FlexShopper(FPAY) - 2023 Q3 - Quarterly Report

Revenue Performance - Total revenues for Q3 2023 were $31,386,446, an increase of 20.5% compared to $26,141,451 in Q3 2022[16] - Loan revenues and fees for Q3 2023 increased significantly to $10,304,247 from $1,629,365 in Q3 2022, marking a growth of 532.5%[16] - Total revenues for the three months ended September 30, 2023, were $31,386,446, reflecting a 20.1% increase from $26,141,451 in Q3 2022[175] - For the nine months ended September 30, 2023, total revenues were $86,704,258, a decrease of $4,940,580 or 5.4% compared to the same period in 2022[198] Income and Profitability - Operating income for Q3 2023 was $5,952,419, compared to an operating loss of $4,548,561 in Q3 2022[16] - Net income for Q3 2023 was $940,101, a turnaround from a net loss of $6,280,434 in Q3 2022[16] - For the nine months ended September 30, 2023, FlexShopper reported a net loss of $4,587,769 compared to a net income of $5,727,852 for the same period in 2022, indicating a significant decline in profitability[21] - Adjusted EBITDA for the nine months ended September 30, 2023, was $15,084,967, a substantial increase of 340.4% from $3,424,977 in 2022[176] Asset and Liability Management - Total current assets decreased to $105,274,930 as of September 30, 2023, from $109,685,473 at December 31, 2022, a decline of 4.0%[13] - Total liabilities decreased to $115,815,240 as of September 30, 2023, from $117,254,837 at December 31, 2022, a reduction of 1.2%[13] - The accumulated deficit increased to $(36,178,352) as of September 30, 2023, compared to $(31,590,583) at December 31, 2022[13] - FlexShopper's total stockholders' equity as of September 30, 2023, was $28,601,812, compared to $23,082,979 as of September 30, 2022, representing an increase of approximately 24%[20] Cash Flow and Liquidity - FlexShopper's cash flows from operating activities provided $2,562,763 in 2023, a notable recovery from a cash outflow of $27,545,463 in 2022[21] - The total cash and restricted cash at the end of the period was $5,737,809, slightly down from $5,756,086 at the end of September 2022[21] - The Company’s liquidity was reported at $5,732,483, significantly above the required minimum of $1,500,000[112] Expenses and Cost Management - Marketing expenses decreased by $722,048 or 30.2% to $1,671,137 in Q3 2023 compared to $2,393,185 in Q3 2022[187] - Depreciation and impairment of lease merchandise decreased by $5,684,939 or 30.3% to $13,061,958 in Q3 2023 compared to $18,746,897 in Q3 2022[185] - Loan origination costs and fees increased significantly to $4,878,158 for the nine months ended September 30, 2023, compared to $2,256,838 in the prior year, representing an increase of $2,621,320 or 116.2%[203] Shareholder Equity and Stock Compensation - The Company raised $20.0 million from the sale of 20,000 shares of Series 2 Convertible Preferred Stock, with an additional $1.95 million from 1,952 shares sold to another investor[118] - The total stock-based compensation expense for the nine months ended September 30, 2023, was $1,336,367, compared to $950,003 for the same period in 2022[130] - The Company granted 1,596,567 stock options at an exercise price of $0.80 during the nine months ended September 30, 2023[132] Loan and Credit Management - The outstanding balance under the Credit Agreement was $86,205,000 as of September 30, 2023, up from $81,200,000 as of December 31, 2022[114] - Interest expense incurred under the Credit Agreement amounted to $3,503,486 for the three months ended September 30, 2023, and $10,115,009 for the nine months ended September 30, 2023, compared to $2,426,513 and $5,874,504 for the same periods in 2022[114] - The aggregate fair value of loan receivables that are 90 days or more past due as of September 30, 2023, was $23,571,023, up from $7,147,585 in 2022, showing an increase of 230.5%[78] Doubtful Accounts and Provisions - The provision for doubtful accounts decreased by 33.4% to $10,038,122 in Q3 2023 from $15,075,109 in Q3 2022[175] - FlexShopper's provision for doubtful accounts was $32,123,950 in 2023, down from $42,639,102 in 2022, indicating a decrease of about 25%[21] - The company's lease receivables increased to $53,168,976 as of September 30, 2023, compared to $48,618,843 as of December 31, 2022, while the allowance for doubtful accounts decreased to $11,747,936 from $13,078,800[39] Fair Value and Amortization - The company recorded a bargain purchase gain of $14,461,274 related to the Revolution Transaction, as the fair value of net assets acquired exceeded the purchase price consideration[151] - Future estimated amortization expense for identifiable intangible assets over the next five years totals $7,358,040[98] - Amortization expense for intangible assets was $442,636 for the three months ended September 30, 2023, compared to $769 in the same period of 2022[52]