Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 14, 2023 | |
Document Information Line Items | ||
Entity Registrant Name | FLEXSHOPPER, INC. | |
Trading Symbol | FPAY | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 21,752,304 | |
Amendment Flag | false | |
Entity Central Index Key | 0001397047 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Jun. 30, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-37945 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-5456087 | |
Entity Address, Address Line One | 901 Yamato Road | |
Entity Address, Address Line Two | Suite 260 | |
Entity Address, City or Town | Boca Raton | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33431 | |
City Area Code | (855) | |
Local Phone Number | 353-9289 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | ||
Cash | $ 6,372,699 | $ 6,051,713 |
Restricted cash | 6,285 | 121,636 |
Lease receivables, net | 39,227,399 | 35,540,043 |
Loan receivables at fair value | 25,105,046 | 32,932,504 |
Prepaid expenses and other assets | 3,068,559 | 3,489,136 |
Lease merchandise, net | 24,597,836 | 31,550,441 |
Total current assets | 98,377,824 | 109,685,473 |
Property and equipment, net | 8,830,978 | 8,086,862 |
Right of use asset, net | 1,324,953 | 1,406,270 |
Intangible assets, net | 14,276,231 | 15,162,349 |
Other assets, net | 1,832,175 | 1,934,728 |
Deferred tax asset, net | 13,471,568 | 12,013,828 |
Total assets | 138,113,729 | 148,289,510 |
CURRENT LIABILITIES: | ||
Accounts payable | 4,005,219 | 6,511,943 |
Accrued payroll and related taxes | 299,741 | 310,820 |
Promissory notes to related parties, including accrued interest | 1,207,798 | 1,209,455 |
Accrued expenses | 2,386,547 | 3,988,093 |
Lease liability - current portion | 228,358 | 208,001 |
Total current liabilities | 8,127,663 | 12,228,312 |
Loan payable under credit agreement to beneficial shareholder, net of unamortized issuance costs of $211,516 at June 30, 2023 and $352,252 at December 31, 2022 | 80,943,484 | 80,847,748 |
Promissory notes to related parties, net of unamortized issuance costs of $879,348 at June 30, 2023 and $0 at December 31, 2022 and net of current portion | 9,870,652 | 10,750,000 |
Promissory note related to acquisition, net of discount of $1,046,551 at June 30, 2023 and $1,165,027 at December 31, 2022 | 3,133,617 | 3,158,471 |
Loan payable under Basepoint credit agreement, net of unamortized issuance costs of $112,197 at June 30, 2023 | 7,300,408 | |
Purchase consideration payable related to acquisition | 8,703,684 | |
Lease liabilities, net of current portion | 1,447,788 | 1,566,622 |
Total liabilities | 110,823,612 | 117,254,837 |
STOCKHOLDERS’ EQUITY | ||
Common stock, $0.0001 par value - authorized 40,000,000 shares, issued and outstanding 21,752,304 shares at June 30, 2023 and 21,750,804 shares at December 31, 2022 | 2,176 | 2,176 |
Additional paid in capital | 41,602,734 | 39,819,420 |
Accumulated deficit | (37,118,453) | (31,590,583) |
Total stockholders’ equity | 27,290,117 | 31,034,673 |
Total liabilities and stockholders' equity | 138,113,729 | 148,289,510 |
Series 1 Convertible Preferred Stock | ||
STOCKHOLDERS’ EQUITY | ||
Convertible preferred stock value | 851,660 | 851,660 |
Series 2 Convertible Preferred Stock | ||
STOCKHOLDERS’ EQUITY | ||
Convertible preferred stock value | $ 21,952,000 | $ 21,952,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Loan payable under credit agreement to beneficial shareholder, net (in Dollars) | $ 211,516 | $ 352,252 |
Promissory notes to related parties, net of unamortized costs (in Dollars) | 879,348 | 0 |
Net of discount (in Dollars) | 1,046,551 | 1,165,027 |
Loan payable under Basepoint credit agreement to beneficial shareholder, net (in Dollars) | $ 112,197 | |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 21,752,304 | 21,750,804 |
Common stock, shares outstanding | 21,752,304 | 21,750,804 |
Series 1 Convertible Preferred Stock | ||
Convertible preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Convertible preferred stock, shares authorized | 250,000 | 250,000 |
Convertible preferred stock, shares issued | 170,332 | 170,332 |
Convertible preferred stock, shares outstanding | 170,332 | 170,332 |
Convertible Preferred Stock, stated value (in Dollars) | $ 5 | $ 5 |
Series 2 Convertible Preferred Stock | ||
Convertible preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Convertible preferred stock, shares authorized | 25,000 | 25,000 |
Convertible preferred stock, shares issued | 21,952 | 21,952 |
Convertible preferred stock, shares outstanding | 21,952 | 21,952 |
Convertible Preferred Stock, stated value (in Dollars) | $ 1,000 | $ 1,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenues: | ||||
Lease revenues and fees, net | $ 22,906,843 | $ 30,468,476 | $ 47,621,001 | $ 58,234,788 |
Loan revenues and fees, net of changes in fair value | 1,625,193 | 6,079,675 | 7,696,810 | 7,268,599 |
Total revenues | 24,532,036 | 36,548,151 | 55,317,811 | 65,503,387 |
Costs and expenses: | ||||
Depreciation and impairment of lease merchandise | 14,485,417 | 18,207,305 | 29,831,205 | 37,367,916 |
Loan origination costs and fees | 1,655,424 | 804,228 | 3,489,051 | 1,229,741 |
Marketing | 1,488,578 | 3,770,820 | 2,587,767 | 5,784,935 |
Salaries and benefits | 2,976,008 | 3,014,920 | 5,702,898 | 5,979,362 |
Operating expenses | 5,957,932 | 5,748,286 | 11,585,640 | 11,421,488 |
Total costs and expenses | 26,563,359 | 31,545,559 | 53,196,561 | 61,783,442 |
Operating (loss)/ income | (2,031,323) | 5,002,592 | 2,121,250 | 3,719,945 |
Interest expense including amortization of debt issuance costs | (4,568,557) | (2,347,838) | (9,099,884) | (4,305,906) |
(Loss)/income before income taxes | (6,599,880) | 2,654,754 | (6,978,634) | (585,961) |
Benefit from income taxes | 1,302,225 | 11,734,467 | 1,450,764 | 12,594,247 |
Net (loss)/ income | (5,297,655) | 14,389,221 | (5,527,870) | 12,008,286 |
Dividends on Series 2 Convertible Preferred Shares | (992,493) | (609,777) | (1,964,726) | (1,219,554) |
Net (loss)/ income attributable to common and Series 1 Convertible Preferred shareholders | $ (6,290,148) | $ 13,779,444 | $ (7,492,596) | $ 10,788,732 |
Basic and diluted (loss)/ income per common share: | ||||
Basic (in Dollars per share) | $ (0.22) | $ 0.63 | $ (0.34) | $ 0.49 |
Diluted (in Dollars per share) | $ (0.22) | $ 0.51 | $ (0.34) | $ 0.42 |
WEIGHTED AVERAGE COMMON SHARES: | ||||
Basic (in Shares) | 28,923,393 | 21,605,234 | 21,751,807 | 21,576,312 |
Diluted (in Shares) | 28,923,393 | 27,898,824 | 21,751,807 | 28,193,268 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) - USD ($) | Series 1 Convertible Preferred Stock | Series 2 Convertible Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2021 | $ 851,660 | $ 21,952,000 | $ 2,144 | $ 38,560,117 | $ (45,222,302) | $ 16,143,619 |
Balance (in Shares) at Dec. 31, 2021 | 170,332 | 21,952 | 21,442,278 | |||
Provision for compensation expense related to stock-based compensation | 305,229 | 305,229 | ||||
Exercise of stock options into common stock | $ 17 | 137,040 | 137,057 | |||
Exercise of stock options into common stock (in Shares) | 162,956 | |||||
Net income (Loss) | (2,380,935) | (2,380,935) | ||||
Balance at Mar. 31, 2022 | $ 851,660 | $ 21,952,000 | $ 2,161 | 39,002,386 | (47,603,237) | 14,204,970 |
Balance (in Shares) at Mar. 31, 2022 | 170,332 | 21,952 | 21,605,234 | |||
Balance at Dec. 31, 2021 | $ 851,660 | $ 21,952,000 | $ 2,144 | 38,560,117 | (45,222,302) | 16,143,619 |
Balance (in Shares) at Dec. 31, 2021 | 170,332 | 21,952 | 21,442,278 | |||
Net income (Loss) | 12,008,286 | |||||
Balance at Jun. 30, 2022 | $ 851,660 | $ 21,952,000 | $ 2,161 | 39,259,862 | (33,214,016) | 28,851,667 |
Balance (in Shares) at Jun. 30, 2022 | 170,332 | 21,952 | 21,605,234 | |||
Balance at Mar. 31, 2022 | $ 851,660 | $ 21,952,000 | $ 2,161 | 39,002,386 | (47,603,237) | 14,204,970 |
Balance (in Shares) at Mar. 31, 2022 | 170,332 | 21,952 | 21,605,234 | |||
Provision for compensation expense related to stock-based compensation | 257,476 | 257,476 | ||||
Net income (Loss) | 14,389,221 | 14,389,221 | ||||
Balance at Jun. 30, 2022 | $ 851,660 | $ 21,952,000 | $ 2,161 | 39,259,862 | (33,214,016) | 28,851,667 |
Balance (in Shares) at Jun. 30, 2022 | 170,332 | 21,952 | 21,605,234 | |||
Balance at Dec. 31, 2022 | $ 851,660 | $ 21,952,000 | $ 2,176 | 39,819,420 | (31,590,583) | 31,034,673 |
Balance (in Shares) at Dec. 31, 2022 | 170,332 | 21,952 | 21,750,804 | |||
Provision for compensation expense related to stock-based compensation | 420,748 | 420,748 | ||||
Exercise of stock options into common stock | 1,185 | 1,185 | ||||
Exercise of stock options into common stock (in Shares) | 1,500 | |||||
Net income (Loss) | (230,215) | (230,215) | ||||
Balance at Mar. 31, 2023 | $ 851,660 | $ 21,952,000 | $ 2,176 | 40,241,353 | (31,820,798) | 31,226,391 |
Balance (in Shares) at Mar. 31, 2023 | 170,332 | 21,952 | 21,752,304 | |||
Balance at Dec. 31, 2022 | $ 851,660 | $ 21,952,000 | $ 2,176 | 39,819,420 | (31,590,583) | 31,034,673 |
Balance (in Shares) at Dec. 31, 2022 | 170,332 | 21,952 | 21,750,804 | |||
Net income (Loss) | (5,527,870) | |||||
Balance at Jun. 30, 2023 | $ 851,660 | $ 21,952,000 | $ 2,176 | 41,602,734 | (37,118,453) | 27,290,117 |
Balance (in Shares) at Jun. 30, 2023 | 170,332 | 21,952 | 21,752,304 | |||
Balance at Mar. 31, 2023 | $ 851,660 | $ 21,952,000 | $ 2,176 | 40,241,353 | (31,820,798) | 31,226,391 |
Balance (in Shares) at Mar. 31, 2023 | 170,332 | 21,952 | 21,752,304 | |||
Provision for compensation expense related to stock-based compensation | 443,800 | 443,800 | ||||
Extension of warrants | 917,581 | 917,581 | ||||
Net income (Loss) | (5,297,655) | (5,297,655) | ||||
Balance at Jun. 30, 2023 | $ 851,660 | $ 21,952,000 | $ 2,176 | $ 41,602,734 | $ (37,118,453) | $ 27,290,117 |
Balance (in Shares) at Jun. 30, 2023 | 170,332 | 21,952 | 21,752,304 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss)/ income | $ (5,527,870) | $ 12,008,286 |
Adjustments to reconcile net (loss)/ income to net cash provided by/ (used in) operating activities: | ||
Depreciation and impairment of lease merchandise | 29,831,205 | 37,367,916 |
Other depreciation and amortization | 3,710,703 | 2,059,323 |
Amortization of debt issuance costs | 182,174 | 106,886 |
Amortization of discount on the promissory note related to acquisition | 118,476 | |
Compensation expense related to stock-based compensation | 864,548 | 562,705 |
Provision for doubtful accounts | 22,085,828 | 27,563,993 |
Interest in kind added to promissory notes balance | 113,509 | |
Deferred income tax | (1,457,740) | (12,561,074) |
Net changes in the fair value of loans receivables at fair value | 837,048 | (2,457,851) |
Changes in operating assets and liabilities: | ||
Lease receivables | (25,773,184) | (34,275,950) |
Loans receivables at fair value | 6,990,410 | (16,516,074) |
Prepaid expenses and other assets | 412,391 | (155,773) |
Lease merchandise | (22,878,600) | (32,562,799) |
Purchase consideration payable related to acquisition | 208,921 | |
Lease liabilities | (12,243) | (5,091) |
Accounts payable | (2,506,724) | (2,740,017) |
Accrued payroll and related taxes | (11,079) | 25,656 |
Accrued expenses | (1,603,202) | 1,794,983 |
Net cash provided by/ (used in) operating activities | 5,471,062 | (19,671,372) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment, including capitalized software costs | (3,114,534) | (2,924,537) |
Purchases of data costs | (343,428) | (762,704) |
Net cash used in investing activities | (3,457,962) | (3,687,241) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from loan payable under credit agreement | 2,750,000 | 17,800,000 |
Repayment of loan payable under credit agreement | (2,795,000) | (1,125,000) |
Repayment of loan payable under Basepoint credit agreement | (1,500,000) | |
Debt issuance related costs | (115,403) | (86,932) |
Proceeds from exercise of stock options | 1,185 | 137,057 |
Proceeds from promissory notes to related parties | 7,000,000 | |
Principal payment under finance lease obligation | (4,917) | (5,592) |
Repayment of purchase consideration payable related to acquisition | (143,330) | |
Repayment of installment loan | (5,605) | |
Net cash provided by/ (used in) financing activities | (1,807,465) | 23,713,928 |
INCREASE IN CASH and RESTRICTED CASH | 205,635 | 355,315 |
CASH and RESTRICTED CASH, beginning of period | 6,173,349 | 5,094,642 |
CASH and RESTRICTED CASH, end of period | 6,378,984 | 5,449,957 |
Supplemental cash flow information: | ||
Interest paid | 8,453,511 | 3,953,765 |
Noncash investing and financing activities | ||
Due date extension of warrants | $ 917,581 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2023 | |
Basis of Presentation [Abstract] | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION The unaudited condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim financial information. Accordingly, the information presented in the interim financial statements does not include all information and disclosures necessary for a fair presentation of FlexShopper, Inc.’s financial position, results of operations and cash flows in conformity with GAAP for annual financial statements. In the opinion of management, these financial statements reflect all adjustments consisting of normal recurring accruals, necessary for a fair statement of our financial position, results of operations and cash flows for such periods. The results of operations for any interim period are not necessarily indicative of the results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained in FlexShopper, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on April 24, 2023. The condensed consolidated balance sheet as of December 31, 2022 contained herein has been derived from audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain prior year/period amounts have been reclassified to conform to the current year presentation. |
Business
Business | 6 Months Ended |
Jun. 30, 2023 | |
Business [Abstract] | |
BUSINESS | 2. BUSINESS FlexShopper, Inc. (the “Company”) is a corporation organized under the laws of the State of Delaware in 2006. The Company owns 100% of FlexShopper, LLC, a North Carolina limited liability company, owns 100% of FlexLending, LLC, a Delaware limited liability company, and owns 100% of Flex Revolution, LLC, a Delaware limited liability company. The Company is a 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 Credit Agreement entered in March 2015 (see Note 8), FlexShopper 1 LLC and FlexShopper 2 LLC were organized as wholly owned Delaware subsidiaries of FlexShopper LLC to conduct operations. FlexShopper Inc, together with its subsidiaries, are hereafter referred to as “FlexShopper.” FlexShopper, LLC provides 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 leasing it to the 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation - Estimates - Segment Information Cash and Cash Equivalents – Restricted Cash – The reconciliation of cash and restricted cash is as follows: June 30, December 31, Cash $ 6,372,699 $ 6,051,713 Restricted cash 6,285 121,636 Total cash and restricted cash $ 6,378,984 $ 6,173,349 Revenue Recognition Lease Receivables and Allowance for Doubtful Accounts - June 30, December 31, Lease receivables $ 41,663,220 $ 48,618,843 Allowance for doubtful accounts (2,435,821 ) (13,078,800 ) Lease receivables, net $ 39,227,399 $ 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 $13,757,036 and $32,728,807 for the three and six months ended June 30, 2023, respectively, and $23,719,531 and $40,803,098 for the three and six months ended June 30, 2022, respectively. Six Months Year Ended Beginning balance $ 13,078,800 $ 27,703,278 Provision 22,085,828 57,420,480 Accounts written off (32,728,807 ) (72,044,958 ) Ending balance $ 2,435,821 $ 13,078,800 Lease Merchandise, net The net lease merchandise balances consisted of the following as of June 30, 2023 and December 31, 2022: June 30, December 31, Lease merchandise at cost $ 52,734,813 $ 62,379,920 Accumulated depreciation and impairment reserve (28,136,977 ) (30,829,479 ) Lease merchandise, net $ 24,597,836 $ 31,550,441 Loan receivables at fair value – 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 these receivables. The Company estimates the fair value of the loan 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 underlying 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 instrument, 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 was a loss of $1,252,600 and $837,048 for the three and six months ended June 30, 2023, respectively, and a gain of $2,981,275 and $2,457,851 for the three and six months ended June 30, 2022, respectively. Lease Accounting Three Months ended Six Months ended 2023 2022 2023 2022 Lease billings and accruals $ 32,501,656 $ 39,596,845 $ 66,756,740 $ 79,194,274 Provision for doubtful accounts (10,847,413 ) (15,732,876 ) (22,085,828 ) (27,563,993 ) Gain on sale of lease receivables 1,252,600 6,604,507 2,950,089 6,604,507 Lease revenues and fees $ 22,906,843 $ 30,468,476 $ 47,621,001 $ 58,234,788 Deferred Debt Issuance Costs - 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 $38,233 and $38,233 for the three and six months ended June 30, 2023, respectively, and $0 and $1,274 for the three and six months ended June 30, 2022, respectively. 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 $3,206 and $3,206 for the three and six months ended June 30, 2023, respectively. Intangible Assets – 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 locations 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 finite lives, tests for impairment must be performed if conditions exist that indicate the carrying amount may not be recoverable. Intangible assets amortization expense was $443,059 and $886,118 for the three and six months ended June 30, 2023, respectively, and $769 and $1,538 for the three and six months ended June 30, 2022, respectively. Property and Equipment - Software Costs Data Costs Capitalized data costs amounted to $174,346 and $343,428 for the three and six months ended June 30, 2023, respectively, and $469,650 and $762,704 for the three and six months ended June 30, 2022, respectively. Capitalized data costs amortization expense was $234,417 and $454,167 for the three and six months ended June 30, 2023, respectively, and $120,938 and $209,659 for the three and six months ended June 30, 2022, respectively. Capitalized data costs net of its amortization are included in the consolidated balance sheets in Other assets, net. Operating Expenses - Marketing Costs - Per Share Data - Basic earnings per common 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 total of the weighted average number of common shares outstanding during the period. Diluted earnings per share is 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 non-participating Series 2 Convertible Preferred Stock, options, performance share units and warrants. The dilutive effect of Series 2 Convertible Preferred Stock is computed using the if-converted method. The dilutive effect of options, performance share units and warrants are computed using the treasury stock method, which assumes the repurchase of common shares at the average market 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. June 30, 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 5,435,572 3,936,083 Common Stock Warrants 2,255,184 2,255,184 Performance Share Units 1,250,000 790,327 15,011,682 13,169,423 The following table sets forth the computation of basic and diluted earnings per common share for the six months ended June 30, 2023 and 2022: Six Months ended June 30, 2023 2022 Numerator Net (loss)/ income $ (5,527,870 ) $ 12,008,286 Series 2 Convertible Preferred Stock dividends (1,964,726 ) (1,219,554 ) Net (loss)/ income attributable to common and Series 1 Convertible Preferred Stock (7,492,596 ) 10,788,732 Net income attributable to Series 1 Convertible Preferred Stock - (124,057 ) Series 2 Convertible Preferred Stock dividends attributable to Series 1 Convertible Preferred Stock - 12,599 Net (loss)/ income attributable to common shares- Numerator for basic EPS (7,492,596 ) $ 10,677,274 Effect of dilutive securities: Series 2 Convertible Preferred Stock dividends - 1,219,554 Net (loss)/ income attributable to common shares after assumed conversions- Numerator for diluted EPS (7,492,596 ) 11,896,828 Denominator Weighted average of common shares outstanding- Denominator for basic EPS 21,751,807 21,576,312 Effect of dilutive securities: Series 2 Convertible Preferred Stock - 5,845,695 Series 1 Convertible Preferred Stock - 225,231 Common stock options and performance share units - 355,753 Common stock warrants - 190,277 Adjusted weighted average of common shares outstanding and assumed conversions- Denominator diluted EPS 21,751,807 28,193,268 Basic EPS $ (0.34 ) $ 0.49 Diluted EPS $ (0.34 ) $ 0.42 The following table sets forth the computation of basic and diluted earnings per common share for the three months ended June 30, 2023 and 2022: Three Months ended June 30, 2023 2022 Numerator Net (loss)/ income $ (5,297,655 ) $ 14,389,221 Series 2 Convertible Preferred Stock dividends (992,493 ) (609,777 ) Net (loss)/ income attributable to common and Series 1 Convertible Preferred Stock (6,290,148 ) 13,779,444 Net income attributable to Series 1 Convertible Preferred Stock - (148,457 ) Series 2 Convertible Preferred Stock dividends attributable to Series 1 Convertible Preferred Stock - 6,291 Net (loss)/ income attributable to common shares- Numerator for basic EPS (6,290,148 ) 13,637,278 Effect of dilutive securities: Series 2 Convertible Preferred Stock dividends - 609,777 Net (loss)/ income attributable to common shares after assumed conversions – Numerator for diluted EPS $ (6,290,148 ) $ 14,247,055 Denominator Weighted average of common shares outstanding- Denominator for basic EPS 28,923,393 21,605,234 Effect of dilutive securities Series 2 Convertible Preferred Stock - 5,845,695 Series 1 Convertible Preferred Stock - 225,231 Common stock options and performance share units - 222,664 Common stock warrants - - Adjusted weighted average of common shares outstanding and assumed conversions- Denominator for diluted EPS 28,923,393 27,898,824 Basic EPS $ (0.22 ) $ 0.63 Diluted EPS $ (0.22 ) $ 0.51 Stock-Based Compensation – Compensation expense for stock options is determined by reference to the fair value of an award on the date of grant and is recognized on a straight-line basis over the vesting period. The 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 Company utilizes the fair value option on its entire loan receivables portfolio purchased from its bank partner, for the portfolio acquired in the Revolution Transaction (See Note 14), and for the portfolio directly originated. Fair Value Measurements- ● 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 June 30, 2023 and December 31, 2022 is as follows: Fair Value Measurement Using Carrying Financial instruments – As of June 30, 2023 (1) Level 1 Level 2 Level 3 Amount Loan receivables at fair value $ - $ - $ 25,105,046 $ 46,133,615 Promissory note related to acquisition - - 3,133,617 3,133,617 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 loans payable under the Credit Agreement, the carrying value of loans 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 fair 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 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 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 June 30, 2023 and December 31, 2022: Six Months Year Ended Beginning balance $ 32,932,504 $ 3,560,108 Purchases of loan participation 311,527 31,216,406 Obligation of loan participation (7,128 ) 12,931 Purchase of loan portfolio in Revolution Transaction - 13,320,326 Loan originations 27,923,504 5,519,303 Interest and fees (1) 8,528,767 16,680,080 Collections (43,747,080 ) (27,816,669 ) Net charge off (1) (8,915,014 ) (10,653,751 ) Net change in fair value (1) 8,077,966 1,093,770 Ending balance $ 25,105,046 $ 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 June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Minimum Maximum Weighted (2) Minimum Maximum Weighted Estimated losses (1) 0.9 % 92.5 % 50.8 % 2.0 % 92.4 % 40.8 % Servicing costs - - 4.9 % - - 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 June 30, 2023 and December 31, 2022 concerning loan receivables at fair value are as follows: June 30, December 31, Aggregate fair value of loan receivables that are 90 days or more past due $ 15,308,976 $ 7,147,585 Unpaid principal balance of loan receivables that are 90 days or more past due 37,950,094 19,834,547 Aggregate fair value of loan receivables in non-accrual status 15,159,360 6,947,224 Income Taxes 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 from 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 June 30, 2023, the Company had not recorded any unrecognized tax benefits. Interest and penalties related to liabilities for uncertain tax positions will be charged to interest and operating expenses. Reclassifications Certain prior year/period balances have been reclassified to conform with the current year/period presentation. These reclassifications primarily include separating the prepaid expenses, right of use asset and loan revenues and fees, net of changes in fair value as separate line items. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
LEASES | 4. LEASES Refer to Note 3 to these condensed consolidated financial statements for further information about the Company’s revenue 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 office 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 is 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 recorded. As part of the Revolution Transaction (See Note 14), 22 storefront lease agreements were acquired by FlexShopper. Some of those stores were closed or transferred to franchisees after the Revolution Transaction. As of June 30, 2023, 20 storefront lease agreements belong to FlexShopper. The stores are located in Alabama, Michigan, Nevada, and Oklahoma and are used to offer finance products to customers. The monthly average rent for these stores is approximately $1,700 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 recorded. The Company determines if an arrangement is a lease 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 June 30, December 31, Assets Operating Lease Asset Right of use asset, net $ 1,318,008 $ 1,395,741 Finance Lease Asset Right of use asset, net 6,944 10,529 Total Lease Assets $ 1,324,952 $ 1,406,270 Liabilities Operating Lease Liability – current portion Current Lease Liabilities $ 219,438 $ 199,535 Finance Lease Liability – current portion Current Lease Liabilities 8,920 8,466 Operating Lease Liability – net of current portion Long Term Lease Liabilities 1,447,788 1,562,022 Finance Lease Liability – net of current portion Long Term Lease Liabilities - 4,600 Total Lease Liabilities $ 1,676,146 $ 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 uses 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 Company will exercise the option. The Company generally uses the base, non-cancelable, lease term when determining the lease assets and liabilities. Under the short-term lease exception provided within ASC 842, the Company does 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 weighted-average discount rate and weighted-average remaining lease term for the Company’s leases: Weighted Weighted 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 operating and finance lease expense all relate to lease costs amounted to $97,367 and $194,623 for the three and six months ended June 30, 2023, respectively, and $97,442 and $194,697 for the three and six months ended June 30, 2022, respectively. Supplemental cash flow information related to operating leases is as follows: Six Months ended June 30, 2023 2022 Cash payments for operating leases $ 206,736 $ 200,714 Cash payments for finance leases 4,782 5,592 Below is a summary of undiscounted operating lease liabilities as of June 30, 2023. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the operating lease liabilities included in the consolidated balance sheet. Operating 2023 $ 210,870 2024 430,134 2025 443,038 2026 456,330 2027 470,019 2028 and thereafter 303,574 Total undiscounted cash flows 2,313,965 Less: interest (646,739 ) Present value of lease liabilities $ 1,667,226 Below is a summary of undiscounted finance lease liabilities as of June 30, 2023. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance lease liabilities included in the consolidated balance sheet. Finance 2023 $ 4,782 2024 4,782 Total undiscounted cash flows 9,564 Less: interest (644 ) Present value of lease liabilities $ 8,920 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2023 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT Property and equipment consist of the following: Estimated June 30, December 31, Furniture, fixtures and vehicle 2-5 years $ 395,468 $ 395,468 Website and internal use software 3 years 23,065,295 20,542,457 Computers and software 3-7 years 4,263,799 3,672,103 27,724,562 24,610,028 Less: accumulated depreciation and amortization (18,893,584 ) (16,523,166 ) $ 8,830,978 $ 8,086,862 Depreciation and amortization expense for property and equipment was $1,207,069 and $2,370,418 for the three and six months ended June 30, 2023, respectively, and $1,000,555 and $1,848,129 for the three and six months ended June 30, 2022, respectively. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2023 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | 6. INTANGIBLE ASSETS The following table provides a summary of our intangible assets: June 30, 2023 Estimated Gross Carrying Accumulated Net Carrying Patent 10 years $ 30,760 $ (30,414 ) $ 346 Franchisee contract-based agreements 10 years 12,744,367 (743,420 ) 12,000,947 Liberty Loan brand 10 years 340,218 (19,845 ) 320,373 Non-compete agreements 10 years 86,113 (5,026 ) 81,087 Non contractual customer relationships 5 years 1,952,371 (227,780 ) 1,724,591 Customer list 3 years 184,825 (35,938 ) 148,887 $ 15,338,654 $ (1,062,423 ) $ 14,276,231 December 31, 2022 Estimated Gross Carrying Accumulated Net Carrying 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 Depreciation and amortization expense for intangible assets was $443,059 and $886,118 for the three and six months ended June 30, 2023, respectively, and $769 and $1,538 for the three and six months ended June 30, 2022, respectively. As of June 30, 2023, future estimated amortization expense related to identifiable intangible assets over the next five years is set forth in the following table: Amortization 2023 (six months remaining) $ 884,926 2024 1,769,160 2025 1,764,026 2026 1,707,552 2027 1,675,012 Total $ 7,800,676 |
Promissory Notes-Related Partie
Promissory Notes-Related Parties | 6 Months Ended |
Jun. 30, 2023 | |
Promissory Notes-Related Parties [Abstract] | |
PROMISSORY NOTES-RELATED PARTIES | 7. PROMISSORY NOTES-RELATED PARTIES 122 Partners Note- Interest paid for the 122 Partner Note was $53,346 and $105,988 for the three and six months ended June 30, 2023, respectively, and $69,428 and $102,144 for the three and six months ended June 30, 2022, respectively. Interest expensed for the 122 Partner Note $53,346 and $105,022 for the three and six months ended June 30, 2023, respectively, and $42,462 and $104,991 for the three and six months ended June 30, 2022, respectively. NRNS Note- On June 29, 2023, the Company, the 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. Principal and accrued and unpaid interest outstanding on the NRNS Note was $10,940,113 as of June 30, 2023 and $10,941,629 as of December 31, 2022. Interest paid for the NRNS Note was $573,466 and $1,139,375 for the three and six months ended June 30, 2023, respectively, and $382,497 and $533,783 for the three and six months ended June 30, 2022, respectively. Interest expensed for the NRNS Note was $573,466 and $1,128,987 for the three and six months ended June 30, 2023, respectively, and $352,207 and $644,445 for the three and six months ended June 30, 2022, respectively. Amounts payable under the promissory notes are as follows: Debt 2023 $ 1,207,798 2024 $ 10,750,000 |
Loan Payable Under Credit Agree
Loan Payable Under Credit Agreement | 6 Months Ended |
Jun. 30, 2023 | |
Loan Payable Under Credit Agreement [Abstract] | |
LOAN PAYABLE UNDER CREDIT AGREEMENT | 8. 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, National 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 $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 the 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 June 30, 2023, amounts borrowed bear interest at 16.26%. 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 Commitment 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 a one-time basis, to the formation of a new subsidiary, Flex TX, LLC, and to 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”). No other changes were made to the Credit Agreement. 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 Credit 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 June 30, 2023, follows: June 30, 2023 Required Actual Equity Book Value not less than $ 16,452,246 $ 27,290,117 Liquidity greater than 1,500,000 6,372,699 Cash greater than 500,000 6,378,984 Consolidated Total Debt to Equity Book Value ratio not to exceed 5.25 3.80 The 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 Credit Agreement and related agreements entered into with the 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 borrowing base, certain judgments against FlexShopper and bankruptcy events. The Company borrowed under the Credit Agreement $0 and $2,750,000 for the three and six months ended June 30, 2023, respectively, and $11,000,000 and $17,800,000 for the three and six months ended June 30, 2022, respectively. The Company repaid under the Credit Agreement and $220,000 and $2,795,000 for the three and six months ended June 30, 2023, respectively, and $0 and $1,125,000 for the three and six months ended June 30, 2022, respectively. Interest expense incurred under the Credit Agreement amounted to $3,332,686 and $6,611,523 for the three and six months ended June 30, 2023, respectively, and $1,896,146 and $3,447,990 for the three and six months ended June 30, 2022, respectively. The outstanding balance under the Credit Agreement was $81,155,000 as of June 30, 2023 and was $81,200,000 as of December 31, 2022. Such amount is presented in the consolidated balance sheets net of unamortized issuance costs of $211,516 and $352,252 as of June 30, 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, 2024, or from reductions in the borrowing base. The Company must repay all borrowed amounts one year after the Commitment Termination Date. Accordingly, all principal is shown as a non-current liability at June 30, 2023. Since October 2022, the Company has been entering into Interest Rate Cap Agreements with AXOS bank, a financial institution not related with the Lender of the Credit Agreement. These agreements cap the variable portion (one month SOFR) of the Credit Agreement interest rate to 4%, which reduce the Company’s exposure to additional increases in interest rates. |
Capital Structure
Capital Structure | 6 Months Ended |
Jun. 30, 2023 | |
Capital Structure [Abstract] | |
CAPITAL STRUCTURE | 9. CAPITAL STRUCTURE The Company’s capital structure consists of preferred and common stock as described below: Preferred Stock The Company is authorized to issue 500,000 shares of $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 the Company’s preferred stock. ● Series 1 Convertible Preferred Stock – As of June 30, 2023, each share of Series 1 Convertible Preferred Stock was convertible into 1.32230 shares of the Company’s 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 stock at any time. Upon conversion, all accumulated and unpaid dividends, if any, will be paid as additional shares of common stock. The holders 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. As of June 30, 2023, 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 Series 2 Preferred Shares were sold for $1,000 per share (the “Stated Value”) and accrue dividends on the Stated Value at an annual rate of 10% compounded annually. Cumulative accrued dividends as of June 30, 2023 totaled $21,049,102. As of June 30, 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 holders of the Series 2 Preferred Stock have the option to convert such shares into shares of common 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 shall be entitled to receive out of the assets of the Company prior to and in preference to the common stock and 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 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. Common Stock The Company 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, which expired by their terms seven years after the date of issuance. 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. 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 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 date of 840,000 The expense related to warrants was $917,581 and $917,581 for the three and six months ended June 30, 2023, respectively, and $0 and $0 for the three and six months ended June 30, 2022, respectively. The following table summarizes information about outstanding stock warrants as of June 30, 2023 and December 31, 2022, all of which are exercisable: Exercise Common Stock Warrants Weighted Average Remaining Contractual Life Price Outstanding June 30, 2023 Dec 31, 2022 $ 1.25 1,055,184 3 years 1 year $ 1.25 160,000 3 years Less than 1 year $ 1.34 40,000 3 years Less than 1 year $ 1.40 40,000 3 years Less than 1 year $ 1.54 40,000 3 years Less than 1 year $ 1.62 40,000 3 years Less than 1 year $ 1.68 40,000 3 years 2 years $ 1.69 40,000 3 years Less than 1 year $ 1.74 40,000 3 years Less than 1 year $ 1.76 40,000 3 years Less than 1 year $ 1.91 40,000 3 years Less than 1 year $ 1.95 40,000 3 years 2 years $ 2.00 40,000 3 years Less than 1 year $ 2.01 40,000 3 years Less than 1 year $ 2.08 40,000 3 years 2 years $ 2.45 40,000 3 years Less than 1 year $ 2.53 40,000 3 years Less than 1 year $ 2.57 40,000 3 years 2 years $ 2.70 40,000 2 years 3 years $ 2.78 40,000 3 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 3 years Less than 1 year $ 2.97 40,000 2 years 2 years $ 3.09 40,000 4 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 |
Equity Compensation Plans
Equity Compensation Plans | 6 Months Ended |
Jun. 30, 2023 | |
Equity Compensation Plans [Abstract] | |
EQUITY COMPENSATION PLANS | 10. 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. Stock-based compensation expense include the following components: Three Months ended Six Months ended 2023 2022 2023 2022 Stock options $ 384,396 $ 232,824 $ 805,144 $ 524,107 Performance share units 59,404 24,652 59,404 38,598 Total stock-based compensation $ 443,800 $ 257,476 $ 864,548 $ 562,705 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 $443,800 and $864,548 for the three and six months ended June 30, 2023, respectively, and $257,476 and $562,705 for the three and six months ended June 30, 2022, respectively. Unrecognized compensation cost related to non-vested options and PSU at June 30, 2023 amounted to $1,441,170, which is expected to be recognized over a weighted average period of 2.24 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-Merton (BSM) pricing model with the following weighted average assumptions: Six Months Six Months Exercise price $ 0.79 $ 1.48 Expected life 6 years 6 years Expected volatility 96 % 68 % Dividend yield 0 % 0 % Risk-free interest rate 3.54 2.04 % The expected dividend yield is based on the Company’s historical dividend yield. The expected volatility is based on the historical volatility of the Company’s common stock. The expected life is based on the simplified 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 zero-coupon U.S. Treasury bond the maturity of which equals the option’s expected life. Activity in stock options for the six month periods ended June 30, 2023 and June 30, 2022 was as follows: Number of Weighted Weighted Aggregate Outstanding at January 1, 2023 3,919,228 $ 1.97 $ 52,223 Granted 1,517,844 0.79 75 Exercised (1,500 ) 0.79 345 Outstanding at June 30, 2023 5,435,572 $ 1.64 7.27 $ 1,102,624 Vested and exercisable at June 30, 2023 4,049,004 $ 1.84 6.66 $ 580,962 Outstanding at January 1, 2022 3,080,904 $ 2.06 $ 1,923,642 Granted 1,050,468 1.48 — Exercised (162,956 ) .84 204,030 Forfeited (7,333 ) 2.22 2,273 Expired (25,000 ) 1.70 — Outstanding at June 30, 2022 3,936,083 $ 1.96 7.17 $ 39,412 Vested and exercisable at June 30, 2022 2,707,122 $ 2.06 6.58 $ 39,412 The weighted average grant date fair value of options granted during the six month periods ended June 30, 2023 and June 30, 2022 was $0.60 and $0.89 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 number 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 conditions 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 awards 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 the 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 six months ended June 30, 2023 and June 30, 2022 was as follows: Number of Weighted 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 June 30, 2023 1,250,000 $ 0.78 Non- vested at January 1, 2022 — $ — Granted 790,327 1.53 Forfeited/ unearned — — Vested — — Non- vested at June 30, 2022 790,327 $ 1.53 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 11. INCOME TAXES Effective income tax rates for interim periods are based on the Company’s estimate of the applicable annual income tax rate. The Company’s effective income tax rate varies based upon the estimate of the Company’s annual taxable earnings and the allocation of those taxable earnings across the various states in which we operate. Changes in the annual allocation of the Company’s activity among these jurisdictions results in changes to the effective tax rate utilized to measure the Company’s income tax provision and deferred tax assets and liabilities. The Company’s effective income tax rate for the three months ended June 30, 2023 was approximately 22%. This was different than the expected federal income tax rate of 21% primarily due to the impact of non-taxable income from non-deductible equity compensation and state income taxes. 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 June 30, 2023 is more likely than not based on the Company’s projected taxable income. |
Contingencies and Other Uncerta
Contingencies and Other Uncertainties | 6 Months Ended |
Jun. 30, 2023 | |
Contingencies and Other Uncertainties [Abstract] | |
CONTINGENCIES AND OTHER UNCERTAINTIES | 12. 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. Employment agreements Certain executive management entered into employment agreements with the Company. The contracts are for a period between three to five years and renew for three successive one-year terms unless receipt of written notices by the parties. The contracts provide that such management may earn discretionary cash bonuses and equity awards, based on financial performance metrics defined each year by the Compensation Committee of the Company’s 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 been, and may in the future, be impacted by COVID-19 or any similar pandemic or health crisis, and this 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 highly uncertain and cannot be predicted. |
Commitments
Commitments | 6 Months Ended |
Jun. 30, 2023 | |
Commitments [Abstract] | |
COMMITMENTS | 13. COMMITMENTS The Company does not have any commitments other than real property leases (Note 4). |
Revolution Transaction
Revolution Transaction | 6 Months Ended |
Jun. 30, 2023 | |
Revolution Transaction [Abstract] | |
REVOLUTION TRANSACTION | 14. 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 $3,133,617 as of June 30, 2023 and $3,158,471 as of December 31, 2022. The Seller Note is 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 15) 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 measured 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 a prior to year-end closing was for various reasons, including potential credit facility covenant issues and accelerating operating losses after recent regulatory changes. |
Basepoint Credit Agreement
Basepoint Credit Agreement | 6 Months Ended |
Jun. 30, 2023 | |
Basepoint Credit Agreement [Abstract] | |
BASEPOINT CREDIT AGREEMENT | 15. BASEPOINT CREDIT AGREEMENT On June 7, 2023, the Company, through a wholly owned subsidiary, Flex Revolution, LLC (the “New Borrower”) entered into a Joinder 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 14), 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 “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 an 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 borrower’s portfolio (the “Borrowing Base”). The annual interest rate on loans under the Basepoint Credit Agreement is 13.42%. The principal balance outstanding under the Basepoint Credit Agreement is due on June 7, 2026. The Basepoint Credit Agreement includes covenants requiring the Borrower and the guarantor to maintain a minimum amount of liquidity that is no less than 5% of the current Borrowing Base and maintain a minimum amount of cash held in the concentration accounts of $ 200,0000 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 borrower in the Basepoint Credit Agreement and related documents (including certain covenants), deficiencies in the Borrowing Base, certain judgments against the borrower and bankruptcy events. Interest expense incurred under the Basepoint Credit Agreement amounted to $289,574 and $592,014 for the three and six months ended June 30, 2023, respectively. The outstanding balance under the Basepoint Credit Agreement was $7,412,605 as of June 30, 2023. Such amount is presented in the consolidated balance sheets net of unamortized issuance costs of $112,197 as of June 30, 2023. Interest is payable weekly on the outstanding balance of the amounts borrowed. No principal is expected to be repaid in the next twelve months, or from reductions in the borrowing base. Accordingly, all principal is shown as a non-current liability at June 30, 2023. |
Employee Benefit Plan
Employee Benefit Plan | 6 Months Ended |
Jun. 30, 2023 | |
Employee Benefit Plan [Abstract] | |
EMPLOYEE BENEFIT PLAN | 16. 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 the plan on behalf of the employees. Total contributions to the plan were $36,601and $86,762 for the three and six months ended June 30, 2023, respectively, and $30,756 and $81,373 for the three and six months ended June 30, 2022, respectively. |
Share Repurchase Program
Share Repurchase Program | 6 Months Ended |
Jun. 30, 2023 | |
Share Repurchase Program [Abstract] | |
SHARE REPURCHASE PROGRAM | 17. SHARE REPURCHASE PROGRAM On May 17, 2023, the Board of Directors authorized a share repurchase program to acquire up to $2 million of the Company’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 trading plans intended to qualify under Rule 10b-18 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The share repurchase program will have a term of 18 months and may be suspended or discontinued at any time and does not obligate the company to acquire any amount of common stock. As of August 14, 2023, the Company didn’t repurchase common stock under this program. |
Nasdaq Notices
Nasdaq Notices | 6 Months Ended |
Jun. 30, 2023 | |
Nasdaq Notices [Abstract] | |
NASDAQ NOTICES | 18. NASDAQ NOTICES Nasdaq Notices On April 19, 2023, the Company received a notice (the “Notice”) from the Nasdaq Listing Qualifications staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, as a result of not having timely filed its Annual Report on Form 10-K for the period ended December 31, 2022 (the “Form 10-K”), the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing of all required periodic financial reports with the Securities and Exchange Commission. The Notice had no immediate effect on the listing or trading of the Company’s common stock on The Nasdaq Capital Market. The Notice provided that the Company must submit a plan to regain compliance with Nasdaq Listing Rule 5250(c)(1). On April 25, 2023, the Company received a letter from Nasdaq indicating that based on the April 24, 2023, filing of the Company’s Form 10-K for the year ended December 31, 2022, the Company regained compliance with Nasdaq Listing Rule 5250(c)(1). On April 21, 2023, the Company received a letter (the “Second Notice”) from The Nasdaq Stock Market notifying the Company that, because the closing bid price of the Company’s common stock had been below $1.00 per share for 30 consecutive business days, it no longer complied with the $1.00 per share minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”) for continued listing on The Nasdaq Capital Market. On May 31, 2023, the Company received a letter (the “Compliance Notice”) from Nasdaq notifying the Company that the Listing Qualifications Department (the “Staff”) of Nasdaq has determined that for the last 11 consecutive business days, from May 16, 2023 through May 31, 2023, the closing bid price of the Company’s common stock has been at $1.00 per share or greater. Accordingly, the Company has regained compliance with the Minimum Bid Price Requirement, and the Staff has determined that this matter is now closed. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation - |
Estimates | Estimates - |
Segment Information | Segment Information |
Cash and Cash Equivalents | Cash and Cash Equivalents – |
Restricted Cash | Restricted Cash – The reconciliation of cash and restricted cash is as follows: June 30, December 31, Cash $ 6,372,699 $ 6,051,713 Restricted cash 6,285 121,636 Total cash and restricted cash $ 6,378,984 $ 6,173,349 |
Revenue Recognition | Revenue Recognition |
Lease Receivables and Allowance for Doubtful Accounts | Lease Receivables and Allowance for Doubtful Accounts - June 30, December 31, Lease receivables $ 41,663,220 $ 48,618,843 Allowance for doubtful accounts (2,435,821 ) (13,078,800 ) Lease receivables, net $ 39,227,399 $ 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 $13,757,036 and $32,728,807 for the three and six months ended June 30, 2023, respectively, and $23,719,531 and $40,803,098 for the three and six months ended June 30, 2022, respectively. Six Months Year Ended Beginning balance $ 13,078,800 $ 27,703,278 Provision 22,085,828 57,420,480 Accounts written off (32,728,807 ) (72,044,958 ) Ending balance $ 2,435,821 $ 13,078,800 |
Lease Merchandise, net | Lease Merchandise, net The net lease merchandise balances consisted of the following as of June 30, 2023 and December 31, 2022: June 30, December 31, Lease merchandise at cost $ 52,734,813 $ 62,379,920 Accumulated depreciation and impairment reserve (28,136,977 ) (30,829,479 ) Lease merchandise, net $ 24,597,836 $ 31,550,441 |
Loan receivables at fair value | Loan receivables at fair value – 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 these receivables. The Company estimates the fair value of the loan 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 underlying 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 instrument, 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 was a loss of $1,252,600 and $837,048 for the three and six months ended June 30, 2023, respectively, and a gain of $2,981,275 and $2,457,851 for the three and six months ended June 30, 2022, respectively. |
Lease Accounting | Lease Accounting Three Months ended Six Months ended 2023 2022 2023 2022 Lease billings and accruals $ 32,501,656 $ 39,596,845 $ 66,756,740 $ 79,194,274 Provision for doubtful accounts (10,847,413 ) (15,732,876 ) (22,085,828 ) (27,563,993 ) Gain on sale of lease receivables 1,252,600 6,604,507 2,950,089 6,604,507 Lease revenues and fees $ 22,906,843 $ 30,468,476 $ 47,621,001 $ 58,234,788 |
Deferred Debt Issuance Costs | Deferred Debt Issuance Costs - 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 $38,233 and $38,233 for the three and six months ended June 30, 2023, respectively, and $0 and $1,274 for the three and six months ended June 30, 2022, respectively. 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 $3,206 and $3,206 for the three and six months ended June 30, 2023, respectively. |
Intangible Assets | Intangible Assets – 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 locations 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 finite lives, tests for impairment must be performed if conditions exist that indicate the carrying amount may not be recoverable. Intangible assets amortization expense was $443,059 and $886,118 for the three and six months ended June 30, 2023, respectively, and $769 and $1,538 for the three and six months ended June 30, 2022, respectively. |
Property and Equipment | Property and Equipment - |
Software Costs | Software Costs |
Data Costs | Data Costs Capitalized data costs amounted to $174,346 and $343,428 for the three and six months ended June 30, 2023, respectively, and $469,650 and $762,704 for the three and six months ended June 30, 2022, respectively. Capitalized data costs amortization expense was $234,417 and $454,167 for the three and six months ended June 30, 2023, respectively, and $120,938 and $209,659 for the three and six months ended June 30, 2022, respectively. Capitalized data costs net of its amortization are included in the consolidated balance sheets in Other assets, net. |
Operating Expenses | Operating Expenses - |
Marketing Costs | Marketing Costs - |
Per Share Data | Per Share Data - Basic earnings per common 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 total of the weighted average number of common shares outstanding during the period. Diluted earnings per share is 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 non-participating Series 2 Convertible Preferred Stock, options, performance share units and warrants. The dilutive effect of Series 2 Convertible Preferred Stock is computed using the if-converted method. The dilutive effect of options, performance share units and warrants are computed using the treasury stock method, which assumes the repurchase of common shares at the average market 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. June 30, 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 5,435,572 3,936,083 Common Stock Warrants 2,255,184 2,255,184 Performance Share Units 1,250,000 790,327 15,011,682 13,169,423 The following table sets forth the computation of basic and diluted earnings per common share for the six months ended June 30, 2023 and 2022: Six Months ended June 30, 2023 2022 Numerator Net (loss)/ income $ (5,527,870 ) $ 12,008,286 Series 2 Convertible Preferred Stock dividends (1,964,726 ) (1,219,554 ) Net (loss)/ income attributable to common and Series 1 Convertible Preferred Stock (7,492,596 ) 10,788,732 Net income attributable to Series 1 Convertible Preferred Stock - (124,057 ) Series 2 Convertible Preferred Stock dividends attributable to Series 1 Convertible Preferred Stock - 12,599 Net (loss)/ income attributable to common shares- Numerator for basic EPS (7,492,596 ) $ 10,677,274 Effect of dilutive securities: Series 2 Convertible Preferred Stock dividends - 1,219,554 Net (loss)/ income attributable to common shares after assumed conversions- Numerator for diluted EPS (7,492,596 ) 11,896,828 Denominator Weighted average of common shares outstanding- Denominator for basic EPS 21,751,807 21,576,312 Effect of dilutive securities: Series 2 Convertible Preferred Stock - 5,845,695 Series 1 Convertible Preferred Stock - 225,231 Common stock options and performance share units - 355,753 Common stock warrants - 190,277 Adjusted weighted average of common shares outstanding and assumed conversions- Denominator diluted EPS 21,751,807 28,193,268 Basic EPS $ (0.34 ) $ 0.49 Diluted EPS $ (0.34 ) $ 0.42 The following table sets forth the computation of basic and diluted earnings per common share for the three months ended June 30, 2023 and 2022: Three Months ended June 30, 2023 2022 Numerator Net (loss)/ income $ (5,297,655 ) $ 14,389,221 Series 2 Convertible Preferred Stock dividends (992,493 ) (609,777 ) Net (loss)/ income attributable to common and Series 1 Convertible Preferred Stock (6,290,148 ) 13,779,444 Net income attributable to Series 1 Convertible Preferred Stock - (148,457 ) Series 2 Convertible Preferred Stock dividends attributable to Series 1 Convertible Preferred Stock - 6,291 Net (loss)/ income attributable to common shares- Numerator for basic EPS (6,290,148 ) 13,637,278 Effect of dilutive securities: Series 2 Convertible Preferred Stock dividends - 609,777 Net (loss)/ income attributable to common shares after assumed conversions – Numerator for diluted EPS $ (6,290,148 ) $ 14,247,055 Denominator Weighted average of common shares outstanding- Denominator for basic EPS 28,923,393 21,605,234 Effect of dilutive securities Series 2 Convertible Preferred Stock - 5,845,695 Series 1 Convertible Preferred Stock - 225,231 Common stock options and performance share units - 222,664 Common stock warrants - - Adjusted weighted average of common shares outstanding and assumed conversions- Denominator for diluted EPS 28,923,393 27,898,824 Basic EPS $ (0.22 ) $ 0.63 Diluted EPS $ (0.22 ) $ 0.51 |
Stock-Based Compensation | Stock-Based Compensation – Compensation expense for stock options is determined by reference to the fair value of an award on the date of grant and is recognized on a straight-line basis over the vesting period. The 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 | Fair Value of Financial Instruments The Company utilizes the fair value option on its entire loan receivables portfolio purchased from its bank partner, for the portfolio acquired in the Revolution Transaction (See Note 14), and for the portfolio directly originated. |
Fair Value Measurements | Fair Value Measurements- ● 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 June 30, 2023 and December 31, 2022 is as follows: Fair Value Measurement Using Carrying Financial instruments – As of June 30, 2023 (1) Level 1 Level 2 Level 3 Amount Loan receivables at fair value $ - $ - $ 25,105,046 $ 46,133,615 Promissory note related to acquisition - - 3,133,617 3,133,617 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 loans payable under the Credit Agreement, the carrying value of loans 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 fair 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 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 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 June 30, 2023 and December 31, 2022: Six Months Year Ended Beginning balance $ 32,932,504 $ 3,560,108 Purchases of loan participation 311,527 31,216,406 Obligation of loan participation (7,128 ) 12,931 Purchase of loan portfolio in Revolution Transaction - 13,320,326 Loan originations 27,923,504 5,519,303 Interest and fees (1) 8,528,767 16,680,080 Collections (43,747,080 ) (27,816,669 ) Net charge off (1) (8,915,014 ) (10,653,751 ) Net change in fair value (1) 8,077,966 1,093,770 Ending balance $ 25,105,046 $ 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 June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Minimum Maximum Weighted (2) Minimum Maximum Weighted Estimated losses (1) 0.9 % 92.5 % 50.8 % 2.0 % 92.4 % 40.8 % Servicing costs - - 4.9 % - - 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 June 30, 2023 and December 31, 2022 concerning loan receivables at fair value are as follows: June 30, December 31, Aggregate fair value of loan receivables that are 90 days or more past due $ 15,308,976 $ 7,147,585 Unpaid principal balance of loan receivables that are 90 days or more past due 37,950,094 19,834,547 Aggregate fair value of loan receivables in non-accrual status 15,159,360 6,947,224 |
Income Taxes | Income Taxes 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 from 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 June 30, 2023, the Company had not recorded any unrecognized tax benefits. Interest and penalties related to liabilities for uncertain tax positions will be charged to interest and operating expenses. |
Reclassifications | Reclassifications Certain prior year/period balances have been reclassified to conform with the current year/period presentation. These reclassifications primarily include separating the prepaid expenses, right of use asset and loan revenues and fees, net of changes in fair value as separate line items. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of Reconciliation of Cash and Restricted Cash | The reconciliation of cash and restricted cash is as follows: June 30, December 31, Cash $ 6,372,699 $ 6,051,713 Restricted cash 6,285 121,636 Total cash and restricted cash $ 6,378,984 $ 6,173,349 |
Schedule of Lease Receivables Balances | The lease receivables balances consisted of the following as of June 30, 2023 and December 31, 2022: June 30, December 31, Lease receivables $ 41,663,220 $ 48,618,843 Allowance for doubtful accounts (2,435,821 ) (13,078,800 ) Lease receivables, net $ 39,227,399 $ 35,540,043 |
Schedule of Lease Receivables Balances Charged Off Against the Allowance | Six Months Year Ended Beginning balance $ 13,078,800 $ 27,703,278 Provision 22,085,828 57,420,480 Accounts written off (32,728,807 ) (72,044,958 ) Ending balance $ 2,435,821 $ 13,078,800 |
Schedule of Net Lease Merchandise Balances | The net lease merchandise balances consisted of the following as of June 30, 2023 and December 31, 2022: June 30, December 31, Lease merchandise at cost $ 52,734,813 $ 62,379,920 Accumulated depreciation and impairment reserve (28,136,977 ) (30,829,479 ) Lease merchandise, net $ 24,597,836 $ 31,550,441 |
Schedule of Lessor Revenues and Fees | The breakout of lease revenues and fees, net of lessor bad debt expense, that ties to the consolidated statements of operations is shown below: Three Months ended Six Months ended 2023 2022 2023 2022 Lease billings and accruals $ 32,501,656 $ 39,596,845 $ 66,756,740 $ 79,194,274 Provision for doubtful accounts (10,847,413 ) (15,732,876 ) (22,085,828 ) (27,563,993 ) Gain on sale of lease receivables 1,252,600 6,604,507 2,950,089 6,604,507 Lease revenues and fees $ 22,906,843 $ 30,468,476 $ 47,621,001 $ 58,234,788 |
Schedule of Number of Common Shares Issuable Upon Conversion or Exercise | The following table reflects the number of common shares issuable upon conversion or exercise. June 30, 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 5,435,572 3,936,083 Common Stock Warrants 2,255,184 2,255,184 Performance Share Units 1,250,000 790,327 15,011,682 13,169,423 |
Schedule of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per common share for the six months ended June 30, 2023 and 2022: Six Months ended June 30, 2023 2022 Numerator Net (loss)/ income $ (5,527,870 ) $ 12,008,286 Series 2 Convertible Preferred Stock dividends (1,964,726 ) (1,219,554 ) Net (loss)/ income attributable to common and Series 1 Convertible Preferred Stock (7,492,596 ) 10,788,732 Net income attributable to Series 1 Convertible Preferred Stock - (124,057 ) Series 2 Convertible Preferred Stock dividends attributable to Series 1 Convertible Preferred Stock - 12,599 Net (loss)/ income attributable to common shares- Numerator for basic EPS (7,492,596 ) $ 10,677,274 Effect of dilutive securities: Series 2 Convertible Preferred Stock dividends - 1,219,554 Net (loss)/ income attributable to common shares after assumed conversions- Numerator for diluted EPS (7,492,596 ) 11,896,828 Denominator Weighted average of common shares outstanding- Denominator for basic EPS 21,751,807 21,576,312 Effect of dilutive securities: Series 2 Convertible Preferred Stock - 5,845,695 Series 1 Convertible Preferred Stock - 225,231 Common stock options and performance share units - 355,753 Common stock warrants - 190,277 Adjusted weighted average of common shares outstanding and assumed conversions- Denominator diluted EPS 21,751,807 28,193,268 Basic EPS $ (0.34 ) $ 0.49 Diluted EPS $ (0.34 ) $ 0.42 Three Months ended June 30, 2023 2022 Numerator Net (loss)/ income $ (5,297,655 ) $ 14,389,221 Series 2 Convertible Preferred Stock dividends (992,493 ) (609,777 ) Net (loss)/ income attributable to common and Series 1 Convertible Preferred Stock (6,290,148 ) 13,779,444 Net income attributable to Series 1 Convertible Preferred Stock - (148,457 ) Series 2 Convertible Preferred Stock dividends attributable to Series 1 Convertible Preferred Stock - 6,291 Net (loss)/ income attributable to common shares- Numerator for basic EPS (6,290,148 ) 13,637,278 Effect of dilutive securities: Series 2 Convertible Preferred Stock dividends - 609,777 Net (loss)/ income attributable to common shares after assumed conversions – Numerator for diluted EPS $ (6,290,148 ) $ 14,247,055 Denominator Weighted average of common shares outstanding- Denominator for basic EPS 28,923,393 21,605,234 Effect of dilutive securities Series 2 Convertible Preferred Stock - 5,845,695 Series 1 Convertible Preferred Stock - 225,231 Common stock options and performance share units - 222,664 Common stock warrants - - Adjusted weighted average of common shares outstanding and assumed conversions- Denominator for diluted EPS 28,923,393 27,898,824 Basic EPS $ (0.22 ) $ 0.63 Diluted EPS $ (0.22 ) $ 0.51 |
Schedule of Fair Value Assets Measured on Recurring Basis | The Company’s financial instruments that are measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 is as follows: Fair Value Measurement Using Carrying Financial instruments – As of June 30, 2023 (1) Level 1 Level 2 Level 3 Amount Loan receivables at fair value $ - $ - $ 25,105,046 $ 46,133,615 Promissory note related to acquisition - - 3,133,617 3,133,617 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 loans payable under the Credit Agreement, the carrying value of loans 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. |
Schedule of Fair Value Assets Measured on Recurring Basis, Unobservable Input Reconciliation | the following table presents a reconciliation of the beginning and ending balances for the years ended June 30, 2023 and December 31, 2022: Six Months Year Ended Beginning balance $ 32,932,504 $ 3,560,108 Purchases of loan participation 311,527 31,216,406 Obligation of loan participation (7,128 ) 12,931 Purchase of loan portfolio in Revolution Transaction - 13,320,326 Loan originations 27,923,504 5,519,303 Interest and fees (1) 8,528,767 16,680,080 Collections (43,747,080 ) (27,816,669 ) Net charge off (1) (8,915,014 ) (10,653,751 ) Net change in fair value (1) 8,077,966 1,093,770 Ending balance $ 25,105,046 $ 32,932,504 (1) Included in loan revenues and fees, net of changes in fair value in the consolidated statements of operations |
Schedule of Quantitative Information About the Inputs Used in Fair Value Measurement | the following table presents quantitative information about the inputs used in the fair value measurement as of June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Minimum Maximum Weighted (2) Minimum Maximum Weighted Estimated losses (1) 0.9 % 92.5 % 50.8 % 2.0 % 92.4 % 40.8 % Servicing costs - - 4.9 % - - 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. |
Schedule of Concerning Loan Receivables at Fair Value | Other relevant data as of June 30, 2023 and December 31, 2022 concerning loan receivables at fair value are as follows: June 30, December 31, Aggregate fair value of loan receivables that are 90 days or more past due $ 15,308,976 $ 7,147,585 Unpaid principal balance of loan receivables that are 90 days or more past due 37,950,094 19,834,547 Aggregate fair value of loan receivables in non-accrual status 15,159,360 6,947,224 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Schedule of Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases is as follows: Balance Sheet Classification June 30, December 31, Assets Operating Lease Asset Right of use asset, net $ 1,318,008 $ 1,395,741 Finance Lease Asset Right of use asset, net 6,944 10,529 Total Lease Assets $ 1,324,952 $ 1,406,270 Liabilities Operating Lease Liability – current portion Current Lease Liabilities $ 219,438 $ 199,535 Finance Lease Liability – current portion Current Lease Liabilities 8,920 8,466 Operating Lease Liability – net of current portion Long Term Lease Liabilities 1,447,788 1,562,022 Finance Lease Liability – net of current portion Long Term Lease Liabilities - 4,600 Total Lease Liabilities $ 1,676,146 $ 1,774,623 |
Schedule of Weighted-Average Discount Rate and Weighted-Average Remaining Lease Term | Below is a summary of the weighted-average discount rate and weighted-average remaining lease term for the Company’s leases: Weighted Weighted Operating Leases 13.03 % 5 Finance Leases 13.39 % 1 |
Schedule of Supplemental Cash Flow Information Related to Operating Leases | Below is a summary of the weighted-average discount rate and weighted-average remaining lease term for the Company’s leases Six Months ended June 30, 2023 2022 Cash payments for operating leases $ 206,736 $ 200,714 Cash payments for finance leases 4,782 5,592 |
Schedule of Undiscounted Operating Lease Liabilities | Below is a summary of undiscounted operating lease liabilities as of June 30, 2023 Operating 2023 $ 210,870 2024 430,134 2025 443,038 2026 456,330 2027 470,019 2028 and thereafter 303,574 Total undiscounted cash flows 2,313,965 Less: interest (646,739 ) Present value of lease liabilities $ 1,667,226 |
Schedule of Undiscounted Finance Lease Liabilities | Below is a summary of undiscounted finance lease liabilities as of June 30, 2023 Finance 2023 $ 4,782 2024 4,782 Total undiscounted cash flows 9,564 Less: interest (644 ) Present value of lease liabilities $ 8,920 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consist of the following: Estimated June 30, December 31, Furniture, fixtures and vehicle 2-5 years $ 395,468 $ 395,468 Website and internal use software 3 years 23,065,295 20,542,457 Computers and software 3-7 years 4,263,799 3,672,103 27,724,562 24,610,028 Less: accumulated depreciation and amortization (18,893,584 ) (16,523,166 ) $ 8,830,978 $ 8,086,862 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Intangible Assets [Abstract] | |
Schedule of Intangible Assets | The following table provides a summary of our intangible assets: June 30, 2023 Estimated Gross Carrying Accumulated Net Carrying Patent 10 years $ 30,760 $ (30,414 ) $ 346 Franchisee contract-based agreements 10 years 12,744,367 (743,420 ) 12,000,947 Liberty Loan brand 10 years 340,218 (19,845 ) 320,373 Non-compete agreements 10 years 86,113 (5,026 ) 81,087 Non contractual customer relationships 5 years 1,952,371 (227,780 ) 1,724,591 Customer list 3 years 184,825 (35,938 ) 148,887 $ 15,338,654 $ (1,062,423 ) $ 14,276,231 December 31, 2022 Estimated Gross Carrying Accumulated Net Carrying 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 |
Schedule of Future Estimated Amortization Expense | As of June 30, 2023, future estimated amortization expense related to identifiable intangible assets over the next five years is set forth in the following table: Amortization 2023 (six months remaining) $ 884,926 2024 1,769,160 2025 1,764,026 2026 1,707,552 2027 1,675,012 Total $ 7,800,676 |
Promissory Notes-Related Part_2
Promissory Notes-Related Parties (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Promissory Notes-Related Parties [Abstract] | |
Schedule of Amounts Payable Under the Promissory Notes | Amounts payable under the promissory notes are as follows: Debt 2023 $ 1,207,798 2024 $ 10,750,000 |
Loan Payable Under Credit Agr_2
Loan Payable Under Credit Agreement (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Loan Payable Under Credit Agreement [Abstract] | |
Schedule of Covenant Requirements, and FlexShopper's Actual Results | A summary of the covenant requirements, and FlexShopper’s actual results at June 30, 2023, follows: June 30, 2023 Required Actual Equity Book Value not less than $ 16,452,246 $ 27,290,117 Liquidity greater than 1,500,000 6,372,699 Cash greater than 500,000 6,378,984 Consolidated Total Debt to Equity Book Value ratio not to exceed 5.25 3.80 |
Capital Structure (Tables)
Capital Structure (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Capital Structure [Abstract] | |
Schedule of Outstanding Stock Warrants | The following table summarizes information about outstanding stock warrants as of June 30, 2023 and December 31, 2022, all of which are exercisable: Exercise Common Stock Warrants Weighted Average Remaining Contractual Life Price Outstanding June 30, 2023 Dec 31, 2022 $ 1.25 1,055,184 3 years 1 year $ 1.25 160,000 3 years Less than 1 year $ 1.34 40,000 3 years Less than 1 year $ 1.40 40,000 3 years Less than 1 year $ 1.54 40,000 3 years Less than 1 year $ 1.62 40,000 3 years Less than 1 year $ 1.68 40,000 3 years 2 years $ 1.69 40,000 3 years Less than 1 year $ 1.74 40,000 3 years Less than 1 year $ 1.76 40,000 3 years Less than 1 year $ 1.91 40,000 3 years Less than 1 year $ 1.95 40,000 3 years 2 years $ 2.00 40,000 3 years Less than 1 year $ 2.01 40,000 3 years Less than 1 year $ 2.08 40,000 3 years 2 years $ 2.45 40,000 3 years Less than 1 year $ 2.53 40,000 3 years Less than 1 year $ 2.57 40,000 3 years 2 years $ 2.70 40,000 2 years 3 years $ 2.78 40,000 3 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 3 years Less than 1 year $ 2.97 40,000 2 years 2 years $ 3.09 40,000 4 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 |
Equity Compensation Plans (Tabl
Equity Compensation Plans (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity Compensation Plans [Abstract] | |
Schedule of Stock-Based Compensation Expense | Stock-based compensation expense include the following components: Three Months ended Six Months ended 2023 2022 2023 2022 Stock options $ 384,396 $ 232,824 $ 805,144 $ 524,107 Performance share units 59,404 24,652 59,404 38,598 Total stock-based compensation $ 443,800 $ 257,476 $ 864,548 $ 562,705 |
Schedule of Measured the Fair Value of Each Stock Option Award | 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-Merton (BSM) pricing model with the following weighted average assumptions: Six Months Six Months Exercise price $ 0.79 $ 1.48 Expected life 6 years 6 years Expected volatility 96 % 68 % Dividend yield 0 % 0 % Risk-free interest rate 3.54 2.04 % |
Schedule of Stock Option | Activity in stock options for the six month periods ended June 30, 2023 and June 30, 2022 was as follows: Number of Weighted Weighted Aggregate Outstanding at January 1, 2023 3,919,228 $ 1.97 $ 52,223 Granted 1,517,844 0.79 75 Exercised (1,500 ) 0.79 345 Outstanding at June 30, 2023 5,435,572 $ 1.64 7.27 $ 1,102,624 Vested and exercisable at June 30, 2023 4,049,004 $ 1.84 6.66 $ 580,962 Outstanding at January 1, 2022 3,080,904 $ 2.06 $ 1,923,642 Granted 1,050,468 1.48 — Exercised (162,956 ) .84 204,030 Forfeited (7,333 ) 2.22 2,273 Expired (25,000 ) 1.70 — Outstanding at June 30, 2022 3,936,083 $ 1.96 7.17 $ 39,412 Vested and exercisable at June 30, 2022 2,707,122 $ 2.06 6.58 $ 39,412 |
Schedule of Activity in Performance Share Units | Activity in performance share units for the six months ended June 30, 2023 and June 30, 2022 was as follows: Number of Weighted 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 June 30, 2023 1,250,000 $ 0.78 Non- vested at January 1, 2022 — $ — Granted 790,327 1.53 Forfeited/ unearned — — Vested — — Non- vested at June 30, 2022 790,327 $ 1.53 |
Business (Details)
Business (Details) | Jun. 30, 2023 |
FlexShopper, LLC [Member] | |
Business (Details) [Line Items] | |
Ownership percentage | 100% |
FlexLending, LLC [Member] | |
Business (Details) [Line Items] | |
Ownership percentage | 100% |
Flex Revolution, LLC [Member] | |
Business (Details) [Line Items] | |
Ownership percentage | 100% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Accounts receivable charged off against allowance | $ 13,757,036 | $ 23,719,531 | $ 32,728,807 | $ 40,803,098 |
Net of changes in fair value of gain | 1,252,600 | 2,981,275 | 837,048 | 2,457,851 |
Amortization included in interest expense | $ 3,206 | $ 3,206 | ||
Intangible assets, terms | 10 years | 10 years | ||
Intangible assets amortization expense | $ 443,059 | 769 | $ 886,118 | 1,538 |
Capitalized software costs | 1,227,024 | 1,285,088 | 2,522,838 | 2,270,082 |
Capitalized software amortization expense | 961,061 | 683,161 | 1,870,405 | 1,304,855 |
Capitalized data costs | 174,346 | 469,650 | 343,428 | 762,704 |
Capitalized data costs amortization expense | 234,417 | 120,938 | $ 454,167 | 209,659 |
Largest benefit percentage | 50% | |||
Property, Plant and Equipment [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Intangible assets amortization expense | 1,207,069 | 1,000,555 | $ 2,370,418 | 1,848,129 |
Promissory Notes [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Amortization included in interest expense | 0 | 1,274 | ||
Deferred Debt Issuance Costs [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Amortization included in interest expense | 70,368 | $ 56,283 | 140,735 | $ 105,612 |
Deferred Debt Issuance Costs [Member] | Promissory Notes [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Amortization included in interest expense | $ 38,233 | $ 38,233 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of Reconciliation of Cash and Restricted Cash - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of Reconciliation of Cash and Restricted Cash [Abstract] | ||
Cash | $ 6,372,699 | $ 6,051,713 |
Restricted cash | 6,285 | 121,636 |
Total cash and restricted cash | $ 6,378,984 | $ 6,173,349 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of Lease Receivables Balances - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of Accounts Receivable [Abstract] | ||
Lease receivables | $ 41,663,220 | $ 48,618,843 |
Allowance for doubtful accounts | (2,435,821) | (13,078,800) |
Lease receivables, net | $ 39,227,399 | $ 35,540,043 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of Lease Receivables Balances Charged Off Against the Allowance - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Schedule of Allowance for Doubtful Accounts [Abstract] | ||
Beginning balance | $ 13,078,800 | $ 27,703,278 |
Provision | 22,085,828 | 57,420,480 |
Accounts written off | (32,728,807) | (72,044,958) |
Ending balance | $ 2,435,821 | $ 13,078,800 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details) - Schedule of Net Lease Merchandise Balances - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of Net Leased Merchandise [Abstract] | ||
Lease merchandise at cost | $ 52,734,813 | $ 62,379,920 |
Accumulated depreciation and impairment reserve | (28,136,977) | (30,829,479) |
Lease merchandise, net | $ 24,597,836 | $ 31,550,441 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details) - Schedule of Lessor Revenues and Fees - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule of Lessor Revenues and Fees [Abstract] | ||||
Lease billings and accruals | $ 32,501,656 | $ 39,596,845 | $ 66,756,740 | $ 79,194,274 |
Provision for doubtful accounts | (10,847,413) | (15,732,876) | (22,085,828) | (27,563,993) |
Gain on sale of lease receivables | 1,252,600 | 6,604,507 | 2,950,089 | 6,604,507 |
Lease revenues and fees | $ 22,906,843 | $ 30,468,476 | $ 47,621,001 | $ 58,234,788 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details) - Schedule of Number of Common Shares Issuable Upon Conversion or Exercise - shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 15,011,682 | 13,169,423 |
Common Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 5,435,572 | 3,936,083 |
Common Stock Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 2,255,184 | 2,255,184 |
Performance Share Units [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 1,250,000 | 790,327 |
Series 1 Convertible Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 225,231 | 225,231 |
Series 2 Convertible Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 5,845,695 | 5,845,695 |
Series 2 Convertible Preferred Stock issuable upon exercise of warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 116,903 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies (Details) - Schedule of Basic and Diluted Earnings Per Share - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator | ||||
Net (loss)/ income | $ (5,297,655) | $ 14,389,221 | $ (5,527,870) | $ 12,008,286 |
Series 2 Convertible Preferred Stock dividends | (992,493) | (609,777) | (1,964,726) | (1,219,554) |
Net (loss)/ income attributable to common and Series 1 Convertible Preferred Stock | (6,290,148) | 13,779,444 | (7,492,596) | 10,788,732 |
Net income attributable to Series 1 Convertible Preferred Stock | (148,457) | (124,057) | ||
Series 2 Convertible Preferred Stock dividends attributable to Series 1 Convertible Preferred Stock | 6,291 | 12,599 | ||
Net (loss)/ income attributable to common shares- Numerator for basic EPS | (6,290,148) | 13,637,278 | (7,492,596) | 10,677,274 |
Effect of dilutive securities: | ||||
Series 2 Convertible Preferred Stock dividends | 609,777 | 1,219,554 | ||
Net (loss)/ income attributable to common shares after assumed conversions- Numerator for diluted EPS | $ (6,290,148) | $ 14,247,055 | $ (7,492,596) | $ 11,896,828 |
Denominator | ||||
Weighted average of common shares outstanding- Denominator for basic EPS (in Shares) | 28,923,393 | 21,605,234 | 21,751,807 | 21,576,312 |
Effect of dilutive securities: | ||||
Series 2 Convertible Preferred Stock (in Shares) | 5,845,695 | 5,845,695 | ||
Series 1 Convertible Preferred Stock (in Shares) | 225,231 | 225,231 | ||
Common stock options and performance share units (in Shares) | 222,664 | 355,753 | ||
Common stock warrants (in Shares) | 190,277 | |||
Adjusted weighted average of common shares outstanding and assumed conversions- Denominator diluted EPS (in Shares) | 28,923,393 | 27,898,824 | 21,751,807 | 28,193,268 |
Basic EPS (in Dollars per share) | $ (0.22) | $ 0.63 | $ (0.34) | $ 0.49 |
Diluted EPS (in Dollars per share) | $ (0.22) | $ 0.51 | $ (0.34) | $ 0.42 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies (Details) - Schedule of Fair Value Assets Measured on Recurring Basis - Carrying Amount [Member] - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | ||
Summary of Significant Accounting Policies (Details) - Schedule of Fair Value Assets Measured on Recurring Basis [Line Items] | |||
Loan receivables at fair value | [1] | $ 46,133,615 | $ 42,747,668 |
Promissory note related to acquisition | [1] | 3,133,617 | 3,158,471 |
Level 1 [Member] | |||
Summary of Significant Accounting Policies (Details) - Schedule of Fair Value Assets Measured on Recurring Basis [Line Items] | |||
Loan receivables at fair value | [1] | ||
Promissory note related to acquisition | [1] | ||
Level 2 [Member] | |||
Summary of Significant Accounting Policies (Details) - Schedule of Fair Value Assets Measured on Recurring Basis [Line Items] | |||
Loan receivables at fair value | [1] | ||
Promissory note related to acquisition | [1] | ||
Level 3 [Member] | |||
Summary of Significant Accounting Policies (Details) - Schedule of Fair Value Assets Measured on Recurring Basis [Line Items] | |||
Loan receivables at fair value | [1] | 25,105,046 | 32,932,504 |
Promissory note related to acquisition | [1] | $ 3,133,617 | $ 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 loans payable under the Credit Agreement, the carrying value of loans 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. |
Summary of Significant Accou_12
Summary of Significant Accounting Policies (Details) - Schedule of Fair Value Assets Measured on Recurring Basis, Unobservable Input Reconciliation - Level 3 [Member] - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Beginning balance | $ 32,932,504 | $ 3,560,108 | |
Purchases of loan participation | 311,527 | 31,216,406 | |
Obligation of loan participation | (7,128) | 12,931 | |
Purchase of loan portfolio in Revolution Transaction | 13,320,326 | ||
Loan originations | 27,923,504 | 5,519,303 | |
Interest and fees | [1] | 8,528,767 | 16,680,080 |
Collections | (43,747,080) | (27,816,669) | |
Net charge off | [1] | (8,915,014) | (10,653,751) |
Net change in fair value | [1] | 8,077,966 | 1,093,770 |
Ending balance | $ 25,105,046 | $ 32,932,504 | |
[1] Included in loan revenues and fees, net of changes in fair value in the consolidated statements of operations |
Summary of Significant Accou_13
Summary of Significant Accounting Policies (Details) - Schedule of Quantitative Information About the Inputs Used in Fair Value Measurement | Jun. 30, 2023 | Dec. 31, 2022 | ||
Minimum [Member] | ||||
Summary of Significant Accounting Policies (Details) - Schedule of Quantitative Information About the Inputs Used in Fair Value Measurement [Line Items] | ||||
Estimated losses | [1] | 0.90% | 2% | |
Servicing costs | ||||
Discount rate | ||||
Maximum [Member] | ||||
Summary of Significant Accounting Policies (Details) - Schedule of Quantitative Information About the Inputs Used in Fair Value Measurement [Line Items] | ||||
Estimated losses | [1] | 92.50% | 92.40% | |
Servicing costs | ||||
Discount rate | ||||
Weighted Average [Member] | ||||
Summary of Significant Accounting Policies (Details) - Schedule of Quantitative Information About the Inputs Used in Fair Value Measurement [Line Items] | ||||
Estimated losses | [1] | 50.80% | [2] | 40.80% |
Servicing costs | 4.90% | [2] | 4.50% | |
Discount rate | 20.10% | [2] | 21% | |
[1] Figure disclosed as a percentage of outstanding principal balance. Unobservable inputs were weighted by outstanding principal balance, which are grouped by origination channel. |
Summary of Significant Accou_14
Summary of Significant Accounting Policies (Details) - Schedule of Concerning Loan Receivables at Fair Value - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of Concerning Loan Receivables at Fair Value [Abstract] | ||
Aggregate fair value of loan receivables that are 90 days or more past due | $ 15,308,976 | $ 7,147,585 |
Unpaid principal balance of loan receivables that are 90 days or more past due | 37,950,094 | 19,834,547 |
Aggregate fair value of loan receivables in non-accrual status | $ 15,159,360 | $ 6,947,224 |
Leases (Details)
Leases (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2021 USD ($) | Jan. 31, 2019 USD ($) m² | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | |
Leases [Abstract] | ||||||
Term of lease | 108 months | |||||
Additional lease term | five-year | |||||
Area of land (in Square Meters) | m² | 21,622 | |||||
Exercise of stock options into common stock | $ 31,500 | |||||
Monthly rent | $ 8,800 | |||||
Rent expanses | $ 1,700 | |||||
Lease costs | $ 97,367 | $ 97,442 | $ 194,623 | $ 194,697 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of Balance Sheet Information Related to Leases - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Assets | ||
Total Lease Assets | $ 1,324,952 | $ 1,406,270 |
Liabilities | ||
Total Lease Liabilities | $ 1,676,146 | 1,774,623 |
Right of use asset, net [Member] | ||
Assets | ||
Balance Sheet Classification, Operating Lease Asset | Right of use asset, net | |
Operating Lease Asset | $ 1,318,008 | 1,395,741 |
Balance Sheet Classification, Finance Lease Asset | Right of use asset, net | |
Finance Lease Asset | $ 6,944 | 10,529 |
Current Lease Liabilities [Member] | ||
Liabilities | ||
Balance Sheet Classification, Operating Lease Liability – current portion | Current Lease Liabilities | |
Operating Lease Liability - current portion | $ 219,438 | 199,535 |
Balance Sheet Classification, Finance Lease Liability – current portion | Current Lease Liabilities | |
Finance Lease Liability - current portion | $ 8,920 | 8,466 |
Long Term Lease Liabilities [Member] | ||
Liabilities | ||
Balance Sheet Classification, Operating Lease Liability – net of current portion | Long Term Lease Liabilities | |
Operating Lease Liability - net of current portion | $ 1,447,788 | 1,562,022 |
Balance Sheet Classification, Finance Lease Liability – net of current portion | Long Term Lease Liabilities | |
Finance Lease Liability - net of current portion | $ 4,600 |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of Weighted-Average Discount Rate and Weighted-Average Remaining Lease Term | Jun. 30, 2023 |
Operating Leases [Member] | |
Leases (Details) - Schedule of Weighted-Average Discount Rate and Weighted-Average Remaining Lease Term [Line Items] | |
Weighted Average Discount Rate | 13.03% |
Weighted Average Remaining Lease Term (in years) | 5 years |
Finance Leases [Member] | |
Leases (Details) - Schedule of Weighted-Average Discount Rate and Weighted-Average Remaining Lease Term [Line Items] | |
Weighted Average Discount Rate | 13.39% |
Weighted Average Remaining Lease Term (in years) | 1 year |
Leases (Details) - Schedule o_3
Leases (Details) - Schedule of Supplemental Cash Flow Information Related to Operating Leases - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule of Supplemental Cash Flow Information Related to Operating Leases [Abstract] | ||
Cash payments for operating leases | $ 206,736 | $ 200,714 |
Cash payments for finance leases | $ 4,782 | $ 5,592 |
Leases (Details) - Schedule o_4
Leases (Details) - Schedule of Undiscounted Operating Lease Liabilities | Jun. 30, 2023 USD ($) |
Schedule of Undiscounted Operating Lease Liabilities [Abstract] | |
2023 | $ 210,870 |
2024 | 430,134 |
2025 | 443,038 |
2026 | 456,330 |
2027 | 470,019 |
2028 and thereafter | 303,574 |
Total undiscounted cash flows | 2,313,965 |
Less: interest | (646,739) |
Present value of lease liabilities | $ 1,667,226 |
Leases (Details) - Schedule o_5
Leases (Details) - Schedule of Undiscounted Finance Lease Liabilities | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Schedule of Undiscounted Finance Lease Liabilities [Abstract] | |
2023 | $ 4,782 |
2024 | 4,782 |
Total undiscounted cash flows | 9,564 |
Less: interest | (644) |
Present value of lease liabilities | $ 8,920 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Property and Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 1,207,069 | $ 1,000,555 | $ 2,370,418 | $ 1,848,129 |
Property and Equipment (Detai_2
Property and Equipment (Details) - Schedule of Property and Equipment - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 27,724,562 | $ 24,610,028 |
Less: accumulated depreciation and amortization | (18,893,584) | (16,523,166) |
Property and equipment, net | 8,830,978 | 8,086,862 |
Furniture, fixtures and vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 395,468 | 395,468 |
Furniture, fixtures and vehicle [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 2 years | |
Furniture, fixtures and vehicle [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Website and internal use software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Property and equipment, gross | $ 23,065,295 | 20,542,457 |
Computers and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,263,799 | $ 3,672,103 |
Computers and software [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Computers and software [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 7 years |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Depreciation and amortization [Member] | ||||
Intangible Assets (Details) [Line Items] | ||||
Intangible assets | $ 443,059 | $ 769 | $ 886,118 | $ 1,538 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of Intangible Assets - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 10 years | |
Gross Carrying Amount | $ 15,338,654 | $ 15,338,654 |
Accumulated Amortization | (1,062,423) | (176,305) |
Net Carrying Amount | $ 14,276,231 | $ 15,162,349 |
Patent [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 10 years | 10 years |
Gross Carrying Amount | $ 30,760 | $ 30,760 |
Accumulated Amortization | (30,414) | (28,876) |
Net Carrying Amount | $ 346 | $ 1,884 |
Franchisee contract-based agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 10 years | 10 years |
Gross Carrying Amount | $ 12,744,367 | $ 12,744,367 |
Accumulated Amortization | (743,420) | (106,203) |
Net Carrying Amount | $ 12,000,947 | $ 12,638,164 |
Liberty Loan brand [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 10 years | 10 years |
Gross Carrying Amount | $ 340,218 | $ 340,218 |
Accumulated Amortization | (19,845) | (2,835) |
Net Carrying Amount | $ 320,373 | $ 337,383 |
Non-compete agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 10 years | 10 years |
Gross Carrying Amount | $ 86,113 | $ 86,113 |
Accumulated Amortization | (5,026) | (718) |
Net Carrying Amount | $ 81,087 | $ 85,395 |
Non contractual customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 5 years | 5 years |
Gross Carrying Amount | $ 1,952,371 | $ 1,952,371 |
Accumulated Amortization | (227,780) | (32,540) |
Net Carrying Amount | $ 1,724,591 | $ 1,919,831 |
Customer list [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 3 years | 3 years |
Gross Carrying Amount | $ 184,825 | $ 184,825 |
Accumulated Amortization | (35,938) | (5,133) |
Net Carrying Amount | $ 148,887 | $ 179,692 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of Future Estimated Amortization Expense | Jun. 30, 2023 USD ($) |
Schedule of Future Estimated Amortization Expense [Abstract] | |
2023 (six months remaining) | $ 884,926 |
2024 | 1,769,160 |
2025 | 1,764,026 |
2026 | 1,707,552 |
2027 | 1,675,012 |
Total | $ 7,800,676 |
Promissory Notes-Related Part_3
Promissory Notes-Related Parties (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Jan. 25, 2019 | |
Promissory Notes-Related Parties (Details) [Line Items] | ||||||
Principal accrued unpaid interest outstanding | $ 1,017,685 | $ 1,017,826 | ||||
Interest paid | $ 53,346 | $ 69,428 | 105,988 | $ 102,144 | ||
Interest expensed | $ 53,346 | 42,462 | $ 105,022 | 104,991 | ||
Maturity date | Dec. 01, 2027 | Dec. 01, 2027 | ||||
Deferred debt cost | $ 917,581 | |||||
Minimum [Member] | ||||||
Promissory Notes-Related Parties (Details) [Line Items] | ||||||
Maturity date | Apr. 01, 2022 | Apr. 01, 2022 | ||||
Credit commitment | $ 3,750,000 | |||||
Maximum [Member] | ||||||
Promissory Notes-Related Parties (Details) [Line Items] | ||||||
Maturity date | Jul. 01, 2024 | Jul. 01, 2024 | ||||
Credit commitment | $ 11,000,000 | |||||
Chief Financial Officer [Member] | ||||||
Promissory Notes-Related Parties (Details) [Line Items] | ||||||
Principal amount | $ 1,000,000 | |||||
Bear interest rate | 21.26% | 21.26% | ||||
NRNS Note [Member] | ||||||
Promissory Notes-Related Parties (Details) [Line Items] | ||||||
Interest paid | $ 573,466 | 382,497 | $ 1,139,375 | 533,783 | ||
Interest expensed | 573,466 | $ 352,207 | 1,128,987 | $ 644,445 | ||
NRNS [Member] | ||||||
Promissory Notes-Related Parties (Details) [Line Items] | ||||||
Principal amount | $ 3,750,000 | 3,750,000 | ||||
Principal accrued unpaid interest outstanding | $ 10,940,113 | $ 10,941,629 | ||||
Bear interest rate | 21.26% | 21.26% |
Promissory Notes-Related Part_4
Promissory Notes-Related Parties (Details) - Schedule of Amounts Payable Under the Promissory Notes | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
2023 [Member] | |
Promissory Notes-Related Parties (Details) - Schedule of Amounts Payable Under the Promissory Notes [Line Items] | |
Debt Principal | $ 1,207,798 |
2024 [Member] | |
Promissory Notes-Related Parties (Details) - Schedule of Amounts Payable Under the Promissory Notes [Line Items] | |
Debt Principal | $ 10,750,000 |
Loan Payable Under Credit Agr_3
Loan Payable Under Credit Agreement (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||
Jul. 01, 2022 | Oct. 21, 2022 | Sep. 27, 2022 | Jan. 29, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Mar. 08, 2022 | Mar. 06, 2015 | |
Loan Payable Under Credit Agreement (Details) [Line Items] | |||||||||||
Lender fee | $ 237,000 | ||||||||||
Loans percentage | 100% | 100% | |||||||||
Borrowed credit agreement | $ 0 | $ 11,000,000 | $ 2,750,000 | $ 17,800,000 | |||||||
Repaid credit agreement | 220,000 | 0 | $ 2,795,000 | 1,125,000 | |||||||
Interest expense | $ 1,896,146 | $ 3,447,990 | |||||||||
Percentage of credit agreement interest rate | 4% | ||||||||||
Debt [Member] | |||||||||||
Loan Payable Under Credit Agreement (Details) [Line Items] | |||||||||||
Outstanding balance under credit agreement | $ 81,155,000 | $ 81,155,000 | $ 81,200,000 | ||||||||
Credit Agreement [Member] | |||||||||||
Loan Payable Under Credit Agreement (Details) [Line Items] | |||||||||||
Borrow from lender | $ 57,500,000 | ||||||||||
Interest rate | 11% | ||||||||||
Bear interest rate | 16.26% | 16.26% | |||||||||
Increased commitment amount | $ 82,500,000 | ||||||||||
Available commitment balance | $ 110,000,000 | ||||||||||
Interest expense | $ 3,332,686 | $ 6,611,523 | |||||||||
Credit Agreement [Member] | Debt [Member] | |||||||||||
Loan Payable Under Credit Agreement (Details) [Line Items] | |||||||||||
Unamortized issuance costs | $ 211,516 | $ 211,516 | $ 352,252 |
Loan Payable Under Credit Agr_4
Loan Payable Under Credit Agreement (Details) - Schedule of Covenant Requirements, and FlexShopper's Actual Results | 6 Months Ended |
Jun. 30, 2023 USD ($) $ / shares | |
Required Covenant [Member] | |
Loan Payable Under Credit Agreement (Details) - Schedule of Covenant Requirements, and FlexShopper's Actual Results [Line Items] | |
Equity Book Value not less than | $ 16,452,246 |
Liquidity greater than | 1,500,000 |
Cash greater than | $ 500,000 |
Consolidated Total Debt to Equity Book Value ratio not to exceed (in Dollars per share) | $ / shares | $ 5.25 |
Actual Position [Member] | |
Loan Payable Under Credit Agreement (Details) - Schedule of Covenant Requirements, and FlexShopper's Actual Results [Line Items] | |
Equity Book Value not less than | $ 27,290,117 |
Liquidity greater than | 6,372,699 |
Cash greater than | $ 6,378,984 |
Consolidated Total Debt to Equity Book Value ratio not to exceed (in Dollars per share) | $ / shares | $ 3.8 |
Capital Structure (Details)
Capital Structure (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2018 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Capital Structure (Details) [Line Items] | ||||||
Convertible | 225,231 | |||||
Common stock, share authorized | 40,000,000 | 40,000,000 | 40,000,000 | |||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Exercise price (in Dollars per share) | $ 1,250 | |||||
Warrants expiration period | 7 years | |||||
Deferred costs (in Dollars) | $ 917,581 | $ 917,581 | ||||
Expense related to warrants (in Dollars) | $ 0 | $ 0 | $ 917,581 | $ 917,581 | ||
Preferred Stock [Member] | ||||||
Capital Structure (Details) [Line Items] | ||||||
Preferred stock, shares authorized | 500,000 | 500,000 | ||||
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | ||||
Common Stock [Member] | ||||||
Capital Structure (Details) [Line Items] | ||||||
Common stock price per share (in Dollars per share) | $ 23 | |||||
Common stock, share authorized | 40,000,000 | 40,000,000 | ||||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||||
Series 1 Convertible Preferred Stock [Member] | ||||||
Capital Structure (Details) [Line Items] | ||||||
Convertible preferred stock outstanding | 170,332 | 170,332 | ||||
Series 1 Convertible Preferred Stock [Member] | Preferred Stock [Member] | ||||||
Capital Structure (Details) [Line Items] | ||||||
Preferred stock, shares authorized | 250,000 | 250,000 | ||||
Preferred stock, designated | 1.3223 | 1.3223 | ||||
Series 2Convertible Preferred Stock [Member] | ||||||
Capital Structure (Details) [Line Items] | ||||||
Preferred stock, designated | 25,000 | 25,000 | ||||
Convertible preferred stock, shares issued upon conversion | 20,000 | 20,000 | ||||
Gross proceeds from sale of shares (in Dollars) | $ 20,000,000 | |||||
Additional sale of shares | 1,952 | |||||
Gross proceeds (in Dollars) | $ 1,950,000 | |||||
Preferred shares sold per share (in Dollars per share) | $ 1,000 | |||||
Stated value, percentage | 10% | 10% | ||||
Cumulative accrued dividends (in Dollars) | $ 21,049,102 | $ 21,049,102 | ||||
Preferred stock conversion into common stock, shares | 266 | |||||
Series 2Convertible Preferred Stock [Member] | Warrant [Member] | ||||||
Capital Structure (Details) [Line Items] | ||||||
Preferred stock conversion into common stock, shares | 439 | |||||
Warrant [Member] | ||||||
Capital Structure (Details) [Line Items] | ||||||
Warrants expiration period | 840000 years | |||||
Warrants exercisable for shares of common stock | 1,055,184 | |||||
Warrant exercise price (in Dollars per share) | $ 1.25 | |||||
Issuance of warrants | 1,200,000 | |||||
Description of warrants expiration | The following table summarizes information about outstanding stock warrants as of June 30, 2023 and December 31, 2022 |
Capital Structure (Details) - S
Capital Structure (Details) - Schedule of Outstanding Stock Warrants - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2021 | |
Class of Warrant or Right [Line Items] | ||
Common Stock Warrants Outstanding | 2,255,184 | |
Exercise Price 1.25 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.25 | |
Common Stock Warrants Outstanding | 1,055,184 | |
Weighted Average Remaining Contractual Life | 3 years | 1 year |
Exercise Price 1.25 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.25 | |
Common Stock Warrants Outstanding | 160,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 1.34 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.34 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 1.40 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.4 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 1.54 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.54 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 1.62 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.62 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 1.68 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.68 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | 2 years |
Exercise Price 1.69 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.69 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 1.74 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.74 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 1.76 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.76 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 1.91 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.91 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 1.95 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.95 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | 2 years |
Exercise Price 2.00 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 2.01 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.01 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 2.08 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.08 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | 2 years |
Exercise Price 2.45 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.45 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 2.53 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.53 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 2.83 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.57 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | 2 years |
Exercise Price 2.70 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.7 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 2 years | 3 years |
Exercise Price 2.78 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.78 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 2.79 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.79 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 2 years | 2 years |
Exercise Price 2.89 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.89 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 4 years | 2 years |
Exercise Price 2.93 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.93 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 3 years | Less than 1 year |
Exercise Price 2.97 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 2.97 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 2 years | 2 years |
Exercise Price 3.09 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 3.09 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 4 years | 2 years |
Exercise Price 3.17 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 3.17 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 4 years | 2 years |
Exercise Price 3.19 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 3.19 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 2 years | 3 years |
Exercise Price 3.27 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 3.27 | |
Common Stock Warrants Outstanding | 40,000 | |
Weighted Average Remaining Contractual Life | 2 years | 2 years |
Equity Compensation Plans (Deta
Equity Compensation Plans (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Equity Compensation Plans (Details) [Line Items] | ||||
Stock-based compensation | $ 443,800 | $ 257,476 | $ 864,548 | $ 562,705 |
Unrecognized compensation cost related to non-vested options | $ 1,441,170 | $ 1,441,170 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 2 years 2 months 26 days | |||
Weighted average grant fair value (in Dollars per share) | $ 0.6 | $ 0.89 | ||
Minimum [Member] | ||||
Equity Compensation Plans (Details) [Line Items] | ||||
Performance based shares (in Shares) | 0 | |||
Maximum [Member] | ||||
Equity Compensation Plans (Details) [Line Items] | ||||
Performance based shares (in Shares) | 1,250,000 |
Equity Compensation Plans (De_2
Equity Compensation Plans (Details) - Schedule of Stock-Based Compensation Expense - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Equity Compensation Plans (Details) - Schedule of Stock-Based Compensation Expense [Line Items] | ||||
Stock-based compensation expense | $ 443,800 | $ 257,476 | $ 864,548 | $ 562,705 |
Stock options [Member] | ||||
Equity Compensation Plans (Details) - Schedule of Stock-Based Compensation Expense [Line Items] | ||||
Stock-based compensation expense | 384,396 | 232,824 | 805,144 | 524,107 |
Performance share units [Member] | ||||
Equity Compensation Plans (Details) - Schedule of Stock-Based Compensation Expense [Line Items] | ||||
Stock-based compensation expense | $ 59,404 | $ 24,652 | $ 59,404 | $ 38,598 |
Equity Compensation Plans (De_3
Equity Compensation Plans (Details) - Schedule of Measured the Fair Value of Each Stock Option Award - Minimum [Member] - $ / shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Equity Compensation Plans (Details) - Schedule of Measured the Fair Value of Each Stock Option Award [Line Items] | ||
Exercise price (in Dollars per share) | $ 0.79 | $ 1.48 |
Expected life | 6 years | 6 years |
Expected volatility | 96% | 68% |
Dividend yield | 0% | 0% |
Risk-free interest rate | 3.54% | 2.04% |
Equity Compensation Plans (De_4
Equity Compensation Plans (Details) - Schedule of Stock Option - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule of Stock Option [Abstract] | ||
Number of options Outstanding beginning | 3,919,228 | 3,080,904 |
Weighted average exercise price Outstanding beginning | $ 1.97 | $ 2.06 |
Aggregate intrinsic value Outstanding beginning | $ 52,223 | $ 1,923,642 |
Number of options Granted | 1,517,844 | 1,050,468 |
Weighted average exercise price Granted | $ 0.79 | $ 1.48 |
Aggregate intrinsic value Granted | $ 75 | |
Number of options Exercised | (1,500) | (162,956) |
Weighted average exercise price Exercised | $ 0.79 | $ 0.84 |
Aggregate intrinsic value Exercised | $ 345 | $ 204,030 |
Number of options Forfeited | (7,333) | |
Weighted average exercise price Forfeited | $ 2.22 | |
Aggregate intrinsic value Forfeited | $ 2,273 | |
Number of options Expired | (25,000) | |
Weighted average exercise price Expired | $ 1.7 | |
Aggregate intrinsic value Expired | ||
Number of options Outstanding ending | 5,435,572 | 3,936,083 |
Weighted average exercise price Outstanding ending | $ 1.64 | $ 1.96 |
Weighted average contractual term (years) Outstanding ending | 7 years 3 months 7 days | 7 years 2 months 1 day |
Aggregate intrinsic value Outstanding ending | $ 1,102,624 | $ 39,412 |
Number of options Vested and exercisable | 4,049,004 | 2,707,122 |
Weighted average exercise price Vested and exercisable | $ 1.84 | $ 2.06 |
Weighted average contractual term (years) Vested and exercisable | 6 years 7 months 28 days | 6 years 6 months 29 days |
Aggregate intrinsic value Vested and exercisable | $ 580,962 | $ 39,412 |
Equity Compensation Plans (De_5
Equity Compensation Plans (Details) - Schedule of Activity in Performance Share Units - shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule of Activity in Performance Share Units [Abstract] | ||
Number of performance share units, Non- vested, Beginning | 790,327 | |
Weighted average grant date fair value, Non- vested, Beginning | 1.53 | |
Number of performance share units, Granted | 1,250,000 | 790,327 |
Weighted average grant date fair value, Granted | 0.78 | 1.53 |
Number of performance share units, Forfeited/ unearned | (790,327) | |
Weighted average grant date fair value, Forfeited/ unearned | 1.53 | |
Number of performance share units, Vested | ||
Weighted average grant date fair value, Vested | ||
Number of performance share units, Non- vested, Ending | 1,250,000 | 790,327 |
Weighted average grant date fair value, Non- vested, Ending | 0.78 | 1.53 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 22% | |
Federal income tax rate | 21% |
Contingencies and Other Uncer_2
Contingencies and Other Uncertainties (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Minimum [Member] | |
Contingencies and Other Uncertainties (Details) [Line Items] | |
Contracts period | 3 years |
Maximum [Member] | |
Contingencies and Other Uncertainties (Details) [Line Items] | |
Contracts period | 5 years |
Revolution Transaction (Details
Revolution Transaction (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Revolution Transaction [Abstract] | ||
Principal amount | $ 5,000,000 | |
Investment maturity date | Dec. 01, 2027 | |
Interest per annum | 8% | |
Consideration transferred | $ 3,421,991 | |
Net discount | 3,133,617 | $ 3,158,471 |
Bargain price | $ 14,461,274 |
Basepoint Credit Agreement (Det
Basepoint Credit Agreement (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) | |
Basepoint Credit Agreement (Details) [Line Items] | ||
Consumer loans | $ 20,000,000 | |
Interest rate | 13.42% | 13.42% |
Current borrowing value | $ 2,000,000 | $ 2,000,000 |
Borrowing rate | 10% | |
Interest expense agreement | 289,574 | $ 592,014 |
Outstanding balance credit agreement | 7,412,605 | 7,412,605 |
Unamortized issuance costs | $ 112,197 | $ 112,197 |
Basepoint Credit Agreement [Member] | ||
Basepoint Credit Agreement (Details) [Line Items] | ||
Interest rate | 5% | 5% |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Employee Benefit Plan [Abstract] | ||||
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent | 4% | |||
Total contribution | $ 36 | $ 30,756 | $ 86,762 | $ 81,373 |
Share Repurchase Program (Detai
Share Repurchase Program (Details) $ in Millions | May 17, 2023 USD ($) |
Share Repurchase Program [Abstract] | |
Repurchase program authorized | $ 2 |
Nasdaq Notices (Details)
Nasdaq Notices (Details) - NASDAQ [Member] - $ / shares | May 31, 2023 | Apr. 21, 2023 |
Nasdaq Notices (Details) [Line Items] | ||
Second Notice from Nasdaq Stock Market, Description | Company received a letter (the “Second Notice”) from The Nasdaq Stock Market notifying the Company that, because the closing bid price of the Company’s common stock had been below $1.00 per share for 30 consecutive business days, it no longer complied with the $1.00 per share minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”) for continued listing on The Nasdaq Capital Market | |
Common stock per share | $ 1 | $ 1 |
Compliance Notice from Nasdaq Stock Market, Description | Company received a letter (the “Compliance Notice”) from Nasdaq notifying the Company that the Listing Qualifications Department (the “Staff”) of Nasdaq has determined that for the last 11 consecutive business days, from May 16, 2023 through May 31, 2023, the closing bid price of the Company’s common stock has been at $1.00 per share or greater. Accordingly, the Company has regained compliance with the Minimum Bid Price Requirement, and the Staff has determined that this matter is now closed |