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SHARE REPURCHASE PROGRAM
 9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
SHARE REPURCHASE PROGRAM 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 – Series 1 Convertible Preferred Stock ranks senior to common stock upon liquidation.
As of September 30, 2024, 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 September 30, 2024, there were 170,332 shares of Series 1 Convertible Preferred Stock outstanding, which were convertible into 225,231 shares of common stock.
•Series 2 Convertible Preferred Stock – The Company sold to B2 FIE V LLC (the “Investor”), an entity affiliated with Pacific Investment Management Company LLC, 20,000 shares of Series 2 Convertible Preferred Stock
(“Series 2 Preferred Stock”) for gross proceeds of $20.0 million. The Company sold an additional 1,952 shares of Series 2 Preferred Stock to a different investor for gross proceeds of $1.95 million at a subsequent closing.
The Series 2 Preferred Shares were sold for $1,000 per share (the “Stated Value”) and accrue dividends on the Stated Value at an annual rate of 10% compounded annually. Cumulative accrued dividends as of September 30, 2024 totaled $26,525,613. As of September 30, 2024, 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.”
See subsequent events related to Common Stock on Note 18.

Warrants
In September 2018, the Company issued warrants exercisable for an aggregate 1,055,184 shares of common stock at an exercise price of $1.25 per warrant to Mr. Heiser and NRNS in connection with partial conversions of their promissory notes (the “Conversion Warrants”). The original expiration date of these warrants was September 28, 2023 (and extended as described below).
From January 2019 to August 2021, the Company issued to PITA Holdings, LLC (“PITA”) Common Stock Purchase Warrants (the “Consulting Warrants”) to purchase up to an aggregate of 1,200,000 shares of the Company’s common stock 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 of the Consulting Warrants was extended 30 months from the original expiration date. The cost of the warrant modification was $917,581 and was recorded as a deferred debt cost of NRNS note.
There was no expense related to warrants during the three and nine months ended September 30, 2024, and the expense related to warrants was $917,581 and $917,581 for the three and nine months ended September 30, 2023, respectively.
The following table summarizes information about outstanding stock warrants as of September 30, 2024 and December 31, 2023, all of which are exercisable:
Exercise
Price
Common
Stock Warrants
Outstanding
Weighted Average
Remaining
Contractual Life
September 30, 2024Dec 31, 2023
$1.25 1,055,1841 year2 years
$1.25 160,0001 year2 years
$1.34 40,0001 year2 years
$1.40 40,0001 year2 years
$1.54 40,0001 year2 years
$1.62 40,0001 year2 years
$1.68 40,0001 year2 years
$1.69 40,0001 year2 years
$1.74 40,0001 year2 years
$1.76 40,0001 year2 years
$1.91 40,0001 year2 years
$1.95 40,0001 year2 years
$2.00 40,0001 year2 years
$2.01 40,0001 year2 years
$2.08 40,0001 year2 years
$2.45 40,0001 year2 years
$2.53 40,0001 year2 years
$2.57 40,0001 year2 years
$2.70 40,000
1 years
2 years
$2.78 40,0001 year2 years
$2.79 40,000
1 years
2 years
$2.89 40,0003 years4 years
$2.93 40,0001 year2 years
$2.97 40,000
1 years
2 years
$3.09 40,0002 years3 years
$3.17 40,0003 years4 years
$3.19 40,000
1 years
2 years
$3.27 40,000
1 years
2 years
2,255,184
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 have a term through May 2025 and may be suspended or discontinued at any time and does not obligate the company to acquire any amount of common stock.
The Company purchased under the share repurchase program 362,793 shares of common stock for a net cost of $396,780 for the nine months ended September 30, 2024.