,162,775 Salaries and 2,276,516 2,037,081 4,825,385 3,795,168 benefitsOperating 3,337,162 2,841,846 6,508,853 5,438,128 expensesTotal costs 23,741,072 19,952,302 47,320,507 40,998,163 and expenses Operating 789,058 712,038 2,052,370 2,397,574 income Interestexpenseincludingamortization 1,051,120 1,021,984 2,262,747 2,203,977 of debtissuancecostsNet (loss)/ (262,062 ) (309,946 ) (210,377 ) 193,597 income Deemeddividendfrom - - 713,212 - exchangeoffer ofwarrantsDividends onSeries 2Convertible 609,728 609,282 1,219,445 1,218,450 PreferredSharesNet lossattributable $ (871,790 ) $ (919,228 ) $ (2,143,034 ) $ (1,024,853 )to commonshareholders Basic anddiluted loss per commonshare:Basic and $ (0.04 ) $ (0.05 ) $ (0.10 ) $ (0.06 )diluted WEIGHTEDAVERAGE COMMONSHARES:Basic and 21,351,914 17,666,193 20,627,674 17,658,562 diluted

FLEXSHOPPER, INC.CONSOLIDATED BALANCE SHEETS

June30, December31, 2020 2019 (unaudited) ASSETS CURRENT ASSETS: Cash $ 9,851,009 $ 6,868,472 Accounts receivable, net 7,969,997 8,272,332 Prepaid expenses 591,276 672,242 Lease merchandise, net 26,081,242 31,063,104 Total current assets 44,493,524 46,876,150 PROPERTY AND EQUIPMENT, net 5,489,986 5,260,407 OTHER ASSETS, net 73,854 78,335 $ 50,057,364 $ 52,214,892 LIABILITIES AND STOCKHOLDERS? EQUITY CURRENT LIABILITIES: Accounts payable $ 3,079,283 $ 4,567,889 Accrued payroll and related taxes 513,098 513,267 Loan payable under credit agreement tobeneficial shareholder, net of $36,838 at 8,541,037 - 2020 of unamortized issuance costsPromissory notes to related parties, net of$16,552 at 2020 and $5,333 at 2019 of 4,793,918 1,067,740 unamortized issuance costs, including accruedinterestPromissory note 845,047 - Accrued expenses 1,210,665 1,372,901 Lease liability - current portion 151,146 27,726 Total current liabilities 19,134,194 7,549,523 Loan payable under credit agreement tobeneficial shareholder, net of $73,676 at 17,082,075 28,904,738 2020 and $281,138 at 2019 of unamortizedissuance costs and current portionPromissory notes to related parties, net of$24,828 at 2019 of unamortized issuance costs - 3,725,172 and current portionPromissory note 1,072,042 - Accrued payroll and related taxes less 85,091 - current portionLease liabilities less current portion 2,028,852 2,067,184 Total liabilities 39,402,254 42,246,617 STOCKHOLDERS? EQUITY Series 1 Convertible Preferred Stock, $0.001par value - authorized 250,000 shares, issued 851,660 855,955 and outstanding 170,332 shares at 2020 and171,191 shares at 2019 at $5.00 stated 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 2,136 1,779 21,356,112 shares at 2020 and 17,783,960shares at 2019Additional paid in capital 36,214,871 35,313,721 Accumulated deficit (48,365,557 ) (48,155,180 )Total stockholders? equity 10,665,110 9,968,275 $ 50,057,364 $ 52,214,892

FLEXSHOPPER, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFor the six months ended June 30, 2020 and 2019(unaudited)

2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss)/ income $ (210,377 ) $ 193,597 Adjustments to reconcile net income/(loss) to net cash provided by operating activities:Depreciation and impairment of lease 32,095,204 29,538,247 merchandiseOther depreciation and amortization 1,246,372 1,237,143 Compensation expense related to issuance 763,328 371,972 of stock options and warrantsProvision for doubtful accounts 15,564,198 15,774,830 Interest in kind added to promissory 2,989 - notes balanceChangesin operating assets and liabilities:Accounts receivable (15,261,863 ) (16,296,288 )Prepaid expenses and other 81,916 (198,666 )Lease merchandise (27,113,342 ) (21,598,717 )Security deposits 2,943 (40,801 )Accounts payable (1,488,607 ) (5,745,326 )Accrued payroll and related taxes 84,922 (28,436 )Accrued expenses 27,258 (511,712 )Net cash provided by operating 5,794,941 2,695,843 activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment, (1,399,360 ) (1,105,122 )including capitalized software costsNet cash used in investing activities (1,399,360 ) (1,105,122 ) CASH FLOWS FROM FINANCING ACTIVITIES Principal payment under finance lease (3,175 ) - obligationRefund of equity issuance related costs - 23,147 Proceeds from exercise of warrants 131,250 - Proceeds from exercise of stock options 2,634 - Proceeds from promissory notes, net of 1,914,100 3,440,000 feesProceeds from loan payable under credit 2,412,000 1,358,343 agreementRepayment of loan payable under credit (5,864,250 ) (9,255,988 )agreementRepayment of promissory note - (500,000 )Repayment of instalment loan (5,603 ) (5,604 )Net cash used in financing activities (1,413,044 ) (4,940,102 ) INCREASE/ (DECREASE) IN CASH 2,982,537 (3,349,381 ) CASH, beginning of period $ 6,868,472 $ 6,141,210 CASH, end of period $ 9,851,009 $ 2,791,829 Supplemental cash flow information: Interest paid $ 2,120,502 $ 1,936,218 Deemed dividend from exchange offer of $ 713,212 $ - warrantsConversion of preferred stock to common $ 4,295 $ 341,070 stock

Non-GAAP MeasuresWe 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 and six months ended June 30, 2020 and 2019 were as follows:

Three months ended June 30,

2020 2019 $ Change % ChangeAdjusted EBITDA:Net loss $ (262,062 ) $ (309,946 ) $ 47,884 (15.4 )Amortization of 89,888 58,569 31,319 53.5 debt costsOtheramortization 602,126 593,605 8,521 1.4 anddepreciationInterest 961,233 963,415 (2,182 ) (0.2 )expenseStock 452,033 303,243 148,790 49.1 compensationNon-recurringproduct/ 63,376 134,814 (71,438 ) (53.0 )infrastructureexpensesWarrantscompensation- 95,481 32,000 63,481 198.4 consultingagreementAdjusted EBITDA $ 2,002,075 $ 1,775,700 $ 226,375 12.7

Six months ended June 30, 2020 2019 $ Change % ChangeAdjusted EBITDA:Net income/ $ (210,377 ) $ 193,597 $ (403,974 ) (208.7 )(loss) Amortization 184,233 118,834 65,399 55.0 of debt costsOtheramortization 1,062,139 1,118,308 (56,169 ) (5.0 )anddepreciationInterest 2,078,514 2,085,143 (6,629 ) (0.3 )expenseStock 623,848 328,772 295,076 89.8 compensationNon-recurringproduct/ 184,440 227,111 (42,671 ) (18.8 )infrastructureexpensesWarrantscompensation- 139,480 43,200 96,280 222.9 consultingagreementAdjusted $ 4,062,277 $ 4,114,965 $ (52,688 ) (1.3 )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 StatementsAll 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.