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Press release content from Globe Newswire. The AP news staff was not involved in its creation.

FlexShopper, Inc. Reports 2019 Fourth Quarter and Full-Year Financial Results; Record Net Income of $0.6 million and Adjusted EBITDA of $8.3 million for FY 2019

March 3, 2020 GMT

BOCA RATON, Fla., March 02, 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 and year ended December 31, 2019, highlighted by record net income and Adjusted EBITDA.

Results for Quarter Ended December 31, 2019 vs. Quarter Ended December 31, 2018:

-- Net lease revenues and fees increased 23.3% to $21.4 million from $17.3 million. -- FlexShopper originated 56,391 gross leases, down 15.7% from 65,250. -- Gross lease originations decreased $3.3 million, a decrease of 13.7%, to $24.1 million from $27.4 million. -- The average origination value increased to $427 from $420. -- Net loss of $(1.0) million compared with net loss of $(2.5) million. -- Net loss attributable to common stockholders of $(1.6) million, or $(0.09) per diluted share, compared to $(3.1) million, or $(0.18) per diluted share. -- Gross profit increased 13.5% to $7.5 million from $6.7 million. -- Adjusted EBITDA1 increased to $1.1 million compared to ($0.8) million.

Results for the Year Ended December 31, 2019 vs. Year Ended December 31, 2018:

-- Net lease revenues and fees increased 44.1% to $85.3 million from $59.2 million. -- Lease originations increased to 152,122, an increase of 8.7% from 139,934. -- Gross lease originations increased $10.6 million, an increase of 18.2%, to $68.8 million from $58.2 million. -- The average origination value increased to $452 versus $416. -- Net income was $0.6 million compared to a net loss of $(9.5) million. -- Net loss attributable to common shareholders of $(1.9) million or $(0.11) per diluted share, compared to $(11.9) million, or $(1.39) per diluted share. -- Gross profit increased 47.1% to $28.6 million from $19.4 million. -- Adjusted EBITDA1 increased to $8.3 million compared to $(3.1) million.

¹Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measures under “Non-GAAP Measures”.

2019 Highlights and Recent Developments

-- First profitable fiscal year in FlexShopper’s history. With net income of approximately $600,000, fiscal year 2019 was the first profitable year for the Company. Additionally, Adjusted EBITDA of $8.3 million was up $11.4 million from the prior year. -- Continued strong top line growth. Net revenue and fees increased 44.1% to $85.3 million, driven by origination growth of 8.7% coupled with an increase in average origination value from $416 to $452. During the fourth quarter the Company tightened its underwriting algorithm with the intention of reducing the approval rate of lower-quality leases. This impacted the number of lease approvals while benefiting gross margin and Adjusted EBITDA. -- B to B to C Channel continued to expand. As of December 31, 2019, FlexShopper’s integrationless, app-based RTO checkout option was available at 1,348 retail partner locations compared with 771 locations at December 31, 2018. -- Completed warrant exchange subsequent to year-end.As a first step toward simplifying the company’s capital structure, FlexShopper completed a warrant exchange on February 19, 2020, which resulted in the FPAYW ticker delisting from NASDAQ.

Rich House, CEO, stated, “We closed 2019 with record results for FlexShopper, punctuated by the first annual profit in the Company’s history of approximately $600,000. We also continued to grow our top line during the year, although we did make some strategic changes to our origination funnel. As I reported last quarter, we are currently in a position where we can couple continued strong orgination and revenue growth with an emphasis on profitability and return on capital.”

Financial Outlook – Guidance

Current Guidance 2019 Actual ----------------------------- ---------------- --------------- 2020 Gross Lease Originations > $82.0 million > $68.8 million ----------------------------- ---------------- --------------- 2020 Revenue > $100.0 million > $88.8 million ----------------------------- ---------------- --------------- 2020 Gross Profit > $35.0 million > $28.6 million ----------------------------- ---------------- --------------- 2020 Adjusted EBITDA > $11.0 million > $8.3 million ----------------------------- ---------------- ---------------

Mr. House continued, “We are excited about what lies ahead for FlexShopper as 2020 promises to be an exciting year. Continuing our practice from last year, we are providing guidance which is summarized in the accompanying table. Notably, our outlook for 2020 includes continued solid growth in originations and revenues with an even more significant expansion in profitability.”

The Company’s guidance for Gross Lease Originations, Revenue, Gross Profit and Adjusted EBITDA are forward-looking statements. They are subject to various risks and uncertainties that could cause the Company’s actual results to differ materially from the anticipated targets. There can be no assurance the Company will meet these financial projections. See the cautionary information about forward-looking statements in the “Forward-Looking Statements” section of this press release. Additionally, Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition of this measure under “Non-GAAP Measures,” but note that information reconciling forward-looking non-GAAP measures to GAAP measures is not available without unreasonable effort.

Conference Call Details Date: Tuesday, March 3, 2020 Time: 9:00 a.m. Eastern Time Participant Dial-In Numbers: Domestic callers: (877) 407-3944 International callers: (412) 902-0038

Access by WebcastThe 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://78449.themediaframe.com/dataconf/productusers/fpay/mediaframe/35941/indexl.html. An audio replay of the call will be archived on the Company’s website.

FLEXSHOPPER, INC.CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended For the twelve months ended December 31, December 31, ---------------------------- ----------------------------- 2019 2018 2019 2018 ------------ ------------ ------------ ------------- Revenues: Lease revenues and fees, net $ 21,378,164 $ 17,343,495 $ 85,331,360 $ 59,219,472 Lease merchandise sold 1,083,653 677,152 3,458,529 2,269,708 - ---------- - ---------- - ---------- - ----------- Total revenues 22,461,817 18,020,647 88,789,889 61,489,180 - ---------- - ---------- - ---------- - ----------- Costs and expenses: Cost of lease revenues, consisting of depreciation and impairment of lease 14,152,683 10,954,365 57,939,899 40,639,232 merchandise Cost of lease merchandise sold 760,792 415,849 2,282,036 1,423,526 Marketing 1,618,065 3,021,303 3,649,292 7,046,812 Salaries and benefits 2,484,537 2,398,012 8,469,334 8,796,011 Operating expenses 3,188,853 2,598,135 11,345,091 8,761,815 - ---------- - ---------- - ---------- - ----------- Total costs and expenses 22,204,930 19,387,664 83,685,652 66,667,396 - ---------- - ---------- - ---------- - ----------- Operating income/(loss) 256,887 (1,367,017 ) 5,104,237 (5,178,216 ) Loss on extinguishment of debt - - - 126,622 Interest expense including amortization of 1,044,651 1,115,592 4,310,422 4,156,424 debt issuance costs - ---------- - ---------- - ---------- - ----------- Income/(loss) before income taxes (787,764 ) (2,482,609 ) 793,815 (9,461,262 ) Provision for income taxes 216,400 216,400 - ---------- - ---------- - ---------- - ----------- Net income/(loss) (1,004,164 ) (2,482,609 ) 577,415 (9,461,262 ) Dividends on Series 2 Convertible Preferred 609,717 609,168 2,437,884 2,426,840 Shares - ---------- - ---------- - ---------- - ----------- Net income/(loss) attributable to common $ (1,613,881 ) $ (3,091,777 ) $ (1,860,469 ) $ (11,888,102 ) shareholders - ---------- - ---------- - ---------- - ----------- Basic and diluted (loss) per common share: Basic and diluted $ (0.09 ) $ (0.18 ) $ (0.11 ) $ (1.39 ) - ---------- - ---------- - ---------- - ----------- WEIGHTED AVERAGE COMMON SHARES: Basic and diluted 17,704,865 17,579,870 17,672,156 8,574,569 - ---------- - ---------- - ---------- - -----------

FLEXSHOPPER, INC.CONSOLIDATED BALANCE SHEETS

December 31, December 31, 2019 2018 ------------- ------------- ASSETS CURRENT ASSETS: Cash $ 6,868,472 $ 6,141,210 Accounts receivable, net 8,272,332 6,375,963 Prepaid expenses 672,242 317,160 Lease merchandise, net 31,063,104 32,364,697 - ----------- - ----------- Total current assets 46,876,150 45,199,030 PROPERTY AND EQUIPMENT, net 5,260,407 3,336,664 OTHER ASSETS, net 78,335 90,621 - ----------- - ----------- $ 52,214,892 $ 48,626,315 - ----------- - ----------- LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Current portion of loan payable under credit agreement to beneficial shareholder, net of $0 at 2019 and $167,483 at 2018 of unamortized issuance $ - $ 14,252,717 costs Accounts payable 4,567,889 8,317,216 Accrued payroll and related taxes 513,267 393,095 Promissory notes to related parties, net of $5,333 at 2019 and $0 at 2018 of 1,067,740 1,814,771 unamortized issuance costs, including accrued interest Accrued expenses 1,372,901 1,335,505 Lease liability - current portion 27,726 - - ----------- - ----------- Total current liabilities 7,549,523 26,113,304 Loan payable under credit agreement to beneficial shareholder, net of $281,138 at 2019 and $164,752 at 2018 of unamortized issuance costs and 28,904,738 14,020,335 current portion Promissory notes to related parties, net of $24,828 at 2019 and $0 at 2018 3,725,172 - of unamortized issuance costs and current portion Lease liabilities less current portion 2,067,184 - - ----------- - ----------- Total liabilities 42,246,617 40,133,639 STOCKHOLDERS’ EQUITY Preferred Stock authorized 500,000 shares, $0.001 par value Series 1 Convertible Preferred Stock, $0.001 par value - designated 250,000 shares, issued and outstanding 171,191 shares at 2019 and 239,405 shares at 855,955 1,197,025 2018 at $5.00 stated value Series 2 Convertible Preferred Stock, $0.001 par value - designated25,000 21,952,000 21,952,000 shares, issued and outstanding 21,952 shares at $1,000 stated value Common stock, $0.0001 par value- authorized 40,000,000 shares, issued and 1,779 1,758 outstanding 17,783,960 shares at 2019 and 17,579,870 shares at 2018 Additional paid in capital 35,313,721 34,074,488 Accumulated deficit (48,155,180 ) (48,732,595 ) - ----------- - ----------- Total stockholders’ equity 9,968,275 8,492,676 - ----------- - ----------- $ 52,214,892 $ 48,626,315 - ----------- - -----------

FLEXSHOPPER, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2019 and 2018

2019 2018 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss) $ 577,415 $ (9,461,262 ) Adjustments to reconcile net income/(loss) to net cash used in operating activities: Depreciation and impairment of lease merchandise 58,253,095 40,639,232 Other depreciation and amortization 2,524,422 2,410,537 Compensation expense related to issuance of stock options and warrants 723,394 133,428 Provision for doubtful accounts 34,838,046 23,239,189 Loss on debt extinguishment - 126,622 Payment of interest in kind under promissory notes 73,073 64,771 Payment of interest in kind under credit agreement 170,550 248,535 Changes in operating assets and liabilities: Accounts receivable (36,734,415 ) (25,355,684 ) Prepaid expenses and other (352,710 ) 6,844 Lease merchandise (56,951,502 ) (51,588,607 ) Security deposits 9,210 2,025 Accounts payable (3,814,098 ) 827,715 Accrued payroll and related taxes 120,172 (11,251 ) Accrued expenses 93,887 557,648 - ----------- - ----------- Net cash used in operating activities (469,461 ) (18,160,258 ) - ----------- - ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment, including capitalized software costs (2,241,172 ) (2,284,876 ) - ----------- - ----------- Net cash used in investing activities (2,241,172 ) (2,284,876 ) - ----------- - ----------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payment under finance lease obligation (2,527 ) - Refund of equity issuance related costs 61,509 - Proceeds from exercise of warrants 43,875 1,750 Proceeds from exercise of stock options 69,406 - Proceeds from public offering - 10,007,500 Equity issuance related costs - (1,123,419 ) Proceeds from promissory notes, net of fees 3,440,000 3,465,000 Repayment of promissory note (500,000 ) - Proceeds from loan payable under credit agreement 12,396,078 19,366,359 Repayment of loan payable under credit agreement (11,815,488 ) (9,959,607 ) Repayment of installment loan (11,208 ) (11,208 ) Debt issuance related costs (243,750 ) (128,946 ) - ----------- - ----------- Net cash provided by financing activities 3,437,895 21,617,429 - ----------- - ----------- INCREASE IN CASH 727,262 1,172,295 CASH, beginning of period 6,141,210 4,968,915 - ----------- - ----------- CASH, end of period $ 6,868,472 $ 6,141,210 - ----------- - ----------- Supplemental cash flow information: Interest paid $ 3,606,328 $ 2,806,285 Non-cash financing activities: Issuance of common stock and warrants to extinguishment debt and accrued - $ 2,089,266 interest Warrants issued for debt issuance costs - $ 523,251 Conversion of preferred stock to common stock $ 341,070 -

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 months ended December 31, 2019 and 2018 were as follows:

Three months ended December 31, ---------------------------- 2019 2018 $ Change % Change ------------ ------------ ----------- ------ Adjusted EBITDA: Net Loss $ (1,004,164 ) $ (2,482,609 ) $ 1,478,445 - Provision for income taxes 216,400 - 216,400 - Amortization of debt costs 94,346 50,089 44,257 88.4 Other amortization and depreciation 550,140 524,628 25,512 4.9 Interest expense, excluding amortization of debt 950,305 1,065,503 (115,198 ) (10.8 ) costs Stock compensation 149,927 32,403 117,524 362.7 Non-recurring product/infrastructure expense 95,513 - 95,513 - - ---------- - ---------- - --------- ----- Adjusted EBITDA $ 1,052,467 $ (809,986 ) $ 1,862,453 - - ---------- - ---------- - --------- -----

Key performance metrics for the twelve months ended December 31, 2019 and 2018 were as follows:

Twelve months ended December 31, -------------------------- 2019 2018 $ Change % Change ----------- ------------ ------------ ------ Adjusted EBITDA: Net Loss $ 577,415 $ (9,461,262 ) $ 10,038,677 - Provision for income taxes 216,400 - 216,400 - Amortization of debt costs 324,686 511,085 (186,399 ) (36.5 ) Other amortization and depreciation 2,199,737 1,914,084 285,653 14.9 Interest expense, excluding amortization of debt costs 3,985,736 3,645,339 340,397 9.3 Loss on debt extinguishment - 126,622 (126,622 ) - Stock compensation 595,833 133,428 462,405 346.6 Non-recurring product/infrastructure expense 401,896 - 401,896 - - --------- - ---------- - ---------- ----- Adjusted EBITDA $ 8,301,703 $ (3,130,704 ) $ 11,432,407 - - --------- - ---------- - ---------- -----

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 Company’s 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 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:Jeremy HellmanSenior AssociateThe Equity Group212-836-9626 jhellman@equityny.com

FlexShopper, Inc.Investor Relations ir@flexshopper.com

FlexShopper, Inc.