UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K/A

Amendment No. 1


[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

For the fiscal year ended December 31, 2023

or

[ ]TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ____________ to ___________

Commission File Number: 001-37945

 

FLEXSHOPPER, INC.

(Exact name of Registrant as specified in its charter)

Delaware Commission File Number: 0-5258920-5456087
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization)Identification No.)
   
 
FLEXSHOPPER, INC.
(Exact name of Registrant as specified in its charter)
901 Yamato Road, Ste. 260  
DelawareBoca Raton, FL 20-545608733431
(State of jurisdiction of(I.R.S. Employer
incorporation or organization)Identification Number) 
10801 Johnston Road, Suite 210 
 Charlotte, North Carolina28226  
(Address of principal executive offices)   (Zip(Zip Code)


Registrant’s telephone number, including area code: (866) 950-6669(855) 353-9289

Securities registered pursuant to Section 12 (b)12(b) of the Act:  None


Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareFPAYThe NASDAQ Stock Market LLC

Securities registered pursuant to Section 12 (g)12(g) of the Act: Common Stock, $.0001 Par ValueNone


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities ActAct. Yes    No [X]


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes    No [X]


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X ☒   No __.


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ]   No [  ]


1

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A [X].

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act: smaller

Large accelerated filer:Accelerated filer:
Non-accelerated filer:Smaller reporting company:
Emerging growth company:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting company [X]under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).


Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ]   No [X]


As

The aggregate market value of June 30, 2013, the number of shares of Common Stockvoting and non-voting common equity held by non-affiliates of the Registrant, as of the last business day of the Registrant’s most recently completed second fiscal quarter, was approximately 7,400,000 shares (excluding 376,387 shares of Series A Preferred Stock convertible into 1,919,574 common shares).  The approximate market value based$16,272,000 (based on the price at which the Registrant’s common stock was last sale (i.e. $0.35sold on June 30, 2023 of $1.28 per share as of June 28, 2013) of the Company’s Common Stock held by non-affiliates was approximately $2,600,000.share).


The number of shares outstanding of the Registrant’s Common Stock,common stock, as of March 1, 2014,April 3, 2024, was 21,148,862.  The Registrant also has outstanding 376,387 shares of Series 1 Preferred Stock convertible into 1,919,574 shares of Common Stock.21,752,304.


Documents incorporated by reference: None.reference: None


Auditor Name: Grant Thornton LLPAuditor Location: Fort Lauderdale, FloridaAuditor Firm ID: 248

 

2




EXPLANATORY NOTE


Explanatory Note


   The purpose of this

This Amendment toNo. 1 on Form 10-K/A amends the FlexShopper, Inc.’s (“FlexShopper” or the “Company”) Annual Report on Form 10-K for the fiscal year ended December 31, 2013 is2023, as filed with the Securities and Exchange Commission (“SEC”) on April 1, 2024 (the “Original Filing”). We are filing this Amendment No. 1 to correct certain typographical errorsthe basic and diluted weighted average common shares and the basic and diluted loss per common shares as of December 31, 2023 in the “NotesConsolidated Statements of Operations and in Note 2 to the Consolidated Financial Statements”Statement, as those numbers were reported inaccurately in Item 8the Original Filing. As required by Rule 12b-15 under the Securities Exchange Act of 1934, new certifications of our principal executive officer and in Item 11principal financial officer are being filed as it pertainsexhibits to this Amendment No. 1 on Form 10-K/A.

Except as described above, no other changes have been made to the bonus agreement for Brad Bernstein, PresidentOriginal Filing. The Original Filing continues to speak as of the Company. Mr. Bernstein’s bonus agreement equal to 5% of annual net income provided net income is equal to or greater than $200,000 expired at the end of 2013 and the original filing made reference to applying to fiscal 2014, which was an error. The Form 10-K filed for the Registrant’s fiscal year ended December 31, 2013, is being corrected herein to eliminate the error by filing amended Items 8 and 11 herein together with the exhibit list contained in Item 15, signature page and certifications.  Accordingly, the Registrant’s Form 10-K consistsdate of the original Form 10-K filed on March 31, 2014, as amended byOriginal Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of this Form 10-K/A with respect to Items 8, 11 and 15 as set forth herein.


    There are no other changes to the Form 10-K other than as set forth above.  This Amendment does not reflect events occurring after the March 31, 2014 filing of our Form 10-K or modify or update the disclosures set forth in the Form 10-K in any way.  As a result,Original Filing. Accordingly, this Amendment contains forward-looking information that has not been updated for eventsNo. 1 should be read in conjunction with our filings with the SEC subsequent to the March 31, 2014 filingdate of our Form 10-K, and we direct you to our SEC filings made subsequent to March 31, 2014 for additional information.the Original Filing.




i

PART II



Item 8. Financial Statements and Supplementary Data.Data


FLEXSHOPPER, INC.

Consolidated Financial Statements


CONTENTS

The report of the Independent Registered Public Accounting Firm, Consolidated Financial Statements and Schedules are set forth beginning on the following page.

4

FLEXSHOPPER, INC.

CONTENTS
YEARS ENDED DECEMBER 31, 20132023 AND 20122022PAGE
FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID 248)F-1F-2
Consolidated Balance Sheets as of December 31, 2013 and 2012F-2F-4
Consolidated Statements of OperationsF-3F-5
Consolidated Statements of Stockholders'Stockholders’ EquityF-4F-6
Consolidated Statements of Cash FlowsF-5F-7
Notes to Consolidated Financial StatementsF-6 - F-17F-8




Report of Independent Registered Public Accounting Firm

_____


The Board of Directors and StockholdersShareholders of

FlexShopper, Inc. and Subsidiaries (formerly Anchor Funding Services, Inc.)


Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of FlexShopper, Inc. and subsidiaries (the “Company”) as of December 31, 20132023 and 2012, and2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the period ended December 31, 2013. United States of America.

Basis for opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidatedthe Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. OurAs part of our audits, included considerationwe are required to obtain an understanding of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.


Critical audit matters

In

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Doubtful Accounts on Lease Receivables

As described further in Note 2 to the consolidated financial statements, referredthe Company records an allowance on lease receivables with a corresponding reduction to above present fairly,lease revenue and fees. The Company determines the amount of allowance to recognize based upon historical and current customer collections as a portion of its gross customer billings.

The principal consideration for our determination that the allowance on lease receivables is a critical audit matter is the high degree of subjectivity that is involved in all material respects,evaluating the reasonableness of management’s estimate, including collection rate assumptions used in the allowance model that derive the expected future customer payments.

Our audit procedures related to the allowance for doubtful accounts on lease receivables included the following, among others:

We obtained an understanding of management’s process and evaluated the design of controls related to the allowance model, including controls over the completeness and accuracy of information used in the model and management review controls over the model.

We assessed the reasonableness of the methodology used by management to determine the allowance.

We sampled leases and tested the underlying data including the lease amount, lease aging, and completeness and accuracy of the application of lease payments during 2023.

We recomputed historical collection rates and the allowance for the year ended December 31, 2023.


Loan Receivables at Fair Value

As described further in Note 2 to the consolidated financial positionstatements, the Company records its loan receivables at fair value on a recurring basis with changes in fair value recognized as a component of loan revenues and fees. The Company determines the fair value of loan receivables using a discounted cash flow model based on the estimated amount and timing of expected future cash flows.

The principal consideration for our determination that the fair value measurement of loan receivables is a critical audit matter is the high degree of subjectivity that is involved in evaluating the reasonableness of management’s estimate, including the discount rate, prepayment rate, default rate and loss severity assumptions.

Our audit procedures related to the fair value measurement of loan receivables included the following, among others:

We obtained an understanding of management’s process and evaluated the design of controls related to the loan receivables valuation model, including controls over the completeness and accuracy of information used in the model and management review controls over the model.

We confirmed loan balances with the third-party loan servicer.

We sampled loans and tested the underlying data.

With the assistance of an internal specialist, we independently determined the fair value measurement of loan receivables as of December 31, 2023 and compared it to management’s fair value measurement for reasonableness.

Income Taxes

As discussed in Note 2 and Note 10 to the consolidated financial statements, the Company records a valuation allowance to reduce the deferred tax asset when a judgment is made, that is considered more likely than not, that a tax benefit will not be realized. The ultimate realization of the deferred tax asset is dependent upon the generation of future taxable income during the periods in which those temporary differences will become deductible. The Company as of December 31, 2013assesses the need for a valuation allowance by evaluating both positive and 2012, andnegative evidence that exists. We identified the consolidated results of its operations and its cash flows for eachrealizability of the two yearsfederal deferred tax asset to be a critical audit matter.

The principal consideration for our determination that the realizability of the deferred tax asset is a critical audit matter is that the forecast of future taxable income is an accounting estimate subject to a high level of estimation. There is inherent uncertainty and subjectivity related to management’s judgments and assumptions regarding the Company’s future financial performance which is complex in nature and requires significant auditor judgment.

Our audit procedures related to the period ended December 31, 2013 in conformity with accounting principles generally accepted inrealizability of the United States of America.federal deferred tax asset included the following, among others:

We obtained an understanding of management’s process and evaluated the design of controls related to the realizability of the federal deferred tax asset.

With the assistance of an internal specialist, we reviewed the valuation models for reasonableness and tested the assessment of the realizability of the federal deferred tax asset, including testing the calculations related to the potential limitation of tax attributes, and testing the schedule of reversing temporary differences.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2022.

Fort Lauderdale, FL

April 1, 2024


/s/ Scott and Company LLC


Columbia, South Carolina

March 31, 2014
F-1

FLEXSHOPPER, INC.

CONSOLIDATED BALANCE SHEETS

December 31,

  December 31,  December 31, 
  2023  2022 
       
ASSETS      
CURRENT ASSETS:      
Cash $4,413,130  $6,051,713 
Restricted cash  -   121,636 
Lease receivables, net  44,795,090   35,540,043 
Loan receivables at fair value  35,794,290   32,932,504 
Prepaid expenses and other assets  3,300,677   3,489,136 
Lease merchandise, net  29,131,440   31,550,441 
Total current assets  117,434,627   109,685,473 
         
Property and equipment, net  9,308,859   8,086,862 
Right of use asset, net  1,237,010   1,406,270 
Intangible assets, net  13,391,305   15,162,349 
Other assets, net  2,175,215   1,934,728 
Deferred tax asset, net  12,943,361   12,013,828 
Total assets $156,490,377  $148,289,510 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES:        
Accounts payable $7,139,848  $6,511,943 
Accrued payroll and related taxes  578,197   310,820 
Promissory notes to related parties, including accrued interest  198,624   1,209,455 
Accrued expenses  3,972,397   3,988,093 
Lease liability - current portion  245,052   208,001 
Total current liabilities  12,134,118   12,228,312 
Loan payable under credit agreement to beneficial shareholder, net of unamortized issuance costs of $70,780 at December 31,2023 and $352,252 at December 31,2022  96,384,220   80,847,748 
Promissory notes to related parties, net of unamortized issuance costs of $649,953 at December 31, 2023 and $0 at December 31, 2022, and net of current portion  10,100,047   10,750,000 
Promissory note related to acquisition, net of discount of $1,165,027 at December 31, 2022  -   3,158,471 
Loan payable under Basepoint credit agreement, net of unamortized issuance costs of $92,963 at December 31, 2023  7,319,641   - 
Purchase consideration payable related to acquisition  -   8,703,684 
Lease liabilities, net of current portion  1,321,578   1,566,622 
Total liabilities  127,259,604   117,254,837 
         
STOCKHOLDERS’ EQUITY        
Series 1 Convertible Preferred Stock, $0.001 par value - authorized 250,000 shares, issued and outstanding 170,332 shares at $5.00 stated value  851,660   851,660 
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 40,000,000 shares, issued and outstanding 21,752,304 shares at December 31, 2023 and 21,750,804 shares at December 31, 2022  2,176   2,176 
Treasury shares, at cost- 164,029 shares at 2023  (166,757)  - 
Additional paid in capital  42,415,894   39,819,420 
Accumulated deficit  (35,824,200)  (31,590,583)
Total stockholders’ equity  29,230,773   31,034,673 
  $156,490,377  $148,289,510 

ASSETS      
  2013  2012 
CURRENT ASSETS:      
  Cash $960,032  $610,439 
  Retained interest in purchased accounts receivable, net  4,966,338   7,019,463 
  Due from clients  256,313   - 
  Earned but uncollected fee income  138,480   168,805 
  Prepaid expenses and other  52,904   100,998 
  Lease merchandise  8,004   - 
    Total current assets  6,382,071   7,899,705 
         
PROPERTY AND EQUIPMENT, net  58,079   14,257 
         
OTHER ASSETS:        
Intangible assets – patent costs  30,760   - 
Security deposits  9,485   6,023 
   40,245   6,023 
         
  $6,480,395  $7,919,985 
         
LIABILITIES AND STOCKHOLDERS' EQUITY     
       
CURRENT LIABILITIES:      
  Due to financial institution $3,240,942  $4,977,763 
  Accounts payable  47,314   86,772 
  Accrued payroll and related taxes  68,141   69,338 
  Accrued expenses  55,412   59,252 
  Collected but unearned fee income  12,328   28,642 
    Total current liabilities  3,424,137   5,221,767 
         
COMMITMENTS AND CONTINGENCIES        
         
CONVERTIBLE PREFERRED STOCK, net of issuance        
   costs of $1,209,383  671,409   671,409 
COMMON STOCK  4,363   1,863 
ADDITIONAL PAID IN CAPITAL  8,545,914   7,496,693 
ACCUMULATED DEFICIT  (6,165,428)  (5,471,747)
   3,056,258   2,698,218 
         
  $6,480,395  $7,919,985 

The accompanying notes to consolidated financial statements are an integral part of these statements.


F-2



FLEXSHOPPER, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

  For the years ended
December 31,
 
  2023  2022 
       
Revenues:      
Lease revenues and fees, net $91,943,729  $105,936,072 
Loan revenues and fees, net of changes in fair value  25,031,278   7,120,101 
Total revenues  116,975,007   113,056,173 
         
Costs and expenses:        
Depreciation and impairment of lease merchandise  56,288,128   72,556,431 
Loan origination costs and fees  6,007,598   3,384,013 
Marketing  7,620,795   11,031,695 
Salaries and benefits  12,499,099   10,991,477 
Operating expenses  24,547,729   21,395,767 
Net change in fair value of promissory note related to acquisition  (3,678,689)  - 
Total costs and expenses  103,284,660   119,359,383 
         
Operating income/ (loss)  13,690,347   (6,303,210)
         
Gain on bargain purchase  -   14,461,274 
Interest expense including amortization of debt issuance costs  (18,913,773)  (11,161,396)
Loss before income taxes  (5,223,426)  (3,003,332)
Benefit from income taxes  989,809   16,635,051 
Net (loss)/ income  (4,233,617)  13,631,719 
         
Dividends on Series 2 Convertible Preferred Shares  4,103,638   3,730,580 
Net (loss)/ income attributable to common and Series 1 Convertible Preferred shareholders $(8,337,255) $9,901,139 
         
Basic and diluted (loss)/ income per common share:        
Basic $(0.38) $0.45 
Diluted $(0.38) $0.44 
         
WEIGHTED AVERAGE COMMON SHARES:        
Basic  21,705,406   21,646,896 
Diluted  21,705,406   22,425,354 

       
  For the years ended 
  December 31, 
  2013  2012 
FINANCE REVENUES $2,364,128  $2,526,626 
INTEREST EXPENSE - financial institution  (385,918)  (454,241)
INTEREST EXPENSE – related parties  -   (15,123)
         
NET FINANCE REVENUES  1,978,210   2,057,262 
PROVISION FOR CREDIT LOSSES, net of recoveries  (62,603)  (41,797)
         
FINANCE REVENUES, NET OF INTEREST EXPENSE        
 AND CREDIT LOSSES  1,915,607   2,015,465 
         
OPERATING EXPENSES  (2,609,288)  (1,636,606)
         
(LOSS) INCOME FROM OPERATIONS BEFORE        
   INCOME TAXES  (693,681)  378,859 
         
INCOME TAXES  -   - 
         
         
NET (LOSS) INCOME $(693,681) $378,859 
         
BASIC EARNINGS PER COMMON SHARE:        
   NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $(0.04) $0.02 
         
         
DILUTED EARNINGS PER COMMON SHARE:        
   NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $(0.04) $0.02 
         
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING        
  Basic  18,987,702   18,634,369 
  Dilutive  18,987,702   20,763,632 

The accompanying notes to consolidated financial statements are an integral part of these statements.


F-3

FLEXSHOPPER, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS'CHANGES IN STOCKHOLDERS’ EQUITY

For the years ended December 31, 20132023 and 20122022

  Series 1
Convertible
Preferred Stock
  Series 2
Convertible
Preferred Stock
  Common Stock  Treasury Stock  Additional
Paid in
  Accumulated    
  Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Total 
Balance, January 1, 2022  170,332  $851,660   21,952  $21,952,000   21,442,278  $2,144   -  $-  $38,560,117  $(45,222,302) $16,143,619 
Provision for compensation expense related to stock-based compensation  -   -   -   -   -   -   -   -   997,830   -   997,830 
Exercise of stock options into common stock  -   -   -   -   308,526   32   -   -   261,473   -   261,505 
Net income  -   -   -   -   -   -   -   -   -   13,631,719   13,631,719 
Balance, December 31, 2022  170,332  $851,660   21,952  $21,952,000   21,750,804  $2,176   -  $-  $39,819,420  $(31,590,583) $31,034,673 
Provision for compensation expense related to stock-based compensation  -   -   -   -   -   -   -   -   1,677,708   -   1,677,708 
Exercise of stock options into common stock  -   -   -   -   1,500   -   -   -   1,185   -   1,185 
Extension of warrants  -   -   -   -   -   -   -   -   917,581   -   917,581 
Purchases of treasury stock  -   -   -   -   -   -   164,029   (166,757)  -   -   (166,757)
Net loss  -   -   -   -   -   -   -   -   -   (4,233,617)  (4,233,617)
Balance, December 31, 2023  170,332  $851,660   21,952  $21,952,000   21,752,304  $2,176   164,029  $(166,757) $42,415,894  $(35,824,200) $29,230,773 

The accompanying notes are an integral part of these condensed consolidated statements.


  Preferred  Common  Additional  Accumulated    
  Stock  Stock  Paid in Capital  Deficit  Total 
Balance, January 1, 2012 $671,409  $1,863  $7,465,386  $(5,850,606) $2,288,052 
                     
Provision for compensation expense related to issued stock options  -   -   10,229   -   10,229 
                     
Benefit for compensation expense related to expired stock options  -   -   21,078   -   21,078 
                     
Net income year ended December 31, 2012  -   -   -   378,859   378,859 
Balance, December 31, 2012  671,409   1,863   7,496,693   (5,471,747)  2,698,218 
                     
Provision for compensation expense related to issued stock options  -   -   49,805   -   49,805 
                     
Provision for compensation expense related to issued warrants  -   -   1,916   -   1,916 
                     
Sale of common stock  -   2,500   997,500   -   1,000,000 
                     
Net loss year ended December 31, 2013  -   -   -   (693,681)  (693,681)
Balance, December 31, 2013 $671,409  $4,363  $8,545,914  $(6,165,428) $3,056,258 
  

FLEXSHOPPER, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2023 and 2022

  2023  2022 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net (loss)/ income $(4,233,617) $13,631,719 
Adjustments to reconcile net (loss)/ income to net cash used in operating activities:        
Depreciation and impairment of lease merchandise  56,288,128   72,556,431 
Other depreciation and amortization  7,881,110   4,769,614 
Amortization of debt issuance costs  571,538   228,843 
Amortization of discount on the promissory note related to acquisition  236,952   19,747 
Compensation expense related to stock-based compensation  1,677,708   997,830 
Provision for doubtful accounts  42,505,647   57,420,480 
Interest in kind added to promissory notes balance  -   155,093 
Deferred income tax  (929,533)  (17,282,364)
Net change in fair value of promissory note related to acquisiton  (3,678,689)  - 
Gain on bargain purchase  -   (14,461,274)
Net changes in the fair value of loan receivables at fair value  (10,217,854)  9,559,979 
Changes in operating assets and liabilities, net of effects of acquisition:        
Lease receivables  (51,760,694)  (67,487,369)
Loan receivables at fair value  7,356,068   (25,612,049)
Prepaid expenses and other assets  

177,169

   

(1,670,836

)
Lease merchandise  (53,869,127)  (63,164,760)
Purchase consideration payable related to acquisition  208,921   164,102 
Promissory note related to acquisition  283,266   - 
Lease liabilities  (30,268)  (14,488)
Accounts payable  627,905   (1,976,844)
Accrued payroll and related taxes  267,377   (80,258)
Accrued expenses  

(26,527

)   1,009,468 
Net cash used in operating activities  (6,664,520)  (31,236,936)
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Cash acquired in business combination  -   2,938,355 
Purchases of property and equipment, including capitalized software costs  (6,335,276)  (6,498,115)
Purchases of data costs  (1,225,983)  (1,640,885)
Net cash used in investing activities  (7,561,259)  (5,200,645)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from loan payable under credit agreement  18,050,000   36,455,000 
Repayment of loan payable under credit agreement  (2,795,000)  (5,730,000)
Repayment of loan payable under Basepoint credit agreement  (1,500,000)  - 
Repayment of promissory notes to related parties  (1,000,000)  - 
Debt issuance related costs  (115,403)  (166,745)
Proceeds from exercise of stock options  1,185   261,505 
Proceeds from promissory notes to related parties  -   7,000,000 
Principal payment under finance lease obligation  (8,465)  (11,184)
Repayment of purchase consideration payable related to acquisition  -   (283,266)
Repayment of installment loan  -   (9,022)
Purchases of Treasury Stock  (166,757)  - 
Net cash provided by financing activities  12,465,560   37,516,288 
         
(DECREASE)/ INCREASE IN CASH and RESTRICTED CASH  (1,760,219)  1,078,707 
         
CASH and RESTRICTED CASH, beginning of period  6,173,349   5,094,642 
         
CASH and RESTRICTED CASH, end of period $4,413,130  $6,173,349 
         
Supplemental cash flow information:        
Interest paid $17,337,292  $10,289,334 
Due date extension of warrants $917,581  $- 
Noncash investing and financing activities        
Acquisition of loan receivables at fair value $-  $13,320,326 
Acquisition of property and equipment  -   136,249 
Acquisition of intangible assets  -   15,307,894 
Acquisition of purchase consideration payable related to acquisition  -   8,539,582 
Acquisition of accounts payable  -   506,607 
Acquisition of deferred tax liability  -   4,773,370 
Issuance of promissory note related to acquisition  -   3,421,991 

The accompanying notes to consolidated financial statements are an integral part of these statements.

F-4

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

      
CASH FLOWS FROM OPERATING ACTIVITIES: 2013  2012
  Net (loss) income $(693,681) $378,859 
  Adjustments to reconcile net (loss) income to net cash        
     provided by (used in) operating activities:        
    Depreciation and amortization  38,326   19,804 
    Compensation expense related to issuance of stock options and warrants  51,721   31,307 
    Allowance for uncollectible accounts  -   62,949 
    Decrease (increase) in retained interest in purchased        
       accounts receivable  2,053,125   (751,256)
    Increase in due from client  (256,313)  - 
    Decrease (increase) in earned but uncollected  30,325   (11,735)
    Decrease (increase) in prepaid expenses and other  48,094   (30,074)
    Increase in lease merchandise  (8,004)  - 
    Increase in security deposits  (3,462)  (537)
    (Decrease) increase in accounts payable  (39,458)  41,396 
    (Decrease) increase in accrued payroll and related taxes  (1,197)  8,420 
    Decrease in collected but not earned  (16,314)  (8,297)
    Increase (decrease) in accrued expenses  (3,840)  29,643 
      Net cash  provided by (used in) operating activities  1,199,322   (229,521)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
    Patent costs  (30,760)  - 
    Purchases of property and equipment  (82,148)  (17,031)
      Net cash used in investing activities  (112,908)  (17,031)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
   (Payments to) proceeds from financial institution, net  (1,736,821)  550,420 
   Proceeds from capital contributions  1,000,000   - 
     Net cash (used in) provided by financing activities  (736,821)  550,420 
         
INCREASE IN CASH  349,593   303,868 
         
CASH, beginning of period  610,439   306,571 
         
CASH, end of period $960,032  $610,439 
 
The accompanying notes to consolidated financial statements are an integral part of these statements.
F-5

FLEXSHOPPER, INC.

FLEXSHOPPER, INC.

Notes To Consolidated Financial Statements


For the year ended December 31, 201330, 2023 and 20122022



1.  BACKGROUND AND DESCRIPTION OF BUSINESS:

1. BUSINESS

FlexShopper, Inc. (the “Company”) is a corporation organized under the laws of the State of Delaware in 2006. The consolidated financial statements include the accountsCompany owns 100% of FlexShopper, Inc. (formerly Anchor Funding Services, Inc. the "Company") and its wholly owned subsidiaries, Anchor Funding Services, LLC, ("Anchor") and FlexShopper, LLC ("FlexShopper").


FlexShopper, Inc. is a Delaware holding corporation. FlexShopper, Inc. has no operations; substantially all operations of the Company are the responsibility of Anchor.

Anchor is a North Carolina limited liability company. Today, the Company operates in two industry segments designated as Anchorcompany, owns 100% of FlexLending, LLC, a Delaware limited liability company, and FlexShopper. Anchor purchases company’s accounts receivable, which provide businesses with critical working capital so they can meet their operational costs and obligations while waiting to receive payment from their customers. Anchor also provides back office services to businesses located throughout the United Statesowns 100% of America.Flex Revolution, LLC, a Delaware limited liability company. The Company is actively pursuinga holding corporation with no operations except for those conducted by its subsidiaries FlexShopper, LLC, FlexLending, LLC and Flex Revolution, LLC.

In January 2015, in connection with the saleCredit Agreement entered in March 2015 (see Note 7), FlexShopper 1 LLC and FlexShopper 2 LLC were organized as wholly owned Delaware subsidiaries of this business. FlexShopper LLC to conduct operations. FlexShopper Inc, together with its subsidiaries, are hereafter referred to as “FlexShopper.”

FlexShopper, LLC provides certain types of durable goods to consumers on a lease-to-own basis (“LTO”). After receiving a signed consumer lease, the Company then funds the leased item by purchasing the item from the Company’s merchant partner and also provides lease-to-own terms to consumers of third party retailers and e-tailers.

FlexShopper is a North Carolina limited liability company. FlexShopper is developing a business that will directly provide certain categories of durable goods to consumers on a lease-to-own basis and currently provides lease-to-own terms to consumers of third party retailers. FlexShopper began generating revenues in December 2013; the amount of these revenues is immaterialleasing it to the financial statements.consumer.

FlexLending, LLC participates in a consumer finance program offered by a third-party bank partner. The third-party originates unsecured consumer loans through strategic sales channels. Under this program, FlexLending, LLC purchases a participation interest in each of the loans originated by the third-party.

Flex Revolution, LLC operates a direct origination model for consumers in 11 states. In the direct origination model, applicants who apply and obtain a loan through our platform are underwritten, approved, and funded directly by the Company.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation -The accompanying consolidated financial statements include FlexShopper, Inc. (formerly Anchor Funding Services, Inc. the "Company")accounts of the Company and its wholly owned subsidiaries Anchor Funding Services, LLC ("Anchor")after elimination of intercompany balances and FlexShopper, LLC ("FlexShopper").


transactions.

Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of AmericaGAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.periods. Actual results could differ from those estimates.


Revenue Recognition

Segment Information - Operating segments are defined as components of an enterprise about which separate financial information is available between which resources are allocated by the chief operating decision maker. The Company’s chief operating decision maker is the chief executive officer. The Company has one operating and reportable segment that include all the Company’s financial services, which is consistent with the current organizational structure.

Cash and Cash EquivalentsAnchor charges fees to its customers in oneThe Company considers all highly liquid investments with a maturity of two ways as follows:


1)  
Fixed Transaction Fee. Fixed transaction fees are a fixed percentage of the purchased invoice and purchase order advance.  This percentage does not change from the date the purchased invoice is funded until the date the purchased invoice is collected.

2)  
Variable Transaction Fee.  Variable transaction fees are variable based on the length of time the purchased invoice and purchase order advance is outstanding.   As specified in its contract with the client, Anchor charges variable increasing percentages of the purchased invoice or purchase order advance as time elapses from the purchase date to the collection date.

For both Fixed and Variable Transaction fees, Anchor recognizes revenue by using one of two methods depending on the type of customer.  For new customers Anchor recognizes revenue using the cost recovery method.  For established customers Anchor recognizes revenue using the accrual method.

Under the cost recovery method, all revenue is recognized upon collection of the entire amount of purchased accounts receivable.

Anchor considers new customers to be accounts whose initial funding has been within the last three months or less.  Management believes it needs three months of history to reasonably estimate a customer’s collection period and accrued revenues.  If three months of history has a limited number of transactions, the cost recovery method will continueless when purchased to be used until a reasonable revenue estimatecash equivalents. The Company maintains cash and cash equivalents with high-quality financial institutions, which at times exceed the Federal Deposit Insurance Corporation insurance limits. While the Company monitors daily the cash balances in its operating accounts and adjusts the balances as appropriate, these balances could be impacted if one or more of the financial institutions with which the Company deposits fails or is subject to other adverse conditions in the financial or credit markets. To date, the Company has experienced no loss or lack of access to its invested cash or cash equivalents; however, no assurance can be made based on additional history.  Once Anchor obtains sufficient historical experience, itprovided that access to invested cash and cash equivalents will begin usingnot be impacted by adverse conditions in the accrual methodfinancial and credit markets. As of December 31, 2023 and 2022, the Company had no cash equivalents.

Restricted Cash – The Company classifies all cash whose use is limited by contractual provisions as restricted cash. Restricted cash as of December 31, 2022 consists primarily of cash required by our third-party banking partner to recognize revenue.cover obligations related to loan participation.

The reconciliation of cash and restricted cash is as follows:

  December 31,
2023
  December 31,
2022
 
       
Cash $4,413,130  $6,051,713 
Restricted cash  -   121,636 
Total cash and restricted cash $4,413,130  $6,173,349 


F-6

For established

Revenue Recognition - Merchandise is leased to customers Anchor uses the accrual method of accounting.  Anchor applies this method by multiplying the historical yield,pursuant to lease purchase agreements which provide for each customer, times the amount advanced on each purchased invoice outstanding for that customer, times the portion of a year that the advance is outstanding.  The customers’ historical yield is based on the Anchor last six months of experienceweekly lease terms with non-refundable lease payments. Generally, the customer alonghas the right to acquire title either through a 90-day same as cash option, an early purchase option, or through completion of all required lease payments, generally 52 weeks. On any current lease, customers have the option to cancel the agreement in accordance with lease terms and return the Company’s experience in the customer’s industry, if applicable.


The amounts recordedmerchandise. Customer agreements are accounted for as revenue under the accrual method described above are estimates.  As purchased invoices and purchase order advances are collected, Anchor records the appropriate adjustments to record the actual revenue earned on each purchased invoice and purchase order advance. Adjustments from the estimated revenue to the actual revenue have not been material.

Revenue Recognition FlexShopper – Leaseoperating leases with lease revenues  are recognized in the month they are due on the accrual basis of accounting. For  internal  management reporting purposes, lease revenues from sales and lease ownership agreements are recognized as revenue in the month the cash is collected. On a monthly basis, we record an accrual for lease revenues due but not yet received, net of allowances, and a deferral of revenueRevenue for lease payments received prior to their due date is deferred and is recognized as revenue in the month due. Our revenue recognition accountingperiod to which the payments relate. Revenues from leases and sales are reported net of sales taxes.

Lease Receivables and Allowance for Doubtful Accounts - FlexShopper seeks to collect amounts owed under its leases from each customer on a weekly or biweekly basis by charging their bank accounts or credit cards. Lease receivables are principally comprised of lease payments currently owed to FlexShopper which are past due, as FlexShopper has been unable to successfully collect in the aforementioned manner and therefore the Company has an in-house and near-shore team to collect on the past due amounts. FlexShopper maintains an allowance for doubtful accounts, under which FlexShopper’s policy matchesis to record an allowance for estimated uncollectible charges, primarily based on historical collection experience that considers both the aging of the lease revenueand the origination channel. Other qualitative factors are considered in estimating the allowance, such as seasonality, underwriting changes and other business trends. We believe our allowance is adequate to absorb all expected losses. The lease receivables balances consisted of the following as of December 31, 2023 and December 31, 2022:

  December 31,
2023
  December 31,
2022
 
       
Lease receivables $64,749,918  $48,618,843 
Allowance for doubtful accounts  (19,954,828)  (13,078,800)
Lease receivables, net $44,795,090  $35,540,043 

FlexShopper does not charge off any customer account until it has exhausted all collection efforts with respect to each account, including attempts to repossess items. Lease receivables balances charged off against the allowance were $35,629,619 for twelve months ended December 31, 2023, and $72,044,958 for twelve months ended December 31, 2022.

  Year Ended
December 31,
2023
  Year Ended
December 31,
2022
 
Beginning balance $13,078,800  $27,703,278 
Provision  42,505,647   57,420,480 
Accounts written off  (35,629,619)  (72,044,958)
Ending balance $19,954,828  $13,078,800 

Lease Merchandise, net - Until all payment obligations for ownership are satisfied under the lease agreement, the Company maintains ownership of the lease merchandise. Lease merchandise consists primarily of residential furniture, consumer electronics, computers, appliances and household accessories and is recorded at cost net of accumulated depreciation. The Company depreciates leased merchandise using the straight-line method over the applicable agreement period for a consumer to acquire ownership, generally twelve months with no salvage value. Upon transfer of ownership of merchandise to customers resulting from satisfaction of their lease obligations, the Company reflects the undepreciated portion of the lease merchandise as depreciation expense and the related cost and accumulated depreciation are removed from lease merchandise. For lease merchandise returned either voluntarily or through repossession, the Company provides an impairment reserve for the undepreciated balance of the merchandise net of any estimated salvage value with a corresponding costs, mainlycharge to depreciation and impairment of lease merchandise. The cost, accumulated depreciation and impairment reserve related to such merchandise are written off upon determination that no salvage value is obtainable.

The net lease merchandise balances consisted of the following as of December 31, 2023 and December 31, 2022:

  December 31,
2023
  December 31,
2022
 
Lease merchandise at cost $49,687,498  $62,379,920 
Accumulated depreciation and impairment reserve  (20,556,058)  (30,829,479)
Lease merchandise, net $29,131,440  $31,550,441 


Loan receivables at fair value – The Company elected the fair value option on its entire loan and loan participation receivables portfolio. As such, loan receivables are carried at fair value in the consolidated balance sheets with changes in fair value recorded in the consolidated statements of operations. Accrued and unpaid interest and fees are included in loan receivables at fair value in the consolidated balance sheets. Management believes the reporting of these receivables at fair value method closely approximates the true economics of the loan.

Interest and fees are discontinued when loan receivables become contractually 120 or more days past due. The Company charges-off loans at the earlier of when the loans are determined to be uncollectible or when the loans are 120 days contractually past due. Recoveries on loan receivables that were previously charged off are recognized when cash is received. Changes in the fair value of loan receivables include the impact of current period charge offs associated with the leased merchandise.


Retained Interest in Purchased Accounts Receivable – Retained interest in purchased accounts receivable represents the gross amount of invoices purchased and advances on purchase orders from clients less amounts maintained in a reserve account.  For factoring transactions, Anchor purchases a customer’s accounts receivable and advances them a percentage of the invoice total.  these receivables. 

The difference between the purchase price and amount advanced is maintained in a reserve account.  The reserve account is used to offset any potential losses Anchor may have related to the purchased accounts receivable.  For purchase order transactions the company advances and pays for 100% of the product’s cost.


Anchor’s factoring and security agreements with their customers include various recourse provisions requiring the customers to repurchase accounts receivable if certain conditions, as defined in the factoring and security agreement, are met.

Senior management reviews the status of uncollected purchased accounts receivable and purchase order advances monthly to determine if any are uncollectible.  Anchor has a security interest in the accounts receivable and inventory purchased and, on a case-by-case basis, may have additional collateral.  Anchor files security interests in the property securing their advances.  Access to this collateral is dependent upon the laws and regulations in each state where the security interest is filed.  Additionally, Anchor has varying types of personal guarantees from their customers relating to the purchased accounts receivable and purchase order advances.

Management considered approximately $3,000 of their December 31, 2013 and $80,500 of their December 31, 2012 retained interest in purchased accounts receivable to be uncollectible.

Management believesCompany estimates the fair value of the retained interest in purchased accounts receivable approximates its recorded value becauseloan receivables using a discounted cash flow analysis at an individual loan level to more accurately predict future payments. The Company adjusts expected cash flows for estimated losses and servicing costs over the estimated duration of the relatively short-term natureunderlying assets. These adjustments are determined using historical data and include appropriate consideration of recent trends and anticipated future performance. Future cash flows are discounted using a rate of return that the Company believes a market participant would require. Model results may be adjusted by management if the Company does not believe the output reflects the fair value of the purchased receivableinstrument, as defined under U.S. GAAP. The models are updated at each measurement date to capture any changes in internal factors such as nature, term, volume, payment trends, remaining time to maturity, and portfolio mix, as well as changes in underwriting or observed trends expected to impact future performance.

Further details concerning loan receivables at fair value are presented within “Fair Value Measurement” section in this Note.

Net changes in the fair value of loan receivables included in the consolidated statements of operations in the line “loan revenues and fees, net of changes in fair value” were a gain of $10,217,854 for the twelve months ended December 31, 2023 and a loss of $9,559,979 for the twelve months ended December 31, 2022.

Lease Accounting - The Company accounts for leases in accordance with Accounting Standards Codification (ASC) Topic 842 Leases (Topic 842). Under Topic 842, lessees are required to recognize leases at the commencement date as a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. For more information on leases for which the Company is lessee, refer to Note 3 to the consolidated financial statements. Under the same Topic, lessors are also required to classify leases. All customer agreements are considered operating leases, and the factCompany currently does not have any sales-type or direct financing leases as a lessor. An operating lease with a customer results in the recognition of lease income on a straight-line basis, while the underlying leased asset remains on the lessor’s balance sheet and continues to depreciate. The breakout of lease revenues and fees, net of lessor bad debt expense, that ties to the majorityconsolidated statements of these invoices have been subsequently collected.operations is shown below: 

  Year ended
December 31,
 
  2023  2022 
Lease billings and accruals $131,634,768  $154,535,446 
Provision for doubtful accounts  (42,505,647)  (57,420,480)
Gain on sale of lease receivables  2,814,608   8,821,106 
Lease revenues and fees $91,943,729  $105,936,072 


Deferred Debt Issuance Costs - Debt issuance costs incurred in conjunction with the Credit Agreement entered into on March 6, 2015 and subsequent amendments are offset against the outstanding balance of the loan payable and are amortized using the straight-line method over the remaining term of the related debt, which approximates the effective interest method. Amortization, which is included in interest expense, was $281,471 for twelve months ended December 31, 2023 and $227,568 for twelve months ended December 31, 2022.

Debt issuance costs incurred in conjunction with the subordinated Promissory Notes to related parties are offset against the outstanding balance of the loan payable and are amortized using the straight-line method over the remaining term of the related debt, which approximates the effective interest method. Amortization, which is included in interest expense, was $267,628 for twelve months ended December 31, 2023 and $1,274 for twelve months ended December 31, 2022.

Debt issuance costs incurred in conjunction with the Basepoint Credit Agreement entered into on June 7, 2023 are offset against the outstanding balance of the loan payable and are amortized using the straight-line method over the remaining term of the related debt, which approximates the effective interest method. Amortization, which is included in interest expense, was $22,439 for the twelve months ended December 31, 2023.

Intangible Assets - Intangible assets primarilyconsist of a patent costs, areon the Company’s LTO payment method at check-out for third party e-commerce sites and of assets acquired in connection with Revolution Transaction (See Note 13). The patent is stated at cost less any accumulated amortization and any provision for impairment.amortization. Patent costs are amortized by using the straight linestraight-line method over the legal life, or if shorter, the useful life of the patent, which has been estimated to be ten years.

In the Revolution Transaction, the Company identified intangible assets for the franchisee contract-based agreements, the related non-compete agreements, the Liberty Loan brand, the non-contractual customer relationships associated with the corporate locations and the list of previous customers. The franchisee contract-based agreements relate to the assignment of agreements with Liberty Tax franchisees in which their legal (20 years) orlocations and staff are used to assist in the origination and servicing of a loan portfolio in exchange for a share of the net revenue. In addition, there is non-compete embedded in these agreements. The Liberty Loan brand intangible asset relates to the value associated with the established brands acquired in the transaction that would otherwise need to be licensed. The non-contractual customer relationship intangible asset is the value of the customer relationships for the corporate stores acquired in the transaction. The customer list intangible asset relates to the value of valuable customers information that will be used to market additional products. The franchisee contract-based agreement, the Liberty Loan brand and the non-compete intangible assets are amortized on a straight-line basis over the expected useful life of the assets of ten years. The non-contractual customer relationship intangible asset is amortized on a straight-line basis over a five-year estimated useful life. The customer list is amortized on a straight-line basis over a three-year estimated useful life.

For intangible assets with definite lives, tests for impairment must be performed if conditions exist that indicate the carrying amount may not be recoverable. Intangible assets amortization expense was $1,771,044 for the twelve months ended December 31, 2023 and $150,505 for the twelve months ended December 31, 2022.

Property and Equipment - Property and equipment are recorded at cost less accumulated depreciation. Depreciation is recognized over the estimated useful lives of the respective assets on a straight-line basis, ranging from 2 to 7 years. Repairs and maintenance expenditures are expensed as incurred, unless such expenses extend the timeuseful life of the asset, in which case they are first availablecapitalized. Depreciation and amortization expense for use.


Advertisingproperty and equipment was $5,113,279 and $4,037,936 for the twelve months ended December 31, 2023 and 2022, respectively.

Software Costs Costs related to developing or obtaining internal-use software incurred during the preliminary project and post-implementation stages of an internal use software project are expensed as incurred and certain costs incurred in the project’s application development stage are capitalized as property and equipment. The Company charges advertisingexpenses costs related to expensethe planning and operating stages of a website. Costs associated with minor enhancements and maintenance for the website are included in expenses as incurred. Total advertisingDirect costs were approximately $282,000incurred in the website’s development stage are capitalized as property and $267,000equipment. Capitalized software costs amounted to $5,243,863 for twelve months ended December 31, 2023 and $5,240,437 for twelve months ended December 31, 2022. Capitalized software amortization expense was $3,964,738 for twelve months ended December 31, 2023 and $2,907,435 twelve months ended December 31, 2022.

Data Costs - The Company buys data from different vendors upon receipt of an application. The data costs directly used to make underwriting decisions are expensed as incurred. Certain data costs that are probable to provide future economic benefit to the Company are capitalized and amortized on a straight-line basis over their estimated useful lives. The probability to provide future economic benefit of the data cost assets is estimated based upon future usage of the information in different areas and products of the Company. At the beginning of the third quarter of 2021, the Company made several changes including the implementation of a more disciplined process around data procurement and storage. Those improvements triggered a change in the estimate of the probability to provide future economic benefit of some data cost.

Capitalized data costs amounted to $1,225,983 for twelve months ended December 31, 2023 and $1,640,885 for twelve months ended December 31, 2022. Capitalized data costs amortization expense was $996,787 for twelve months ended December 31, 2023 and $581,173 for twelve months ended December 31, 2022. 

Capitalized data costs net of its amortization are included in the consolidated balance sheets in Other assets, net.

Impairment of Long-Lived Assets – We evaluate all long-lived assets, including intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the related assets may not be recoverable by the undiscounted net cash flow they will generate. Impairment is recognized when the carrying amounts of such assets exceed their fair value. For the years ended December 31, 20132023 and 2012, respectively.2022, there were no impairments.

Operating Expenses - Operating expenses include corporate overhead expenses such as salaries, stock-based compensation, insurance, occupancy, and other administrative expenses.


Earnings

Marketing Costs - Marketing costs, primarily consisting of advertising, are charged to expense as incurred. Direct acquisition costs, primarily consisting of commissions earned based on lease originations, are capitalized and amortized over the life of the lease.

Per Share Data - Per share data is computed by use of the two-class method as a result of outstanding Series 1 Convertible Preferred Stock, which participates in dividends with the common stock and accordingly has participation rights in undistributed earnings as if all such earnings had been distributed during the period (see Note 8). Under such method income available to common shareholders is computed by deducting both dividends declared or, if not declared, accumulated on Series 2 Convertible Preferred Stock from net income. Loss attributable to common shareholders is computed by increasing net loss by such dividends. Where the Company has a net loss, as the participating Series 1 Convertible Preferred Stock has no contractual obligation to share in the losses of the Company, there is no loss allocation between common stock and Series 1 Convertible Preferred Stock.

Basic earnings per Share (“EPS”) – Basic net income percommon share is computed by dividing net income/ (loss) available to common shareholders reduced by any dividends paid or declared on common and participating Series 1 Convertible Preferred Stock by the net income for the period bytotal of the weighted average number of common shares outstanding during the period.  Dilutive

Diluted earnings per share includeis based on the more dilutive of the if-converted method (which assumes conversion of the participating Series 1 Convertible Preferred Stock as of the beginning of the period) or the two-class method (which assumes that the participating Series 1 Convertible Preferred Stock is not converted) plus the potential impact of dilutive securities, such as convertible preferred stock, stocknon-participating Series 2 Convertible Preferred Stock, options, performance share units and stock warrants. The dilutive effect of stockSeries 2 Convertible Preferred Stock is computed using the if-converted method. The dilutive effect of options, performance share units and warrants isare computed using the treasury stock method, which assumes the repurchase of common shares at the average market price.


F-7

price during the period. Under the treasury stock method, options, performance share units and warrants will have a dilutive effect when the average price of common stock during the period exceeds the exercise price of options, performance share units or warrants. When there is a loss from continuing operations, potential common shares are not included in the computation of diluted loss per share since they have an anti-dilutive effect.

The following table reflects the number of common shares issuable upon conversion or exercise.

  December 31, 
  2023  2022 
Series 1 Convertible Preferred Stock  225,231   225,231 
Series 2 Convertible Preferred Stock  5,845,695   5,845,695 
Series 2 Convertible Preferred Stock issuable upon exercise of warrants  -   116,903 
Common Stock Options  4,452,447   3,919,228 
Common Stock Warrants  2,255,184   2,255,184 
Performance Share Units  1,250,000   790,327 
   14,028,557   13,152,568 


  2013  2012 
     (Denominator)        (Denominator)    
     Weighted-  Per     Weighted-  Per 
  (Numerator)  Average  Share  (Numerator)  Average  Share 
  Net Loss  Shares  Amount  Net Income  Shares  Amount 
                   
Year  Ended December 31,                  
Basic EPS $(693,681)  18,987,702  $(0.04) $378,859   18,634,369  $0.02 
Effect of Dilutive Securities – Options and                        
  Convertible Preferred Stock  -   -   -   -   2,129,263   - 
Diluted EPS $(693,681)  18,987,702  $(0.04) $378,859   20,763,632  $0.02 


Stock Based

The following table sets forth the computation of basic and diluted earnings per common share for the twelve months ended December 31, 2023 and 2022:

  Year ended 
  December 31, 
  2023  2022 
Numerator      
Net (loss)/ income $(4,233,617) $13,631,719 
Series 2 Convertible Preferred Stock dividends  (4,103,638)  (3,730,580)
Net loss attributable to common and Series 1 Convertible Preferred Stock  (8,337,255)  9,901,139 
Net income attributable to Series 1 Convertible Preferred Stock  -   (140,374)
Series 2 Convertible Preferred Stock dividends attributable to Series 1 Convertible Preferred Stock  -   38,416 
Net (loss)/ income attributable to common shares - Numerator for basic and diluted EPS $(8,337,255) $9,799,181 
Denominator        
Weighted average of common shares outstanding- Denominator for basic EPS  21,705,406   21,646,896 
Effect of dilutive securities:  -   - 
Series 1 Convertible Preferred Stock  -   225,231 
Common stock options and performance share units  -   351,576 
Common stock warrants  -   201,651 
Adjusted weighted average of common shares outstanding and assumed conversions- Denominator diluted EPS  21,705,406   22,425,354 
Basic EPS $(0.38) $0.45 
Diluted EPS $(0.38) $0.44 

Stock-Based Compensation - The fair value of transactions in which the Company exchanges its equity instruments for employee and non-employee services (share-based payment transactions) is recognized as ana compensation expense in the financial statements as services are performed.


Compensation expense for stock options is determined by reference to the fair value of an award on the date of grant and is amortizedrecognized on a straight-line basis over the vesting period. We haveThe Company has elected to use the Black-Scholes-Merton (BSM) pricing model to determine the fair value of all stock option awards.

Compensation expense for performance share units is recognized on an accelerated basis over the vesting period based on the Company’s projected assessment of the level of performance that will be achieved and earned. The fair value of performance share units is based on the fair market value of the Company’s common stock on the date of grant (see Note 9).

Fair Value of Financial Instruments - The carrying value of certain financial instruments such as cash, lease receivable, and accounts payable approximate their fair value due to their short-term nature. The carrying value of loans payable under the Credit Agreement, under Basepoint Credit Agreement and under the promissory notes to related parties approximates fair value based upon their interest rates, which approximate current market interest rates.


See

The Company utilizes the fair value option on its entire loan receivables portfolio purchased from its bank partner and for the portfolio acquired in the Revolution Transaction (See Note 913).

Fair Value Measurements- The Company uses a hierarchical framework that prioritizes and ranks the market observability of inputs used in its fair value measurements. Market price observability is affected by a number of factors, including the type of asset or liability and the characteristics specific to the asset or liability being measured. Assets and liabilities with readily available, active, quoted market prices or for which fair value can be measured from actively quoted prices generally are deemed to have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The Company classifies the inputs used to measure fair value into one of three levels as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable.

Level 3: Unobservable inputs for the asset or liability measured.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation.

The Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2023 and December 31, 2022 is as follows:

  Fair Value Measurement Using  Carrying 
Financial instruments – As of December 31, 2023 (1) Level 1  Level 2  Level 3  Amount 
Loan receivables at fair value $-  $-  $35,794,290  $48,076,705 
Promissory note related to acquisition  -   -   -   - 

  Fair Value Measurement Using  Carrying 
Financial instruments – As of December 31, 2022 (1) Level 1  Level 2  Level 3  Amount 
Loan receivables at fair value $-  $-  $32,932,504  $42,747,668 
Promissory note related to acquisition  -   -   3,158,471   3,158,471 

(1)For cash, lease receivable, and accounts payable the carrying amount is a reasonable estimate of fair value due to their short-term nature. The carrying value of loan payable under the Credit Agreement, the carrying value of loan payable under Basepoint Credit Agreement, and the carrying value of promissory notes to related parties approximates fair value based upon their interest rates, which approximate current market interest rates.

The Company primarily estimates the fair value of its loan receivables portfolio using discounted cash flow models. The models use inputs, such as estimated losses, servicing costs and discount rates, that are unobservable but reflect the Company’s best estimates of the assumptions a market participant would use to calculate fair value. Certain unobservable inputs may, in isolation, have either a directionally consistent or opposite impact on the operating resultsfair value of the financial instrument for a given change in that input. An increase to the net loss rate, servicing cost, or discount rate would decrease the fair value of the Company’s loan receivables. When multiple inputs are used within the valuation techniques for loan receivables, a change in one input in a certain direction may be offset by an opposite change from another input.

The company estimates the fair value of the promissory note related to acquisition using discounted cash flow model. The model uses inputs including estimated cash flows and a discount rate.

The following describes the primary inputs to the discounted cash flow models that require significant judgement:

Estimated losses are estimates of the principal payments that will not be repaid over the life of the loans, net of the expected principal recoveries on charged-off receivables. FlexShopper systems monitor collections and portfolio performance data that are used to continually refine the analytical models and statistical measures used in making marketing and underwriting decisions. Leveraging the data at the core of the business, the Company utilizes the models to estimate lifetime credit losses for loan receivables. Inputs to the models include expected cash flows, historical and current performance, and behavioral information. Management may also incorporate discretionary adjustments based on the Company’s expectations of future credit performance.

Servicing costs – Servicing costs applied to the expected cash flows of the portfolio reflect the Company’s estimate of the amount investors would incur to service the underlying assets for the remainder of their lives. Servicing costs are derived from the Company internal analysis of our cost structure considering the characteristics of the receivables and have been benchmarked against observable information on comparable assets in the marketplace.

Discount rates – the discount rates utilized in the cash flow analyses reflect the Company’s estimates of the rates of return that investors would require when investing in financial instruments with similar risk and return characteristics.


For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents a reconciliation of the beginning and ending balances for the years ended December 31, 20132023 and 2012.


Fair ValueDecember 31, 2022:

  Year Ended
December 31,
2023
  Year Ended
December 31,
2022
 
Beginning balance $32,932,504  $3,560,108 
Purchases of loan participation  389,949   31,216,406 
Obligation of loan participation  (12,931)  12,931 
Purchase of loan portfolio in Revolution Transaction  -   13,320,326 
Loan originations  57,554,746   5,519,303 
Interest and fees(1)  14,801,188   16,680,080 
Collections  (80,089,020)  (27,816,669)
Net charge off (1)  (11,041,155)  (10,653,751)
Net change in fair value(1)  21,259,009   1,093,770 
Ending balance $35,794,290  $32,932,504 

(1)Included in loan revenues and fees, net of changes in fair value in the consolidated statements of operations

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents quantitative information about the inputs used in the fair value measurement as of Financial Instruments – The carryingDecember 31, 2023 and December 31, 2022:

  December 31, 2023  December 31, 2022 
  Minimum  Maximum  Weighted
Average(2)
  Minimum  Maximum  Weighted
Average
 
Estimated losses(1)  0%  92.5%  28.9%  2.0%  92.4%  40.8%
Servicing costs  -   -   4.7%  -   -   4.5%
Discount rate  -   -   20.1%  -   -   21.0%

(1)Figure disclosed as a percentage of outstanding principal balance.
(2)Unobservable inputs were weighted by outstanding principal balance, which are grouped by origination channel.

Other relevant data as of December 31, 2023 and December 31, 2022 concerning loan receivables at fair value of cash equivalents, retained interest in purchased accounts receivable, due to financial institution, accounts payableare as follows:

  December 31,
2023
  December 31,
2022
 
Aggregate fair value of loan receivables that are 90 days or more past due $27,828,083  $7,147,585 
Unpaid principal balance of loan receivables that are 90 days or more past due  41,208,009   19,834,547 
Aggregate fair value of loan receivables in non-accrual status  27,764,926   6,947,224 

Income Taxes - Deferred tax assets and accrued liabilities approximates their fair value.


Cash and Cash Equivalents – Cash and cash equivalents consist primarily of highly liquid cash investment funds with original maturities of three months or less when acquired.

Income Taxes – Effective January 31, 2007,are determined based on the Company became a “C” corporation for income tax purposes.  In a “C” corporation income taxes are provided for theestimated future tax effects of transactions reportednet operating loss carryforwards and temporary differences between the tax bases of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records a valuation allowance for its deferred tax assets when management concludes that it is not more likely than not that such assets will be recognized.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements plus deferred income taxesfrom such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of December 31, 2023, and 2022, the Company had not recorded any unrecognized tax benefits. Interest and penalties related to the differences between financial statement and taxable income.


The primary differences between financial statement and taxable income for the Company are as follows:

·Expenses related to the issuance of equity instruments
·Use of the reserve method of accounting for bad debts
·Net operating loss carryforwards.

The deferred tax asset represents the future tax return consequences of utilizing these items.   Deferred tax assets are reduced by a valuation reserve, when management is uncertain if the net deferred tax assets will ever be realized.

The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related to the process associated with accountingliabilities for uncertain tax positions recognized in our financial statements. The Company applied this guidancewill be charged to all its tax positions, including tax positions takeninterest and those expectedoperating expenses.

Reclassifications

Certain prior year balances have been reclassified to be taken, underconform with the transition provision of the interpretation. For the years ended December 31, 2013 and 2012, the Company concluded that it had no material uncertain tax positions.current year presentation.


The Company classifies interest accrued on unrecognized tax benefits with interest expense.  Penalties accrued on unrecognized tax benefits are classified with operating expenses.


F-8


Recent Accounting Pronouncements


The FASB amended the Comprehensive Income topic of the ASC in February 2013 with ASU No. 2013-02. The amendment addresses reporting of amounts reclassified out of accumulated other comprehensive income. Specifically, the amendment does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendment does require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component.

In addition, in certain circumstances an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. The amendment was effective for the Company on a prospective basis for fiscal year 2013. This amendment did not have a material effect on the Company’s financial statements.


In February 2013, the FASB Issued ASU No. 2013-04, "Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date". ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for obligations within the scope of this ASU, which is effective January l, 2014. Upon adoption, we do not expect this ASU to impact our financial statements.

In July 2013,November 2023, the FASB issued ASU 2013-11 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, "Presentationwhich requires enhanced disclosures of an Unrecognized Tax Benefit Whensignificant segment expenses on a Net Operating Loss Carryforward, a  Similar Tax  Loss, or  a Tax Credit Carryforward Exists, "  which among other  things,  require an unrecognized tax benefit, or a portionquarterly and annual basis and is intended to improve the transparency of an unrecognized tax benefit, toreportable segment disclosures. The adoption of ASU 2023-07 will be presented inrequired for the financial  statements as a reduction  to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as denoted within the ASU.Company beginning January 1, 2024. The amendments inadoption of this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. We are currently evaluating thedid not have an impact on our financial statements with respectas the Company has one operating and reporting segment.

In December 2023, the FASB issued ASU No. 2023-08, Accounting for and Disclosure of Crypto Assets (Subtopic 350-60). This ASU requires certain crypto assets to be measured at fair value separately in the balance sheet and income statement each reporting period. This ASU 2013-11.


Otheralso enhances the other intangible asset disclosure requirements. The adoption of ASU 2023-08 will be required for the Company beginning January 1, 2025. The adoption of this ASU will not have an impact on our financial statements as the Company doesn’t have any crypto assets.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to improve the transparency of the annual income tax disclosures by requiring specific categories in the income tax rate reconciliation and disaggregation of income taxes paid by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The adoption of ASU 2023-09 will be required for the Company beginning January 1, 2025. We do not believe the adoption of this ASU will have a material impact on our financial statements.

From time to time, new accounting standards that have beenpronouncements are issued or proposed by the FASB or other standards-settingstandards setting bodies that we adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of any other recently issued standards that are not expectedyet effective are either not applicable to us at this time or will not have a material impact inon our consolidated financial statements upon adoption.

3. LEASES

Refer to Note 2 to these consolidated financial statements for further information about the Company’s financial position, resultsrevenue generating activities as a lessor. All the Company’s customer agreements are considered operating leases, and the Company currently does not have any sales-type or direct financing leases as a lessor.

Lease Commitments

In January 2019, FlexShopper entered into a 108-month lease with an option for one additional five-year term for 21,622 square feet of operationsoffice space in Boca Raton, FL to accommodate FlexShopper’s business and its employees. The monthly rent for this space is approximately $31,500 with annual three percent increases throughout the initial 108-month lease term beginning on the anniversary of the commencement date, which was September 18, 2019.

In September 2021, FlexShopper entered into a 12-month lease for an office space for approximately 18 people at the Battery at SunTrust Park at Georgia, Atlanta mainly to expand the sales team. This lease was renewed for another twelve month period with a monthly rent of approximately $8,800. This lease ended in September 2023. This lease was accounted for under the practical expedient for leases with initial terms for 12 months or cash flows.less, and as such no related right of use asset or liability was recorded.


3. RETAINED INTEREST IN PURCHASED ACCOUNTS RECEIVABLE:


Retained interest in purchased accounts receivable consists

As part of the following:


  December 31, 2013  December 31, 2012 
Purchased invoices $6,085,940  $8,921,203 
Purchase order advances  365,394   21,156 
Reserve account  (1,481,996)  (1,842,447)
Allowance for uncollectible invoices  (3,000)  (80,449)
  $4,966,338  $7,019,463 

Retained interest in purchased accounts receivable consists, excludingRevolution Transaction (See Note 13), 22 storefront lease agreements were acquired by FlexShopper. Some of those stores were closed or transferred from franchisees after the allowance for uncollectible invoices, of United States companies in the following industries:

  December 31, 2013  December 31, 2012 
Staffing $192,806  $185,557 
Transportation  1,592,900   1,773,290 
Service  3,063,021   4,528,668 
Manufacturing  120,611   612,397 
  $4,969,338  $7,099,912 

F-9



Adjustments to the allowance for uncollectible invoices were as follows:

  For the years ending December 31, 
  2013  2012 
Balance - beginning of year $80,449  $17,500 
Provision for credit losses  12,200   62,949 
Write-offs  (89,649)  - 
Balance - end of year $3,000  $80,449 

Total purchased invoices and purchase order advances were as follows:

  For the years ending December 31, 
   2013  2012 
Purchased invoices $83,653,644  $95,875,787 
Purchase order advances  843,193   435,928 
  $84,496,837  $ 96,311,715 
4. DUE FROM CLIENT
Revolution Transaction. As of December 31, 2013, Anchor2023, 33 storefront lease agreements belong to FlexShopper. The stores are located in Alabama, Idaho, Michigan, Mississippi, Nevada, and Oklahoma and are used to offer finance products to customers. The monthly average rent for these stores is approximately $1,800 per month. These leases are accounted for under the practical expedient for leases with initial terms for 12 months or less, and as such no related right of use asset or liability was owed approximately $250,000 fromrecorded.

The Company determines if an arrangement is a Food Servicelease at inception. Operating lease assets and liabilities are included in the Company’s condensed consolidated balance sheets within the Right of use asset, net, Lease liability- current portion and Lease liabilities net of current portion.

Supplemental balance sheet information related to leases is as follows:

  Balance Sheet Classification December 31,
2023
  December 31,
2022
 
Assets        
Operating Lease Asset Right of use asset, net $1,233,538  $1,395,741 
Finance Lease Asset Right of use asset, net  3,472   10,529 
Total Lease Assets   $1,237,010  $1,406,270 
           
Liabilities          
Operating Lease Liability – current portion Current Lease Liabilities $240,444  $199,535 
Finance Lease Liability – current portion Current Lease Liabilities  4,608   8,466 
Operating Lease Liability – net of current portion Long Term Lease Liabilities  1,321,578   1,562,022 
Finance Lease Liability – net of current portion Long Term Lease Liabilities  -   4,600 
Total Lease Liabilities   $1,566,630  $1,774,623 

Operating lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The Company from whom Anchor had purchased invoices. In July 2013, Anchor determineduses its incremental borrowing rate as the discount rate for its leases, as the implicit rate in the lease is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. Operating lease assets also include any prepaid lease payments and lease incentives. The lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Food Service Company had misdirected certain payments due to Anchor,will exercise the option. The Company generally uses the base, non-cancelable, lease term when determining the lease assets and Anchor ceased funding this client. On August 8, 2013,liabilities. Under the Food Serviceshort-term lease exception provided within ASC 842, the Company filed Chapter 11 Bankruptcy. At the timedoes not record a lease liability or right-of-use asset for any leases that have a lease term of 12 months or less at commencement.

Below is a summary of the bankruptcy filing, Anchor'sweighted-average discount rate and weighted-average remaining lease term for the Company’s leases:

  Weighted
Average
Discount
Rate
  Weighted
Average
Remaining
Lease Term
(in years)
 
Operating Leases  13.03%  5 
Finance Leases  13.39%  1 

Operating lease expense is recognized on a straight-line basis over the lease term within operating expenses in the Company’s consolidated statements of operations. Finance lease expense is recognized over the lease term within interest expense and amortization in the Company’s consolidated statements of operations. The Company’s total funding employedoperating and finance lease expense all relate to lease costs and amounted to $388,219 and $389,647 for the twelve months ended December 31, 2023 and December 31, 2022, respectively.

Supplemental cash flow information related to operating leases is as follows:

  Twelve Months ended 
  December 31, 
  2023  2022 
Cash payments for operating leases $417,606  $405,443 
Cash payments for finance leases  9,699   11,184 


Below is a summary of undiscounted operating lease liabilities as of December 31, 2023. The table also includes a reconciliation of the future undiscounted cash flows to the Food Service Company was approximately $1,453,500. Under a Court Order approved settlement with the Food Service Company, Anchor collected approximately $1,153,500present value of the Food Service Company’s accounts receivable. By Court Order,operating lease liabilities included in the finalconsolidated balance sheet.

  Operating
Leases
 
   
2024 $430,134 
2025  443,038 
2026  456,330 
2027  470,019 
2028 and thereafter  303,574 
Total undiscounted cash flows  2,103,095 
Less: interest  (541,073)
Present value of lease liabilities $1,562,022 

Below is a summary of $300,000 isundiscounted finance lease liabilities as of December 31, 2023. The table also includes a reconciliation of the future undiscounted cash flows to be paid to Anchorthe present value of the finance lease liabilities included in twelve monthly installments of $25,000 beginning November 8, 2013.the consolidated balance sheet.

  Finance
Leases
 
   
2024 $4,790 
Total undiscounted cash flows  4,790 
Less: interest  (182)
Present value of lease liabilities $4,608 

5.  

4.PROPERTY AND EQUIPMENT:


EQUIPMENT

Property and equipment consist of the following:

 Estimated      
 Useful Lives December 31, 2013  December 31, 2012 
Furniture and fixtures2-5 years $64,945  $46,818 
Computers and software3-7 years  251,525   187,505 
    316,470   234,323 
Less: accumulated depreciation   (258,391)  (220,066)
   $58,079  $14,257 

  Estimated
Useful Lives
 December 31,
2023
  December 31,
2022
 
Furniture, fixtures and vehicle 2-5 years $395,868  $395,468 
Website and internal use software 3 years  25,786,321   20,542,457 
Computers and software 3-7 years  4,763,115   3,672,103 
     30,945,304   24,610,028 
Less: accumulated depreciation and amortization    (21,636,445)  (16,523,166)
    $9,308,859  $8,086,862 

Depreciation and amortization expense for property and equipment was $38,326$5,113,278 and $19,804$4,037,936 for the yearstwelve months ended December 31, 20132023 and 2012, respectively.2022, respectively 


5.INTANGIBLE ASSETS

The following table provides a summary of our intangible assets:

  December 31, 2023
  Estimated
Useful
Life
 Gross Carrying
Amount
  Accumulated
Amortization
  Net Carrying
Amount
 
Patent 10 years $30,760  $(30,760) $- 
Franchisee contract-based agreements 10 years  12,744,367   (1,380,638)  11,363,729 
Liberty Loan brand 10 years  1,952,371   (423,020)  1,529,351 
Non-compete agreements 10 years  184,825   (66,742)  118,083 
Non contractual customer relationships 5 years  340,218   (36,855)  303,363 
Customer list 3 years  86,113   (9,334)  76,779 
    $15,338,654  $(1,947,349) $13,391,305 

6.  DUE TO FINANCIAL INSTITUTION:

  December 31, 2022
  Estimated
Useful
Life
 Gross Carrying
Amount
  Accumulated
Amortization
  Net Carrying
Amount
 
Patent 10 years $30,760  $(28,876) $1,884 
Franchisee contract-based agreements 10 years  12,744,367   (106,203)  12,638,164 
Liberty Loan brand 10 years  340,218   (2,835)  337,383 
Non-compete agreements 10 years  86,113   (718)  85,395 
Non contractual customer relationships 5 years  1,952,371   (32,540)  1,919,831 
Customer list 3 years  184,825   (5,133)  179,692 
    $15,338,654  $(176,305) $15,162,349 

Intangible assets amortization expense was $1,771,044 for the twelve months ended December 31, 2023 and $150,505 for twelve months ended December 31, 2022.

As of December 31, 2023, future estimated amortization expense related to identifiable intangible assets over the next five years is set forth in the following table:

  Amortization
Expense
 
2024 $1,769,160 
2025  1,764,026 
2026  1,707,552 
2027  1,675,012 
2028  1,317,072 
Total $8,232,822 

6. PROMISSORY NOTES-RELATED PARTIES

122 Partners Note - On November 8, 2011, AnchorJanuary 25, 2019, FlexShopper, LLC (the “Promissory Note Borrower”) entered into a Rediscount Credit Facilitysubordinated debt financing letter agreement with 122 Partners, LLC, as lender, pursuant to which the Promissory Note Borrower issued a Commercial Bank that was effective November 30, 2011subordinated promissory note to 122 Partners, LLC (the “122 Partners Note”) in the principal amount of $1,000,000. H. Russell Heiser, Jr. (“Mr. Heiser”), FlexShopper’s Chief Executive Officer, is a member of 122 Partners, LLC. Payment of the principal amount and replaced its prior credit facility. The maximum amount that can be borrowedaccrued interest under the facility is $10 million122 Partners Note was due and payable by the Promissory Note Borrower on April 30, 2020 and the Promissory Note Borrower can prepay principal and interest at any time without penalty. Obligations under the 122 Partners Note were subordinated to obligations under the Credit Agreement. The 122 Partners Note was subject to customary representations and warranties and events of default. If an event of default occurs and is continuing, the Promissory Note Borrower may be required to repay all amounts outstanding under the 122 Partners Note. Obligations under the 122 Partners Note were secured by substantially all of the Promissory Note Borrower’s assets, subject to the senior rights of the lenders under the Credit Agreement. On April 30, 2020, pursuant to an amendment to the subordinated debt financing letter agreement, the Promissory Note Borrower and 122 Partners, LLC agreed to extend the maturity date of the 122 Partners Note to April 30, 2021. On March 22, 2021, the Promissory Note Borrower executed a second amendment to the 122 Partners Note such that the maturity date of the 122 Partners Note was extended to April 1, 2022. On June 30, 2022, the Promissory Note Borrower executed a third amendment to the 122 Partners Note such that the maturity date of the 122 Partners Note was extended to April 1, 2023. On March 30, 2023, the Promissory Note Borrower executed a fourth amendment to the 122 Partners Note such that the maturity date of the 122 Partners Note was extended from April 1, 2023 to October 1, 2023. On September 6, 2023, the Promissory Note Borrower paid all the principal and interest outstanding as of that date.

Interest paid for the 122 Partner Note was $163,183 and $196,338 for the twelve months ended December 31, 2023 and 2022, respectively.

Interest expensed for the 122 Partner Note was $145,357 and $211,349 for the twelve months ended December 31, 2023 and 2022, respectively.


NRNS Note - FlexShopper LLC (the “Promissory Note Borrower”) previously entered into letter agreements with NRNS Capital Holdings LLC (“NRNS”), the manager of which is the Chairman of the Company’s Board of Directors, pursuant to which the Promissory Note Borrower issued subordinated promissory notes to NRNS (the “NRNS Note”) in the total principal amount of $3,750,000. Payment of principal and accrued interest under the NRNS Note was due and payable by the Promissory Note Borrower on June 30, 2021 and the Promissory Note Borrower can prepay principal and interest at any time without penalty. At September 30, 2023, amounts outstanding under the NRNS Note bear interest at a rate of 21.47%. Obligations under the NRNS Note are subordinated to obligations under the Credit Agreement. The NRNS Note is subject to customary representations and warranties and events of default. If an event of default occurs and is continuing, the Promissory Note Borrower may be required to repay all amounts outstanding under the NRNS Note. Obligations under the NRNS Note is secured by substantially all of the Promissory Note Borrower’s assets, subject to rights of the lenders under the Credit Agreement. On March 22, 2021, the Promissory Note Borrower executed an amendment to the NRNS Note such that the maturity date was extended to April 1, 2022. On February 2, 2022, the Promissory Note Borrower executed another amendment to the NRNS Note. This last amendment extended the maturity date from April 1, 2022 to July 1, 2024 and increased the credit commitment from $3,750,000 to $11,000,000.

On June 29, 2023, the Company, the Promissory Note Borrower, NRNS, Mr. Heiser and PITA Holdings, LLC (“PITA”) entered into an Amendment to Subordinated Debt and Warrants to Purchase Common Stock (the “Amendment”), pursuant to which, among other things, the parties agreed to extend the maturity date of the NRNS Note from July 1, 2024 to July 1, 2025. In order to induce NRNS to enter into the Amendment, the Company extended the expiration date of certain warrants (See Note 9). The cost of the warrant modification was $917,581 and was recorded as a deferred debt cost of NRNS note. No other changes were made to such NRNS Note.

Interest paid for the NRNS Note was $2,298,395 and $1,541,493 for the twelve months ended December 31, 2023 and 2022, respectively.

Interest expensed for the NRNS Note was $2,305,389 and $1,677,103 for the twelve months ended December 31, 2023 and 2022, respectively.

Amounts payable under the promissory notes are as follows:

  Debt
Principal
  Interest 
2024 $-  $198,624 
2025 $10,750,000  $- 

7. LOAN PAYABLE UNDER CREDIT AGREEMENT

On March 6, 2015, FlexShopper, through a wholly-owned subsidiary (“Borrower”), entered into a credit agreement (as amended from time-to-time, the “Credit Agreement”) with Wells Fargo Bank, will advanceNational Association as paying agent, various lenders from time to time party thereto and WE 2014-1, LLC, an affiliate of Waterfall Asset Management, LLC, as administrative agent and lender (“Lender”). The Borrower is permitted to borrow funds under the Credit Agreement based on FlexShopper’s cash on hand and the Amortized Order Value of its Eligible Leases (as such terms are defined in the Credit Agreement) less certain deductions described in the Credit Agreement. Under the terms of the Credit Agreement, subject to the satisfaction of certain conditions, the Borrower may borrow up to 80%$57,500,000 from the Lender until the Commitment Termination Date and must repay all borrowed amounts one year thereafter, on the date that is 12 months following the Commitment Termination Date (unless such amounts become due or payable on an earlier date pursuant to the terms of Anchor's advancesthe Credit Agreement). The Lender was granted a security interest in certain leases and loans as collateral under this Agreement.

On January 29, 2021, the Company and the Lender signed an Omnibus Amendment to the Credit Agreement. This Amendment extended the Commitment Termination Date to April 1, 2024, amended other covenant requirements, partially removed indebtedness covenants and amended eligibility rules. The interest rate charged on amounts borrowed is LIBOR plus 11% per annum. The Company paid the Lender a fee of $237,000 in consideration of the execution of this Omnibus Amendment. At December 31, 2023, amounts borrowed bear interest at 16.47%.

On March 8, 2022, pursuant to Amendment No. 15 to Credit Agreement, the Commitment Amount was increased to be up to $82,500,000. The incremental increase in the Commitment Amount was provided by WE 2022-1, LLC, as an additional lender under the Credit Agreement. WE 2022-1, LLC is an affiliate of Waterfall Asset Management, LLC. No other changes were made to the credit agreement. As of July 1, 2022, WE 2022-1, LLC assigned 100% of its clients. Anchor paysCommitment and all Loans to WE 2014-1, LLC. Effective September 27, 2022, WE 2014-1, LLC assigned 100% of its Commitments and all Loans to Powerscourt Investments 32, LP, an affiliate of Waterfall Asset Management, LLC.


On October 21, 2022, pursuant to Amendment No. 16 to Credit Agreement, the Commitment Amount was increased to be up to $110,000,000. This amendment also replaced LIBOR references in the Credit Agreement with SOFR (Secured Overnight Financing Rate), as the basis for our interest payments under the Credit Agreement.

On June 7, 2023, pursuant to Amendment No. 17 to the Credit Agreement, the administrative agent and lender consented, on advances monthly ata one-time basis, to the 90 Day Libor Rate plus 6.25%formation of a new subsidiary, Flex TX, LLC, and various other monthly feesto the Company’s execution and performance of the Revolution Agreements (as defined below) between the Company and BP Fundco, LLC to incur certain indebtedness and grant a security interest in certain of its assets in connection with (i) a Limited Payment Guaranty (Flex Revolution Loan) between the Company and BP Fundo, LLC and (ii) a Pledge Agreement among the Company, Flex Revolution, LLC and BP Fundco, LLC (collectively, the “Revolution Agreements”).

The Credit Agreement provides that FlexShopper may not incur additional indebtedness (other than expressly permitted indebtedness) without the permission of the Lender and also prohibits payments of cash dividends on common stock. Additionally, the Credit Agreement includes covenants requiring FlexShopper to maintain a minimum amount of Equity Book Value, maintain a minimum amount of liquidity and cash and maintain a certain ratio of Consolidated Total Debt to Equity Book Value (each capitalized term, as defined in the agreement. The agreement requires that Anchor maintainCredit Agreement). Upon a Permitted Change of Control (as defined in the Credit Agreement), FlexShopper must refinance the debt under the Credit Agreement, subject to the payment of an early termination fee. A summary of the covenant requirements, and FlexShopper’s actual results at all times a ratio of debt to tangible net worth of not higher than four to one (4:1).  As of December 31, 2013, the Company was in compliance. 2023, follows:

  December 31, 2023 
  Required
Covenant
  Actual
Position
 
Equity Book Value not less than $16,452,247  $29,230,773 
Liquidity greater than  1,500,000   4,413,130 
Cash greater than  500,000   4,413,130 
Consolidated Total Debt to Equity Book Value ratio not to exceed  5.25   3.93 

The agreement containsCredit Agreement includes customary representations and warranties, events of default, including, among others, failures to make payment of principal and limitations, among other provisions. The agreement is collateralized by a first lien on all Anchors' assets. The agreement’s next anniversary date is November 30, 2014 and automatically renews each year for an additional year provided thatinterest, breaches or defaults under the Company has not provided 60 days’ notice to the Bank in advanceterms of the anniversary date. The facility was renewed through November 30, 2014. This facility contains certain standard covenants, representationsCredit Agreement and warranties for loans of this type.  In the event that we fail to complyrelated agreements entered into with the covenant(s)Lender, breaches of representations, warranties or certifications made by or on behalf of FlexShopper in the Credit Agreement and related documents (including certain financial and expense covenants), deficiencies in the lender does not waive such non-compliance, we could be in default of our credit facility, which could subject usborrowing base, certain judgments against FlexShopper and bankruptcy events.

The Company borrowed under the Credit Agreement $18,050,000 for the twelve months ended December 31, 2023, respectively, and $36,455,000 for the twelve ended December 31, 2022. The Company repaid under the Credit Agreement $2,795,000 for the twelve months ended December 31, 2023 and $5,730,000 for the twelve ended December 31, 2022.

Interest expense incurred under the Credit Agreement amounted to penalty rates of interest$13,927,252 for the twelve months ended December 31, 2023, and accelerate$8,902,935 for the maturity oftwelve months ended December 31, 2022. The outstanding balance under the outstanding balances in addition to other legal remedies, including foreclosure on collateral. The Company’s President and CEO have provided validity guarantees to the Bank. Anchor owed this financial institution $3,240,942 and $4,977,763Credit Agreement was $96,455,000 as of December 31, 20132023 and 2012,was $81,200,000 as of December 31, 2022. Such amount is presented in the consolidated balance sheets net of unamortized issuance costs of $70,780 and $352,252 as of December 31, 2023 and December 31, 2022, respectively. Interest is payable monthly on the outstanding balance of the amounts borrowed. No principal is expected to be repaid in the next twelve months due to the Commitment Termination Date having been extended to April 1, 2026 (See Note 17), or from reductions in the borrowing base. Accordingly, all principal is shown as a non-current liability at December 31, 2023.

See Note 17 for subsequent events related to the loan payable under Credit Agreement.

F-10


7.  CAPITAL STRUCTURE:


8. CAPITAL STRUCTURE

The Company’s capital structure consists of preferred and common stock as described below:


Preferred Stock

The Company is authorized to issue 10,000,000500,000 shares of $.001$0.001 par value preferred stock. Of this amount, 250,000 shares have been designated as Series 1 Convertible Preferred Stock and 25,000 shares have been designated as Series 2 Convertible Preferred Stock. The Company’s Board of Directors determines the rights and preferences of itsthe Company’s preferred stock.


On January 31, 2007, the Company filed a Certificate of Designation with the Secretary of State of Delaware.  Effective with this filing, 2,000,000 preferred shares became Series 1 Convertible Preferred Stock.  Series 1 Convertible Preferred Stock will rank senior to Common Stock.

Series 1 Convertible Preferred Stock is convertible into 5.1 shares of the Company’s Common Stock.  The holder of the Series 1 Convertible Preferred Stock has the option to convert the shares to Common Stock at any time.  Upon conversion all accumulated and unpaid dividends will be paid as additional shares of Common Stock.

The dividend rate on Series 1 Convertible Preferred Stock is 8%.  Dividends are paid annually on December 31st in the form of additional Series 1 Convertible Preferred Stock unless the Board of Directors approves a cash dividend.  Dividends on Series 1 Convertible Preferred Stock shall cease to accrue on the earlier

Series 1 Convertible Preferred Stock Series 1 Convertible Preferred Stock ranks senior to common stock upon liquidation.

As of December 31, 2009, or on the date they are converted to Common Shares.  Thereafter, the holders2023, each share of Series 1 Convertible Preferred Stock have the same dividend rights as holders of Common Stock, as if the Series 1 Convertible Preferred Stock had been converted to Common Stock.


Common Stock – The Company is authorized to issue 65,000,000 shares of $.0001 par value Common Stock.  Each share of Common Stock entitles the holder to one vote at all stockholder meetings.  Dividends on Common Stock will be determined annually by the Company’s Board of Directors.

During the last quarter of 2013, the Company raised $1,000,000 from the sale of its restricted Common Stock at $.40 per share. An aggregate of 2,500,000 shares of Common Stock were sold under Rule 506 and/or Section 4(2) of the Securities Act of 1933 as amended.  The Company also issued 14,493 shares to consultants for services rendered.

The changes in Series 1 Convertible Preferred Stock and Common Stock shares for the years ended December 31, 2013 and 2012 is summarized as follows:

  Series 1 Convertible  Common 
  Preferred Stock  Stock 
Balance, January 1, 2012  376,387   18,634,369 
Preferred Stock Conversions  -   - 
Common Stock Issuances  -   - 
Balance, December 31, 2012  376,387   18,634,369 
         
Preferred Stock Conversions  -   - 
Common Stock Issuances  -   2,514,493 
Balance, December 31, 2013  376,387   21,148,862 

8.  RELATED PARTY TRANSACTIONS:

Promissory notes payable

On March 19, 2014, FlexShopper entered into two Promissory Notes totaling $1,000,000, one with Morry Rubin and the other with a major shareholder and Director of the company. Each demand Promissory Note is for $500,000 and earns interest (payable monthly) at 10% per annum. The Promissory Notes are to assist FlexShopper in purchasing merchandise for lease to support FlexShopper’s growth.

F-11

On June 5, 2012, upon approval of the Board, Anchor entered into two Promissory Notes totaling $400,000, one with Morry Rubin and the other with a major shareholder of the company. Each Promissory Note was for $200,000, had a 90 day term, and earned interest (payable monthly) at 15% per annum. The Promissory Notes were to assist Anchor in providing factoring and purchase order funding facilities to some of its clients. The Promissory Notes were subordinate to and supplemented Anchor's $10 Million Rediscount Credit Facility with a Commercial Bank. Both promissory notes were paid on September 5, 2012. Anchor paid $15,123 of interest on these notes for year ended December 31, 2012.

Options granted to officers and directors.

On March 20, 2012, M. Rubin and B. Bernstein were each granted 10 year options to purchase 250,000 shares of common stock each for a total of 500,000 shares, with the options vesting over a period of 10 years. Due to the anti-dilution provisions of our Series 1 Convertible Preferred Stock, this grant caused an adjustment of our preferred stock into common stock. Each share of Series 1 Preferred Stock is now convertible into 5.11.32230 shares of the Company’s Common Stock.common stock, subject to certain anti-dilution rights. The holders of the Series 1 Convertible Preferred Stock have the option to convert the shares to Common Stockcommon stock at any time. See Note 7.

In June 2012, Paul Healy was granted 10-year non-statutory stock options to purchase 180,000Upon conversion, all accumulated and unpaid dividends, if any, will be paid as additional shares of Anchor’scommon stock. The holders of Series 1 Convertible Preferred Stock have the same dividend rights as holders of common stock, exercisableas if the Series 1 Convertible Preferred Stock had been converted to common stock.

As of December 31, 2023 and 2022, there were 170,332 shares of Series 1 Convertible Preferred Stock outstanding, which were convertible into 225,231 shares of common stock.

Series 2 Convertible Preferred Stock The Company sold to B2 FIE V LLC (the “Investor”), an entity affiliated with Pacific Investment Management Company LLC, 20,000 shares of Series 2 Convertible Preferred Stock (“Series 2 Preferred Stock”) for gross proceeds of $20.0 million. The Company sold an additional 1,952 shares of Series 2 Preferred Stock to a different investor for gross proceeds of $1.95 million at a subsequent closing.

The Series 2 Preferred Shares were sold for $1,000 per share (the “Stated Value”) and accrue dividends on the Stated Value at $.25 per share.an annual rate of 10% compounded annually. Cumulative accrued dividends as of December 31, 2023 totaled $23,188,014. As of December 31, 2023, each Series 2 Preferred Share was convertible into approximately 266 shares of common stock; however, the conversion rate is subject to further increase pursuant to a weighted average anti-dilution provision. The options vest one-third immediately and one-third on eachholders of the successive anniversary dates from Mr. Healy joiningSeries 2 Preferred Stock have the board until fully vested.

In June 2013, the Company granted the Chief Information Officer of F1exShopper, which is a non-executive officer position, 10-year Incentive Stock Optionsoption to purchase 100,000convert such shares into shares of Anchor's Commoncommon stock and have the right to vote with holders of common stock on an as-converted basis. If the average closing price during any 45-day consecutive trading day period or change of control transaction values the common stock at a price equal to or greater than $23.00 per share, then conversion shall be automatic. Upon a Liquidation Event or Deemed Liquidation Event (each as defined), holders of Series 2 Preferred Stock exercisable at $.35 per share. The options vest one-third immediately, and one-third on eachshall be entitled to receive out of the successive anniversary dates from the date the FlexShopper Chief Information Officer commenced work.
9. EMPLOYMENT AND STOCK OPTION AGREEMENTS:

On January 31, 2007, the Board adopted our 2007 Omnibus Equity Compensation Plan (the “Plan”), with 2,100,000 common shares authorized for issuance under the Plan.  In October 2009 the Company's stockholders approved an increase in the number of shares covered by the Plan to 4,200,000 shares.

The general purpose of the plan is to provide an incentive to the Company’s employees, directors and consultants by enabling them to share in the future growth of the business.

At closing of the exchange transaction described above, M. Rubin and Brad Bernstein (“B. Bernstein”), the Presidentassets of the Company entered into employment contractsprior to and in preference to the common stock option agreements.  Additionally, at closing two non-employee directors entered intoand Series 1 Convertible Preferred Stock an amount equal to the greater of (1) the Stated Value, plus any accrued and unpaid dividends thereon, and (2) the amount per share as would have been payable had all shares of Series 2 Preferred Stock been converted to common stock option agreements.immediately before the Liquidation Event or Deemed Liquidation Event.

As the dividends for the Series 2 Preferred Shares have not been declared by the Company’s Board of Directors, there is no dividends accrual reflected in the Company’s Consolidated Financial Statement. The Series 2 Preferred Shares dividends is reflected on the Consolidated Statement of Operations for purposes of determining the net income attributable to common and Series 1 Convertible Preferred shareholders.

The following summarizes M. Rubin’s employment agreement and stock options:
·The employment agreement with M. Rubin currently retains his services as Co-chairman and Chief Executive Officer through January 31, 2015.
F-12


·On August 8, 2013, the board agreed to modify M. Rubin’s employment agreement and approved an annual salary of $125,000. Previously M. Rubin received an annual salary of $1.00. M. Rubin is eligible to receive periodic review of his base salary and annual bonuses as determined by the Company’s compensation committee.  M. Rubin shall be entitled to a monthly automobile allowance of $1,500.

·10-year options to purchase 650,000 shares exercisable at $1.25 per share, pursuant to the Plan. All of the aforementioned options are fully vested.

Common Stock

The following summarizes B. Bernstein’s employment agreementCompany is authorized to issue 40,000,000 shares of common stock, par value $0.0001 per share. Each share of common stock entitles the holder to one vote at all stockholder meetings. The common stock is traded on the Nasdaq Capital Market under the symbol “FPAY.”

Warrants

In connection with the issuance of Series 2 Convertible Preferred Stock in June 2016, the Company issued to the placement agent in such offering warrants exercisable for 439 shares of Series 2 Convertible Preferred Stock at an initial exercise price of $1,250 per share. These warrants expired in June 2023.

In September 2018, the Company issued warrants exercisable for an aggregate 1,055,184 shares of common stock at an exercise price of $1.25 per warrant to Mr. Heiser and NRNS in connection with partial conversions of their promissory notes (the “Conversion Warrants”). The original expiration date of these warrants was September 28, 2023 (and extended as described below).

From January 2019 to August 2021, the Company issued to PITA Holdings, LLC (“PITA”) Common Stock Purchase Warrants (the “Consulting Warrants”) to purchase up to an aggregate of 1,200,000 shares of the Company’s common stock options:in connection with that certain Consulting Agreement, dated as of February 19, 2019 (as may be amended from time to time), between the Company and XLR8 Capital Partners LLC (“XLR8”).

PITA, NRNS and XLR8 are affiliates of the Company.

On June 29, 2023, the Company, FlexShopper, LLC, NRNS, Mr. Heiser and PITA entered into an Amendment to Subordinated Debt and Warrants to Purchase Common Stock (the “Amendment”), pursuant to which, among other things, the parties agreed to extend the maturity date of the NRNS Note from July 1, 2024 to July 1, 2025. In order to induce NRNS to enter into the Amendment, the expiration date of the Conversion Warrants and the expiration date of 840,000 of the Consulting Warrants was extended 30 months from the original expiration date. The cost of the warrant modification was $917,581 and was recorded as a deferred debt cost of NRNS note.

The expense related to warrants was $917,581 for the twelve months ended December 31, 2023 and $0 for the twelve months ended December 31, 2022.

·The employment agreement with B. Bernstein currently retains his services as President through January 31, 2015.

·An annual salary of $240,000.  The Board may periodically review B. Bernstein’s base salary and may determine to increase (but not decrease) the base salary in accordance with such policies as the Company may hereafter adopt from time to time.


·The Board approved an annual bonus program for Mr. Bernstein commencing with the 2012 fiscal year and ending with the 2013 fiscal year. The annual bonus is equal to 5% of annual net income provided net income is equal to or greater than $200,000. The bonus is calculated on the Company’s audited GAAP financial statements.  B. Bernstein shall be entitled to a monthly automobile allowance of $1,000.


·10-year options to purchase 950,000 shares exercisable at $1.25 per share, pursuant to the Plan. All of the aforementioned options are fully vested.

The following table summarizes information about outstanding stock optionswarrants as of December 31, 2013:2023 and 2022, all of which are exercisable:

Exercise  

Common

Stock Warrants

  

Weighted Average

Remaining

Contractual Life

Price  Outstanding  Dec 31, 2023 Dec 31, 2022
$1.25   1,055,184  2 years 1 year
$1.25   160,000  2 years Less than 1 year
$1.34   40,000  2 years Less than 1 year
$1.40   40,000  2 years Less than 1 year
$1.54   40,000  2 years Less than 1 year
$1.62   40,000  2 years Less than 1 year
$1.68   40,000  2 years 2 years
$1.69   40,000  2 years Less than 1 year
$1.74   40,000  2 years Less than 1 year
$1.76   40,000  2 years Less than 1 year
$1.91   40,000  2 years Less than 1 year
$1.95   40,000  2 years 2 years
$2.00   40,000  2 years Less than 1 year
$2.01   40,000  2 years Less than 1 year
$2.08   40,000  2 years 2 years
$2.45   40,000  2 years Less than 1 year
$2.53   40,000  2 years Less than 1 year
$2.57   40,000  2 years 2 years
$2.70   40,000  2 years 3 years
$2.78   40,000  2 years Less than 1 year
$2.79   40,000  2 years 2 years
$2.89   40,000  4 years 2 years
$2.93   40,000  2 years Less than 1 year
$2.97   40,000  2 years 2 years
$3.09   40,000  3 years 2 years
$3.17   40,000  4 years 2 years
$3.19   40,000  2 years 3 years
$3.27   40,000  2 years 2 years
     2,255,184     


Exercise  Number Remaining Number 
Price  Outstanding Contractual Life Exercisable 
         
$1.25   1,605,000 4  years  1,605,000 
$1.00   45,000 6  years  33,750 
$0.62   500,000 6  years  500, 000 
$0.17   500,000 9  years  500,000 
$0.25   180,000 10 years  120,000 
$0.35   100,000 10 years  33,333 
$0.30   60,000 10 years  20,000 
$0.45   25,000 10 years  8,333 
     3,015,000    2,820,416 

9. EQUITY COMPENSATION PLANS

In April 2018, the Company adopted the FlexShopper, Inc. 2018 Omnibus Equity Compensation Plan (the “2018 Plan”). The 2018 Plan replaced the Prior Plans. No new awards will be granted under the Prior Plans; however, awards outstanding under the Prior Plans upon approval of the 2018 Plan remain subject to and will be settled with shares under the applicable Prior Plan.

Grants under the 2018 Plan and the Prior Plans consist of incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares, restricted stock units, dividend equivalents and other stock-based awards. Employees, directors and consultants and other service providers are eligible to participate in the 2018 Plan and the Prior Plans. As of December 31, 2023, approximately 2,150,461 shares remained available for issuance under the 2018 Plan.

Stock-based compensation expense include the following components:

  Year Ended
December 31,
 
  2023  2022 
Stock options $1,288,750  $997,830 
Performance share units (“PSU”)  388,958   - 
Total stock-based compensation $1,677,708  $997,830 

The fair value of stock-based compensation is recognized as compensation expense over the vesting period. Compensation expense recorded for stock-based compensation in the consolidated statements of operations was $1,677,708 for the twelve months ended December 31, 2022 and $997,830 for twelve months ended December 31, 2021. Unrecognized compensation cost related to non-vested options and PSU at December 31, 2022 amounted to $1,181,541, which is expected to be recognized over a weighted average period of 2.09 years.

Stock options:

The fair value of stock options is recognized as compensation expense using the straight-line method over the vesting period. The Company measured the fair value of each stock option award on the date of grant using the Black Scholes optionBlack-Scholes-Merton (BSM) pricing model (BSM) with the following assumptions:

Exercise price$.17 to $1.25
Term10 years
Volatility0.38 to 2.50
Dividends0%
Discount rate0.02% to 4.75%
The fair value amounts recorded for these options in the statement of operations was $49,805 and $10,229 for the years ended December 31, 2013 and 2012, respectively.
Stock option activity and weighted average exercise priceassumptions:

  Year ended
December 31,
2023
  Year ended
December 31,
2022
 
Exercise price $0.83  $1.45 
Expected life  6 years   6 years 
Expected volatility  95%  71%
Dividend yield  0%  0%
Risk-free interest rate  3.59%  2.25%

The expected dividend yield is summarized as follows:

  2013  2012  2011 
  Options  Price  Options  Price  Options  Price 
Outstanding at beginning of year  2,830,000   0.88   2,430,000   1.12   2,440,000   1.10 
        Granted  195,000   0.35   680,000   0.19   -   - 
        Cancelled  (10,000)  0.45   (280,000)  1.25   (10,000)  1.00 
        Exercised  -   -   -   -   -   - 
Outstanding at end of year  3,015,000   0.85   2,830,000   0.88   2,430,000   1.12 
                         
Exercisable at end of year  2,820,416   0.88   2,198,750   1.08   2,401,250   1.12 

F-13

10. WARRANTS:

In March, 2007,based on the Company’s placement agent was issued warrants to purchase 1,342,500 shareshistorical dividend yield. The expected volatility is based on the historical volatility of the Company’s common stock. These warrants were due to expire on January 31, 2013, but were extendedThe expected life is based on the condition that each warrant holder acceptsimplified expected term calculation permitted by the Securities and Exchange Commission, which defines the expected life as the average of the contractual term of the options and the weighted-average vesting period for all option tranches. The risk-free interest rate is based on the annual yield on the grant date of a new exercise pricezero-coupon U.S. Treasury bond the maturity of $1.35 per share. Currently, these warrants are scheduled to expire on January 31, 2018 and are currently exercisable atwhich equals the original price of $1.10 per share.  The following information was input into BSM to compute a per warrant price of $.023:option’s expected life.


Exercise price $1.10
Term 7 years
Volatility  40%
Dividends  0%
Discount rate  .05%


For

Activity in stock options for the yeartwelve months period ended December 31, 2013, the Company recorded compensation expense of $1,916 related to the issuance of these warrants.

On2023 and December 7, 2009, the Company received gross proceeds of $500,002 from the sale of 500,002 shares of common stock and ten year warrants to purchase 2,000,004 shares of common stock exercisable at $1.00 per share. BSM31, 2022 was used to compute theas follows:

  Number of
options
  Weighted
average
exercise
price
  Weighted
average
contractual
term
(years)
  Aggregate
intrinsic
value
 
Outstanding at January 1, 2023  3,919,228  $1.97      $52,223 
Granted  1,645,619   0.83       75 
Exercised  (1,500)  0.79       345 
Forfeited  (1,110,900)  1.90       4,400 
Expired  -   -       - 
Outstanding at December 31, 2023  4,452,447  $1.57   7.34  $2,152,602 
Vested and exercisable at December 31, 2023  3,696,778  $1.65   7.10  $1,668,723 
                 
Outstanding at January 1, 2022  3,080,904  $2.06      $1,923,642 
Granted  1,179,183   1.45       - 
Exercised  (308,526)  0.85       480,029 
Forfeited  (7,333)  2.22       2,273 
Expired  (25,000)  1.70       - 
Outstanding at December 31, 2022  3,919,228  $1.97   6.78  $52,223 
Vested and exercisable at December 31, 2022  3,152,169  $2.02   6.52  $52,223 

The weighted average grant date fair value of options granted during the warrants.

The following table summarizes information about stock warrants as of December 31, 2013:
     Weighted Average   
Exercise  Number Remaining Number 
Price  Outstanding Contractual Life Exercisable 
         
$1.10   1,342,500 1 Month  1,342,500 
$1.00   2,000,004  7 years  2,000,004 
11. CONCENTRATIONS:

Revenues – The Company recorded revenues from United States companies in the following industries as follows:
Industry For the year ending December 31, 
  2013  2012 
Staffing $80,780  $69,773 
Transportation  627,095   782,058 
Service  1,365,379   1,426,583 
Other  20,357   105,483 
Manufacturing  173,844   - 
Apparel  96,673   142,729 
  $2,364,128  $2,526,626 

Major Customers – The Company did not have any major customers for the years ending December 31, 2013 and 2012 that represented 10% or more of its revenues.

Client Accounts - As of December 31, 2013, Anchor has five clients that account for an aggregate of approximately 36.1% of its accounts receivable portfolio and approximately 16.3% of its revenues for the yeartwelve month period ended December 31, 2013.2023 and December 31, 2022 was $0.62 and $0.90 per share, respectively.

Performance Share Units:

On February 10, 2022, and on April 21, 2023, the Compensation Committee of the Board of Directors approved awards of performance share units to certain senior executives of the Company (the “2022 PSU”, and the “2023 PSU”, respectively).

For performance share units, which are settled in stock, the number of shares earned is subject to both performance and time-based vesting. For the performance component, the number of shares earned is determined at the end of the periods based upon achievement of specified performance conditions such as the Company’s Adjusted EBITDA. When the performance criteria are met, the award is earned and vests assuming continued employment through the specified service period(s). Shares are issued from the Company’s 2018 Omnibus Equity Compensation Plan upon vesting. The transactionsnumber of 2023 PSU which could potentially be issued ranges from 0 up to a maximum of 1,250,000 of the target awards depending on the specified terms and balancesconditions of the target award.

The fair value of performance share units is based on the fair market value of the Company’s common stock on the date of grant. The compensation expense associated with these clientsawards is amortized on an accelerated basis over the vesting period based on the Company’s projected assessment of the level of performance that will be achieved and earned. In the event the Company determines it is no longer probable that the minimum performance criteria specified in the plan will be achieved, all previously recognized compensation expense is reversed in the period such a determination is made. The 2022 PSU were forfeited in April 2023 as ofthe minimum performance component was not achieved. For the 2023 PSU, the Company determined it was probable that the minimum performance component would be met and accordingly commenced amortization in the quarter ended June 30, 2023.

Activity in performance share units for the yeartwelve months ended December 31, 2013 are summarized below:2023 was as follows:

  Number of
performance
share
units
  Weighted
average
grant date
fair
value
 
Non- vested at January 1, 2023  790,327  $1.53 
Granted  1,250,000   0.78 
Forfeited/ unearned  (790,327)  1.53 
Vested  -   - 
Non- vested at December 31, 2023  1,250,000  $0.78 


F-14

  Percentage of Accounts Receivable  Percentage of Revenues for 
  Portfolio  the Twelve Months 
   As of  Ended 
Entity December 31, 2013  December 31, 2013 
Trucking company in MI  8.7%  4.3%
Cable trenching utility in FL  6.4%  3.4%
Importer in MI  8.4%  3.0%
Aerospace servicer in NM  6.2%  3.7%
Trucking Company in VA  6.4%  1.9%
   36.1%  16.3%

Cash – The Company places its cash and cash equivalents on deposit with financial institutions in the United States. The Federal Deposit Insurance Corporation (FDIC) provides coverage up to $250,000 per depositor at FDIC-insured depository institutions.  At December 31, 2013, the Company had approximately $546,000 on deposit in excess

10. INCOME TAXES

Reconciliation of the insured limits.

12. SUPPLEMENTAL DISCLOSURES OF CASH FLOW:
Cash paid for interest was as follows:
  For the year ending December 31, 
  2013  2012 
To a financial institution $369,487  $446,922 
To a related party  -   15,123 
Total $369,487  $462,045 

 Non-cash financing and investing activities consisted of the following:

For the year ending 2013 –
None

For the year ending 2012 –
None

13.  INCOME TAXES:
For the year ended December 31, 2013, the Company had losses from continuing operations, therefore no current taxes were incurred.   For the year ended December 31, 2012, the Company was able to offset its taxable income through the utilization of  net operating loss carryforwards, therefore no current taxes were incurred.

The following table reconciles the total provisionbenefit for income taxes from continuing operations recorded in the consolidated statementstatements of operations with the amounts computed at the statutory federal tax raterates for each year:

  2023  2022 
Federal tax at statutory rate $(1,096,920) $(630,700)
State tax, net of federal tax  (91,893)  (736,962)
Tax impact on gain on bargain purchase  -   (3,036,868)
Permanent differences  168,215   123,933 
Change in statutory rate  30,789   7,862 
Change in valuation allowance  -   (12,525,690)
Other      163,374 
Benefit/ (expense) for income taxes $(989,809) $(16,635,051)

Tax affected components of 34%:


  2013  2012 
       
Federal tax expense at statutory rate $(235,000) $146,000 
State tax expense  (10,000)  15,000 
Permanent items  5,000    
Change in valuation allowance  (240,000)  (161,000)
Income taxes $-  $- 

Temporary differences between the amounts reported in the financial statements and the tax bases of assets and liabilities resulted in deferred taxes.  Deferred tax assets at December 31, 2013 and 2012 were as follows; certain prior year numbers have been reclassified to conform to current year presentation.


F-15



  2013  2012 
       
Equity based compensation $102,000  $91,000 
Allowance for doubtful accounts  1,000   31,000 
Net operating loss carry-forwards  1,660,000   1,385,000 
         
Gross deferred tax assets  1,763,000   1,507,000 
Fixed assets and intangible basis difference  (19,000)  (3,000)
   1,744,000   1,504,000 
Valuation allowance  (1,744,000)  (1,504,000)
Income taxes $-  $- 

Primarily due to a taxable loss in 2013 the Company’s gross deferred tax asset increased to $1,763,000. All available evidence, both positive and negative, was considered to determine whether any impairment of this asset should be recognized.  Based on consideration of the available evidence including historical losses which must be treated as substantial negative evidence and the potential of future taxable income, a $1,744,000 valuation allowance has been recognized to adjust deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022 were as follows:

  2023  2022 
Deferred tax assets (liabilities):      
Equity based compensation $677,514  $428,111 
Allowance for doubtful accounts  4,981,308   3,240,968 
Fixed assets  (4,715,210)  (8,479,349)
Lease impairment  151,328   989,120 
Lease Liability  391,076   439,758 
Right of use asset  (308,793)  (348,478)
Accrued expenses  (57,410)    
Change in fair value of loans receivable  (5,684,857)  (375,222)
Tax credit carryforward  -   32,394 
Sec 163(j) carryforward  3,269,003   - 
Federal loss carry-forwards  15,266,448   16,219,665 
State loss carry forward  4,111,334   4,567,883 
Intangible assets  (5,138,380)  (4,701,022)
Other  -   - 
Gross deferred tax  12,943,361   12,013,828 
Valuation allowance  -   - 
Net deferred tax assets/ liability $12,943,361  $12,013,828 

During the second quarter of 2022, the Company released the valuation allowance of the Company’s deferred tax asset recorded as of December 31, 2021. The Company had historical cumulative positive pre-tax income plus permanent differences. The realization of the deferred tax asset as of December 31, 2023 is more likely than not based on the Company’s projected taxable income.

The release of the deferred tax asset valuation allowance resulted in a tax benefit of approximately $12.5 million in the year ended December 31, 2022.

As of December 31, 2023, the Company had federal and state net operating loss carryforwards of $72,697,376 and $21,800,909, respectively available to the amount ofoffset future income. Our federal loss carryforwards do not expire. The Company’s net operating losses may be subject to annual Section 382 of the Internal Revenue Code limitations due to ownership changes that are expected to be realized.  If realized,could impact future realization.


The components of income tax benefits for the years ended December 31, 2023 and 2022 were as follows:

  2023  2022 
Current Income Tax:      
Federal $205,910  $- 
State  (273,141)  754,505 
Deferred Income Tax:        
Federal  (1,168,681)  (13,439,360)
State  246,103   (3,950,196)
  $(989,809) $(16,635,051)

The Company’s effective tax benefit for this item will reduce current tax expense for that period as it didrate for the year ended December 31, 2012.

The Company has2023 and 2022 differs from the following net operating loss carryforwards availablestatutory rate of 21% primarily due to offset future taxable income:

  Amount  Expiration 
       
Federal $4,313,000   2022 - 2025 
         
State $1,669,000   2022 - 2025 

state income taxes, permanent differences and the release of the valuation allowance.

The Company files tax returns in the U.S. federal jurisdiction and various states.  At December 31, 2013,2023, federal tax returns remained open for Internal Revenue Service review for tax years after 2010,2018, while state tax returns remain open for review by state taxing authorities for tax years after 2009.2019.  The IRS can examine net operating loss carryforwards from earlier years the extent utilized in years after 2019. During 2019, the Company was notified that its 2017 federal income tax return was selected for examination. In the second quarter of 2021, the IRS completed their review with no changes to the reported tax. There were no other federal or state income tax audits being conducted as of December 31, 2013.2023.

The Company completed its analysis and review of all tax positions taken through December 31, 2023 and does not believe that there are any unrecognized tax benefits or liabilities related to tax positions taken on its income tax returns.

11. CONTINGENCIES AND OTHER UNCERTAINTIES

Regulatory inquiries

In the first quarter of 2021, FlexShopper, along with a number of other lease-to-own companies, received a subpoena from the California Department of Financial Protection and Innovation (the “DFPI”) requesting the production of documents and information regarding the Company’s compliance with state consumer protection laws. The Company is cooperatively engaging with the DFPI in response to its inquiry. Although the Company believes it is in compliance with all applicable consumer protection laws and regulations in California, this inquiry ultimately could lead to an enforcement action and/or a consent order, and substantial costs, including legal fees, fines, penalties, and remediation expenses.

Litigation

The Company is not involved in any current or pending material litigation. The Company could be involved in litigation incidental to the operation of the business. The Company intends to vigorously defend all matters in which the Company is named defendants, and, for insurable losses, maintain significant levels of insurance to protect against adverse judgments, claims or assessments that may affect the Company. Although the adequacy of existing insurance coverage of the outcome of any legal proceedings cannot be predicted with certainty, based on the current information available, the Company does not believe the ultimate liability associated with known claims or litigation, if any, in which the Company is involved will materially affect the Company’s consolidated financial condition or results of operations.


14. SEGMENT INFORMATION:


Employment agreements

Certain executive management entered into employment agreements with the Company. The Company’s reportable segments consistcontracts are for a period of Anchorthree years and FlexShopper. Anchor purchases company’s accounts receivable, whichrenew for three successive one-year terms unless receipt of written notices by the parties. The contracts provide businesses with critical working capital so they can meet their operational coststhat such management may earn discretionary cash bonuses and obligations while waiting to receive payment from their customers. FlexShopper provides certain typesequity awards, based on financial performance metrics defined each year by the Compensation Committee of durable goods to consumers on a lease-to-own basis and also provides lease-to-own terms to consumers of third party retailers and e-tailers.

Information for the Company’s segments is as follows:
  Year Ended December 31, 
  2013  2012 
Assets:      
FlexShopper $718,896  $ 
Anchor  5,761,499   7,919,985 
Total $6,480,395  $7,919,985 
         
Revenues:        
FlexShopper $119  $ 
Anchor  2,364,009   2,526,626 
Total $2,364,128  $2,526,626 
         
Net (loss) income:        
FlexShopper $(655,474) $ 
Anchor  (38,207)  378,859 
Total $(693,681) $378,859 
F-16


15. COMMITMENTS AND CONTINGENCIES:

Lease Commitments

Board of Directors. Additionally, under certain termination conditions, such contracts provide for severance payments and other benefits.

COVID-19 and other similar health crisis

The Company has lease agreements for office spacebeen, and may in Charlotte, NC,the future, be impacted by COVID-19 or any similar pandemic or health crisis, and Boca Raton, FL. All lease agreementsthis could affect our results of operations, financial condition, or cash flow in the future. The extent and the effects of the impact of any of these events on the operation and financial performance of our business depend on several factors which are with unrelated parties.highly uncertain and cannot be predicted.

12. COMMITMENTS

The Company does not have any commitments other than real property leases (Note 3).


13. REVOLUTION TRANSACTION

On December 3, 2022, Flex Revolution, LLC, a wholly-owned subsidiary of FlexShopper, Inc. (the “Buyer”) closed a transaction (“Revolution Transaction”) pursuant to an Asset Purchase Agreement with Revolution Financial, Inc., a provider of consumer loans and credit products (collectively with certain of its subsidiaries, “Revolution”), under which the Company acquired the material net assets of the Revolution business.

In consideration for the sale of the Revolution net assets, the Company issued an adjustable promissory note (“Seller Note”) with an initial principal amount of $5,000,000. The Seller Note matures on December 1, 2027, bears interest at 8% per annum and is subject to adjustment based upon the pre-tax net income of the acquired business in 2023. The fair value of the Seller Note as of the acquisition date was $3,421,991. The Seller Note, net of the discount, was $3,158,471 as of December 31, 2022. The Seller Note was included in the condensed consolidated balance sheets in the line Promissory note related to acquisition.

The Revolution Transaction includes the Buyer’s assumption of Revolution’s consumer loan portfolio, related cash and its credit facility (“Revolution Credit Facility”) as this facility is backed by the portfolio acquired. As of December 31, 2022, the Revolution Credit Agreement was not legally transferred to FlexShopper, so this liability was included in the condensed consolidated balance sheets on the line Purchase consideration payable related to acquisition as the Company was obligated for the outstanding balance as December 31, 2022. On June 7, 2023, the Revolution Credit Facility was legally transferred to FlexShopper (See Note 14)

The parties to the Asset Purchase Agreement have each made customary representations and warranties in the Asset Purchase Agreement and have agreed to indemnify each other for breaches of such representations and warranties. The Buyer’s primary recourse in the event of a claim is to offset the Seller Note equal to the indemnifiable losses subject to such claim.

The Revolution Transaction has been accounted for as a business combination in accordance with ASC 805, Business Combination. The Company has two Charlotte leasesmeasured the net assets acquired in Revolution Transaction at fair value on the acquisition date.

The fair value of the intangible assets was determined primarily by using discounted cash flow models. The models use inputs including estimated cash flows and a discount rate.

The Company recorded a bargain purchase gain of $14,461,274 related to the Revolution Transaction at acquisition date as the fair value of the net assets acquired exceed the fair value of the purchase price consideration. The Company believes that the most significant reason its management was able to negotiate a bargain purchase was due to the speed with which the seller wanted to close this transaction which resulted in a non-competitive process akin to a forced sale. The strong desire for adjoining space that expire Maya prior to year-end closing was for various reasons, including potential credit facility covenant issues and accelerating operating losses after recent regulatory changes.

As of December 31, 2014.  The monthly rent for2023, the combined space is approximately $2,340.


Beginning November 1, 2009,promissory note related to acquisition was adjusted based upon the companypre-tax loss of the acquired business in 2023, and based on this the Company recognized in the year ended December 31, 2023 a positive net change in fair value of promissory note related to acquisition of $3,678,689.

14. BASEPOINT CREDIT AGREEMENT

On June 7, 2023, the Company, through a wholly owned subsidiary, Flex Revolution, LLC (the “New Borrower”) entered into a 24 month  leaseJoinder Agreement to a credit agreement (the “Basepoint Credit Agreement”) with Revolution Financial, Inc. (the “Existing Borrower”), the subsidiary guarantors party thereto, the lenders party thereto, the individual guarantor party and BP Fundco, LLC, as administrative agent.

The Existing Borrower with certain of its subsidiaries (collectively, the “Seller”) and Flex Revolution, LLC (the “Buyer”) entered into an Asset Purchase Agreement (See Note 13), pursuant to which the Seller agreed to, among other things, transfer substantially all of its assets to the Buyer.

In the Basepoint Credit Agreement, the New Borrower agreed to become a borrower (the “Basepoint Borrower”) and a grantor as applicable under the agreement. The Company is a guarantor of the Basepoint Credit Agreement.

The Basepoint Credit Agreement provides for office  space  in Boca  Raton, FL, andan up to a $20 million credit facility for the origination of consumer loans. The credit facility is backed by eligible principal balance of eligible consumer receivable of the Basepoint borrower’s portfolio (the “Borrowing Base”). The annual interest rate on November 1, 2012  renewed  for another  two years. This lease expiredloans under the Basepoint Credit Agreement is 13.42%. The principal balance outstanding under the Basepoint Credit Agreement is due on September 30, 2013 and was not renewed.  The monthly rent was approximately $1,413.June 7, 2026.


On August 1, 2013, FlexShopper entered into

The Basepoint Credit Agreement includes covenants requiring the Basepoint Borrower and the guarantor to maintain a 39 month lease for additional office spaceminimum amount of liquidity that is no less than 5% of the current Borrowing Base and maintain a minimum amount of cash held in Boca Raton, FL to accommodate the FlexShopper businessconcentration accounts of $200,0000. The tangible net worth of the Basepoint Borrower and its additional employees.the guarantor shall not be less than 10% of the current Borrowing Base and the Basepoint Borrower and the guarantor shall maintain a positive consolidated net income. The monthly rent was approximately $6,800. This lease agreement was amended in January 2014 to reflect a 63 month term for a larger suite in an adjoining building. Upon commencement the monthly base rent including operating expensesterms tangible net worth and positive consolidated net income for the first year willpurpose of calculating the covenants under the Basepoint Credit Agreement are defined in the agreement. The Company is in compliance with Basepoint Credit Agreement covenants as of December 31, 2023.

The Basepoint Credit Agreement includes customary events of default, including, among others, failures to make payment of principal and interest, breaches or defaults under the terms of the Basepoint Credit Agreement, breaches of representations, warranties or certifications made by or on behalf of the Basepoint Borrower in the Basepoint Credit Agreement and related documents (including certain covenants), deficiencies in the Borrowing Base, certain judgments against the Basepoint Borrower and bankruptcy events.

Interest expense incurred under the Basepoint Credit Agreement amounted to $1,094,926 for the twelve months ended December 31, 2023. The outstanding balance under the Basepoint Credit Agreement was $7,412,605 as of December 31, 2023. Such amount is presented in the consolidated balance sheets net of unamortized issuance costs of $92,963 as of December 31, 2023. Interest is payable weekly on the outstanding balance of the amounts borrowed. No principal is expected to be approximately $15,800 with annual three percent increases throughoutrepaid in the lease term.


Anchor hadnext twelve months, or from reductions in the borrowing base. Accordingly, all principal is shown as a lease for office space in Medley, FL, which wasnon-current liability at December 31, 2023.

15. EMPLOYEE BENEFIT PLAN

The Company sponsors an employee retirement savings plan that qualifies under Section 401(k) of the Internal Revenue Code. Participating employees may contribute, but not more than statutory limits. The Company makes nondiscretionary 4% Safe Harbor contributions of participants’ eligible earnings who have completed the plan’s eligibility requirements. The contributions are made to expirethe plan on May 12, 2014. Anchor terminated this lease in 2013behalf of the employees. Total contributions to the plan were $162,618 and forfeited its security deposit.


The rental expense$145,161 for the years ended December 31, 20132023 and 2012 was approximately $58,921 and $46,571,2022, respectively. The future minimum lease payments are approximately as follows:

    
2014 $86,900 
2015  117,600 
2016  122,000 
2017  126,000 
2018  129,600 
Thereafter  77,200 
  $659,300 

Contingencies
We are not a party to any pending material legal proceedings except as described below. To our knowledge, no governmental authority is contemplating commencing a legal proceeding in which we would be named as a party.

16. SHARE REPURCHASE PROGRAM

On October 22, 2010, Anchor filed a complaint in the Superior Court of Stamford/Norwalk, Connecticut against the Administrators of the Estate of David Harvey (“Harvey”) to recoup a credit loss incurred by the Company’s former subsidiary, Brookridge Funding Services, LLC.  Harvey was the owner of a Company that caused the credit loss and the Company is pursuing its rights under the personal guarantee that Harvey provided.  The Complaint is demanding principal of approximately $485,000 plus interest and damages.


16. SUBSEQUENT EVENTS
On March 6, 2014, Anchor signed a non-binding letter of intent with a financial institution to sell its factoring business. There can be no assurances given that the Company will sell its Anchor factoring business on terms satisfactory to the Company, if at all.
On March 19, 2014 upon approval of the Board, FlexShopper entered into two Promissory Notes totaling $1,000,000, one with Morry Rubin and the other with a major shareholder and Director of the company. Each demand Promissory Note is for $500,000 and earns interest (payable monthly) at 10% per annum. The Promissory Notes are to assist FlexShopper in purchasing merchandise for lease to support FlexShopper’s growth.

F-17


PART III
Item 11.  Executive Compensation.

The following table sets forth the overall compensation earned over the fiscal years ended December 31, 2013 and 2012 by (1) each person who served as the principal executive officer of the Company or its subsidiary during fiscal year 2013; (2) our most highly compensated (up to a maximum of two) executive officers as of December 31, 2013 with compensation during fiscal year ended 2013 of $100,000 or more; and (3) those two individuals, if any, who would have otherwise been in included in section (2) above but for the fact that they were not serving as an executive of us as of December 31, 2013.

  
Fiscal
Year
  
Salary
($)
  
Bonus
($)
  
Stock
Awards
($)
  
Options
Awards
($)(1)
 
Non-Equity
Incentive Plan
Compensation ($)
Non-quali-
fied
Deferred
Compensation
Earnings ($)
All Other
Compen-
sation
($) (2)(3)
Total ($)
                    
Morry F. Rubin
  
2012
  
$
1.00 
  
$
-0-
  
$
-0-
  
$
21,000 
  
$
-0-
  
$
-0-
  
$
18,000
  $
39,001
 
Chief Executive Officer (4)  2013  $67,308  $-0-  $-0-  $-0-  $-0-  $-0-  $18,000  $85,308 
                                     
Brad Bernstein
  
2012
  
$
240,000
  
$
20,021
  
$
-0-
  
$
39,000 
  
$
-0-
  
$
-0-
  
$
12,000
  $
311,021
 
President  2013  $ 240,000  $-0-  $-0-  $-0-  $-0-  $-0-  $12,000  $252,000 
________________
(1)Topic 718 requires the company to determine the overall full grant date fair value of the restricted stock awards and options as of the date of grant based upon the Black-Scholes method of valuation which total amounts are set forth in the table above under the year of grant, and to then expense that value over the service period over which the restricted stock awards and options become vested.  As a general rule, for time-in-service-based restricted stock awards and options, the company will immediately expense any restricted stock awards and option or portion thereof which is vested upon grant, while expensing the balance on a pro rata basis over the remaining vesting term of the restricted stock awards and options.  For a description Topic 718 and the assumptions used in determining the value of the restricted stock awards and options under the Black-Scholes model of valuation, see the notes to the consolidated financial statements included with this Form 10-K/A.
(2)Includes all other compensation not reported in the preceding columns, including (i) perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is less than $10,000; (ii) any “gross-ups” or other amounts reimbursed during the fiscal year for the payment of taxes; (iii) discounts from market price with respect to securities purchased from the company except to the extent available generally to all security holders or to all salaried employees; (iv) any amounts paid or accrued in connection with any termination (including without limitation through retirement, resignation, severance or constructive termination, including change of responsibilities) or change in control; (v) contributions to vested and unvested defined contribution plans; (vi) any insurance premiums paid by, or on behalf of, the company relating to life insurance for the benefit of the named executive officer; and (vii) any dividends or other earnings paid on stock or option awards that are not factored into the grant date fair value required to be reported in a preceding column.
(3)       Includes compensation for service as a director described under Director Compensation, below.
(4)       Does not include monies paid to Mr. Rubin on an investment in the Company as described under "Item 13".

For a description of the material terms of each named executive officers’ employment agreement, including the terms of any contract, agreement, plan or other arrangement that provides for any payment to a named executive officer in connection with his or her resignation, retirement or other termination, or a change in control of the company see section below entitled “Employment Agreements.”
No outstanding common share purchase option or other equity-based award granted to or held by any named executive officer in 2013 were repriced or otherwise materially modified, including extension of exercise periods, the change of vesting or forfeiture conditions, the change or elimination of applicable performance criteria, or the change of the bases upon which returns are determined, nor was there any waiver or modification of any specified performance target, goal or condition to payout.
5

Executive Officer Outstanding Equity Awards At Fiscal Year-End
The following table provides certain information concerning any common share purchase options, stock awards or equity incentive plan awards held by each of our named executive officers that were outstanding, exercisable and/or vested as of December 31, 2013.

  Option Awards Stock Awards 
Name 
Number
 of
Securities
Under-
lying
Unexer-
cised
Options
(#)
Exercis-
able
  
Number 
of
Securities
Underly-
ing
Unexe-
rcised
Options
(#)
Unexercisable
  
Equity
Incentive Plan
Awards:
Number 
of
Securities
Underly-
ing
Unexer-
cised
Unearned
Options 
(#)
  
Option
Exercise
Price ($)
 
Option
Expiration
Date 
 
Number 
of
Shares or
Units of
Stock 
That
Have Not
Vested 
(#)
  
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
  
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That 
Have
Not
Vested
  
Equity
Incentive Plan
Awards:
Market or
Payout 
Value 
Of Unearned
Shares, 
Units 
Or Other 
Rights
That 
Have Not
Vested
 
Morry F. Rubin
  
650,000
   
- 0 -
   
-0-
   
1.25
 
01/31/2017
  
-0-
   
N/A
   
-0-
   
N/A
 
Morry F. Rubin
  
250,000
   
- 0 -
   
-0-
   
0.62
 
03/23/2019
  
-0-
   
N/A
   
-0-
   
N/A
 
Morry F. Rubin
  
250,000
   
- 0 -
   
-0-
   
0.17
 
03/20/2022
  
-0-
   
N/A
   
-0-
   
N/A
 
Brad Bernstein
  
950,000
   
- 0 -
   
-0-
   
1.25
 
01/31/2017
  
-0-
   
N/A
   
-0-
   
N/A
 
Brad Bernstein
  
250,000
   
- 0 -
   
-0-
   
0.62
 
03/23/2019
  
-0-
   
N/A
   
-0-
   
N/A
 
Brad Bernstein
  
250,000
   
- 0 -
   
-0-
   
0.17
 
03/20/2022
  
-0-
   
N/A
   
-0-
   
N/A
 
                                  
Each of the following executive officers is a party to an employment agreement with the Company.
NamePosition
2014
Annual 
Salary(1)
2014
Bonus (2)
Morry F. Rubin
Chief Executive Officer
$
125,000 (1)
None.
Brad Bernstein
President
$
240,000 (2)
None.
____________
N/A – Not applicable.

(1)On August 8, 2013, the Board agreed to modify M. Rubin’s employment agreement and approved an annual salary of $125,000. Previously, M. Rubin received an annual salary of $1.00. M. Rubin is eligible to receive periodic review of his base salary.
(2)The Company pays Mr. Bernstein a fixed base salary of $240,000. The Board may periodically review Mr. Bernstein’s Base Salary and may determine to increase (but not decrease) the Base Salary, in accordance with such policies as the Company may hereafter adopt from time to time, if it deems appropriate. The Board approved an annual bonus program for Mr. Bernstein commencing with the 2012 fiscal year and ending with the 2013 fiscal year. The annual bonus was equal to 5% of annual net income provided net income is equal to or greater than $200,000. The bonus was calculated on the Company’s audited GAAP financial statements.
6


On January 31, 2007, we entered into an employment agreement with Morry F. Rubin (“M. Rubin”) to retain his services as Co-chairman and Chief Executive Officer. We also entered into an employment agreement to retain the services of Brad Bernstein (“Bernstein”) as President. The following summarizes the employment agreements of M. Rubin and Bernstein, who are individually referred to as “Executive” and collectively as “Executives.”

·Each Executive shall receive a base salary and bonuses as described above. M. Rubin and Bernstein shall be entitled to a monthly automobile allowance of $1,500 and $1,000, respectively;

·M. Rubin and Bernstein were granted on January 31, 2007 10-year options to purchase 650,000 and 950,000 shares, respectively, exercisable at $1.25 per share, pursuant to the Company’s 2007 Omnibus Equity Compensation Plan.   All options granted to them have vested.

·The Agreement shall be automatically renewed for additional one year terms unless either party notifies the other, in writing, at least 60 days prior to the expiration of the term, of such party’s intention not to renew the Agreement. On December 2, 2013, each Agreement renewed for one additional year through the close of business on January 31, 2015;

·Mr. Bernstein is required to devote his full business time and efforts to the business and affairs of the Company. Mr. Rubin is required to devote to the Company, such time is necessary for the performance of his duties. Each executive shall be entitled to indemnification to the full extent permitted by law. Each executive is subject to provisions relating to non-compete, non-solicitation of employees and customers during the term of the Agreement and for a specified period thereafter (other than for termination without cause or by the Executive for good reason).

·Each Executive shall be entitled to participate in such Executive benefit and other compensatory or non-compensatory plans that are available to similarly situated executives of the Company and shall be entitled to be reimbursed for up to $25,000 of medical costs not covered by the Company’s health insurance per year.
·The Company shall, to the extent such benefits can be obtained at a reasonable cost, provide the Executive with disability insurance benefits of at least 60% of his gross Base Salary per month; provided that for purposes of the foregoing, prior to the date on which M. Rubin’s Base Salary was adjusted above $1.00 as described above, M. Rubin’s Base Salary shall be deemed to be $300,000. In the event of the Executive’s Disability, the Executive and his family shall continue to be covered by all of the Company’s Executive welfare benefit plans at the Company’s expense, to the extent such benefits may, by law, be provided, for the lesser of the term of such Disability and 24 months, in accordance with the terms of such plans; and

·The Company shall, to the extent such benefits can be obtained at a reasonable cost, provide the Executive with life insurance benefits in the amount of at least $500,000. In the event of the Executive’s death, the Executive’s family shall continue to be covered by all of the Company’s Executive welfare benefit plans, at the Company’s expense, to the extent such benefits may, by law, be provided, for 12 months following the Executive’s death in accordance with the terms of such plans.

Termination of Employment. 

Each Executive’s employment with the Company may be terminated by mutual agreement. The following description summarizes the severance pay (exclusive of base salary, car allowances and benefits due up to the date of termination), if any, of each Executive in the event of termination (other than by mutual agreement) and the treatment of each Executive’s options:

Termination for Cause.  In the event of any termination for cause (as defined in the agreement), the Executive shall not receive any severance pay and any and all stock options granted to the Executive shall terminate according to their terms of grant with any such vested options being exercisable for the shorter of (i) 90 days from the date of termination and (ii) the exercise term of each relevant option grant.

Termination for Disability or Death.  In the event of termination for disability (as defined in the agreement) or death, Executive shall receive all bonuses then earned, six months severance pay in the case of death, and the acceleration of certain options.  Such options may be exercised for the longer of (i) 12 months from the date of the date of termination and (ii) the exercise term of each relevant option grant.

Termination without Cause. The Executive's employment with the Company may be terminated by the Company, in the absence of Cause and by Executive for Good Reason (as defined in the agreement). In such event, Executive shall receive 12 months severance pay, targeted bonuses, continuation of certain benefits and full vesting of all options. Such options may be exercised for the longer of (i) 12 months from the date of termination and (ii) the exercise term of each relevant option grant.

Voluntary Resignation. The Executive’s employment with the Company may be terminated by the Executive without Good Reason. In such event, the Executive shall not receive any severance pay and unless termination occurs in the first year of employment, all vested options shall be retained by the Executive for the full exercise term of each relevant option.

7


Option Grants.

Messrs. M. Rubin and Bernstein are each eligible to receive stock options and other compensation as determined at the discretion of the board. See “Executive Officer Outstanding Equity Awards at Fiscal Year-End” above for a description of outstanding options granted to Messrs. M. Rubin and Bernstein as of December 31, 2013.

Review of Risks Arising from Compensation Policies and Practices

We have reviewed our compensation policies and practices for all employees and concluded that any risks arising from our policies and practices are not reasonably likely to have a material adverse effect on the Company.

DIRECTOR COMPENSATION
Cash Fees and Options

Currently the Company has no audit, compensation, corporate governance, nominating or other committee ofMay 17, 2023, the Board of Directors although it intendsauthorized a share repurchase program to establish an audit, compensation and corporate governance committee in the near future. The chairman of each committee that is formed by us at a later date will be entitledacquire up to an annual fee of $6,500 and each non-executive director will receive an annual fee of $6,500 as a member$2 million of the Board, a feeCompany’s common stock. The Company may purchase common stock on the open market, through privately negotiated transactions, or by other means including through the use of $1,000 per Board or Committee meeting (or consenttrading plans intended to qualify under Rule 10b-18 under the Securities Exchange Act of 1934, as amended, in lieuaccordance with applicable securities laws and other restrictions. The timing and total amount of a meeting),stock repurchases will depend upon business, economic and an activity fee of $1,000 per day for services rendered by the Board member. George Rubin is receiving the same healthmarket conditions, corporate and dental insurance benefits as those provided to our executive officers to the extent permitted by the rulesregulatory requirements, prevailing stock prices, and regulations applicable thereto and an additional medical reimbursement of up to $25,000 per annum. Members of the Board of Directors are eligible to participate under one or more of our company’s stock option plan(s). On January 31, 2007, we established a stock option plan and granted non-statutory stock options to purchase 950,000, shares and 650,000 shares to Brad Bernstein and Morry F. Rubin, respectively, exercisable at $1.25 per share. These optionsother considerations. The share repurchase program will have a term of ten years18 months and vest one-third onmay be suspended or discontinued at any time and does not obligate the date of grant, one-third on February 29, 2008 and one-third on February 28, 2009. On March 23, 2009, we granted non-statutory stock optionscompany to purchase 250,000 shares to each of Rubin and Bernstein, exercisable at $0.62 per share; these options have a term of 10 years and vested on the date of grant. On March 20, 2012, we granted non-statutory stock options to purchase 250,000 shares to each of Rubin and Bernstein, exercisable at $0.17 per share; these options have a term of 10 years and vested. On June 14, 2012, we granted Paul B. Healy options to purchase 180,000 shares, exercisable at $0.25 per share from the vesting date through June 14, 2022, with one-third vesting on June 14, 2012, one third vesting on June 14, 2013 and the remaining one-third vesting on June 14, 2014.  In the event that a director is no longer serving on the Board of Directors, the director has 90 days to exercise all vested options. Equity incentive awards and cash payments to directors will be determined in the sole discretion of the Board and/or compensation committee of the Board at such times and in such amounts as the Board or a committee thereof determines to make such awards.

Travel Expenses
All directors shall be reimbursed for their reasonable out of pocket expenses associated with attending the meetings.

2013 Compensation
The following table shows the overall compensation earned for the 2013 fiscal year with respect to each non-employee and non-executive directors of the Company as of December 31, 2013.

  DIRECTOR COMPENSATION 
 
Name and
Principal
Position
 
Fees
Earned
or Paid
in Cash
($)
  
Stock
Awards 
($) (1)
  
Option
Awards ($)
(1)
  
Non-Equity
Incentive Plan
Compensation
($) (2)
  
Nonqualified
Deferred
Compensation
Earnings ($)
  
All Other
Compensation
 ($) (3)
  Total ($) 
Paul B. Healy, Director
 
$
10,500
  
$
-0-
  
$
-0-
  
$
-0-
  
$
-0-
  
$
-0-
  
$
10,500
 
                             
George Rubin, Director (4)
 
$
10,500
  
$
-0-
  
$
-0-
  
$
-0-
  
$
-0-
  
$
6,822
  
$
17,322
 

8

(1)Topic 718 requires the company to determine the overall full grant date fair market value of the restricted stock awards and the options as of the date of grant based upon the Black-Scholes method of valuation which total amounts are set forth in the table above under the year of grant, and to then expense that value over the service period over which the restricted stock awards and the options become exercisable vested.  As a general rule, for time-in-service-based restricted stock awards and options, the company will immediately expenseacquire any restricted stock award or option or portion thereof which is vested upon grant, while expensing the balance on a pro rata basis over the remaining vesting term of the restricted stock award and option.  For a description of Topic 718 and the assumptions used in determining the value of the restricted stock awards and options under the Black-Scholes model of valuation, see the notes to the consolidated financial statements included with this Form 10-SB/A.
(2)Excludes awards or earnings reported in preceding columns.
(3)Includes all other compensation not reported in the preceding columns, including (i) perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is less than $10,000; (ii) any “gross-ups” or other amounts reimbursed during the fiscal year for the payment of taxes; (iii) discounts from market price with respect to securities purchased from the company except to the extent available generally to all security holders or to all salaried employees; (iv) any amounts paid or accrued in connection with any termination (including without limitation through retirement, resignation, severance or constructive termination, including change of responsibilities) or change in control; (v) contributions to vested and unvested defined contribution plans; (vi) any insurance premiums paid by, or on behalf of, the company relating to life insurance for the benefit of the director; (vii) any consulting fees earned, or paid or payable; (viii) any annual costs of payments and promises of payments pursuant to a director legacy program and similar charitable awards program; and (ix) any dividends or other earnings paid on stock or option awards that are not factored into the grant date fair value required to be reported in a preceding column.
(4)All other compensation includes the payment of health insurance which is not provided to other non-employee directors.  Mr. Rubin's compensation excludes monies earned as an investor.  See "Item 13" for a description of certain transactions involving George Rubin.
Indemnification; Director and Officer Liability Insurance.

The Company has agreed to indemnify (and advance the costs of defense of) each director (and his legal representatives) to the fullest extent permitted by the laws of the state in which the Company is incorporated, as in effect at the time of the subject act or omission, or by the Certificate of Incorporation and Bylaws of the Company, whichever affords greater protection to each director, and both during and after termination (for any reason). The Company shall cause each director to be covered under a directors and officers' liability insurance policy for his acts (or non-acts) as an officer or director of the Company or any of its affiliates. Such policy shall be maintained by the Company at its expense in an amount of at least $5 million during the term each director serves the Company (including the time periodcommon stock. The objective of coverage after each director’s service terminates for any reason whatsoever).

In the event of any litigation or other proceeding between the Company and a director with respectthis program is to enforcement of a director’s rights to indemnification and director and officer liability insurance and such litigation or proceeding results in final judgment or order in favor of the Director, which judgment or order is substantially inconsistent with the positions asserted by the Company in such litigation or proceeding, the losing party shall reimburse the prevailing party for all of his/its reasonable costs and expenses relating to such litigation or other proceeding, including, without limitation, his/its reasonable attorneys' fees and expenses.

2007 Omnibus Equity Compensation Plan
On January 31, 2007, the Board adopted our 2007 Omnibus Equity Compensation Plan (the “Plan”), with 2,100,000 common shares authorized for issuance under the Plan.  In October 2009 the Company's stockholders approved an increase in the number of shares covered by the Plan to 4,200,000 shares.
9


The following table shows the amounts that have been granted under the Plan as of December 31, 2013:


2007 Omnibus Equity Compensation Plan 
Name and Position Dollar Value ($)  Number of Options 
  (1)    
Morry R. Rubin, Chief Executive Officer (2)
  
115,250
   
1,150,000
 
         
Brad Bernstein, President (2)
  
115,250
   
1,450,000
 
         
Executive Group (two persons) (2)
  
230,500
   
2,600,000
 
         
Non-Executive Director Group (one person) (2)
  
68,400
   
180,000
 
         
Non-Executive Officer Employee Group
  
17,110
   
225,000
 
    ______________

 (1)The dollar value of these options is based upon the fair market value of our common stock as of the close of business on December 31, 2013 of $.63 per share, less the exercise price of each respective option.

(2)We have a stock option plan covering 4,200,000 shares and granted non-statutory stock options to purchase 950,000, shares and 650,000 shares to Brad Bernstein and Morry F. Rubin, respectively, exercisable at $1.25 per share. These options have a term of ten years and vest one-third on the date of grant, one-third on February 29, 2008 and one-third on February 28, 2009. On March 23, 2009, we granted non-statutory stock options to purchase 250,000 shares to each of Rubin and Bernstein, exercisable at $0.62 per share; these options have a term of 10 years and vested on the date of grant. On March 20, 2012, we granted non-statutory stock options to purchase 250,000 shares to each of Rubin and Bernstein, exercisable at $0.17 per share; these options have a term of 10 years and vested.  On June 14, 2012, we granted Paul B. Healy options to purchase 180,000 shares, exercisable at $0.25 per share from the vesting date through June 14, 2022, with one-third vesting on June 14, 2012, one third vesting on June 14, 2013 and the remaining one-third vesting on June 14, 2014.
The following is a summary of the material features of the Plan:
Shares Subject to the Plan

The maximum number ofrepurchases shares of common stock with respect to which awards may be made under the Plan is 4,200,000.  In the event of any stock split, reverse stock split, stock dividend, recapitalization, reclassification or other similar event or transaction, the Compensation Committee will make such equitable adjustments to the number, kind and price of shares subject to outstanding grants and to the number of shares available for issuance under the Plan as it deems necessary or appropriate. Shares subject to forfeiture, cancelled or expired awards granted under the Plan will again become available for issuance under the Plan. In addition, shares surrendered in payment of any exercise price or in satisfaction of any withholding obligation arising in connection with an award granted under the Plan will again become available for issuance under the Plan.
Administration
A committee of two or more directors appointed by the Board will administer the Plan (the “Committee”); however, until the Committee is appointed, the Board administers the Plan. The Committee interprets the Plan, selects award recipients, determines the number of shares subject to each award and establishes the price, vesting and other terms of each award. While there are no predetermined performance formulas or measures or other specific criteria used to determine recipients of awards under the Plan, awards are based generally upon consideration of the grantee's position and responsibilities, the nature of services provided, the value of the services to us, the present and potential contribution of the grantee to our success, the anticipated number of years of service remaining and other factors which the Board or the Committee deems relevant.

Eligibility

Employees, directors, consultants and other service providers of our Company and its affiliates are eligible to participate in the Plan, provided; however, that only employees of our Company are eligible to receive incentive stock options. Other than consultants and other service providers, the number of currently eligible employees in the Plan is five. The maximum number of shares that are the subject of grants made under the Plan to any individual during any calendar year may not exceed 1,000,000 shares, subject to certain adjustments. A participant in the Plan may not accrue dividend equivalents during any calendar year in excess of $500,000.
10


Amendment and Termination of Plan

The Board may amend, alter or discontinue the Plan at any time; provided, however,opportunistically when management believes that the Board may not amendCompany’s stock is trading below the Plan without stockholder approval if such approval is required in order to comply with the Code or applicable laws or to comply with applicable stock exchange requirements.Company’s determination of long-term fair value. The Plan will terminate on the day immediately preceding the tenth anniversary of the Plan’s effective date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the stockholders.

Grants

Grants made under the Plan may consist of incentive stock options, non-qualified stock options, stock appreciation rights or “SARs”, stock awards, stock unit awards, dividend equivalents and other stock-based awards. Each grant is subject to the terms and conditions set forth in the Plan and to those other terms and conditions specified by the Committee and memorialized in a written grant agreement between our Company and grant recipient (the “Grant Instrument”).

Stock Options

The Plan permits the grant of incentive stock options (“ISOs”) to our employees and the employees of our subsidiaries. The Plan also provides for the grant of non-qualified stock options (“NQSOs”) to our employees, directors, and consultants and other individuals who perform services for us (as well as to employees, directors, consultants and service providers of our subsidiaries). The exercise price of any stock option granted under the Plan will be equal to or greater than the fair market value of such stock on the date the option is granted, provided, however, that the exercise price of any incentive stock options granted under the Plan to an employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of our stock or any parent or subsidiary of us, may not be less than 110% of the fair market value of our common stock on the date of grant. Generally, payment of the option price may be made (i) in cash, (ii) with the Committee’s consent, by approval of the Committee, by delivering shares of Company Stock owned by the Optionee (including Company Stock acquired in connection with the exercise of an Option, subject to such restrictions as the Committee deems appropriate) and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation (on a form prescribed by the Committee) to ownership of shares of Company Stock having a Fair Market Value on the date of exercise equal to the Exercise Price, (iii) through a broker in accordance with applicable laws, or (iv) with a combination of cash and shares. The participant must pay the option price and the amount of withholding tax due, if any, at the time of exercise. Shares of common stock will not be issued or transferred upon exercise of the option until the option price and the withholding obligation are fully paid.

Under the Plan, each option is exercisable at such time and to such extent as specified in the pertinent Grant Instrument between our Company and the option recipient. However, no option shall be exercisable with respect to any shares of common stock more than ten years after the date of grant of such award (except as otherwise determinedwhen repurchased by the Committee with respectCompany will become treasury shares.

The Company purchased under the share repurchase program 164,029 shares of common stock for a net cost of $166,757 for the year ended December 31, 2023.

17. SUBSEQUENT EVENTS 

On March 27, 2024, the Company refinanced all the obligations under the Credit Agreement owed to non-incentive options)the Administrative Agent and no incentive stock option that is granted to an employee, who at the time of grant, owns stock possessing more than 10%Lenders, and all liens held by any of the total combined voting powerLenders, or the Administrative Agent were discharged and released. The Administrative Agent, the Lenders and the Company terminated the Credit Agreement.

On March 27, 2024, FlexShopper, through a wholly-owned subsidiary (“Borrower”), entered into a new credit agreement (the “2024 Credit Agreement”) with Computershare Trust Company, National Association as paying agent, various lenders from time to time party thereto and Powerscourt Investment 50, LP, an affiliate of all classesWaterfall Asset Management, LLC, as administrative agent and lender (“Lender”). The Borrower is permitted to borrow funds under the 2024 Credit Agreement based on FlexShopper’s cash on hand and the Amortized Order Value of stock of our Company, or any parent or subsidiary of ours, may be exercised more than five years from the date of grant. Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with the applicable securities laws, according toits Eligible Leases (as such terms asare defined in the Committee may determine; provided that2024 Credit Agreement) less certain deductions described in the Grantee receives no consideration for2024 Credit Agreement. Under the transferterms of an Option and the transferred Option shall continue to be2024 Credit Agreement, subject to the same termssatisfaction of certain conditions, the Borrower may borrow up to $150,000,000 from the Lender until the Commitment Termination Date and conditions as were applicable to the Option immediately before the transfer.


Effects of Termination of Service with our Company

Generally, unless provided otherwise in the Grant Instrument, the right to exercise any option or SAR (described below) terminates ninety (90) days following termination of the participant’s relationship with the Company for reasons other than death, disability or termination for “cause” as defined in the Plan. If the participant’s relationship with us terminates due to death or disability, unless provided otherwise in the Grant Instrument, the right to exercise an option or SAR will terminate the earlier ofmust repay all borrowed amounts one year following such termination or the original expiration date. If the participant’s relationship with us is terminated for “cause” any option or SAR not already exercised will automatically be forfeited as ofthereafter, on the date that is 12 months following the Commitment Termination Date (unless such termination.

Stock Awards

We may issue awards of our common stockamounts become due or payable on an earlier date pursuant to the terms of the Plan. A stock awardCredit Agreement). The Commitment Termination Date is April 1, 2026. The Lender was granted a security interest in certain leases and loans as collateral under this Agreement. The interest rate charged on amounts borrowed is SOFR plus 9% per annum. The Company will pay the Lender a fee in an amount equal to 1% of the aggregate Commitments as of March 27, 2024, payable in 12 monthly installments on each interest payment date commencing April 2024.

The 2024 Credit Agreement provides that FlexShopper may be issued for consideration or for no considerationnot incur additional indebtedness (other than expressly permitted indebtedness) without the permission of the Lender and may be subjectalso prohibits payments of cash dividends on common stock. Additionally, the 2024 Credit Agreement includes covenants requiring FlexShopper to maintain a minimum amount of Equity Book Value, maintain a minimum amount of liquidity and cash and maintain a certain restrictions and riskratio of forfeiture (suchConsolidated Total Debt to Equity Book Value (each capitalized term, as the completion of a period of service or attainment of a performance goal) as determined by the Committee and set forthdefined in the Grant Instrument governing the stock award. If2024 Credit Agreement). Upon a participant’s employment terminates before the vesting condition is fulfilled, the shares will be forfeited. While the shares remain unvested, a participant may not sell, assign, transfer, pledge or otherwise disposePermitted Change of the shares. Unless otherwise determined by the Committee, a stock award entitles the participant to all of the rights of a stockholder of our Company, including the right to vote the shares and the right to receive any dividends thereon.


11

Stock Units

The Plan provides for the grant of stock units to employees, non-employee directors, or consultants or other individuals who perform services for us, subject to any terms and conditions, including the fulfillment of specified performance goals or other conditions, as may be established by the Committee. Each stock unit represents one hypothetical share of common stock and the right of the grantee to receive an amount based on the value of a share of our common stock. Payments with respect to stock units may be made in cash or in shares of common stock, or in combination of the two as determined by the appointed committee.

Stock Appreciation Rights

The Plan also provides for the grant of SARs, either alone or in tandem with stock options. An SAR entitles its holder to a cash payment of the excess of the fair market value of our common stock on the date of exercise, over the fair market value of our common stock on the date of grant. An SAR issued in tandem with a stock option will have the same terms as the stock option. The terms of an SAR granted alone, without an option, will be established by the Committee,Control (as defined in the Grant Instrument governing2024 Credit Agreement), FlexShopper must refinance the SAR.

Other Stock-Based Award

The Committee may grant other stock-based awards, other than those described herein, that are based on, measured by or payable in shares of common stock on such terms and conditions asdebt under the Committee may determine. Such awards may be2024 Credit Agreement, subject to the achievementpayment of performance goalsan early termination fee.

The 2024 Credit Agreement includes customary events of default, including, among others, failures to make payment of principal and interest, breaches or other conditionsdefaults under the terms of the 2024 Credit Agreement and may be payablerelated agreements entered into with the Lender, breaches of representations, warranties or certifications made by or on behalf of FlexShopper in cash, shares of common stock or any combination of cashthe 2024 Credit Agreement and shares of common stock asrelated documents (including certain financial and expense covenants), deficiencies in the Committee shall determine.borrowing base, certain judgments against FlexShopper and bankruptcy events.


Dividend Equivalents


The Committee may grant dividend equivalents in connection with grants under the Plan. Dividend equivalents may be paid currently or accrued as contingent cash obligations and may be payable in cash or shares of common stock, and upon such terms as the appointed committee may establish, including the achievement of specific performance goals.

Change of Control of the Company
In the event of a Change of Control, as that term is defined in the Plan, of our Company, the Committee has discretion to, among other things, accelerate the vesting of outstanding grants, cashout outstanding grants or exchange outstanding grants for similar grants of a successor company. A Change of Control of our Company will be deemed to have taken place upon:
the acquisition by any person of direct or indirect ownership of securities representing more than 50% of the voting power of our then outstanding stock;
a consolidation or merger of our Company resulting in the stockholders of the Company immediately prior to such event not owning at least a majority of the voting power of the resulting entity’s securities outstanding immediately following such event;
the sale of substantially all of our assets; or
the liquidation or dissolution of our Company.


12

PART IV


Item 15. Exhibits and Financial Statement Schedules.


(a)

Financial Statements

The following documents are filed under “Item 8. Financial Statements and Supplementary Data” and are included as part of this Form 10-K/A as the financial statements of the Company for the years ended December 31, 2013 and 2012:A:


Report of Independent Registered Public Accounting Firms
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statement of Stockholders’ Equity
Consolidated Statement of Cash Flows
Consolidated Notes to Financial Statements

13

Exhibits

(1) Exhibits: The following is a list of exhibits are all previously filed in connection with our Form 10-SB, as amended, unless otherwise noted.a part of this 10K-A:

 2.1
Exhibit Number
Exchange Agreement
Description
 3.1
31.1
Certificate of Incorporation-BTHC,INC.
 3.2
Certificate of Merger of BTHC XI, LLC into BTHC XI, Inc.
 3.3
Certificate of Amendment
 3.4
Designation of Rights and Preferences-Series 1 Convertible Preferred Stock
 3.5
Amended and Restated By-laws
 4.1
Form of Placement Agent Warrant issued to Fordham Financial Management
 10.1
Directors’ Compensation Agreement-George Rubin
 10.2
Employment Contract-Morry F. Rubin
 10.3
Employment Contract-Brad Bernstein
 10.4
Agreement-Line of Credit
 10.5
Fordham Financial Management-Consulting Agreement
 10.6
Facilities Lease – Florida
 10.7
Facilities Lease – North Carolina
10.8
Loan and Security Agreement (1)
10.9
Revolving Note (1)
10.10
Debt Subordination Agreement (1)
10.11
Guaranty Agreement (Morry Rubin) (1)
10.12
Guaranty Agreement (Brad Bernstein)(1)
10.13
Continuing Guaranty Agreement (1)
10.14
Pledge Agreement (1)
10.16
Asset Purchase Agreement between the Company and Brookridge Funding LLC (2)
10.17
Senior Credit Facility between the Company and MGM Funding LLC  (2)
10.18
Senior Credit Facility Guarantee - Michael P. Hilton and John A. McNiff III  (4)
10.19
Employment Agreement - Michael P. Hilton  (4)
10.20
Employment Agreement - John A. McNiff  (4)
10.21
Accounts Receivable Credit Facility with Greystone Commercial Services LP  (3)
10.22
Memorandum of Understanding - Re: Rescission Agreement(5)
10.23
Rescission Agreement and Exhibits Thereto (5)
10.24
Termination Agreement by and between Brookridge Funding Services LLC and MGM Funding LLC.(5)
10.25
First Amendment to Factoring Agreement (6)
10.26
Promissory Note dated April 26, 2011 between Anchor Funding Services, Inc. and MGM Funding, LLC (7)
10.27
Rediscount Facility Agreement with TAB Bank (8)
10.28
Form of Validity Warranty to TAB Bank (8)
10.29
Amendment to Employment Agreement of Morry F. Rubin (9)
21.21
Subsidiaries of Registrant listing state of incorporation (4)
32.1
101.INSInline XBRL Instance Document.*
99.1
101.SCH
2007 Omnibus Equity Compensation Plan
99.2
Form of Non-Qualified Option under 2007 Omnibus Equity Compensation Plan
99.3
Amendment to 2007 Omnibus Equity Compensation Plan increasing the Plan to 4,200,000 shares (9) 
99.4
Press Release – Year End Results of Operations (10)
101.INS
XBRL Instance Document,Inline XBRL Taxonomy Extension Schema Document.*
101.SCH
101.CAL
Document,
Inline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.CAL
101.DEF
Calculation Linkbase,
Inline XBRL Taxonomy Extension Definition Linkbase Document.*
101.DEF
101.LAB
Linkbase,
Inline XBRL Taxonomy Extension Labels Label Linkbase Document.*
101.LAB
101.PRE
Linkbase,
Inline XBRL Taxonomy Extension Presentation Linkbase Document.*
101.PRE
104
Presentation Linkbase *
 
___________________
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).*

*
Filed herewith.

(1)  Incorporated by reference to the Registrant’s Form 8-K filed November 24, 2008 (date of earliest event November 21, 2008).
(2)  Incorporated by reference to the Registrant's Form 8-K filed December 8, 2009 (date of earliest event -December 4, 2009).
(3)  Incorporated by reference to the Registrant's Form 8-K filed December 2, 2009 (date of earliest event -November 30, 2009).
(4)  Incorporated by reference to the Registrant's Form 10-K for the fiscal year ended December 31, 2009.
(5)  Incorporated by reference to the Registrant's Form 8-K filed October 12, 2010 (date of earliest event -October 6, 2010).
(6)  Incorporated by reference to the Registrant's Form 10-K for the fiscal year ended December 31, 2010.
(7)  Incorporated by reference to the Registrant's Form 8-K filed April 28, 2011 (date of earliest event -April 26, 2011).
(8)  Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2011.
(9)  Incorporated by reference to Registrant’s Form 10-K for the fiscal year ended December 31, 2012.
(10)  Incorporated by reference to Registrant’s form 10-K for the fiscal year ended December 31, 2013.
(b)  Financial Statement Schedules
We are not filing any financial statement schedules as part of this Form 10-K/A because such schedules are either not applicable or the required information is included in the financial statements or notes thereto.

14

SIGNATURES



SIGNATURES

Pursuant to the requirements Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 FLEXSHOPPER, INC.
   
Dated: April 3, 2024By:/s/ Brad BernsteinH. Russell Heiser, Jr.
  Brad Bernstein, PresidentH. Russell Heiser, Jr.
  and Principal FinancialChief Executive Officer

2

Dated:  Boca Raton, Florida
April 25, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
 
SignaturesTitleDate
/s/ Brad BernsteinPresident andApril 25, 2014
Brad BernsteinPrincipal Financial Officer
/s/ Morry F. RubinPrincipal Executive OfficerApril 25, 2014
Morry F. RubinDirector and Co-Chairman of the Board
/s/ George RubinCo-Chairman of the BoardApril 25, 2014
George Rubin
/s/ Paul B. HealyDirectorApril 25, 2014
Paul B. Healy

 Morry F. Rubin, Brad Bernstein, George Rubin and Paul B. Healy represent all the current members of the Board of Directors.

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