BOCA RATON, Fla. - FlexShopper, Inc. (NASDAQ:FPAY), a financial technology company, announced Monday its intention to launch a rights offering following the filing of a registration statement with the Securities and Exchange Commission (SEC). The offering will provide stockholders with the opportunity to purchase up to 35 million units, each consisting of a common share and three short-term rights to acquire additional shares at discounted prices.
The company's officers and directors have indicated their interest in participating in the offering. Each stockholder of record will be granted two unit subscription rights for each common share they own on a yet-to-be-determined record date. These rights will be issued at no cost and the offering is set to commence after the registration statement becomes effective.
FlexShopper aims to use the proceeds from this offering to fund over 90% of its series 2 convertible preferred stock repurchase, reduce its credit facility balance, and finance potential acquisitions of other payment solutions companies. Any additional funds will be allocated for general corporate purposes.
The rights offering will allow stockholders who fully exercise their subscription rights to also oversubscribe for additional units, subject to availability and pro rata allocation. The specifics of the record date, subscription, and expiration dates, as well as pricing details, will be provided in the final prospectus.
Moody Capital Solutions, Inc. has been engaged as the dealer manager for the offering. FlexShopper has reserved the right to terminate the offering at any time before the expiration date for any reason. The offering is contingent upon the SEC's approval of the registration statement and will only be made through a prospectus.
FlexShopper, known for providing flexible payment options to consumers, operates both an online marketplace and partnerships with various merchants. The proposed rights offering is part of the company's strategy to strengthen its financial position and expand its market presence.
This announcement is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities. The securities mentioned may not be sold until the registration statement filed with the SEC becomes effective.
In other recent news, FlexShopper, Inc. has announced plans to buy back 91% of its Series 2 Preferred Stock at a significant discount, a move expected to contribute approximately $4 million to annual operating income. The company has also expanded its authorized common stock from 40 million to 100 million shares, a development confirmed at its recent annual meeting.
In the realm of legal proceedings, FlexShopper has initiated lawsuits against Upbound Group, Inc., and Katapult Holdings, Inc., alleging unauthorized use of its patented lease-to-own technology. The company, represented by Quinn Emanual Urquhart & Sullivan LLP, is seeking both injunctive relief and monetary damages.
Despite these legal actions, FlexShopper maintains its Buy rating from H.C. Wainwright. These are among the recent developments surrounding FlexShopper, Inc. The company's strategic moves and legal actions are expected to strengthen its financial position and deliver value to its shareholders.
InvestingPro Insights
FlexShopper's planned rights offering comes at a time when the company is experiencing significant financial dynamics. According to InvestingPro data, FlexShopper has seen impressive revenue growth, with a 23.81% increase over the last twelve months as of Q2 2023, and an even stronger 29.46% growth in the most recent quarter. This growth trajectory aligns with the company's ambition to strengthen its financial position through the proposed rights offering.
Despite the revenue growth, an InvestingPro Tip indicates that FlexShopper is "quickly burning through cash," which may explain the urgency of the rights offering to repurchase preferred stock and reduce credit facility balance. This cash burn rate could be a critical factor for investors to consider when evaluating the offering.
Another InvestingPro Tip highlights that the company has not been profitable over the last twelve months, with a negative P/E ratio of -7.17. This profitability challenge underscores the importance of the planned use of proceeds from the rights offering, particularly for potential acquisitions that could enhance the company's market position and financial performance.
It's worth noting that FlexShopper's stock has shown strong recent performance, with a 52.43% return over the last month and a 45.37% return over the last three months. This positive momentum could potentially boost investor interest in the upcoming rights offering.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for FlexShopper, providing a deeper understanding of the company's financial health and market position.
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