Flexshopper
Annual Report 2014

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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K ☒☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 or☐☐TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ___ Commission File Number: 0-52589 FLEXSHOPPER, INC. (Exact name of Registrant as specified in its charter) Delaware 20-5456087(State of jurisdiction of (I.R.S. Employerincorporation or organization) Identification Number) 2700 North Military Trail, Ste. 200 Boca Raton, FL 33431 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (866) 950-6669 Securities registered pursuant to Section 12 (b) of the Act: None Securities registered pursuant to Section 12 (g) of the Act: Common Stock, $.0001 Par Value Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filingrequirements for the past 90 days. Yes ☒ No ☐. Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes ☒ No ☐ 1 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the bestof registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K ☒. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: smaller reporting company ☒. Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ As of June 30, 2014, the number of shares of Common Stock held by non-affiliates was approximately 16,908,000 shares (excluding 376,387 shares of SeriesA Preferred Stock convertible into 2,145,406 common shares). The approximate market value based on the last sale (i.e. $0.75 per share as of June 30, 2014)of the Company’s Common Stock held by non-affiliates was approximately $14,180,000. The number of shares outstanding of the Registrant’s Common Stock, as of March 19, 2015, was 52,015,322. The Registrant also has outstanding 342,219shares of Series 1 Preferred Stock convertible into 2,166,246 shares of Common Stock. Documents incorporated by reference: None. 2 FORWARD-LOOKING STATEMENTS We believe this annual report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Thesestatements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management, based on information currently available toour management. When we use words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “should,” “likely” or similar expressions,we are making forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results of operationsset forth under “Business” and/or “Management's Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements reflect only our current expectations. We may not update these forward-looking statements, even though our situation maychange in the future. In any forward-looking statement, where we express an expectation or belief as to future results or events, such expectation or belief isexpressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will be achieved oraccomplished. Our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statementsdue to a number of uncertainties, many of which are unforeseen, including those matters discussed in the “Risk Factors” section of this Form 10-K. As a resultof these factors, we cannot assure you that the forward-looking statements in this Registration Statement will prove to be accurate. Furthermore, if ourforward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-lookingstatements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans inany specified time frame, if at all. Accordingly, you should not place undue reliance on these forward-looking statements. We qualify all the forward-looking statements contained in this Form 10-K by the foregoing cautionary statements. 3 PART I Item 1. Business Introduction FlexShopper, Inc. (“we,” “us,” “our” or the “Company”) is a corporation organized under the laws of the State of Delaware on August 16, 2006.FlexShopper owns 100% of FlexShopper, LLC, a limited liability company incorporated under the laws of North Carolina on June 24, 2013. Since the sale ofthe assets of Anchor Funding Services LLC, which sale was completed in a series of transactions between April and June 2014, FlexShopper, Inc. is a holdingcorporation with no operations except for those conducted by FlexShopper, LLC. FlexShopper LLC owns two wholly-owned Delaware subsidiaries, namely,FlexShopper 1, LLC and FlexShopper 2, LLC. All references to the business operations of FlexShopper refer to FlexShopper LLC and its wholly-ownedsubsidiaries, unless the context indicates otherwise. Recent Developments On March 6, 2015, FlexShopper entered into a credit agreement (the “Credit Agreement”) with a Lender. FlexShopper is permitted to borrow fundsunder 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 theCredit Agreement) less certain deductions described in the Credit Agreement. Under the terms of the Credit Agreement, subject to the satisfaction of certainconditions, FlexShopper may borrow up to $25,000,000 from the Lender for a term of two years. The borrowing term may be extended for an additionaltwelve months in the sole discretion of the Lender. The Credit Agreement contemplates that the Lender may provide additional debt financing toFlexShopper, up to $100 million in total, under two uncommitted accordions following satisfaction of certain covenants and other terms and conditions. TheLender will receive security interests in certain leases as collateral under the Credit Agreement. In connection with entering into the Credit Agreement, onMarch 6, 2015, FlexShopper raised approximately $8.6 million in net proceeds through direct sales of 17.0 million shares of FlexShopper common stock, parvalue $0.0001 per share, to certain affiliates of the Lender and other accredited investors for a purchase price of $0.55 per share.Overview In June 2013, we formed FlexShopper for the purpose of developing a business that provides certain types of durable goods to consumers on a lease-to-own basis and also provides lease-to-own terms to consumers of third party retailers and e-tailers. FlexShopper has been generating revenues from this newline of business since December 2013. Management believes that the introduction of FlexShopper's lease-to-own (“LTO”) programs support broad untappedexpansion opportunities within the U.S. consumer e-commerce and retail marketplaces. FlexShopper and its online LTO products provide consumers theability to acquire durable goods, including electronics, computers and furniture on an affordable payment, lease basis. Concurrently, e-tailers and retailersthat work with FlexShopper may increase their sales by utilizing FlexShopper's online channels to connect with consumers that want to acquire products onan LTO basis. GROWTH OPPORTUNITIES AND STRATEGIES FlexShopper believes there is significant opportunity to expand the LTO industry online and into mainstream retail and e-tail. The LTO industrycurrently serves approximately six million consumers annually, generating approximately $8.5 billion in sales primarily through approximately 10,000 LTObrick and mortar stores. Through its strategic sales channels FlexShopper believes it will expand the LTO industry, also known as the rent-to-own or RTOindustry. FlexShopper has successfully developed and is currently processing LTO transactions using its “LTO Engine.” The LTO Engine is FlexShopper’sproprietary technology that automates the process of consumers receiving spending limits and entering into leases for durable goods within a few minutes.The LTO engine is the basis for FlexShopper’s primary sales channels which provide consumers three distinct ways of obtaining brand name durable goodson an LTO basis: 1) At FlexShopper’s LTO e-commerce marketplace, www.flexshopper.com, consumers can choose from over 80,000 different itemsincluding electronics, furniture, musical instruments, and equipment. 2) On third party e-commerce sites featuring FlexShopper’s LTO payment method,consumers can activate FlexShopper’s payment button at checkout. 3) Consumers can use FlexShopper’s automated kiosk in certain retail locations. FlexShopper launched its online LTO Marketplace in March 2014 and FlexShopper launched its LTO payment method in December 2014. Retailersand e-tailers that sell furniture, electronics, computers, appliances and other durable goods and partner with FlexShopper, will have three channels to increasetheir sales: in the store, online and on our marketplace. FlexShopper will enable merchants to sell to more than 50 million consumers that do not havesufficient credit or cash to buy from them. In addition, FlexShopper pays the merchant 100% pf the retail price. Our offerings to retail merchants are as followsas depicted in our marketing literature: 4 COMPETITIVE STRENGTHSWe believe the following competitive strengths differentiate us:·We currently address the lease to own market through online channels which include our online marketplace and patent pending LTO paymentmethod. These channels give us the ability to currently originate leases in forty five states without the operating expenses associated with havingphysical store-fronts in those states.·We believe our three channels described above, provide a compelling package for retailers to adopt to increase their sales with a vast customer base.·Our LTO online marketplace and patent pending payment method offer consumers more choices in products and retailers than traditional brick andmortar LTO storefronts. Our digital channels provide consumers with a selection of over 80,000 items including brand name products fromrecognized retailers. INDUSTRY OVERVIEW The lease-to-own industry offers customers an alternative to traditional methods of obtaining electronics, computers, home furnishings andappliances. In a typical industry lease-to-own transaction, the customer has the option to acquire merchandise over a fixed term, usually 12 to 24 months,normally by making weekly lease payments. The customers may cancel the agreement as prescribed in the lease agreement by returning the merchandise,generally with no further lease obligation if their account is current. If customers lease the item to the full term, they obtain ownership of the item, thoughthey can choose to buy it at any time. FlexShopper’s current fixed term to acquire ownership is fifty-two weeks. The lease-to-own concept is particularly popular with consumers who cannot pay the full purchase price for merchandise at once or who lack thecredit to qualify under conventional financing programs. Lease-to-own is also popular with consumers who, despite good credit, do not wish to incuradditional debt, have only a temporary need for the merchandise or want to try out a particular brand or model before buying it. We believe that there is significant market opportunity to expand the LTO market beyond brick and mortar stores by creating an online presencethrough an LTO e-commerce site and payment method. We believe that the segment of the population targeted by the industry comprises more than 50million people in the United States and the needs of these consumers are generally underserved. UNDERWRITING PROCESS AND RISK MANAGEMENT FlexShopper has developed a proprietary decision engine that automates the process of consumers receiving spending limits and entering into leasesfor durable goods within a few minutes. Included in the determination of a consumer spending limit are factors such as income, frequency that they overdrawtheir bank account, fraud reports, repayment history and charge-off history. The Company obtains such consumer data from multiple third party sourceswhich are monitored and analyzed by our risk department. We will continually update our underwriting models to manage risk of default. Our decisionengine also includes fraud tools and information from third party data sources to combat online fraud. We will continuously develop and implement ongoingimprovements to reduce losses due to fraudulent activity. In 2015, the Company has enhanced its risk department with two new hires including a VicePresident of Risk and an Analytics Manager. 5 CUSTOMERS FlexShopper’s customers typically do not have sufficient cash or credit to obtain durable goods. These consumers find the short-term nature andaffordable payments of lease-to-own attractive. The lease-to-own industry serves a highly diverse customer base. According to the Association of ProgressiveRental Organizations, approximately 83% of lease to-own customers have household incomes between $15,000 and $50,000 per year. We believe we canexpand the LTO market beyond brick and mortar stores with our LTO e-commerce site and online payment method. These sales channels will enable us toserve and target more than 50 million people that we believe do not have sufficient cash or credit for durable goods. SALES AND MARKETING We plan to promote our FlexShopper products and services through print advertisements, Internet sites and direct response marketing, all of whichare designed to increase our lease transactions and name recognition. Our advertisements emphasize such features as instant spending limit and affordableweekly payments. We believe that as the FlexShopper name gains familiarity and national recognition through our advertising efforts, we will continue toeducate our customers and potential customers about the lease-to-own payment alternative as well as solidify our reputation as a leading provider of highquality branded merchandise and services. For each sales channel FlexShopper has a marketing strategy that includes but is not limited to the following: Online LTO MarketplacePatent pending LTO Payment MethodIn-store LTO technology platformSearch engine optimization; pay-per clickDirect to retailers/etailersDirect to retailers/etailersOnline affiliate networksPartnerships with payment aggregatorsConsultants & strategic relationshipsDirect response television campaignsConsultants & strategic relationships Direct mail MANAGEMENT INFORMATION SYSTEMSFlexShopper uses computer-based management information systems to facilitate its entire business model including underwriting, processingtransactions through its sales channels, managing collections and monitoring leased inventory. Through the use of our proprietary software developed in-house, each of our retail partners uses our online merchant portal that automates the process of consumers receiving spending limits and entering into leasesfor durable goods within a few minutes. The management information system generates reports which enable us to meet our financial reporting requirements. GOVERNMENT REGULATIONS The lease to own industry is regulated by and subject to the requirements of various federal, state and local laws and regulations, many of which arein place for consumer protection. In general such laws regulate applications for leases, late fees, other finance rates, the form of disclosure statements, thesubstance and sequence of required disclosures, the content of advertising materials and certain collection procedures. Violations of certain provisions ofthese laws may result in penalties ranging from nominal amounts up to and including forfeiture of fees and other amounts due on leases. We are unable topredict the nature or effect on our operations or earnings of unknown future legislation, regulations and judicial decisions or future interpretations of existingand future legislation or regulations relating to our operations, and there can be no assurance that future laws, decisions or interpretations will not have amaterial adverse effect on our operations and earnings. See “Risk Factors.” COMPETITION The lease-to-own industry is highly competitive. Our operation competes with other national, regional and local lease-to-own businesses, as well aswith rental stores that do not offer their customers a purchase option. Some of these companies have, or may develop, systems that enable consumers to obtainthrough online facilities spending limits and payment terms and to enter into leases nearly instantaneously, in a manner similar to that provided byFlexShopper’s proprietary technology. Many of our competitors have substantially more resources and greater experience in the lease-to-own business thanFlexShopper. With respect to customers desiring to purchase merchandise for cash or on credit, we also compete with retail stores. Competition is basedprimarily on store location, product selection and availability, customer service, and lease rates and terms. We believe that currently we do not havesignificant competition for our on-line LTO marketplace and patent pending LTO payment method, however there is no assurance that other companies maynot develop similar or competing concepts that could adversely impact the usage or value of our online LTO marketplace or our LTO payment method. 6 INTELLECTUAL PROPERTY FlexShopper has filed a provisional patent for a system that enables consumers to obtain products on an LTO basis using mobile devices and tabletsand for a lease-to-own method of payment at check-out on e-commerce sites. We can provide no assurances that FlexShopper will be granted any patents bythe U.S. Patent and Trademark Office. We regard our pending patents, trademarks, service marks, copyrights, trade dress, trade secrets, proprietary technology,and similar intellectual property as critical to our success. In particular, we believe certain proprietary information, including but not limited to ourunderwriting model, and patent pending systems are central to our business model and we believe give us a key competitive advantage. We rely on trademarkand copyright law, trade secret protection, and confidentiality, license and work product agreements with our employees, customers, and others to protect ourproprietary rights. See “Risk Factors.” OPERATIONS AND EMPLOYEES OF FLEXSHOPPER Brad Bernstein, our Chief Executive Officer manages our day-to-day operations and internal growth and oversees our growth strategy. FlexShopper’smanagement includes an Executive Vice President of Operations, Chief Financial Officer, Chief Technology Officer with oversight of the Company’sdevelopment team and a Vice President of e-commerce. In addition, FlexShopper has a customer service and collections call center. As of December 31, 2014,FlexShopper had 44 full-time employees. DISCONTINUED OPERATIONS OF ANCHOR Anchor Funding Services LLC was incorporated under the laws of the State of South Carolina in January 2003 and later reincorporated under thelaws of the State of North Carolina in August 2005. Anchor operated its factoring business for approximately 10 years until the assets were sold in a series ofclosings between April and June, 2014. Anchor purchased clients’ accounts receivable which provided businesses with critical working capital so it couldmeet their operational costs and obligations while waiting to receive payments from its customers. Anchor also provided purchase order financing. During 2013, FlexShopper decided to concentrate its efforts on the operations of FlexShopper and subsequently on April 30, 2014, we entered into an AssetPurchase and Sale Agreement (the “Purchase Agreement”) with a Bank, pursuant to which Anchor Funding Services LLC sold to the Bank substantially all ofits assets (the “Anchor Assets”), consisting primarily of its factoring portfolio (the “Portfolio Accounts”). The purchase price for the Anchor Assets was equalto (1) 110% of the total funds outstanding associated with the Portfolio Accounts plus (2) an amount equal to 50% of the factoring fee and interest incomeearned by the Portfolio Accounts during the 12 month period following acquisition (“Earnout Payments”). The sale of the Anchor Assets was made in a seriesof closings through June 16, 2014. In connection with each closing, Anchor used the proceeds thereof to pay to Bank all amounts due for factor advancesassociated with the Portfolio Accounts acquired pursuant to such closing under Anchor’s Rediscount Facility Agreement with the Bank dated November 30,2011. In accordance with the Purchase Agreement, following the final closing thereunder all obligations of Anchor under the Rediscount Facility Agreement(and the associated Validity Warranty) were paid and satisfied in full and the agreement was terminated to have no further force and effect. Item 1A. Risk Factors You should carefully consider the following risk factors, in addition to the other information presented in this Form 10-K, in evaluating us and ourbusiness. Any of the following risks, as well as other risks and uncertainties, could harm our business and financial results and cause the value of oursecurities to decline, which in turn could cause you to lose all or part of your investment. An investment in our common stock involves a high degree of risk. You should consider carefully the following risks and other information containedin this Form 10-K before you decide whether to buy our common stock. If any of the events contemplated by the following discussion of risks should occur,our business, results of operations and financial condition could suffer significantly. As a result, the market price of our common stock could decline, andyou may lose all or part of the money you paid to buy our common stock. In addition, the risks described below are not the only ones facing our company.Additional risks and uncertainties of which we are unaware or currently deem immaterial may also become important factors that may harm our business. Business Risks Limited operating history. FlexShopper, LLC, which was formed in June 2013 to enter the lease-to-own business, has a limited operating historyupon which investors may judge our performance. Our new FlexShopper business has generated revenues over a limited operating history and has incurrednet losses. Our ability to achieve profitability in this business will depend upon many factors, including, without limitation, our ability to execute our growthstrategy and technology development, obtain sufficient capital, develop relationships with third party retail partners, adapt to fluctuations in the economyand modify our strategy based on the degree and nature of competition. Our senior management team has very limited experience in the lease-to-ownindustry. While we believe our FlexShopper business model will be successful, prior success of our senior management in other businesses should not viewedas an indication that we will be profitable. We can provide no assurances that our operations will ever be profitable. 7 Our business liquidity and capital resources are dependent upon our credit agreement with an institutional lender and our compliance with theterms thereof. On March 6, 2015, FlexShopper, through a wholly-owned subsidiary (the “Borrower”), entered into a credit agreement (the “CreditAgreement”) with a lender (the “Lender”). The Borrower is permitted to borrow funds under the Credit Agreement based on the Borrower’s cash on hand andthe Amortized Order Value of the Borrower’s Eligible Leases (as such terms are defined in the Credit Agreement) less certain deductions described in theCredit Agreement. Under the terms of the Credit Agreement, subject to the satisfaction of certain conditions, the Borrower may borrow up to $25,000,000from the Lender for a term of two years. The borrowing term may be extended for an additional twelve months in the sole discretion of the Lender. The CreditAgreement contemplates that the Lender may provide additional debt financing to the Borrower, up to $100 million in total, under two uncommittedaccordions following satisfaction of certain covenants and other terms and conditions. The Lender will receive security interests in certain leases as collateralunder the Credit Agreement. For the term of the Credit Agreement, FlexShopper and its subsidiaries may not incur additional indebtedness (other than certainindebtedness expressly permitted under the Credit Agreement) without the permission of the Lender. The Lender and its affiliates will have a right of firstrefusal on certain subsequent FlexShopper transactions involving leases or other financial products during the term of the Credit Agreement and up to threemonths following the termination thereof. The Credit Agreement includes customary events of default, including, among others, failures to make payment ofprincipal and interest, breaches or defaults under the terms of the Credit Agreement and related agreements entered into with the Lender, breaches ofrepresentations, warranties or certifications made by or on behalf of the Borrower in the Credit Agreement and related documents (including certain financialand expense covenants), deficiencies in the borrowing base, certain judgments against the Borrower and bankruptcy events. If an event of default occurs andis continuing, the Lender may, among other things, terminate any remaining commitments available to the Borrower, declare all outstanding principal andinterest immediately due and payable and enforce any and all liens created in connection with the Credit Agreement. The occurrence of an event of defaultunder the terms of our Credit Agreement may materially and adversely affect our operations. FlexShopper LTO revenue and earnings growth depend on our ability to execute our growth strategies. Our primary growth strategies are ourFlexShopper LTO online products to consumers and utilization by retailers of FlexShopper’s online channels to connect with customers that want to acquireproducts on a LTO basis. Effectively managing the development and growth can be challenging, particularly as we develop the management and operationalsystems necessary to develop this line of business. If we are unable to successfully execute these growth strategies, revenue from this line of business willgrow slowly or not at all, and we may never achieve profitability. Our LTO business depends on the success of our third-party retail partners and our continued relationships with them. Our LTO revenues dependin part on the ability of unaffiliated third-party retailers to attract customers. In addition, in most cases, our agreements with such third-party retailers may beterminated at the retailer's election. The failure of our third-party retail partners to maintain quality and consistency in their operations and their ability tocontinue to provide products and services, or the loss of the relationship with any of these third-party retailers and an inability to replace them, could causeour LTO business to lose customers, substantially decreasing the revenues and earnings growth in our LTO business. Our growth will depend on our ability to develop our brands, and these efforts may be costly. Our ability to develop the FlexShopper brand will becritical to achieving widespread acceptance of our services, and will require a continued focus on active marketing efforts. We will need to continue to spendsubstantial amounts of money on, and devote substantial resources to, advertising, marketing, and other efforts to create and maintain brand loyalty amongour customers. If we fail to promote and maintain our brand, or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brand,our business would be harmed. Our LTO business will depend on the continued growth of online and mobile commerce. The business of selling goods over the Internet and mobilenetworks is dynamic and relatively new. Concerns about fraud, privacy and other problems may discourage additional consumers from adopting the Internetor mobile devices as modes of commerce, or may prompt consumers to offline channels. In order to expand our user base, we must appeal to and acquireconsumers who historically have used traditional means of commerce to purchase goods and may prefer Internet analogues to such traditional retail means,such as the retailer's own website, to our offerings. If these consumers prove to be less active than we expect due to lower levels of willingness to use theInternet or mobile devices for commerce for any reason, including lack of access to high-speed communications equipment, traffic congestion on the Internetor mobile network outages or delays, disruptions or other damage to users' computers or mobile devices, and we are unable to gain efficiencies in ouroperating costs, including our cost of acquiring new users, our business could be adversely impacted. 8 Our customer base presents significant risk of default for non-payment. We bear the risk of non-payment or slow payment by our customers. Thenature of our customer base makes it sensitive to adverse economic conditions and less likely to meet our prevailing underwriting standards, which may bemore restrictive in an adverse economic environment. As a result, during such periods we may experience decreases in the growth of new customers, and wemay curtail spending limits to existing customers, which may adversely affect our net sales and potential profitability. Our customers can return merchandise without penalty. When our customers acquire merchandise through the FlexShopper LTO program, weactually purchase the merchandise from the retailer and enter the lease-to-own relationship with the customer. Because our customers can return merchandisewithout penalty, there is risk that we may end up owning a significant amount of merchandise that is difficult to monetize. While we have factored customerreturns into our business model, customer return volume may exceed the levels we expect, which could adversely impact our collections, revenues and ourfinancial performance. Returns totaled approximately $77,000 carrying value of leased merchandise during the twelve months ended December 31, 2014. We rely on third party credit/debit card and ACH (Automated Clearing House) processors to process collections from customers on a weeklybasis. Our ability to collect from customers could be impaired if these processors did not work with us. These third-party payment processors may considerour business a high risk since our customer base could have a high incidence of insufficient funds and rejected payments. This could cause a processor todiscontinue its services to us, and we may not be able to find a replacement processor. If this occurred, we would have to collect from our customers using lessefficient methods, which could adversely impact our collections, revenues and our financial performance. We rely on internal models to manage risk, to provide accounting estimates and to make other business decisions. Our results could be adverselyaffected if those models do not provide reliable estimates or predictions of future activity. The accurate modeling of risks is critical to our business,particularly with respect to managing underwriting and spending limits for our customers. Our expectations regarding customer repayment levels, as well asour allowances for doubtful accounts and other accounting estimates, are based in large part on internal modeling. We also rely heavily on internal models inmaking a variety of other decisions crucial to the successful operation of our business. It is therefore important that our models are accurate, and any failure inthis regard could have a material adverse effect on our results. Models are inherently imperfect predictors of actual results because they are based on historicaldata available to us and our assumptions about factors such as demand, payment rates, default rates, delinquency rates and other factors that may overstate orunderstate future experience. Our models could produce unreliable results for a number of reasons, including the limitations or lack of historical data topredict results, invalid or incorrect assumptions underlying the models, the need for manual adjustments in response to rapid changes in economicconditions, incorrect coding of the models, incorrect data being used by the models or inappropriate application of a model to products or events outside ofthe model’s intended use. In particular, models are less dependable when the economic environment is outside of historical experience, as has been the caserecently. Due to the factors described above, unanticipated and excessive default and charge-off experience can adversely affect our profitability andfinancial condition, breach covenants in future credit facilities, limit our ability to secure a credit facility and adversely affect our ability to finance ourbusiness. Our operations are regulated by and subject to the requirements of various federal and state laws and regulations. These laws and regulations,which may be amended or supplemented or interpreted by the courts from time to time, could expose us to significant compliance costs or burdens or forceus to change our business practices in a manner that may be materially adverse to our operations, prospects or financial condition. Currently, 47 states andthe District of Columbia specifically regulate rent-to-own, lease-to-own transactions. At the present time, no federal law specifically regulates the rent-to-ownindustry, although federal legislation to regulate the industry has been proposed from time to time. Any adverse changes in existing laws, or the passage ofnew adverse legislation by states or the federal government could materially increase both our costs of complying with laws and the risk that we could besued or be subject to government sanctions if we are not in compliance. In addition, new burdensome legislation might force us to change our business modeland might reduce the economic potential of our sales and lease ownership operations. Most of the states that regulate rent-to-own transactions have enacteddisclosure laws that require rent-to-own companies to disclose to their customers the total number of payments, total amount and timing of all payments toacquire ownership of any item, any other charges that may be imposed and miscellaneous other items. The more restrictive state lease purchase laws limit thetotal amount that a customer may be charged for an item, or regulate the "cost-of-rental" amount that rent-to-own companies may charge on rent-to-owntransactions, generally defining "cost-of-rental" as lease fees paid in excess of the “retail” price of the goods. There has been increased legislative attention inthe United States, at both the federal and state levels, on consumer debt transactions in general, which may result in an increase in legislative regulatoryefforts directed at the rent-to-own industry. We cannot guarantee that the federal government or states will not enact additional or different legislation thatwould be disadvantageous or otherwise materially adverse to us. In addition to the risk of lawsuits related to the laws that regulate rent-to-own and consumerlease transactions, we could be subject to lawsuits alleging violations of federal and/or state laws and regulations and consumer tort law, including fraud,consumer protection, information security and privacy laws, because of the consumer-oriented nature of the rent-to-own industry. A large judgment againstFlexShopper could adversely affect our financial condition and results of operations. Moreover, an adverse outcome from a lawsuit, even one against one ofour competitors, could result in changes in the way we and others in the industry do business, possibly leading to significant costs or decreased revenues orprofitability. 9 If we fail to protect the integrity and security of customer and employee information, we could be exposed to litigation or regulatory enforcement,and our business could be adversely impacted. We collect and store certain personal information provided to us by our customers and employees in theordinary course of our business. Despite instituted safeguards for the protection of such information, we cannot be certain that all of our systems are entirelyfree from vulnerability to attack. Computer hackers may attempt to penetrate our network security and, if successful, misappropriate confidential customer oremployee information. In addition, one of our employees, contractors or other third party with whom we do business may attempt to circumvent our securitymeasures in order to obtain such information, or inadvertently cause a breach involving such information. Loss of customer or employee information coulddisrupt our operations, damage our reputation and expose us to claims from customers, employees, regulators and other persons, any of which could have anadverse effect on our business, financial condition and results of operations. In addition, the costs associated with information security, such as increasedinvestment in technology, the costs of compliance with privacy laws and costs incurred to prevent or remediate information security breaches, couldadversely impact our business. The loss of any of our key personnel could harm our business. Our future financial performance will depend to a significant extent on our ability tomotivate and retain key management personnel. Further, FlexShopper is seeking to hire additional qualified management for its FlexShopper business.Competition for qualified management personnel is intense, and there can be no assurance that we will be able to hire additional qualified management onterms satisfactory to FlexShopper. Further, in the event we experience turnover in our senior management positions, we cannot assure you that we will be ableto recruit suitable replacements. We must also successfully integrate all new management and other key positions within our organization to achieve ouroperating objectives. Even if we are successful, turnover in key management positions may temporarily harm our financial performance and results ofoperations until new management becomes familiar with our business. At present, we do not maintain key-man life insurance on any of our executive officers,although we entered into an employment contract with Brad Bernstein, Chief Executive Officer and President. Our Board of Directors is responsible forapproval of all future employment contracts with our executive officers. We can provide no assurances that said future employment contracts and/or theircurrent compensation is or will be on commercially reasonable terms to us in order to retain our key personnel. The loss of any of our key personnel couldharm our business. Competition in the LTO business is intense. The lease-to-own industry is highly competitive. Our operation will compete with other national,regional and local lease-to-own businesses, as well as with rental stores that do not offer their customers a purchase option. Some of these companies have, ormay develop, systems that enable consumers to obtain through online facilities spending limits and payment terms and to enter into leases nearlyinstantaneously, in a manner similar to that provided by FlexShopper’s proprietary technology. Many of our competitors will have substantially moreresources and greater experience in the lease-to-own business of FlexShopper. With respect to customers desiring to purchase merchandise for cash or oncredit, we also compete with retail stores. Competition is based primarily on store location, product selection and availability, customer service and leaserates and terms. We believe we do not currently have significant competition for our on-line LTO marketplace and patent pending LTO payment method.However, such competition is likely to develop over time, and we may be unable to successfully compete in our target markets. We can provide no assurancesthat we will be able to successfully compete in the LTO industry. Worsening of current economic conditions could result in decreased revenues or increased costs. Although we believe an economic downturn canresult in increased business in the lease-to-own market as consumers increasingly find it difficult to purchase home furnishings, electronics and appliancesfrom traditional retailers on store installment credit, it is possible that if the conditions continue for a significant period of time, or get worse, consumers maycurtail spending on all or some of the types of merchandise we offer, in which event our revenues may suffer. Changes in regulations or customer concerns, in particular as they relate to privacy and protection of customer data, could adversely affect ourbusiness. Our business is subject to laws relating to the collection, use, retention, security and transfer of personally identifiable information about ourcustomers. The interpretation and application of privacy and customer data protection laws are in a state of flux and may vary from jurisdiction tojurisdiction. These laws may be interpreted and applied inconsistently and our current data protection policies and practices may not be consistent with thoseinterpretations and applications. Complying with these varying requirements could cause us to incur substantial costs or require us to change our businesspractices in a manner adverse to our business. Any failure, or perceived failure, by us to comply with our own privacy policies or with any regulatoryrequirements or orders or other privacy or consumer protection related laws and regulations could result in proceedings or actions against us by governmentalentities or others, subject us to significant penalties and negative publicity and adversely affect our operating results. System interruption and the lack of integration and redundancy in our order entry and online systems may adversely affect our net sales. Customer access to our customer service center and websites is key to the continued flow of new orders. Anything that would hamper or interrupt such accesscould adversely affect our net sales, operating results and customer satisfaction. Examples of risks that could affect access include problems with the Internetor telecommunication infrastructure, limited web access by our customers, local or more systemic impairment of computer systems due to viruses or malware,or impaired access due to breaches of Internet security or denial of service attacks. Changes in the policies of service providers or others that increase the costof telephone or Internet access could inhibit our ability to market our products or transact orders with customers. In addition, our ability to operate ourbusiness from day-to-day, largely depends on the efficient operation of our computer hardware and software systems and communications systems. Ourcomputer and communications systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, earthquakes,acts of war or terrorism, acts of God, computer viruses, physical or electronic break-ins or denial of service attacks, improper operation by employees andsimilar events or disruptions. Any of these events could cause system interruption, delays and loss of critical data and could prevent us from accepting andfulfilling customer orders and providing services, which would impair our operations. Certain of our systems are not redundant, and we have not fullyimplemented a disaster recovery plan. In addition, we may have inadequate insurance coverage to compensate us for any related losses. Interruptions tocustomer ordering, particularly if prolonged, could damage our reputation and be expensive to remedy and have significant adverse effects on our financialresults. 10 We face risk related to the strength of our operational, technological and organizational infrastructure. We are exposed to operational risks thatcan be manifested in many ways, such as errors related to failed or inadequate processes, faulty or disabled computer systems, fraud by employees, contractorsor third parties and exposure to external events. In addition, we are heavily dependent on the strength and capability of our technology systems that we use tomanage our internal financial, credit and other systems, interface with our customers and develop and implement effective marketing campaigns. Our abilityto operate our business to meet the needs of our existing customers and attract new ones and to run our business in compliance with applicable laws andregulations depends on the functionality of our operational and technology systems. Any disruptions or failures of our operational and technology systems,including those associated with improvements or modifications to such systems, could cause us to be unable to market and manage our products and servicesand to report our financial results in a timely and accurate manner, all of which could have a negative impact on our results of operations. In some cases, weoutsource delivery, maintenance and development of our operational and technological functionality to third parties. These third parties may experienceerrors or disruptions that could adversely impact us and over which we may have limited control. Any increase in the amount of our infrastructure that weoutsource to third parties may increase our exposure to these risks. If we do not respond to technological changes, our services could become obsolete, and we could lose customers. To remain competitive, we mustcontinue to enhance and improve the functionality and features of our e-commerce websites and other technologies. We may face material delays inintroducing new products and enhancements. If this happens, our customers may forego the use of our websites and use those of our competitors. The Internetand the online commerce industry are rapidly changing. If competitors introduce new products and services using new technologies or if new industrystandards and practices emerge, our existing websites and our proprietary technology and systems may become obsolete. Our failure to respond totechnological change or to adequately maintain, upgrade and develop our computer network and the systems used to process customers’ orders and paymentscould harm our business, prospects, financial condition and results of operations. We may not be able to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of thirdparties. We have filed provisional patents for a system that enables consumers to buy products on a LTO basis using mobile devices and tablets and for alease-to-own method of payment at check-out on e-commerce sites. We can provide no assurances that we will be granted any patents by the U.S. Patent andTrademark Office. We regard our pending patents, trademarks, service marks, copyrights, trade dress, trade secrets, proprietary technology, and similarintellectual property as critical to our success. In particular, we believe certain proprietary information, including but not limited to our underwriting model,and patent pending systems are central to our business model, and we believe give us a key competitive advantage. We rely on trademark and copyright law,trade secret protection, and confidentiality, license and work product agreements with our employees, customers and others to protect our proprietary rights.We may be unable to prevent third parties from acquiring trademarks, service marks and domain names that are similar to, infringe upon, or diminish thevalue of our trademarks and other proprietary rights. Failure to protect our domain names could affect adversely our reputation and brand, and make it moredifficult for users to find our website. We may be unable to discover or determine the extent of any unauthorized use of our proprietary rights. The protectionof our intellectual property may require the expenditure of significant financial and managerial resources. In addition, the steps we take to protect ourintellectual property may not adequately protect our rights or prevent parties from infringing or misappropriating our proprietary rights. We can be at risk thatothers will independently develop or acquire equivalent or superior technology or other intellectual property rights. The use of our technology or similartechnology by others could reduce or eliminate any competitive advantage we have developed, cause us to lose sales or otherwise harm our business. We cannot be certain that the intellectual property used in our business does not and will not infringe the intellectual property rights of others, andwe are from time to time subject to third party infringement claims. Due to recent changes in patent law, we face the risk of a temporary increase in patentlitigation due to new restrictions on including unrelated defendants in patent infringement lawsuits in the future particularly from entities that own patentsbut that do not make products or services covered by the patents. Any third party infringement claims against us, whether or not meritorious, may result in theexpenditure of significant financial and managerial resources, injunctions against us or the payment of damages. Moreover, should we be found liable forinfringement, we may be required to seek to enter into licensing agreements, which may not be available on acceptable terms or at all. In deciding whether to provide a spending limit to customers, we rely on the accuracy and completeness of information furnished to us by or onbehalf of our customers. If we and our systems are unable to detect any misrepresentations in this information, this could have a material adverse effect onour results of operations and financial condition. In deciding whether to provide a customer with a spending amount, we rely heavily on informationfurnished to us by or on behalf of our customers and our ability to validate such information through third-party services, including personal financialinformation. If a significant percentage of our customers intentionally or negligently misrepresent any of this information, and we or our systems do not ordid not detect such misrepresentations, it could have a material adverse effect on our ability to effectively manage our risk, which could have a materialadverse effect on our results of operations and financial condition. 11 If we fail to timely contact delinquent customers, then the number of delinquent customer receivables eventually being charged off couldincrease. We contact customers with delinquent account balances soon after the account becomes delinquent. During periods of increased delinquencies itis important that we are proactive in dealing with these customers rather than simply allowing customer receivables to go to charge-off. During periods ofincreased delinquencies, it becomes extremely important that we are properly staffed and trained to assist customers in bringing the delinquent balancecurrent and ultimately avoiding charge-off. If we do not properly staff and train our collections personnel, or if we incur any downtime or other issues withour information systems that assist us with our collection efforts, then the number of accounts in a delinquent status or charged-off could increase. Inaddition, managing a substantially higher volume of delinquent customer receivables typically increases our operational costs. A rise in delinquencies orcharge-offs could have a material adverse effect on our business, financial condition, liquidity and results of operations. Our management information systems may not be adequate to meet our evolving business and emerging regulatory needs and the failure tosuccessfully implement them could negatively impact the business and its financial results. We are investing significant capital in new informationtechnology systems to support our growth plan. These investments include redundancies, and acquiring new systems and hardware with updatedfunctionality. We are taking appropriate actions to ensure the successful implementation of these initiatives, including the testing of new systems, withminimal disruptions to the business. These efforts may take longer and may require greater financial and other resources than anticipated, may causedistraction of key personnel, may cause disruptions to our systems and our business, and may not provide the anticipated benefits. The disruption in ourinformation technology systems, or our inability to improve, integrate or expand our systems to meet our evolving business and emerging regulatoryrequirements, could impair our ability to achieve critical strategic initiatives and could adversely impact our sales, collections efforts, cash flows andfinancial condition. If we fail to maintain adequate systems and processes to detect and prevent fraudulent activity, our business could be adverselyimpacted. Criminals are using increasingly sophisticated methods to engage in illegal activities such as paper instrument counterfeiting, fraudulentpayment or refund schemes and identity theft. As we make more of our services available over the internet and other media we subject ourselves to consumerfraud risk. We use a variety of tools to protect against fraud; however, these tools may not always be successful. Our failure to maintain an effective system of internal controls could result in inaccurate reporting of financial results and harm ourbusiness. We are required to comply with a variety of reporting, accounting and other rules and regulations. As such, we maintain a system of internalcontrol over financial reporting, but there are limitations inherent in internal control systems. A control system can provide only reasonable, not absolute,assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraintsand the benefit of controls must be appropriate relative to their costs. Furthermore, compliance with existing requirements is expensive and we may need toimplement additional finance and accounting and other systems, procedures and controls to satisfy our reporting requirements. If our internal control overfinancial reporting is determined to be ineffective, such failure could cause investors to lose confidence in our reported financial information, negativelyaffect the market price of our common stock, subject us to regulatory investigations and penalties, and adversely impact our business and financial condition.Lack of Board Committees. Currently we have no audit, compensation, nominating or other committees of the board of directors. In the future, wemay establish committees at such time as the board deems it to be in the best interest of our stockholders or when it is required under the rules of an exchangeon which we may seek to list our Common Stock. We can provide no assurances that our lack of committees will not continue in future operating periods.Since we have no audit committee composed solely of independent directors, as required by the Sarbanes-Oxley Act of 2002, as amended, our board ofdirectors has all the responsibilities of the audit committee. Control of FlexShopper. Our secured lender described under Item 1, Item 7 and Item 13 beneficially owns 28.0% of our outstanding Common Stockas of the filing date of this Form 10-K. Also, our executive officers and directors beneficially own an additional 27.7% of our Common Stock as of the samedate. In the event that they act in concert on future stockholder matters, such persons may have the ability to affect the election of all of our directors and theoutcome of all issues submitted to our stockholders. Such concentration of ownership could limit the price that certain investors might be willing to pay inthe future for shares of Common Stock and could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party fromattempting to acquire, control of us. We have no established public market for our Securities. Our outstanding Common Stock does not have an established trading market, althoughour Common Stock has been quoted on the OTCQB under the symbol “FPAY.” Trading in our Common Stock has been sporadic in the Over-the-CounterMarket since it began in December 2007. The availability for sale of restricted securities pursuant to Rule 144 or otherwise could adversely affect the marketfor our Common Stock, if any. We can provide no assurances that an established public market will ever develop or be sustained for our Common Stock inthe future. Therefore, investors in this Offering may find it difficult to sell their Shares, whether pursuant to an effective registration statement, under Rule 144or otherwise. 12 The price of our Common Stock may fluctuate significantly. The market price for our Common Stock, if any, can fluctuate as a result of a variety offactors, including the factors listed above, many of which are beyond our control. These factors include: actual or anticipated variations in quarterlyoperating results; announcements of new services by our competitors or us; announcements relating to strategic relationships or acquisitions; changes infinancial estimates or other statements by securities analysts; and other changes in general economic conditions. Because of this, we may fail to meet orexceed the expectations of our stockholders or others, and the market price for our Common Stock could fluctuate as a result. In addition, the securitiesmarkets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particularcompanies. These market fluctuations may also materially and adversely affect the market price of our Common Stock. Our Common Stock is considered to be a “penny stock” and, as such, the market for our Common Stock, should one develop, may be furtherlimited by certain SEC rules applicable to penny stocks. To the extent the price of our Common Stock remains below $5.00 per share or we have net tangibleassets of $2,000,000 or less, our shares of Common Stock will be subject to certain “penny stock” rules promulgated by the SEC. Those rules impose certainsales practice requirements on brokers who sell penny stock to persons other than established customers and accredited investors (generally institutions withassets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000). For transactions covered by the penny stock rules, the broker mustmake a special suitability determination for the purchaser and receive the purchaser’s written consent to the transaction prior to the sale. Furthermore, thepenny stock rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosuredocuments, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices and disclosure of the compensation to thebrokerage firm and disclosure of the sales person working for the brokerage firm. These rules and regulations could adversely affect the ability of brokers tosell our Common Stock in the public market should one develop, and they limit the liquidity of our Shares. We have never declared or paid cash dividends on our Common Stock, and we do not anticipate paying any cash dividends on our Common Stockin the foreseeable future. We currently intend to retain future earnings, if any, to fund the development and growth of our FlexShopper business. Any futuredetermination to pay cash dividends will be dependent upon our financial condition, operating results, capital requirements, applicable contractualrestrictions and other such factors as our Board of Directors may deem relevant. Increased costs associated with corporate governance compliance may significantly impact our results of operations. Changing laws, regulations andstandards relating to corporate governance, public disclosure and compliance practices, including the Dodd-Frank Wall Street Reform and ConsumerProtection Act of 2010, the Sarbanes-Oxley Act of 2002, and new SEC regulations, may create difficulties for companies such as ours in understanding andcomplying with these laws and regulations. As a result of these difficulties and other factors, devoting the necessary resources to comply with evolvingcorporate governance and public disclosure standards has resulted in and may in the future result in increased general and administrative expenses and adiversion of management time and attention to compliance activities. We also expect these developments to increase our legal compliance and financialreporting costs. In addition, these developments may make it more difficult and more expensive for us to obtain director and officer liability insurance, andwe may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. Moreover, we may be unable to comply with these newlaws and regulations on a timely basis.These developments could make it more difficult for us to retain qualified members of our board of directors, or qualified executive officers. We arepresently evaluating and monitoring regulatory developments and cannot estimate the timing or magnitude of additional costs we may incur as a result. Tothe extent these costs are significant, our general and administrative expenses are likely to increase. If we sell shares of our common stock or securities convertible into our common stock in future financings, the ownership interest of existingshareholders will be diluted and, as a result, our stock price may go down. We may from time to time issue additional shares of common stock at a discountfrom the current trading price of our common stock. As a result, our existing shareholders will experience immediate dilution upon the purchase of any sharesof our common stock sold at a discount. For example, between May 8, 2014 and October 9, 2014, we sold 13,638,368 shares of our common stock in a privateplacement offering (and to two principal stockholders who are officers and/or directors) at a price of $.55 per share, at a time when the market price of ourcommon stock was above this level. As other capital raising opportunities present themselves, we may enter into financing or similar arrangements in thefuture. If we issue common stock or securities convertible into common stock, our shareholders will experience dilution and this dilution will be greater if wefind it necessary to sell securities at a discount to prevailing market prices.13 In January 2015, we filed a registration statement with the Securities and Exchange Commission to register the resale of 13,593,214 shares of ourcommon stock. As of the filing date of this Form 10-K, this registration statement has not been declared effective. Such a large number of shares registeredfor resale may depress the market price of our common stock. In January 2015, we filed a registration statement with the Securities and ExchangeCommission to register the resale of 13,593,214 shares of our common stock. As of the filing date of this Form 10-K, this registration statement has not beendeclared effective. Such a large number of shares registered for resale may depress the market price of our common stock. Further, substantially all theremaining outstanding common shares not registered in this offering are either free trading shares in the public float or shares available for sale pursuant toRule 144 of the Securities Act of 1933, as amended. Sales of a substantial number of shares of our common stock in the public market could cause the marketprice of our common stock to decline. If there are more shares of common stock offered for sale than buyers are willing to purchase, then the market price ofour common stock may decline to a market price at which buyers are willing to purchase shares. Item 1B. Unresolved Staff Comments None Item 2. Properties On August 1, 2013, FlexShopper entered into a 39 month lease for additional office space in Boca Raton, Florida to accommodate FlexShopper’sbusiness and its employees. The monthly rent was approximately $6,800. This lease agreement was amended in January 2014 to reflect a 63 month term for alarger suite in an adjoining building. Upon commencement the monthly base rent including operating expenses for the first year will be approximately$9,600 with annual three percent increases throughout the lease term. Item 3. Legal Proceedings We are not a party to any pending material legal proceedings except as described below. To our knowledge, no governmental authority iscontemplating commencing a legal proceeding in which we would be named as a party. On October 22, 2010, Anchor filed a complaint in the Superior Court of Stamford/Norwalk, Connecticut against the Administrators of the Estate ofDavid Harvey ("Harvey") to recoup a credit loss incurred by FlexShopper’s former subsidiary, Brookridge Funding Services, LLC. Harvey was the owner of aCompany that caused the credit loss, and FlexShopper is pursuing its rights under the personal guarantee that Harvey provided. The Complaint is demandingprincipal of approximately $485,000 plus interest and damages. During the twelve months ended December 31, 2014, there were no current developmentsinvolving the current legal proceeding. Item 4. Mine Safety Disclosures Not applicable 14 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our Common Stock is quoted on the OTCQB under the symbol “FPAY.” The following table sets forth the range of high and low closing sale prices ofour Common Stock for our last two fiscal periods. High Low 2013 - Quarter Ended December 31 $0.63 $0.63 September 30 0.50 0.50 June 30 0.35 0.35 March 31 0.22 0.22 2014 Quarter Ended December 31 1.00 $0.40September 30 0.90 0.69June 30 0.94 0.65March 31 0.95 0.42 Our Common Stock has a limited public market. All quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions andmay not necessarily represent actual transactions. Holders of Record As of December 31, 2014, there were 707 holders of record of shares of Common Stock and 65 holders of record of our Series 1 Preferred Stock.FlexShopper's transfer agent is Continental Stock Transfer & Trust Company, 17 Battery Place, New York, NY 10004. Dividend Policy The holders of our Series 1 Preferred Stock were entitled to receive dividends from issuance in 2007 through December 31, 2009 as more fullydescribed below. We have not paid or declared any cash dividends on our Common Stock. We currently intend to retain any earnings for future growth and,therefore, do not expect to pay cash dividends on our Common Stock in the foreseeable future. Cumulative annual dividends were payable in shares of Series1 Preferred Stock or, in certain instances in cash, at an annual rate of 8% ($.40 per share of Series 1 Preferred Stock), on December 31 of each yearcommencing December 31, 2007 through December 31, 2009. 15 Recent Sales of Unregistered SecuritiesThe following sales of unregistered securities took place during the quarter ended December 31, 2014: Date of SaleTitle of SecurityNumber SoldConsiderationReceivedPurchasersExemption fromRegistrationClaimed October2014Common Stock245,456 shares andplacement agentwarrants to purchase1,773,027 shares (4)$135,000 beforeplacement agentcompensation of$17,550Accredited InvestorsSection 4(2) and/orRule 506promulgatedthereunder October2014Common Stock194,758 shares34,168 PreferredStock conversion;no commissionspaidAccredited InvestorsSection 3(a)(9) October2014Common StockOptions(1)Options to purchase1,121,000 sharesServices rendered;no commissionspaidOfficers, directorsand employeesSection 4(2) (1)Options are exercisable at prices ranging from $0.17 to $1.25 per share. A Form S-8 Registration Statement is anticipated to be filed with theSEC to register the shares issuable upon exercise of options under our 2007 Stock Option Plan. Item 6. Selected Financial Data Not applicable. 16 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto appearing elsewhere in this Form10-K. Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 (the Act) provides a safe harbor for forward-looking statements made by or on behalf of our Company.Our Company and its representatives may from time to time make written or verbal forward-looking statements, including statements contained in this reportand other Company filings with the Securities and Exchange Commission and in our reports to stockholders. Statements that relate to other than strictlyhistorical facts, such as statements about the Company's plans and strategies and expectations for future financial performance are forward-looking statementswithin the meaning of the Act. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will” and other similar expressions identifyforward-looking statements. The forward-looking statements are and will be based on management's then current views and assumptions regarding futureevents and operating performance, and speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-lookingstatements, whether as a result of new information, future events or otherwise. See “Risk Factors” for a discussion of events and circumstances that couldaffect our financial performance or cause actual results to differ materially from estimates contained in or underlying our forward-looking statements. Executive Overview The results of operations from continuing operations below principally reflect the operations of FlexShopper, LLC which provides certain types of durablegoods to consumers on a lease-to-own basis and also provides lease-to-own terms to consumers of third party retailers and e-tailers. FlexShopper begangenerating revenues from this line of business in December 2013. Management believes that the introduction of FlexShopper's Lease-to-own (LTO) programssupport broad untapped expansion opportunities within the U.S. consumer e-commerce and retail marketplaces. FlexShopper and its online LTO platformsprovide consumers the ability to acquire durable goods, including electronics, computers and furniture on an affordable payment, lease basis. Concurrently,e-tailers and retailers that work with FlexShopper may increase their sales by utilizing FlexShopper's online channels to connect with consumers that want toacquire products on an LTO basis. FlexShopper’s sales channels include 1) serving as the financial and technology partner for durable goods retailers andetailers 2) selling directly to consumers via the online FlexShopper LTO Marketplace featuring thousands of durable goods and 3) utilizing FlexShopper’spatent pending LTO payment method at check out on e-commerce sites. Summary of Critical Accounting Policies Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our financial statements, which have been prepared inaccordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, managementevaluates its estimates and judgments, including those related to credit provisions, intangible assets, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experience as well as various other factors that are believed to be reasonable under thecircumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent fromother sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following criticalaccounting policies, among others, reflect the more significant judgments and estimates used in the preparation of our financial statements. Accounts Receivable and Allowance for Doubtful Accounts – The Company seeks to collect amounts owed under its leases from each customer on a weeklybasis by charging their bank account or credit card. Accounts receivable are principally comprised of lease payments currently owed to the Company whichare past due as the Company has been unable to successfully collect in the manner described above. As of December 31, 2014, approximately 60% of theCompany’s leases were current and did not have a past due balance and an additional 15% were past due with balances of one to four payments. Anallowance for doubtful accounts is estimated by reserving all accounts in excess of four payments in arrears, adjusted for subsequent collections. TheCompany is developing historical data to assess the estimate of the allowance in the future. The accounts receivable balances consisted of the following as ofDecember 31, 2014 and 2013. 17 December 31,2014 December 31,2013 Accounts receivable $1,509,736 $119 Allowance for doubtful accounts 1,380,902 - Accounts receivable, net $128,834 $119 The Company’s reserve is 91.4% of the accounts receivable balance as of December 31, 2014. The reserve is a significant percentage of the balance becausethe Company has not charged off any customer accounts since inception to assure that it has exhausted all collection efforts with respect to each accountincluding attempts to repossess items. In addition, the same delinquent customers will continue to accrue weekly charges until they are charged off or theCompany has exhausted collection efforts and the company will charge off accounts once it estimates there is no chance of recovery.Lease Merchandise – Until all payment obligations required for ownership are satisfied under the lease agreement, FlexShopper maintains ownership of thelease merchandise. Lease merchandise consists primarily of residential furniture, consumer electronics, computers, appliances and household accessories andis recorded at cost. FlexShopper depreciates leased merchandise using the straight line method over the applicable agreement period for a consumer toacquire ownership generally twelve months with no salvage value. When indicators of impairment exist FlexShopper accelerates depreciation to six monthsfrom the lease origination date and records an impairment reserve against the carrying value of the leased merchandise with a corresponding charge to cost oflease revenue for the excess of the depreciation over the applicable agreement period. Principal impairment indicators are leases with more than eightpayments past due, where collection access is denied or problematic indicating the Company may need to attempt to repossess the items. FlexShopper isdeveloping historical charge off information to assess recoverability and estimate of the impairment reserve. See “Note 2” in the Notes to ConsolidatedFinancial Statements included under “Item 8.”Stock Based Compensation - The fair value of transactions in which FlexShopper exchanges its equity instruments for employee services (share-basedpayment transactions) is recognized as an expense in the financial statements as services are performed. Compensation expense is determined by reference to the fair value of an award on the date of grant and is amortized on a straight-line basis over the vestingperiod. We have elected to use the Black-Scholes-Merton (BSM) pricing model to determine the fair value of all stock option awards. Results of Operations The following table details the operating results from continuing operations for the twelve months ended December 31, 2014 and 2013. Twelve monthsended Twelve monthsended December 31,2014 December 31,2013 Revenues $5,014,620 $119 Cost of lease revenue and merchandise sold 3,330,786 124 Operating expenses 5,178,383 655,121 Provision for bad debts 1,380,902 - Loss from continuing operations before income taxes (4,875,451) (655,474)Income tax (provision) benefit 458,047 - Loss from continuing operations $(4,417,404) $(655,474) Lease revenues for the twelve months ended December 31, 2014 were $5,014,620. FlexShopper began originating leases in late December 2013 and thereforehad minimal revenues from continuing operations for the year ended December 31, 2013. FlexShopper originated 13,064 leases in year ended December 31,2014, its first year of meaningful operations. Cost of lease revenue and merchandise sold for the year ended December 31, 2014 was principally comprised of depreciation expense on lease merchandiseof $2,204,548, the net book value of merchandise sold of $599,238 and a reserve for inventory impairment of $527,000. Provision for bad debts was $1,380,902 for the twelve months ended December 31, 2014. 2014 was the Company’s first year of meaningful operations duringwhich the Company continuously made changes to its underwriting and risk model to improve portfolio performance. The Company anticipates continuedimprovement as it continues to refine its risk model with an enhanced risk department which includes new hires in 2015 of a Vice President-Risk andAnalytics Manager, both with substantial experience in the non-prime consumer market. 18 Operating expenses for the years ended December 31, 2014 and 2013 were $5,178,383 and 655,121 respectively. Key operating expenses for the years endedDecember 31, 2014 and 2013 included the following: Twelve monthsended Twelve monthsended December 31,2014 December 31,2013 Payroll, benefits and contract labor $2,027,976 $421,168 Legal and professional fees 379,492 123,174 Stock compensation expense 439,320 51,721 Computer, internet and office expenses 221,216 26,322 Advertising 885,012 - Total $3,953,016 $622,385 FlexShopper had a net loss from continuing operations of $4,875,451 and 655,474 for the years ended December 31, 2014 and 2013 respectively. The netlosses are the result of operating expenses associated with starting and operating the new FlexShopper business. Sale of Anchor During 2013, the Company decided to concentrate its efforts on the operations of FlexShopper and subsequently on April 30, 2014, Anchor entered into anAsset Purchase and Sale Agreement (the “Purchase Agreement”) with a Bank, pursuant to which Anchor sold to the Bank substantially all of its assets (the“Anchor Assets”), consisting primarily of its factoring portfolio (the “Portfolio Accounts”). The purchase price for the Anchor Assets was equal to (1)approximately $4,445,000 which represented 110% of the total funds outstanding associated with the Portfolio Accounts which resulted in a gain ofapproximately $445,000 plus (2) an amount equal to 50% of the factoring fee and interest income earned by the Portfolio Accounts during the 12 monthperiod following acquisition (“Earnout Payments”). The Earnout Payments totaled $342,541 for the period ended December 31, 2014. The sale of the AnchorAssets was made in a series of closings through June 16, 2014. In connection with each closing, Anchor used the proceeds thereof to pay the Bank allamounts due for factor advances associated with the Portfolio Accounts acquired pursuant to such closing under Anchor’s Rediscount Facility Agreementwith the Bank dated November 30, 2011 (the “Rediscount Facility Agreement”). In accordance with the Purchase Agreement, following the final closingthereunder all obligations of Anchor under the Rediscount Facility Agreement (and the associated Validity Warranty) were paid and satisfied in full and theagreement was terminated. Anchor recorded a gain of $778,015 on the sale of these assets including the earnout payments received through December 31,2014 which is included in income from discontinued operations. Plan of Operation We plan to promote our FlexShopper products and services across all sales channels through strategic partnerships, direct response marketing, and affiliateand internet marketing, all of which are designed to increase our lease transactions and name recognition. Our advertisements emphasize such features asinstant spending limit, and affordable weekly payments. We believe that as the FlexShopper name gains familiarity and national recognition through ouradvertising efforts, we will continue to educate our customers and potential customers about the lease-to-own payment alternative as well as solidify ourreputation as a leading provider of high quality branded merchandise and services. For each sales channel FlexShopper has a marketing strategy that includes but is not limited to the following: Online LTO MarketplacePatent pending LTO Payment MethodIn-store LTO technology platformSearch engine optimization; pay-per clickDirect to retailers/etailersDirect to retailers/etailersOnline affiliate networksPartnerships with payment aggregatorsConsultants & strategic relationshipsDirect response television campaignsConsultants & strategic relationships Direct mail 19 The Company believes it has a competitive advantage by providing all three channels as a bundled package. Management is anticipating a rapiddevelopment of the FlexShopper business over the next two years as we are able to penetrate each of our sales channels. To support our anticipated growth,FlexShopper will need the availability of substantial capital resources. See “Liquidity and Capital Resources” below. Liquidity and Capital Resources As of December 31, 2014 the Company had cash of $ 2,883,349 compared to $ 960,032 for the same period in 2013. The Company had accounts receivables of $1,509,736 net of an allowance of $1,380,902 totaling $128,834. Accounts receivable are principally comprisedof lease payments owed to the Company. An allowance for doubtful accounts is estimated by reserving all accounts in excess of four payments in arrearsadjusted for subsequent collections. Approximately seventy five percent of the Company’s accounts in the portfolio are not currently subject to reserve. Recent Financings In fiscal 2014, FlexShopper completed the following transactions, each of which has provided or is expected to provide immediate liquidity andcash resources to FlexShopper. 1.A private placement offering completed with FlexShopper’s placement agents on October 9, 2014 resulting in gross proceeds to FlexShopper of$6,501,100 before offering costs of approximately $912,000. 2.The sale of certain assets of Anchor Funding Services through an Asset Purchase Agreement. This transaction was completed in a series of closingsthrough June 16, 2014 and resulted in a gain of $788,015. 3.The receipt of $1 million in funding from George Rubin and Morry F. Rubin through the funding of promissory notes in like principal amount andthe conversion of these notes into shares of FlexShopper’s Common Stock at $.55 per share om May 8, 2014. 4.Entering into a secured promissory note with a principal stockholder pursuant to which we may borrow up to $1,000,000 at an interest rate of 15%per annum, payable upon demand. This note was paid in full on March 6, 2015, concurrent with FlexShopper obtaining the credit facility describedbelow. On March 6, 2015, FlexShopper entered into a credit agreement (the “Credit Agreement”) with a Lender. FlexShopper is permitted to borrow funds under theCredit Agreement based on the FlexShopper’s cash on hand and the Amortized Order Value of the its Eligible Leases (as such terms are defined in the CreditAgreement) less certain deductions described in the Credit Agreement. Under the terms of the Credit Agreement, subject to the satisfaction of certainconditions, FlexShopper may borrow up to $25,000,000 from the Lender for a term of two years. The borrowing term may be extended for an additionaltwelve months in the sole discretion of the Lender. The Credit Agreement contemplates that the Lender may provide additional debt financing toFlexShopper, up to $100 million in total, under two uncommitted accordions following satisfaction of certain covenants and other terms and conditions. TheLender will receive security interests in certain leases as collateral under the Credit Agreement. In connection with entering into the Credit Agreement, onMarch 6, 2015, FlexShopper raised approximately $8.6 million in net proceeds through direct sales of 17.0 million shares of FlexShopper common stock, parvalue $0.0001 per share, to certain affiliates of the Lender and other accredited investors for a purchase price of $0.55 per share.The funds derived from the sale of FlexShopper’s Common Stock in the transactions described above, FlexShopper’s ability to borrow funds under the CreditAgreement and funds from the sale of Anchor’s factoring operations have provided substantial liquidity and capital resources for FlexShopper to purchasedurable goods pursuant to lease-to-own transactions and to support FlexShopper’s current general working capital needs. Management believes that thefinancing transactions described in the preceding paragraph provides sufficient liquidity and capital resources for our anticipated needs through at leastDecember 31, 2015.Cash Flow Summary Cash Flows from Operating Activities Net cash used by continuing activities was $7,202,952 for the year ended December 31, 2014 and was primarily due to our net loss for the periodcombined with cash used for the purchases of leased merchandise. Net cash provided by discontinued operations from our Anchor operations was $1,175,860,resulting in net cash used by operations of $6,027,092. 20 For the year ended December 31, 2013 net cash used by continuing activities was $541,042 primarily due to our net loss for the year. Net cashprovided by discontinued operations from our Anchor operations was $1,740,364, resulting in net cash provided by operations of $1,199,322. Cash Flows from Investing Activities For the year ended December 31, 2014 net cash provided by investing activities was $3,629,227 comprised of income from the sale of discontinuedassets of $4,786,464 offset by the purchase of property and equipment of 1,157,237 including capitalized software costs of $1,017,104. For the year ended December 31, 2013, net cash used in investing activities was $112,908 comprised of $30,760 for patent costs and $82,148 for thepurchase of property and equipment. Cash Flows from Financing Activities Net cash provided by financing activities from continuing operations was $7,562,124 for the year ended December 31, 2014 and was primarily dueto two $1,000,000 promissory notes from shareholders and $6,501,104 of net proceeds from a private placement offering at $.55 per share which wascompleted between May 8, 2014 and October 9, 2014. Net cash used by discontinued financing activities was $3,240,942 for the year ended December 31,2014, and was primarily due to payments to a financial institution. Net cash used by financing activities was $736,821 for the year ended December 31, 2013 and was due to payments of $1,736,821 to a financialinstitution offset by $1,000,000 proceeds from a sale of common stock. Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodityprices. Our primary exposure to market risk is interest rate risk associated with our short term money market investments. The Company does not have anyfinancial instruments held for trading or other speculative purposes and does not invest in derivative financial instruments, interest rate swaps or otherinvestments that alter interest rate exposure. The Company does not have any credit facilities with variable interest rates. Item 8. Financial Statements and Supplementary Data. Consolidated Financial Statements The reports of the Independent Registered Public Accounting Firm, Consolidated Financial Statements and Schedules are set forth beginning on thefollowing page. 21 FLEXSHOPPER, INC. CONTENTS YEARS ENDED DECEMBER 31, 2014 AND 2013 PAGE FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-2 Report of Independent Registered Public Accounting Firm F-3 Consolidated Balance Sheets as of December 31, 2014 and 2013 F-4 Consolidated Statements of Operations F-5 Consolidated Statements of Stockholders' Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8 - F-17 F-1 Report of Independent Registered Public Accounting Firm_____ The Board of Directors and StockholdersFlexShopper, Inc. We have audited the accompanying consolidated balance sheet of FlexShopper, Inc. (the “Company”) as of December 31, 2014, and the related consolidatedstatements of operations, stockholders’ equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is notrequired to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internalcontrol over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of FlexShopper, Inc. as ofDecember 31, 2014, and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting principlesgenerally accepted in the United States of America. /s/ EisnerAmper LLPNew York, NYMarch 31, 2015 F-2 Report of Independent Registered Public Accounting Firm_____ The Board of Directors and StockholdersFlexShopper, Inc. (formerly Anchor Funding Services, Inc.) We have audited the accompanying consolidated balance sheet of FlexShopper, Inc. and subsidiaries (the “Company”) as of December 31, 2013, and therelated consolidated statements of operations, stockholders’ equity, and cash flows for the year ended. These consolidated financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is notrequired to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal controlover financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis forour opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as ofDecember 31, 2013, and the consolidated results of its operations and its cash flows for the year ended December 31, 2013 in conformity with accountingprinciples generally accepted in the United States of America. /s/ Scott and Company LLCColumbia, South CarolinaMarch 31, 2014 except for the reclassification of certain amounts related to discontinued operations described in Note 3 for which the date is March 31, 2015F-3 FLEXSHOPPER, INC.CONSOLIDATED BALANCE SHEETSDecember 31, ASSETS 2014 2013 CURRENT ASSETS: Cash $2,883,349 $960,032 Accounts receivable, net 128,834 119 Prepaid expenses 112,074 50,188 Lease merchandise, net 4,241,918 8,004 Assets of discontinued operations 6,500 5,363,728 Total current assets 7,372,675 6,382,071 PROPERTY AND EQUIPMENT, net 1,051,697 58,079 OTHER ASSETS: Intangible assets, net 26,492 30,760 Security deposits 55,003 9,485 81,495 40,245 $8,505,867 $6,480,395 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $836,792 $20,349 Accrued payroll and related taxes 131,596 68,140 Accrued expenses 197,584 3,693 Loans payable to shareholder 1,000,000 - Liabilities of discontinued operations 7,626 3,331,955 Total current liabilities 2,173,598 3,424,137 COMMITMENTS AND CONTINGENCIES (Note 10) STOCKHOLDERS’ EQUITY PREFERRED STOCK, $0.001 par value- authorized 10,000,000 shares, issued and outstanding 342,219 in 2014 and 376,387 in 2013 at $5.00 stated value 1,711,095 1,881,935 COMMON STOCK, $0.0001 par value- authorized 65,000,000 shares issued and outstanding 35,015,322 in 2014 and 21,148,862 in 2013 3,502 2,115 ADDITIONAL PAID IN CAPITAL 14,513,433 7,337,636 ACCUMULATED DEFICIT (9,895,761) (6,165,428) 6,332,269 3,056,258 $8,505,867 $6,480,395 The accompanying notes to consolidated financial statements are an integral part of these statements. F-4 FLEXSHOPPER, INC.CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended December 31, 2014 2013 Revenues: Lease revenues and fees $4,269,792 $119 Lease merchandise sold 744,828 - Total revenues 5,014,620 - Costs and expenses: Cost of lease revenues, consisting of depreciation and impairment of lease merchandise 2,731,548 124 Cost of lease merchandise sold 599,238 - Provision for doubtful accounts 1,380,902 - Operating expenses 5,178,383 655,121 Total costs and expenses 9,890,071 655,593 Loss from continuing operations, before income tax benefit (4,875,451) (655,474) Income tax benefit 458,047 - Loss from continuing operations (4,417,404) (655,474)Income (loss) from discontinued operations (including gain from the sale of discontinued operation of $788,015 in 2014), net of income taxes of 458,047 in 2014 687,071 (38,207) Net loss $(3,730,333) $(693,681) Basic and diluted (loss) income per common share: Loss from continuing operations $(0.15) $(0.04)Income from discontinued operations 0.02 - Net loss $(0.13) $(0.04) Weighted average common shares outstanding: Basic and diluted 28,244,207 18,987,702 The accompanying notes to consolidated financial statements are an integral part of these statements. F-5 FLEXSHOPPER, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFor the years ended December 31, 2014 and 2013 Additional Preferred Stock Common Stock Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance, January 1,2013: As previously reported 376,387 $671,409 18,634,369 $1,863 $7,496,693 $(5,471,747) $2,698,218 Reclassification ofpreferred stockissuance costs - 1,210,526 - (1,210,526) As reclassified 376,387 1,881,935 18,634,369 1,863 6,286,167 (5,471,747) 2,698,218 Provision forcompensation expenserelated to issued stockoptions - - - - 49,805 - 49,805 Provision forcompensation expenserelated to issued warrants - - - - 1,916 - 1,916 Sale of common stock - - 2,514,493 252 999,748 - 1,000,000 Net loss - - - - - (693,681) (693,681)Balance, December 31,2013 376,387 1,881,935 21,148,862 2,115 7,337,636 (6,165,428) 3,056,258 Provision forcompensation expenserelated to issued stockoptions - - - - 299,700 - 299,700 Provision forcompensation expenserelated to issued warrants - - - - 139,620 - 139,620 Exercise of stockoptions - - 33,333 3 11,634 - 11,637 Sale of common stock,net of placement andother issuance costs of$1,537,489 - - 11,820,187 1,183 4,962,432 - 4,963,615 Warrants issued toplacement agents 586,872 586,872 Conversion ofshareholder loans tocommon stock - - 1,818,182 182 999,818 - 1,000,000 Conversion of preferredshares to common stock (34,168) (170,840) 194,758 19 170,821 - - Accrued interest onshareholder loanscontributed to capital - - - - 4,900 - 4,900 Net loss - - - - - (3,730,333) (3,730,333)Balance, December 31,2014 342,219 $1,711,095 35,015,322 $3,502 $14,513,433 $(9,895,761) $6,332,269 The accompanying notes to consolidated financial statements are an integral part of these statements. F-6 FLEXSHOPPER, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFor the years ended December 31, CASH FLOWS FROM OPERATING ACTIVITIES: 2014 2013 Net loss $(3,730,333) $(693,681) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: (Income) loss from discontinued operation (687,071) 38,207 Depreciation and amortization 162,210 38,326 Depreciation of lease merchandise 2,160,467 123 Impairment of lease merchandise 527,000 - Amortization of patent costs 4,268 - Compensation expense related to issuance of stock options 299,700 49,805 Compensation expense related to issuance of warrants 139,620 1,916 Provision for doubtful accounts 1,380,902 - Other 4,900 - Changes in operating assets and liabilities: (Increase) in accounts receivable (1,509,617) (119) (Increase) in prepaid expenses and other (61,888) (50,188) (Increase) in lease merchandise (6,921,381) (8,128) (Increase) in security deposits (45,518) (9,485) Increase in accounts payable 816,443 20,349 Increase in accrued payroll and related taxes 63,455 68,140 Increase in accrued expenses 193,891 3,693 Net cash used in operating activities - continuing operations (7,202,952) (541,042) Net cash provided by operating activities - discontinued operations 1,175,860 1,740,364 Net cash (used in) provided by operating activities (6,027,092) 1,199,322 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (1,157,237) (67,947) Patent costs - (30,760) Net cash used in investing activities – continuing operations (1,157,237) (98,707) Net cash used in investing activities- discontinued operations - (14,201) Proceeds from sale of discontinued operations 4,786,464 - Net cash provided by (used in) investing activities 3,629,227 (112,908) CASH FLOWS FROM FINANCING ACTIVITIES: Loans from shareholders 2,000,000 - Proceeds from exercise of stock options 11,637 - Proceeds from sale of common stock 6,501,104 1,000,000 Payment of costs related to issuance of common stock (950,617) - Net cash provided by financing operations – continuing operations 7,562,124 1,000,000 Net cash used in financing operations - discontinued operations (3,240,942) (1,736,821) Net cash provided by (used in) financing activities 4,321,182 (736,821) INCREASE IN CASH 1,923,317 349,593 CASH, beginning of period 960,032 610,439 CASH, end of period $2,883,349 $960,032 Supplemental cash flow information: Interest paid $81,370* $369,487*Non-cash Financing activities: Conversion of shareholders loans to common stock $1,000,000 $- Conversion of preferred stock to common stock $170,840 $- *Discontinued operations The accompanying notes to consolidated financial statements are an integral part of these statements. F-7 Notes To Consolidated Financial Statements December 31, 2014 and 2013 1. BUSINESS: FlexShopper Inc.(the “Company”) is a corporation organized under the laws of the State of Delaware on August 16, 2006. The Company owns100% of FlexShopper, LLC, a limited liability company incorporated under the laws of North Carolina on June 24, 2013. Since the sale of the assets ofAnchor Funding Services LLC (“Anchor”), which sale was completed in a series of transactions between April and June 2014, the Company is a holdingcorporation with no operations except for those conducted by FlexShopper. FlexShopper provides through e-commerce sites, certain types of durable goodsto consumers on a lease-to-own basis (“LTO”) including consumers of third party retailers and e-tailers. In January 2015, in connection with the credit agreement entered into in March 2015, (See Note 13) FlexShopper 1 LLC and FlexShopper 2 LLC wereorganized as wholly owned Delaware subsidiaries of FlexShopper to conduct operations. During 2013, the Company decided to concentrate its efforts on the operations of FlexShopper and subsequently, an agreement was entered into with afinancial institution to sell substantially all of the operating assets of Anchor which provided accounts receivable funding to businesses located throughoutthe United States. The sale was finalized in June 2014 (Note 3). The consolidated statements of operations and cash flows for the years ended December 31,2014 and 2013 reflect the historical operations of Anchor as discontinued operations. The consolidated balance sheets as of December 31, 2014 and 2013reflects amounts attributable to Anchor as assets and liabilities of discontinued operations. We have generally presented the notes to our consolidatedfinancial statements on the basis of continuing operations. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation - The accompanying consolidated financial statements include the accounts of the Company. and its wholly owned subsidiariesafter elimination of intercompany balances and transactions. Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition - Merchandise is leased to customers pursuant to lease purchase agreements which provide for weekly and bi-weekly lease terms withnon-refundable lease payments. Generally the customer has the right to acquire title either through a 90 day same as cash option or through payments of allrequired lease payments generally 52 weeks, for ownership. Customers have the option to cancel the agreement in accordance with lease terms and return themerchandise. Accordingly, customer agreements are accounted for as operating leases with lease revenues recognized in the month they are due on theaccrual basis of accounting. Merchandise sales revenue is recognized when the customer exercises the purchase option and pays the purchase price. Revenuefrom processing fees earned upon exercise by the customer of the 90 day purchase option is recorded upon recognition of the related merchandise sales.These fees amounted to approximately $38,000 for the year ended December 31, 2014. Revenue for lease payments received prior to their due date is deferredand recognized as revenue in the period to which the payments relate. Revenues from leases and sales are reported net of sales taxes. Accounts Receivable and Allowance for Doubtful Accounts – FlexShopper seeks to collect amounts owed under its leases from each customer on a weeklybasis by charging their bank account or credit card. Accounts receivable are principally comprised of lease payments currently owed to FlexShopper whichare past due as FlexShopper has been unable to successfully collect in the manner described above. An allowance for doubtful accounts is estimated byproviding an allowance for all accounts in excess of four payments in arrears, adjusted for subsequent collections. FlexShopper is developing historical datato assess the estimate of the allowance in the future. The accounts receivable balances consisted of the following as of December 31, 2014 and 2013. December 31,2014 December 31,2013 Accounts receivable $1,509,736 $119 Allowance for doubtful accounts 1,380,902 - Accounts receivable, net $128,834 $119 F-8 The allowance is a significant percentage of the balance because FlexShopper has not charged off any customer accounts since inception to assurethat it has exhausted all collection efforts with respect to each account including attempts to repossess items. In addition, the same delinquent customers willcontinue to accrue weekly charges until they are charged off or FlexShopper has exhausted collection efforts. FlexShopper will charge off accounts upondetermining that collection is not probable.Lease Merchandise – Until all payment obligations for ownership are satisfied under the lease agreement, the Company maintains ownership of the leasemerchandise. Lease merchandise consists primarily of residential furniture, consumer electronics, computers, appliances and household accessories and isrecorded at cost net of accumulated depreciation. The Company depreciates leased merchandise using the straight line method over the applicable agreementperiod for a consumer to acquire ownership, generally twelve months with no salvage value. For lease merchandise returned or anticipated to be returnedeither voluntarily or through repossession, the Company provides an impairment reserve for the undepreciated balance of the merchandise with acorresponding charge to cost of lease revenue. The impairment charge amounted to $527,000 for the year ended December 31, 2014. The Company isdeveloping historical charge off information to assess recoverability and estimate of the impairment reserve. The net leased merchandise balances consistedof the following as of December 31, 2014 and 2013: December 31,2014 December 31,2013 Lease merchandise at cost $6,929,509 $8,128 Accumulated depreciation 2,160,591 124 Impairment reserve 527,000 - Lease merchandise, net $4,241,918 $8,004 Cost of lease merchandise sold represents the undepreciated cost of rental merchandise at the time of sale. Intangible Assets – Intangible assets consist of a pending patent on the Company’s LTO payment method at check-out for third party e-commerce sites.Patents are stated at cost less accumulated amortization. Patent costs are amortized by using the straight line method over the legal life, or if shorter, theuseful life of the patent which has been estimated to be 10 years. The net patent cost balances consisted of the following as of December 31, 2014 and 2013: December 31,2014 December 31,2013 Patent costs $30,760 $30,760 Accumulated amortization 4,268 - Patent costs, net $26,492 $30,760 Software Costs - Costs related to developing or obtaining internal-use software incurred during the preliminary project and post-implementation stages of aninternal use software project are expensed as incurred and certain costs incurred in the project’s application development stage are capitalized as property andequipment. The Company expenses costs related to the planning and operating stages of a website. Direct costs incurred in the website’s development stageare capitalized as property and equipment. Costs associated with minor enhancements and maintenance for the website are included in expenses as incurred.(Note 4) Operating Expenses – Operating expenses include all corporate overhead expenses such as salaries, payroll taxes and benefits, stock based compensation,occupancy, advertising and other administrative expenses. Advertising Costs – The Company charges advertising costs to expense as incurred. Total advertising costs were approximately $885,000 for the year endedDecember 31, 2014. Prior year advertising costs are included in discontinued operations. Per Share Data – Per share data is computed by use of the two-class method as a result of outstanding convertible preferred stock which participates individends with the common stock and accordingly has participation rights in undistributed earnings as if all such earnings had been distributed during theperiod (see Note 6). Under such method where the Company has undistributed net income, basic earnings per common share is computed based on the total ofany dividends paid per common share plus undistributed income per common share determined by dividing net income reduced by any dividends paid oncommon and preferred stock by the total of the weighted average number of common shares outstanding plus the weighted average number of common sharesissuable upon conversion of outstanding preferred stock during the period. Where the Company has a net loss, basic per share data (including income fromcontinuing operations) is computed based solely on the weighted average number of common shares outstanding during the period. As the convertiblepreferred stock has no contractual obligation to share in the losses of the Company, common shares issuable upon conversion of the preferred stock are notincluded in such computations. F-9 Diluted earnings per share is based on the more dilutive of the if-converted method (which assumes conversion of the preferred stock as of the beginning ofthe period) or the two-class method (which assumes that the preferred stock is not converted) plus the potential impact of dilutive options and warrants. Thedilutive effect of stock options and warrants is computed using the treasury stock method, which assumes the repurchase of common shares at the averagemarket price during the period. Under the treasury stock method, options and warrants will have a dilutive effect when the average price of common stockduring the period exceeds the exercise price of options or warrants. When there is a loss from continuing operations, potential common shares are notincluded in the computation of diluted loss per share, since they have an anti-dilutive effect. In computing diluted loss per share, no effect has been given to the issuance of common stock upon conversion or exercise of the following securities as theireffect is anti-dilutive: Twelve months ended December 31, 2014 2013 Convertible preferred stock 1,984,870 1,919,573 Options 3,755,000 2,923,205 Warrants 5,115,531 3,342,504 10,855,378 8,185,282 Stock Based Compensation - The fair value of transactions in which the Company exchanges its equity instruments for employee services (share-basedpayment transactions) is recognized as an expense in the financial statements as services are performed. Compensation expense is determined by reference to the fair value of an award on the date of grant and is amortized on a straight-line basis over the vestingperiod. We have elected to use the Black-Scholes-Merton (BSM) pricing model to determine the fair value of all stock option awards. See Note 7. Income Taxes – Deferred tax assets and liabilities are determined based on the estimated future tax effects of net operating loss carryforwards and temporarydifferences between the tax bases of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. TheCompany records a valuation allowance for its deferred tax assets when management concludes that it is not more likely than not that such assets will berecognized. 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 examinationby taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a positionare measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of December 31, 2014 and2013, the Company has not recorded any unrecognized tax benefits. Interest and penalties related to liabilities for uncertain tax positions will be charged to interest and operating expenses, respectively. Reclassifications – In addition to reclassifications related to discontinued operations referred to in Note 1, certain stockholder equity balances at December31, 2013 have been reclassified to conform to the current year presentation. Recent Accounting Pronouncements – The Financial Accounting Standards Board (‘FASB”) amended the Comprehensive Income topic of the ASC in February 2013 with ASU No. 2013-02. Theamendment addresses reporting of amounts reclassified out of accumulated other comprehensive income. Specifically, the amendment does not change thecurrent requirements for reporting net income or other comprehensive income in the financial statements. However, the amendment does require an entity toprovide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, in certain circumstances anentity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out ofaccumulated other comprehensive income by the respective line items of net income. The guidance became effective for the Company in the first quarter offiscal year 2014. This amendment did not have any effect on the Company’s financial statements. In July 2013 the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or aTax Credit Carryforward Exists,” which among other things, require an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presentedin the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except asdenoted within the ASU. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15,2013. The adoption of this standard in 2014 did not have any effect on the Company’s financial statements. F-10 In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU No.2014-08 changes the definition of a discontinued operation to include only those disposals of components of an entity that represent a strategic shift that has(or will have) a major effect on an entity's operations and financial results. ASU No. 2014-08 is effective prospectively for fiscal years beginning afterDecember 15, 2014 with early adoption permitted. The Company has early adopted this update in the second quarter of 2014. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This new standard provides guidance for the recognition,measurement and disclosure of revenue resulting from contracts with customers and will supersede virtually all of the current revenue recognition guidanceunder U.S. GAAP. The standard is effective for the first interim period within annual reporting periods beginning after December 15, 2016. The Company iscurrently evaluating the impact of the provisions of this new standard on its financial position and results of operations. In June 2014, FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could BeAchieved after the Requisite Service Period. ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisiteservice period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of theaward. ASU 2014-12 is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. The Company is evaluatingthe potential impacts of the new standard on its existing stock-based compensation plans. In August 2014, the FASB issued ASU 2014-15 Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties aboutan Entity’s Ability to Continue as a Going Concern. In connection with preparing financial statements for each annual and interim reporting period, anentity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’sability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based onrelevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. Substantial doubt about anentity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that theentity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The term probable isused consistently with its use in Topic 450, Contingencies. The amendments in this Update are effective for the annual period ending after December 15,2016, and for annual periods and interim periods thereafter. 3. DISCONTINUED OPERATIONS: During 2013, the Company decided to concentrate its efforts on the operations of FlexShopper and subsequently on April 30, 2014, Anchor entered into anAsset Purchase and Sale Agreement (the “Purchase Agreement”) with a Bank, pursuant to which Anchor sold to the Bank substantially all of its assets (the“Anchor Assets”), consisting primarily of its factoring portfolio (the “Portfolio Accounts”). The purchase price for the Anchor Assets was equal to (1)approximately $4,445,000 which represented 110% of the total funds outstanding associated with the Portfolio Accounts which resulted in a gain ofapproximately $445,000 plus (2) an amount equal to 50% of the factoring fee and interest income earned by the Portfolio Accounts during the 12 monthperiod following acquisition (“Earnout Payments”). The Earnout Payments totaled $342,541 for the period ended December 31, 2014. The sale of the AnchorAssets was made in a series of closings through June 16, 2014. In connection with each closing, Anchor used the proceeds thereof to pay the Bank allamounts due for factor advances associated with the Portfolio Accounts acquired pursuant to such closing under Anchor’s Rediscount Facility Agreementwith the Bank dated November 30, 2011 (the “Rediscount Facility Agreement”). In accordance with the Purchase Agreement, following the final closingthereunder all obligations of Anchor under the Rediscount Facility Agreement (and the associated Validity Warranty) were paid and satisfied in full and theagreement was terminated. Anchor recorded a gain of $788,015 on the sale of these assets including the earnout payments received through December 31,2014 which is included in income from discontinued operations. Future contingent earnout payments will be recorded as income when earned. The assets and liabilities of the discontinued operations are presented separately under the captions “Assets of discontinued operations” and “Liabilities ofdiscontinued operations” in the accompanying consolidated Balance Sheets at December 31, 2014 and December 31, 2013 and consist of the following: December 31,2014 December 31,2013 Assets of discontinued operations: Retained interest in purchased accounts receivable $6,500 $4,966,338 Earned but uncollected fees - 141,077 Due from client - 256,313 $6,500 $5,363,728 Liabilities of discontinued operations: Accounts payable $- $26,966 Accrued expenses 7,626 51,719 Due to financial institution - 3,240,942 Deferred revenue - 12,328 $7,626 $3,331,955 F-11 Major classes of income and expenses related to income from discontinued operations are as follows: Twelve months ended December 31,2014 December 31,2013 Finance revenues $735,357 $2,364,128 Interest expense and other fees -financial institution (109,878) (385,918) Benefit (Provision) for credit losses 24,904 (62,603) Net finance revenues 650,383 1,915,607 Operating expenses (446,733) (1,953,814) Other income 153,453 - 357,103 (38,207) Gain on sale of discontinued assets 788,015 - Income (loss) from discontinued operations before income taxes $1,145,118 $(38,207) 4. PROPERTY AND EQUIPMENT: Property and equipment consist of the following: Estimated Useful Lives December 31, 2014 December 31, 2013 Furniture and fixtures 2-5 years $99,982 $64,945 Website and internal use software 3 years 1,017,103 - Computers and software 3-7 years 355,213 251,525 1,472,298 316,470 Less: accumulated depreciation and amortization (420,601) (258,391) $1,051,697 $58,079 Depreciation and amortization expense was $162,210 and $38,326 for the years ended December 31, 2014 and 2013, respectively. 5. LOANS PAYABLE SHAREHOLDERS: On March 19, 2014, upon approval of the Board of Directors, FlexShopper entered into two Promissory Notes totaling $1,000,000, one with former CEOMorry Rubin and the other with a major shareholder and Director of the Company. Each demand Promissory Note was for $500,000 and earned interest(payable monthly) at 10% per annum. The Promissory Notes were to assist FlexShopper in purchasing merchandise for lease to support FlexShopper’s growth.In May 2014, these loans were converted into shares of the Company’s Common Stock at a price of $0.55 per share (Note 6). In connection therewith accruedinterest amounting to approximately $4,900 was contributed to capital. On December 8, 2014, upon approval of the Board of Directors FlexShopper enteredinto a promissory note for $1,000,000, with a shareholder and executive of the Company. The note is payable on demand. The note was funded in incrementsof $500,000 on December 8th and 18th and earned interest at 15% per annum which amounted to $7,083. The Promissory Note was to assist FlexShopper inpurchasing merchandise for lease and was paid in full with interest on March 11, 2015. ( Note 13) 6. CAPITAL STRUCTURE: The Company’s capital structure consists of preferred and common stock as described below: Preferred Stock – The Company is authorized to issue 10,000,000 shares of $.001 par value preferred stock. The Company’s Board of Directors determinesthe rights and preferences of its preferred stock. F-12 On January 31, 2007, the Company filed a Certificate of Designation with the Secretary of State of Delaware. Effective with this filing, 2,000,000 preferredshares became Series 1 Convertible Preferred Stock. Series 1 Convertible Preferred Stock will rank senior to Common Stock. Each share of Series 1 Convertible Preferred Stock was convertible into 5.1 shares of the Company’s Common Stock, subject to certain anti-dilution rights. Asa result of the Common Stock offering described below and the sale of Common Stock to officers and/or directors, each share of Series 1 Preferred Stock iscurrently convertible into 5.8 shares of the Company’s Common Stock and has voting rights of 5.877 common shares. The holder of the Series 1 ConvertiblePreferred Stock has the option to convert the shares to Common Stock at any time. Upon conversion, all accumulated and unpaid dividends were to be paidas additional shares of Common Stock. The dividend rate on Series 1 Convertible Preferred Stock was 8%. Dividends were paid between 2007 and 2009 annually on December 31st in the form ofadditional Series 1 Convertible Preferred Stock unless the Board of Directors approved a cash dividend. Dividends on Series 1 Convertible Preferred Stockceased to accrue on the earlier of December 31, 2009, or on the date they were converted to Common Shares. Thereafter, the holders of Series 1 ConvertiblePreferred Stock have the same dividend rights as holders of Common Stock, as if the Series 1 Convertible Preferred Stock had been converted to CommonStock. During the year ended December 31, 2014, 34,168 preferred shares were converted into 194,758 common shares. As of December 31, 2014 there were342,219 shares of Series 1 Convertible Preferred Stock outstanding which are convertible into 1,984,870 shares of common stock. (See Note 13) Common Stock – The Company is authorized to issue 65,000,000 shares of $.0001 par value Common Stock. Each share of Common Stock entitles theholder to one vote at all stockholder meetings. Dividends on Common Stock will be determined annually by the Company’s Board of Directors. During the fourth quarter of 2013, the Company raised $1,000,000 from the sale of its restricted Common Stock at $.40 per share. An aggregate of 2,500,000shares of Common Stock were sold under Rule 506 and/or Section 4(2) of the Securities Act of 1933 as amended. The Company also issued 14,493 shares toconsultants for services rendered. From May through October 2014, the Company received gross proceeds of $6,501,100 from the sale of 11,820,187 shares offered through three co-placementagents in a private placement offering at an offering price of $.55 per share under Rule 506 and/or Section 4(2) of the Securities Act of 1933 as amended. Inconnection therewith seven year warrants to purchase 1,773,027 common shares at an exercise price of $.055 per share were issued to placement agents. In addition, pursuant to the terms of the private placement offering, George Rubin and Morry F. Rubin, officers, directors and founders of the Company, eachcompleted the funding of their $500,000 loan to the Company and converted these loans into shares of the Company’s Common Stock at the same offeringprice per share as that paid by investors in the offering. An aggregate of 1,818,182 shares of the Company’s Common Stock were issued to the Rubins fromthe conversion of their notes totaling $1,000,000. 7. STOCK OPTIONS On January 31, 2007, the Board of Directors adopted our 2007 Omnibus Equity Compensation Plan (the “Plan”), with 2,100,000 common shares authorizedfor issuance under the Plan. In October 2009, the Company's stockholders approved an increase in the number of shares covered by the Plan to 4,200,000shares. Grants under the plan may consist of incentive stock options, non-qualified stock options, stock appreciation rights, stock awards, stock unit awards,dividend equivalents and other stock based awards. Employees, directors and consultants and other service providers are eligible to participate in the Plan. Options granted under the plan vest over periodsranging from immediately upon grant to a three year period and expire ten years from date of grant. On March 24, 2014, B. Bernstein an officer and director of the Company was granted 10 year options to purchase 250,000 shares of common stock. Theseoptions vested on the date of grant. On July 25, 2014, and October 14, 2014, two new Directors of the Company were each granted 10 year options to purchase 180,000 shares of common stock.These options vest one third annually commencing at the date of grant. F-13 Activity in stock options for the year ended December 31, 2014 follows: Weightedaverage exerciseprice Weightedaveragecontractualterm Aggregateintrinsic value Number ofshares Outstanding at January 1, 2014 $0.85 4.05 $295,553 3,015,000 Granted $0.80 9.43 1,121,000 Canceled $0.46 7.50 (347,667)Exercised $0.35 8.45 (33,333)Outstanding at December 31, 2014 $0.87 5.30 $757,650 3,755,000 Vested and exercisable at December 31, 2014 $0.89 4.74 $757,650 3,314,999 Vested and exercisable at December 31, 2014 and expected to vest thereafter $0.89 5.30 757,650 3,704,400 The intrinsic value of the options exercised during 2014 was $21,666 The weighted average grant date fair value of options granted during 2014 was $0.06 per share. The Company measured the fair value of each option awardon the date of grant using the Black Scholes option pricing model (BSM) with the following assumptions: 2014 Exercise price $0.75 to$0.90 Expected life 6 years Expected volatility 37% Dividend yield 0%Risk-free interest rate 1.64% to2.70% The expected dividend yield is based on the Company’s historical dividend yield. The expected volatility was based on the average of historical volatilitiesfor a period comparable to the expected life of the options of certain entities considered to be similar to the Company. The expected life is based on thesimplified expected term calculation permitted by the SEC which defines the expected life as the average of the contractual term of the options and theweighted-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.The value of stock options is recognized as compensation expense by the straight line method over the vesting period. Compensation expense recorded foroptions in the statements of operations was $299,700 and $49,805 for the years ended December 31, 2014 and 2013, respectively. Unrecognizedcompensation cost related to non-vested options at December 31, 2014 amounted to $130,400 which is expected to be recognized over a weighted averageperiod of 2.5 years.8. WARRANTS: On January 31, 2014 the expiration date of outstanding warrants issued to one of the Company’s placement agents to purchase 1,342,500 shares of theCompany’s common stock at $1.10 per share, due to expire on January 31, 2014 was extended by the Company through January 31, 2018. The followinginformation was input into BSM to compute a fair value price of $.104 for each modified warrant: Exercise price $1.10 Term 4 years Expected volatility 37% Dividend yield 0% Risk-free interest rate .09% For the years ended December 31, 2014 and 2013, compensation expense of $139,620 and $1,916 respectively was recorded related to these warrants. F-14 The following table summarizes information about outstanding stock warrants as of December 31, 2014 all of which are exercisable: Weighted Average Exercise Number Remaining Price Outstanding Contractual Life $1.10 1,342,500 3 years 1.00 2,000,004 6 years $0.55 1,773,027 7 years 5,115,531 9. INCOME TAXES: For the year ended December 31, 2014, the income tax benefit allocated to continuing operations represents the tax benefit from utilizing the loss fromcontinuing operations to offset income from discontinued operations. A corresponding tax provision was charged to discontinued operations. Reconciliation of the benefit for income taxes from continuing operations recorded in the consolidated statement of operations with the amounts computedat the statutory federal tax rate of 34% as follows: 2014 2013 Federal tax benefit at statutory rate $(1,657,000) $(235,000)State tax benefit, net of federal tax (61,000) (10,000)Permanent differences (38,000) 5,000 Increase in valuation allowance 1,298,000 240,000 Benefit for income taxes $(458,000) $- Tax affected components of deferred tax assets and deferred tax liabilities at December 31, 2014 and 2013 were as follows: 2014 2013 Deferred tax assets: Equity based compensation $229,000 $102,000 Allowance for doubtful accounts 552,000 1,000 Lease merchandise 582,000 - Net operating loss carry-forwards 1,680,000 1,660,000 Gross deferred tax assets 3,043,000 1,763,000 Valuation allowance (3,042,000) (1,744,000)Net deferred tax assets 1,000 19,000 Deferred tax liabilities: Fixed assets (1,000) (19,000) $- $- Based on consideration of the available evidence including historical losses a valuation allowance has been recognized to offset deferred tax assets, asmanagement was unable to conclude that realization of deferred tax assets were more likely than not. As of December 31, 2014, the Company has federal net operating loss carryforwards of approximately $4,547,000 and state net operating loss carryforwardsof approximately $3,351,000 available to offset future taxable income which expire from 2022 to 2034. Section 382 of the Internal Revenue Code imposes a limitation on a corporation's ability to utilize net operating loss carryforwards (“NOLs”) if it experiencesan “ownership change.” In general, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of acorporation by more than 50 percentage points over a three-year period. If such a change were to occur, certain NOLs available to be used could bedisallowed and an annual limitation on utilization of other NOLs would occur. The Company files tax returns in the U.S. federal jurisdiction and various states. At December 31, 2014, federal tax returns remained open for InternalRevenue Service review for tax years after 2010, while state tax returns remain open for review by state taxing authorities for tax years after 2009. There wereno federal or state income tax audits being conducted as of December 31, 2014. F-15 10. COMMITMENTS AND CONTINGENCIES:Lease CommitmentsOn August 1, 2013, FlexShopper entered into a 39 month lease of office space providing for monthly rent of approximately $6,800. This lease agreement wasamended in January 2014 to reflect a 63 month term for a larger suite in an adjoining building. Upon commencement the monthly base rent for the first yearapproximated $9,600 with annual three percent increases throughout the lease term. The rental expense for the years ended December 31, 2014 and 2013 was approximately $163,500 and $58,800, respectively. At December 31, 2014, thefuture minimum annual lease payments are approximately as follows: 2015 $118,000 2016 121,500 2017 125,300 2018 129,000 2019 77,000 $570,800 Contingencies On October 22, 2010, Anchor filed a complaint in the Superior Court of Stamford/Norwalk, Connecticut against the Administrators of the Estate of DavidHarvey (“Harvey”) to recoup a credit loss incurred by the Company’s former subsidiary, Brookridge Funding Services, LLC. Harvey was the owner of aCompany that caused the credit loss and the Company is pursuing its rights under the personal guarantee that Harvey provided. The Complaint is demandingprincipal of approximately $485,000 plus interest and damages. On September 9, 2014, the Company received $124,774 from Harvey as a final settlement,which is included in discontinued operations. 11. EMPLOYMENT AGREEMENTS On January 31, 2007, the Company entered into an employment agreement to retain the services of Brad Bernstein who currently serves as Chief ExecutiveOfficer and President. For fiscal 2013 and fiscal 2014, Mr. Bernstein received an annual salary of $240,000.Mr. Bernstein’s employment agreement currentlyexpires on January 31, 2016 and will automatically renew for an additional one year unless either party notifies the other, in writing, at least 60 days prior tothe expiration date of the term of such party’s intention not to renew the agreement. In the event Mr. Bernstein's services are terminated due to death ordisability, Mr. Bernstein would receive six months’ severance pay. In the event Mr. Bernstein is terminated without cause, Mr. Bernstein would receive 12months’ severance pay. Morry F. Rubin, Chairman of the Board and former Chief Executive Officer had also entered into an employment agreement on January 31, 2007. Pursuant tothe employment agreement, Mr. Rubin received compensation of $85,307 and $98,538 for 2013 and 2014, respectively. On December 29, 2014, Mr. Rubinresigned as Chief Executive Officer of our Company and agreed to terminate his employment agreement. Mr. Rubin is continuing to serve as Chairman of theBoard of the Company and we have agreed to compensate Mr. Rubin by paying 50% of the health insurance premiums for him and his family under ourhealth insurance plan. 12. FOURTH QUARTER ADJUSTMENT In the fourth quarter of 2014, the Company capitalized $1,017,104 of website and internal use software costs and correspondingly recognized $103,222 ofaccumulated amortization, or a net adjustment of $913,822 of which $627,646 related to amounts expensed in prior quarters of 2014 as follows: Quarter Ended Amount March 31 $158,529 June 30 233,751 September 30 235,366 $627,646 F-16 The effects of such adjustments on net loss for the prior quarters follows (unaudited): Quarter Ended: Net loss: March 31, June 30, September 30, As previously reported $(1,201,375) $(1,244,069) $(1,364,623)Adjustment 158,529 233,751 235,366 As adjusted $(1,042,846) $(1,010,318) $(1,129,257)Basic and diluted loss per common share: As previously reported $(0.05) $(0.05) $(0.04)Adjustment 0.01 0.01 0.01 As adjusted $(0.04) $(0.04) $(0.03) 13. SUBSEQUENT EVENTS On March 6, 2015, FlexShopper entered into a credit agreement (the “Credit Agreement”) with a Lender. FlexShopper is permitted to borrow funds under theCredit Agreement based on FlexShopper’s cash on hand and the Amortized Order Value of its Eligible Leases (as such terms are defined in the CreditAgreement) less certain deductions described in the Credit Agreement. Under the terms of the Credit Agreement, subject to the satisfaction of certainconditions, FlexShopper may borrow up to $25,000,000 from the Lender for a term of two years. The borrowing term may be extended for an additionaltwelve months in the sole discretion of the Lender. The Credit Agreement contemplates that the Lender may provide additional debt financing toFlexShopper, up to $100 million in total, under two uncommitted accordions following satisfaction of certain covenants and other terms and conditions. TheLender will receive security interests in certain leases as collateral under the Credit Agreement.In connection with entering into the Credit Agreement, on March 6, 2015, FlexShopper raised approximately $8.6 million in net proceeds through directsales of 17.0 million shares of FlexShopper common stock, (the “Shares”), to certain affiliates of the Lender and other accredited investors (the “Investors”)for a purchase price of $0.55 per share.As a result of the transactions described in the preceding paragraph, each share of Series 1 Convertible Preferred Stock is now convertible into 6.33 shares ofthe Company’s common stock or a total of 2,166,246 common shares. as a result of the anti-dilution rights of the Preferred Stock.On March 26, 2015, our Lender pursuant to its rights under the transaction documents executed on March 6, 2015, nominated as a board member and theboard approved effective April 1, 2015 the election of Philip Gitler. On the same date, the board approved a resolution, subject to stockholder approval and afiling of an amendment to the Company’s Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the number ofauthorized shares of Common Stock from 65 million shares to 100 million shares. Also, the board approved a 2015 Stock Option Plan identical to theexisting 2007 Plan with 4,000,000 shares of its Common Stock that may be issued under the Plan. The 2015 Plan is subject to approval of an increase in thenumber of shares of authorized Common Stock described above and stockholder approval within 12 months.F-17 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable. Item 9.A Controls and Procedures. Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluatedthe effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report.Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. Report of Management on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control overfinancial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance withaccounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that inreasonable e-tail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation ofour consolidated financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance withmanagement authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have amaterial effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control overfinancial reporting is not intended to provide absolute assurance that a misstatement of our consolidated financial statements would be prevented or detected. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control –Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992). Based on this evaluation, managementconcluded that the company’s internal control over financial reporting was effective as of December 31, 2014. There were no changes in our internal controlover financial reporting during the quarter ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internalcontrol over financial reporting. Our independent auditors have not audited and are not required to audit this assessment of our internal control over financialreporting for the fiscal year ended December 31, 2014. Item 9.B. Other Information. Not applicable. 22 PART III Item 10. Directors, Executive Officers and Corporate Governance The names, ages and principal occupations of FlexShopper's executive officers and directors as of the date of this Form 10-K are listed below. Name Age Position Morry F. Rubin 55 Chairman of the Board and Co-Founder Brad Bernstein 49 Chief Executive Officer, President, Director and Co-Founder T. Scott King 62 Director Carl Pradelli 48 Director Frank Matasavage 59 Chief Financial Officer Philip Gitler (1) 41 Director_________________(1)Mr. Gitler was appointed to the Board on March 26, 2015 with an effective date of April 1, 2015. Effective April 1, 2015, the Board of Directors consists of five members. The terms of all directors expire at the annual meeting of directors following theannual stockholders meeting. Officers serve at the pleasure of the Board and may be removed, either with or without cause, by the Board of Directors, and asuccessor elected by a majority vote of the Board of Directors, at any time. Biographical Information of Officers and Directors Morry F. Rubin has been a director of FlexShopper since January 31, 2007 and served as Chief Executive Officer from January 2007 throughDecember 2014. Mr. Rubin served as Co-Chairman of the Board since January 2007 and as Chairman of the Board since December 2014. Previously, MorryF. Rubin served as Chairman, Chief Executive Officer and principal owner of Preferred Labor LLC which completed the sale if its business in April 2007. OnJanuary 31, 2007, Mr. Rubin became an employee of FlexShopper and is devoting such time to the affairs to FlexShopper as is necessary for the performanceof his duties. Prior to his involvement with Preferred Labor, Mr. Rubin was President, Chief Executive Officer, Treasurer and a director of ATC GroupServices, Inc. (“ATC”), a publicly held company, from 1988 to 1998. In January 1998, ATC was sold to a financial investor group for approximately $160million. Mr. Rubin was also President, Chief Executive Officer and Treasurer of Aurora Environmental, Inc. from May 1985 to June 1995, and was a directorof Aurora from September 1983 to June 1995. In 1995, Morry Rubin was selected as a finalist for the Ernst & Young Entrepreneur of the Year under 40 Awardfor the New York City Region. From 1981 to 1987, Mr. Rubin was employed in sales and as director of acquisitions for Staff Builders, Inc., a publicly heldcompany engaged in providing temporary personnel in the healthcare, light industrial and clerical fields. Mr. Rubin has over 25 years of managementexperience and serving on board of directors of various entities. Mr. Rubin has expertise in mergers and acquisitions and in the successful integration ofacquired companies. All of these management and financial skills have allowed him to provide significant leadership and vision to the board of directors. Brad Bernstein is a director, co-founder, Chief Executive Officer and President of FlexShopper. Mr. Bernstein served as Chief Financial Officer of theCompany from January 2007 through December 2014 at which time he became Chief Executive Officer. Previously, Mr. Bernstein was employed by PreferredLabor LLC from March 1999 through January, 2007. Mr. Bernstein served Preferred as its Chief Financial Officer and later as its President. On January 31,2007, Mr. Bernstein became a full-time employee of FlexShopper. Before joining Preferred Labor he was a partner of Miller, Ellin Consulting Group, LLP.Mr. Bernstein’s clients included major commercial and investment banks, asset based lenders and alternative finance companies. These institutions relied onhis ability to oversee due diligence engagements and evaluate a company’s financial performance, its internal control structure and the quality of its assetsbefore making investments or loans. Mr. Bernstein has used his banking relationships to raise debt and negotiate and structure financing for companies. Mr.Bernstein brings to the board his financial and business expertise as a Certified Public Accountant. Mr. Bernstein received a Bachelor of Arts degree fromColumbia University. Carl Pradelli has been a director since July 2014. Mr. Pradelli has been President, CEO, co-founder and a director since 2002 of Nature City LLC.Nature City is a developer and direct to consumer marketer of premium dietary supplements. Nature City principally markets via direct mail and e-commercechannels. From 2002 through 2011, Mr. Pradelli served as President, CEO and co-founder of Advanced Body Care Solutions, a company which marketedhealth and beauty products using direct response television. Previously, he was employed by Donaldson, Lufkin & Jenrette, which was acquired in 2000 byCredit Suisse First Boston at which time he was serving as a Senior Vice President. Mr. Pradelli has served as a director of Duane Reade, Inc. and on itscompensation and governance committees. Mr. Pradelli received his MBA from Wharton Business School at the University of Pennsylvania and his BS inFinance and Accounting from Stern School of Business at New York University. Mr. Pradelli brings to the Board his financial and business experience as wellas serving as a director of Duane Reade and as a member of its board committees, making him an ideal candidate to serve as an independent director and as afinancial expert on our Board of Directors. 23 T. Scott King has been a director since November 2014. From April 2014 through September 2014, Mr. King served as Interim Chief ExecutiveOfficer of Gordmans Stores, Inc. (traded on NASDAQ under the symbol GMAN), an Omaha based apparel and home décor retailer with 99 stores. Mr. King hasalso served as Gordmans Chairman of the Board. From 2003 through 2014, Mr. King served as Senior Managing Director of Operations of Sun CapitalPartners, a Boca Raton based private equity firm with an excess of $10 billion under management. From 1999 through 2003, he served as President and ChiefExecutive Officer of Waterlink Inc. (traded on the NASDAQ under the symbol WLK), an Ohio based, international provider of water and waste watersolutions. Prior to that time he was employed for approximately 20 years with Sherwin-Williams Company, an international manufacturer and retailer of paintand coatings. Mr. King served on the Board of Directors of The Limited, ShopKo, Furniture Brands Inc. and Boston Market. He also serves on the Board ofAdvisors of State University of NY at Oswego, School of Business, where he received his B.A. Degree in Business. Mr.King brings to the Board his financialand business experience as well as serving as a director on various Boards of Directors of public entities, making him an ideal candidate to serve as anindependent director and as a financial expert on our Board of Directors. Frank Matasavage, has been Chief Financial Officer of the Company since December 2014 and previously served as the Registrant’s Controllersince 2014. Mr. Matasavage previously worked at FriendFinder Networks Inc. a publically traded internet technology and entertainment company from 2004thru 2013. Mr. Matasavage has 30 years’ experience as a Chief Financial Officer and Controller in a variety of public and non-public corporations. Mr.Matasavage also brings to the position his financial and business expertise as a Certified Public Accountant. Mr. Matasavage received a Bachelor of Artsdegree from the College of the Holy Cross. Philip Gitler, will become a director of the Company April 1, 2015. Mr. Gitler is a managing director at Waterfall Asset Management, LLC, aninvestment adviser focused on structured credit and whole loans. Prior to joining Waterfall in 2013, Mr. Gitler was managing member of PMG Advisors LLCwhich he founded in 2012. PMG Advisors LLC consulted with finance companies and investors in the structured credit market. Previously, Mr. Gitler was aVice President at Goldman Sachs & Co. where he joined in 2005 and focused on asset and principal financings and advisory services with his clients whichincluded specialty finance, auto and equipment finance and leasing companies of various sizes. Prior to joining Goldman Sachs, Mr. Gitler worked at MerrillLynch & Co. where he joined in 1996 and held several positions in its investment banking and capital markets groups focused on asset and lease financingand securitization. Mr. Gitler received a Bachelor of Science degree in finance from the Pennsylvania State University and an M.B.A. from The WhartonSchool, University of Pennsylvania.. Mr. Gitler was appointed to the Board of Directors as a result of the transaction documents executed with ourinstitutional lender described under Item 13. Key Employees In July 2013, FlexShopper hired Justin Metzl as Vice President of eCommerce, a non-executive officer position. Mr. Metzl leads overall eCommercestrategy including marketing, user experience, product management, web analytics, search engine marketing, e-mail marketing, mobile and social media.Prior to joining FlexShopper, Mr. Metzl was Director of User Experience I eCommerce for five years at TigerDirect.com (Ranked Internet Retailer Top-25largest eCommerce sites). He managed, defined and designed the online user experience, eCommerce strategy, alb/multivariate testing strategy,personalization and product recommendations, mobile strategy and socialmedia initiatives. Before TigerDirect, Mr. Metzl was Director of eCommerce forseven years at Alienware (a Dell Subsidiary). Mr. Metzl brings over 12 years of web & eCommerce experience in B2C and B2B to drive revenue, improveconversion and satisfy the overall customer experience. Mr. Metzl attended Virginia Polytechnic Institute and State University and majored in ManagementScience and Information Technology. Corporate Governance Our business, property and affairs are managed by, or under the direction of, our Board, in accordance with the General Corporation Law of the Stateof Delaware and our By-Laws. Members of the Board are kept informed of our business through discussions with the Chief Executive Officer and other keymembers of management, by reviewing materials provided to them by management. We continue to review our corporate governance policies and practices by comparing our policies and practices with those suggested by variousgroups or authorities active in evaluating or setting best practices for corporate governance of public companies. Based on this review, we have adopted, andwill continue to adopt, changes that the Board believes are the appropriate corporate governance policies and practices for our Company. We have adoptedchanges and will continue to adopt changes, as appropriate, to comply with the Sarbanes-Oxley Act of 2002 and subsequent rule changes made by the SECand any applicable securities exchange. Director Qualifications and Diversity The board seeks independent directors who represent a diversity of backgrounds and experiences that will enhance the quality of the board’sdeliberations and decisions. Candidates shall have substantial experience with one or more publicly traded companies or shall have achieved a high level ofdistinction in their chosen fields. The board is particularly interested in maintaining a mix that includes individuals who are active or retired executiveofficers and senior executives, particularly those with experience in the finance and capital market industries. In evaluating nominations to the Board ofDirectors, our Board also looks for certain personal attributes, such as integrity, ability and willingness to apply sound and independent business judgment,comprehensive understanding of a director’s role in corporate governance, availability for meetings and consultation on Company matters, and thewillingness to assume and carry out fiduciary responsibilities. Qualified candidates for membership on the Board will be considered without regard to race,color, religion, sex, ancestry, national origin or disability. 24 Risk OversightEnterprise risks are identified and prioritized by management and each prioritized risk is assigned to the full board for oversight. These risks include,without limitation, the following: •risks and exposures associated with strategic, financial and execution risks and other current matters that may present material risk to ouroperations, plans, prospects or reputation;•risks and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure, internal control overfinancial reporting, financial policies, investment guidelines and credit and liquidity matters;•risks and exposures relating to corporate governance; and management and director succession planning; and•risks and exposures associated with leadership assessment, and compensation programs and arrangements, including incentive plans. Board Leadership Structure We currently have a Chairman of the Board who presides at all meetings of the Board. The Chairman is appointed on an annual basis by at least amajority vote of the remaining directors. Currently, the offices of Chairman of the Board and Chief Executive Officer are entirely separated. FlexShopper hasno fixed policy with respect to the separation of the offices of the Chairman of the Board and Chief Executive Officer. Limitation of Directors’ Liability and Indemnification Our directors are not personally liable to us or to any of our stockholders for monetary damages for breach of fiduciary duty as a director except forliability (i) for any breach of the director’s duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentionalmisconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware or (iv) for any transaction fromwhich the director derived any improper personal benefit. If the General Corporation Law of the State of Delaware or any other statute of the State of Delawareis amended to authorize the further elimination or limitation of the liability of our directors, then the liability of our directors will be limited to the fullestextent permitted by the statutes of the State of Delaware, as so amended, and such elimination or limitation of liability shall be in addition to, and not in lieuof, the provided limitation on the liability of a director. To the maximum extent permitted by law, we fully indemnify any person who was or is a party or isthreatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) byreason of the fact that such person is or was our director or officer, or is or was serving at our request as a director or officer of another corporation, partnership,joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlementactually and reasonably incurred by such person in connection with such action, suit or proceeding. To the extent permitted by law, we may fully indemnifyany person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil,criminal, administrative or investigative) by reason of the fact that such person is or was our employee or agent, or is or was serving at our request as anemployee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding.We will, if so requested by a director or officer, advance expenses (including attorneys’ fees) incurred by such director or officer in advance of the finaldisposition of such action, suit or proceeding upon the receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shallultimately be determined that such director or officer is not entitled to indemnification. We may advance expenses (including attorneys’ fees) incurred by anemployee or agent in advance of the final disposition of such action, suit or proceeding upon such terms and conditions, if any, as our Board deemsappropriate. Independent Directors Currently, T. Scott King and Carl Pradelli are each deemed by management to be an “independent director” and “Financial Expert” of FlexShopper.Philip Gitler, whose appointment to the board is effective April 1, 2015, is a nominee to the board through the Company’s transaction documents with ourinstitutional lender as described under “Item 13.” Mr. Gitler would have been considered an independent director, except for his relationship and affiliationwith our institutional lender. Lack of Committees As of the date of this Form 10-K, FlexShopper has no audit, compensation, corporate governance, nominating or other committee of the Board ofDirectors. Code of Ethics We have in place a Code of Ethics for Senior Financial Officers (the "Code of Ethics") that applies to all of our executive officers. The code of ethicsis designed to deter wrongdoing and promote: • honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professionalrelationships; • full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other publiccommunications that we make; • compliance with applicable governmental laws, rules and regulations; • the prompt internal reporting of violations of the Code of Ethics to an appropriate person identified in the Code of Ethics; and• accountability for adherence to the Code of Ethics. We intend to disclose any amendments to or waivers of a provision of the Code of Ethics by posting such information on our website available atwww.exactsciences.com and/or in our public filings with the SEC. 25 Compliance with Section 16(a) of the Exchange Act Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers and directors, and persons who own more than ten percent ofa registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the“Commission”). Officers, directors and greater than ten percent stockholders are required by the Commission's regulations to furnish us with copies of allSection 16(a) forms they file. During fiscal year 2014, none of our officers, directors or 10% or greater stockholders are believed to have filed any forms lateto the best of our knowledge, except that T. Scott King and Carl Pradelli each filed a Form 3 and Form 4 late in 2014 due to the time delays incurred inobtaining individual SEC edgar codes required to make the required filings. Item 11. Executive Compensation. The following table sets forth the overall compensation earned over the fiscal years ended December 31, 2014 and 2013 by (1) each person who served as theprincipal executive officer of FlexShopper or its subsidiaries during fiscal year 2014; (2) our most highly compensated (up to a maximum of two) executiveofficers as of December 31, 2014 with compensation during fiscal year ended 2014 of $100,000 or more; and (3) those two individuals, if any, who wouldhave otherwise been in included in section (2) above but for the fact that they were not serving as an executive of us as of December 31, 2014. Fiscal Year Salary($) Bonus($) StockAwards($) OptionsAwards($)(1) Non-EquityIncentive PlanCompensation($) Non-qualifiedDeferredCompensationEarnings ($) All OtherCompen-sation($) (2)(3) Total ($) Morry F. Rubin 2014 $86,538 $-0- $-0- $-0- $-0- $-- $12,000 $98,538 Former CEO(4) 2013 $67,308 $-0- $-0- $-0- $-0- $-0- $18,000 $85,308 Brad Bernstein 2014 $240,000 $-0- $-0- $103,250 $-0- $-0- $12,000 $343,250 CEO and President 2013 $240,000 $-0- $-0- $-0- $-0- $-0- $12,000 $252,000 Frank Matasavage 2014 $120,462 $-- $-- $12,655 $-- $-- $-- $133,117 CFO 2013 $-- $-- $-- $-- $-- $-- $-- $-- ____________________ (1) Topic 718 requires FlexShopper to determine the overall full grant date fair value of the restricted stock awards and options as of the date of grant basedupon the Black-Scholes method of valuation which total amounts are set forth in the table above under the year of grant, and to then expense that value overthe service period over which the restricted stock awards and options become vested. As a general rule, for time-in-service-based restricted stock awards andoptions, FlexShopper will immediately expense any restricted stock awards and option or portion thereof which is vested upon grant, while expensing thebalance on a pro rata basis over the remaining vesting term of the restricted stock awards and options. For a description Topic 718 and the assumptions usedin determining the value of the restricted stock awards and options under the Black-Scholes model of valuation, see the notes to the consolidated financialstatements included with this Form 10-K. 26 (2) Includes all other compensation not reported in the preceding columns, including (i) perquisites and other personal benefits, or property, unless theaggregate amount of such compensation is less than $10,000; (ii) any “gross-ups” or other amounts reimbursed during the fiscal year for the payment oftaxes; (iii) discounts from market price with respect to securities purchased from FlexShopper except to the extent available generally to all security holdersor to all salaried employees; (iv) any amounts paid or accrued in connection with any termination (including without limitation through retirement,resignation, severance or constructive termination, including change of responsibilities) or change in control; (v) contributions to vested and unvesteddefined contribution plans; (vi) any insurance premiums paid by, or on behalf of, FlexShopper relating to life insurance for the benefit of the namedexecutive officer; and (vii) any dividends or other earnings paid on stock or option awards that are not factored into the grant date fair value required to bereported in a preceding column. (3) Includes compensation for service as a director described under Director Compensation, below. (4) Does not include monies paid to Mr. Rubin on an investment in FlexShopper as described under "Certain Transactions." For a description of the material terms of each named executive officers’ employment agreement, including the terms of any contract, agreement,plan or other arrangement that provides for any payment to a named executive officer in connection with his or her resignation, retirement or othertermination, or a change in control of FlexShopper. See section below entitled “Employment Agreements.” No outstanding common share purchase option or other equity-based award granted to or held by any named executive officer in the past two fiscalyears were repriced or otherwise materially modified, including extension of exercise periods, the change of vesting or forfeiture conditions, the change orelimination of applicable performance criteria, or the change of the bases upon which returns are determined, nor was there any waiver or modification of anyspecified performance target, goal or condition to payout. Executive Officer Outstanding Equity Awards The following table provides certain information concerning any common share purchase options, stock awards or equity incentive plan awards heldby each of our named executive officers that were outstanding, exercisable and/or vested as of December 31, 2014. Option Awards Stock AwardsName Number ofSecuritiesUnderlyingUnexercisedOptions(#)Exercisable Number ofSecuritiesUnderlyingUnexercisedOptions(#)Unexercis-able EquityIncentive PlanAwards:Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions (#) OptionExercisePrice ($) OptionExpirationDate NumberofShares orUnits ofStock thathave notVested (#) Market Value of Shares orUnits of Stockthat have not Vested EquityIncentivePlanAwards:NumberofUnearnedShares,Units orOtherRightsthat havenotVested Equity Incentive Plan Awards: Market or Payout Value of un-earned Shares, Units or Other Rights that have not VestedMorry F. Rubin 650,000 -0- -0- 1.25 01/31/2017 -0- N/A -0- N/AMorry F. Rubin 250,000 -0- -0- 0.62 03/23/2019 -0- N/A -0- N/AMorry F. Rubin 250,000 -0- -0- 0.17 03/20/2022 -0- N/A -0- N/ABrad Bernstein 950,000 -0- -0- 1.25 01/31/2017 -0- N/A -0- N/ABrad Bernstein 250,000 -0- -0- 0.62 03/23/2019 -0- N/A -0- N/ABrad Bernstein 250,000 -0- -0- 0.17 03/20/2022 -0- N/A -0- N/ABrad Bernstein 250,000 -0- -0- 0.70 03/24/2024 -0- N/A -0- N/AFrank Matasavage -0- 25,000 -0- .75 01/20/2024 -0- N/A -0- N/AFrank Matasavage 3,333 6,667 -0- .70 12/29/2024 -0- N/A -0- N/A 27 Employment Agreements On January 31, 2007, we entered into an employment agreement to retain the services of Brad Bernstein (“Bernstein”) as President. Mr. Bernsteincurrently serves as Chief Executive Officer. FlexShopper pays Mr. Bernstein a fixed base salary $240,000 during each year of his Employment Term. TheBoard may periodically review Mr. Bernstein’s Base Salary and may determine to increase (but not decrease) the Base Salary, in accordance with suchpolicies as FlexShopper may hereafter adopt from time to time, if it deems appropriate. The following summarizes the employment agreement of Mr.Bernstein. •The Agreement shall be automatically renewed for additional one year terms unless either party notifies the other, in writing, at least 60 days priorto the expiration of the term, of such party’s intention not to renew the Agreement. In December 2014, the Agreement renewed for one additionalyear through the close of business on January 31, 2016;•Mr. Bernstein is required to devote his full business time and efforts to the business and affairs of FlexShopper. Mr. Bernstein is entitled toindemnification to the full extent permitted by law. Mr. Bernstein is subject to provisions relating to non-compete, non-solicitation of employeesand customers during the term of the Agreement and for a specified period thereafter (other than for termination without cause or by Mr. Bernsteinfor good reason).•Mr. Bernstein is entitled to participate in such our benefit and other compensatory or non-compensatory plans that are available to similarlysituated executives of FlexShopper and is entitled to be reimbursed for up to $25,000 of medical costs not covered by FlexShopper’s healthinsurance per year.•FlexShopper shall, to the extent such benefits can be obtained at a reasonable cost, provide Mr. Bernstein with disability insurance benefits of atleast 60% of his gross Base Salary per month. In the event of Mr. Bernstein’s disability, Mr. Bernstein and his family shall continue to be coveredby all of our executive welfare benefit plans at our expense, to the extent such benefits may, by law, be provided, for the lesser of the term of suchdisability and 24 months, in accordance with the terms of such plans; and•FlexShopper shall, to the extent such benefits can be obtained at a reasonable cost, provide Mr. Bernstein with life insurance benefits in the amountof at least $500,000. In the event of Mr. Bernstein’s death, his family shall continue to be covered by all of our executive welfare benefit plans, atour expense, to the extent such benefits may, by law, be provided, for 12 months following Mr. Bernstein’s death in accordance with the terms ofsuch plans.Termination of Employment Mr. Bernstein’s employment with FlexShopper may be terminated by mutual agreement. The following description summarizes his severance pay(exclusive of base salary, car allowances and benefits due up to the date of termination), if any, in the event of termination (other than by mutual agreement)and the treatment of his options: Termination for Cause. In the event of any termination for cause (as defined in the agreement), Mr. Bernstein shall not receive any severance payand any and all stock options granted to him shall terminate according to their terms of grant with any such vested options being exercisable for the shorter of(i) 90 days from the date of termination and (ii) the exercise term of each relevant option grant. Termination for Disability or Death. In the event of termination for disability (as defined in the agreement) or death, Mr. Bernstein shall receive allbonuses then earned, six months’ severance pay in the case of death, and the acceleration of certain options. Such options may be exercised for the longer of(i) 12 months from the date of the date of termination and (ii) the exercise term of each relevant option grant. 28 Termination without Cause. Mr. Bernstein’s employment with FlexShopper may be terminated by us, in the absence of Cause and by Mr. Bernsteinfor Good Reason (as defined in the agreement). In such event, Mr. Bernstein shall receive 12 months’ severance pay, targeted bonuses, continuation of certainbenefits and full vesting of all options. Such options may be exercised for the longer of (i) 12 months from the date of termination and (ii) the exercise term ofeach relevant option grant. Voluntary Resignation. Mr. Bernstein’s employment with FlexShopper may be terminated by him without Good Reason. In such event, Mr.Bernstein shall not receive any severance pay and unless termination occurs in the first year of employment, all vested options shall be retained by him forthe full exercise term of each relevant option. Option Grants Mr. Bernstein is eligible to receive stock options and other compensation as determined at the discretion of the board. See “Executive OfficerOutstanding Equity Awards” above for a description of outstanding options granted to Mr. Bernstein. Termination of Employment Agreement with Morry F. Rubin On December 29, 2014, Mr. Morry F. Rubin resigned as Chief Executive Officer of our company and agreed to terminate his employment agreement.Mr. Rubin is continuing to serve as Chairman of the Board of our company and we have agreed to compensate Mr. Rubin by paying 50% of the healthinsurance premiums for him and his family under our health insurance plan. Mr. Rubin’s employment agreement had contained provisions similar but notidentical to those of Mr. Bernstein’s with the primary difference being the amount of compensation being paid to Mr. Rubin. See Summary CompensationTable above for a description of the compensation paid to Mr. Rubin for the last two fiscal years. Review of Risks Arising from Compensation Policies and Practices We have reviewed our compensation policies and practices for all employees and concluded that any risks arising from our policies and practices arenot reasonably likely to have a material adverse effect on FlexShopper. DIRECTOR COMPENSATION Cash Fees and Options As of the date of this Form 10-K, FlexShopper has no audit, compensation, corporate governance, nominating or other committee of the Board ofDirectors, although it intends to establish an audit, compensation and corporate governance committee in the near future. George Rubin, a former directoruntil December 29, 2014 is receiving reimbursement of health and dental insurance for him and his wife through December 31, 2015. Members of the Boardof Directors are eligible to participate under one or more of our company’s stock option plan(s). On July 25, 2014, we granted Carl Pradelli options topurchase 180,000 shares, exercisable at $.89 per share from the vesting date through July 25, 2024, with one-third vesting on July 25, 2014, one-third vestingon July 25, 2015 and a third vesting on July 25, 2016. In November 2014, we granted T. Scott King options to purchase 180,000 shares, exercisable at $.70per share from the vesting date through November 13, 2024, with one-third vesting on November 13, 2014, one-third vesting on November 13, 2015 and athird vesting on November 13, 2016. In the event that a director is no longer serving on the Board of Directors, the director has 90 days to exercise all vestedoptions. Equity incentive awards and cash payments to directors will be determined in the sole discretion of the Board and/or compensation committee of theBoard at such times and in such amounts as the Board or a committee thereof determines to make such awards. Travel Expenses All directors shall be reimbursed for their reasonable out of pocket expenses associated with attending the meetings. 29 2014 Director Compensation The following table shows the overall compensation earned for the 2014 fiscal year with respect to each non-employee and non-executive directorof FlexShopper as of December 31, 2014. DIRECTOR COMPENSATION Name and Principal Position Fees Earned or Paid in Cash ($) Stock Awards ($) (1) Option Awards ($)(1) Non-Equity Incentive Plan Compensa-tion ($) Nonqualified Deferred Compensa-tion Earnings ($) All Other Compensa-tion ($) (2) Total ($) Paul B. Healy, Former Director $9,500 $-0- $-0- $-0- $-0- $-0- $9,500 George Rubin, Former Director (3) $9,500 $-0- $-0- $-0- $-0- $7,400 $16,900 Carl Pradelli, Director $3,700 $54,540 $-0- -- -- -- $58,240- T. Scott King Director $2,600 $45,360 $-0- -- -- -- $47,960 (1)Topic 718 requires FlexShopper to determine the overall full grant date fair market value of the restricted stock awards and the options as of the date ofgrant based upon the Black-Scholes method of valuation which total amounts are set forth in the table above under the year of grant, and to then expensethat value over the service period over which the restricted stock awards and the options become exercisable vested. As a general rule, for time-in-service-based restricted stock awards and options, FlexShopper will immediately expense any restricted stock award or option or portion thereof which is vestedupon grant, while expensing the balance on a pro rata basis over the remaining vesting term of the restricted stock award and option. For a description ofTopic 718 and the assumptions used in determining the value of the restricted stock awards and options under the Black-Scholes model of valuation, seethe notes to the consolidated financial statements included herein. (2)Includes all other compensation not reported in the preceding columns, including (i) perquisites and other personal benefits, or property, unless theaggregate amount of such compensation is less than $10,000; (ii) any “gross-ups” or other amounts reimbursed during the fiscal year for the payment oftaxes; (iii) discounts from market price with respect to securities purchased from FlexShopper except to the extent available generally to all securityholders or to all salaried employees; (iv) any amounts paid or accrued in connection with any termination (including without limitation throughretirement, resignation, severance or constructive termination, including change of responsibilities) or change in control; (v) contributions to vested andunvested defined contribution plans; (vi) any insurance premiums paid by, or on behalf of, FlexShopper relating to life insurance for the benefit of thedirector; (vii) any consulting fees earned, or paid or payable; (viii) any annual costs of payments and promises of payments pursuant to a director legacyprogram and similar charitable awards program; and (ix) any dividends or other earnings paid on stock or option awards that are not factored into the grantdate fair value required to be reported in a preceding column. (3)All other compensation includes the payment of health insurance which is not provided to other non-employee directors. Mr. Rubin's compensationexcludes monies earned as an investor. See "Certain Transactions" for a description of certain transactions involving George Rubin. 30 Indemnification; Director and Officer Liability Insurance FlexShopper has agreed to indemnify (and advance the costs of defense of) each director (and his legal representatives) to the fullest extentpermitted by the laws of the state in which FlexShopper is incorporated, as in effect at the time of the subject act or omission, or by the Certificate ofIncorporation and Bylaws of FlexShopper, whichever affords greater protection to each director, and both during and after termination (for any reason).FlexShopper shall cause each director to be covered under a directors and officers' liability insurance policy for his acts (or non-acts) as an officer or directorof FlexShopper or any of its affiliates. Such policy shall be maintained by FlexShopper at its expense in an amount of at least $5 million during the term eachdirector serves FlexShopper (including the time period of coverage after each director’s service terminates for any reason whatsoever). In the event of anylitigation or other proceeding between FlexShopper and a director with respect to enforcement of a director’s rights to indemnification and director andofficer liability insurance and such litigation or proceeding results in final judgment or order in favor of the Director, which judgment or order is substantiallyinconsistent with the positions asserted by FlexShopper in such litigation or proceeding, the losing party shall reimburse the prevailing party for all of his/itsreasonable costs and expenses relating to such litigation or other proceeding, including, without limitation, his/its reasonable attorneys' fees and expenses. 2007 Omnibus Equity Compensation Plan On January 31, 2007, the Board adopted our 2007 Omnibus Equity Compensation Plan (the “Plan”), with 2,100,000 common shares authorized forissuance under the Plan. In October 2009, FlexShopper's stockholders approved an increase in the number of shares covered by the Plan to 4,200,000 shares.The following table shows the amounts that have been granted under the Plan as of December 31, 2014 to named executive officers, directors and others: 2007 Omnibus Equity Compensation PlanName and Position Number ofOptions Dollar Value(1) Morry F. Rubin, Former Chief Executive Officer 1,150,000(1) $302,500 Brad Bernstein, Chief Executive Officer 1,700,000(1) $352,500 Frank Matasavage 35,000 $1,000 Executive Group (three persons) 2,885,000(1) $656,000 Non-Executive Director Group (two persons) 360,000(1) $21,600 Non-Executive Officer Employee Group 510,000(1) $80,050 (1)The dollar value of these options is based upon the fair market value of our Common Stock as of the close of business on December 31, 2014 of $1.00per share, less the exercise price of each respective option. The following is a summary of the material features of the Plan: Shares Subject to the Plan The maximum number of shares of Common Stock with respect to which awards may be made under the Plan is 4,200,000. In the event of any stocksplit, reverse stock split, stock dividend, recapitalization, reclassification or other similar event or transaction, the Compensation Committee will make suchequitable adjustments to the number, kind and price of shares subject to outstanding grants and to the number of shares available for issuance under the Planas it deems necessary or appropriate. Shares subject to forfeiture, cancelled or expired awards granted under the Plan will again become available for issuanceunder the Plan. In addition, shares surrendered in payment of any exercise price or in satisfaction of any withholding obligation arising in connection with anaward granted under the Plan will again become available for issuance under the Plan. Administration A committee of two or more directors appointed by the Board will administer the Plan (the “Committee”); however, until the Committee isappointed, the Board administers the Plan. The Committee interprets the Plan, selects award recipients, determines the number of shares subject to each awardand establishes the price, vesting and other terms of each award. While there are no predetermined performance formulas or measures or other specific criteriaused to determine recipients of awards under the Plan, awards are based generally upon consideration of the grantee's position and responsibilities, the natureof services provided, the value of the services to us, the present and potential contribution of the grantee to our success, the anticipated number of years ofservice remaining and other factors which the Board or the Committee deems relevant. 31 Eligibility Employees, directors, consultants and other service providers of our Company and its affiliates are eligible to participate in the Plan, provided;however, that only employees of our Company are eligible to receive incentive stock options. The maximum number of shares that are the subject of grantsmade under the Plan to any individual during any calendar year may not exceed 1,000,000 shares, subject to certain adjustments. A participant in the Planmay not accrue dividend equivalents during any calendar year in excess of $500,000. Amendment and Termination of Plan The Board may amend, alter or discontinue the Plan at any time; provided, however, that the Board may not amend the Plan without stockholderapproval if such approval is required in order to comply with the Internal Revenue Code or applicable laws or to comply with applicable stock exchangerequirements. The Plan will terminate on the day immediately preceding the tenth anniversary of the Plan’s effective date, unless the Plan is terminated earlierby the Board or is extended by the Board with the approval of the stockholders. Grants Grants made under the Plan may consist of incentive stock options, non-qualified stock options, stock appreciation rights or “SARs,” stock awards,stock unit awards, dividend equivalents and other stock-based awards. Each grant is subject to the terms and conditions set forth in the Plan and to thoseother terms and conditions specified by the Committee and memorialized in a written grant agreement between our Company and grant recipient (the “GrantInstrument”). Stock Options The Plan permits the grant of incentive stock options (“ISOs”) to our employees and the employees of our subsidiaries. The Plan also provides forthe grant of non-qualified stock options (“NQSOs”) to our employees, directors, and consultants and other individuals who perform services for us (as well asto employees, directors, consultants and service providers of our subsidiaries). The exercise price of any stock option granted under the Plan will be equal toor greater than the fair market value of such stock on the date the option is granted, provided, however, that the exercise price of any incentive stock optionsgranted under the Plan to an employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes ofour stock or any parent or subsidiary of us, may not be less than 110% of the fair market value of our Common Stock on the date of grant. Generally, paymentof the option price may be made (i) in cash, (ii) with the Committee’s consent, by approval of the Committee, by delivering shares of Company Stock ownedby the Optionee (including Company Stock acquired in connection with the exercise of an Option, subject to such restrictions as the Committee deemsappropriate) and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation (on a form prescribed by the Committee) toownership of shares of Company Stock having a Fair Market Value on the date of exercise equal to the Exercise Price, (iii) through a broker in accordancewith applicable laws, or (iv) with a combination of cash and shares. The participant must pay the option price and the amount of withholding tax due, if any,at the time of exercise. Shares of Common Stock will not be issued or transferred upon exercise of the option until the option price and the withholdingobligation are fully paid. Under the Plan, each option is exercisable at such time and to such extent as specified in the pertinent Grant Instrument between our Company andthe option recipient. However, no option shall be exercisable with respect to any shares of Common Stock more than ten years after the date of grant of suchaward (except as otherwise determined by the Committee with respect to non-incentive options) and no incentive stock option that is granted to anemployee, who at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of our Company, or anyparent or subsidiary of ours, may be exercised more than five years from the date of grant. Notwithstanding the foregoing, the Committee may provide, in aGrant Instrument, that a Grantee may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or ownedby family members, consistent with the applicable securities laws, according to such terms as the Committee may determine; provided that the Granteereceives no consideration for the transfer of an Option and the transferred Option shall continue to be subject to the same terms and conditions as wereapplicable to the Option immediately before the transfer. Effects of Termination of Service with our Company Generally, unless provided otherwise in the Grant Instrument, the right to exercise any option or SAR (described below) terminates 90 daysfollowing termination of the participant’s relationship with FlexShopper for reasons other than death, disability or termination for “cause” as defined in thePlan. If the participant’s relationship with us terminates due to death or disability, unless provided otherwise in the Grant Instrument, the right to exercise anoption or SAR will terminate the earlier of one year following such termination or the original expiration date. If the participant’s relationship with us isterminated for “cause” any option or SAR not already exercised will automatically be forfeited as of the date such termination. 32 Stock Awards We may issue awards of our Common Stock pursuant to the terms of the Plan. A stock award may be issued for consideration or for no considerationand may be subject to certain restrictions and risk of forfeiture (such as the completion of a period of service or attainment of a performance goal) asdetermined by the Committee and set forth in the Grant Instrument governing the stock award. If a participant’s employment terminates before the vestingcondition is fulfilled, the shares will be forfeited. While the shares remain unvested, a participant may not sell, assign, transfer, pledge or otherwise dispose ofthe shares. Unless otherwise determined by the Committee, a stock award entitles the participant to all of the rights of a stockholder of our Company,including the right to vote the shares and the right to receive any dividends thereon. Stock Units The Plan provides for the grant of stock units to employees, non-employee directors, or consultants or other individuals who perform services for us,subject to any terms and conditions, including the fulfillment of specified performance goals or other conditions, as may be established by the Committee.Each stock unit represents one hypothetical share of Common Stock and the right of the grantee to receive an amount based on the value of a share of ourCommon Stock. Payments with respect to stock units may be made in cash or in shares of Common Stock, or in combination of the two as determined by theappointed committee. Stock Appreciation Rights The Plan also provides for the grant of SARs, either alone or in tandem with stock options. An SAR entitles its holder to a cash payment of the excessof the fair market value of our Common Stock on the date of exercise, over the fair market value of our Common Stock on the date of grant. An SAR issued intandem with a stock option will have the same terms as the stock option. The terms of an SAR granted alone, without an option, will be established by theCommittee, in the Grant Instrument governing the SAR. Other Stock-Based Awards The Committee may grant other stock-based awards, other than those described herein, that are based on, measured by or payable in shares ofCommon Stock on such terms and conditions as the Committee may determine. Such awards may be subject to the achievement of performance goals or otherconditions and may be payable in cash, shares of Common Stock or any combination of cash and shares of Common Stock as the Committee shall determine. Dividend Equivalents The Committee may grant dividend equivalents in connection with grants under the Plan. Dividend equivalents may be paid currently or accrued ascontingent cash obligations and may be payable in cash or shares of Common Stock, and upon such terms as the appointed committee may establish,including the achievement of specific performance goals. Change of Control of FlexShopper In the event of a Change of Control, as that term is defined in the Plan, of our Company, the Committee has discretion to, among other things,accelerate the vesting of outstanding grants, cashout outstanding grants or exchange outstanding grants for similar grants of a successor company. A Changeof Control of our Company will be deemed to have taken place upon: •the acquisition by any person of direct or indirect ownership of securities representing more than 50% of the voting power of our then outstandingstock; •a consolidation or merger of our Company resulting in the stockholders of FlexShopper immediately prior to such event not owning at least a majorityof the voting power of the resulting entity’s securities outstanding immediately following such event; •the sale of substantially all of our assets; or •the liquidation or dissolution of our Company. 2015 Omnibus Equity Compensation Plan On March 26, 2015, the Board adopted the 2015 Omnibus Equity Compensation Plan, subject to stockholder approval of an increase in ourauthorized number of shares of Common Stock, to 100 million shares and stockholder approval of the 2015 Plan within one year of March 26, 2015. Thenumber of shares under the Plan is 4 million shares.33 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. As of March 19, 2015, we have 52,015,322 shares of Common Stock and 342,219 shares of Series 1 Preferred Stock issued and outstanding. In thisrespect, each one share of Series 1 Preferred Stock has the voting rights of 5.7877 common shares, but is convertible into 6.33 common shares. Accordingly,the 342,219 shares of Series 1 Preferred Stock are convertible into 2,166,246 shares of Common Stock with the equivalent voting rights of 1,980,661common shares. The following table sets forth information regarding the economic ownership of our company Common Stock by: •each of our stockholders who is known by us to beneficially own more than 5% of our Common Stock; •each of our executive officers; •each of our directors; and all executive officers and directors as a group. Beneficial ownership is determined based on the rules and regulations of the SEC. A person has beneficial ownership of shares if the individual hasthe power to vote and/or dispose of shares. This power can be sole or shared, and direct or indirect. In computing the number of shares beneficially owned bya person and the percentage ownership of that person, shares of Common Stock subject to options held by that person are counted as outstanding in suchcases where the option holder may exercise the options within 60 days of the date hereof. These shares, however, are not counted as outstanding for thepurposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the table below, each person named in the tablehas sole voting and dispositive power with respect to the shares set forth opposite that person’s name. (Note: All addresses of the Company’s officers anddirectors and Marc Malaga are c/o FlexShopper, Inc. at 2700 North Military Trail, Ste. 200, Boca Raton, FL 33431.) Name and address of Beneficial Owner Shares of Common Stock Beneficially Owned % of Sharesof Common StockBeneficially Owned Morry F. Rubin (1) 6,980,431 13.0 George Rubin (1) 4,896,931 9.3 Ilissa and Brad Bernstein (2) 3,700,000 6.9 T. Scott King (3) 60,000 * Carl Pradelli (4) 247,500 * All officers and directors as a group (five persons) (5) 15,622,862 27.7 Buechel Family Ltd Partnership (6) 1,644,095 3.1 Buechel Patient Care Research & Education Fund (7) 1,293,462 2.4 Marc Malaga (8) 3,263,408 6.1 Waterfall Asset Management, LLC (9) 14,545,455 28.0 _________________*Represents less than 1% of the outstanding shares. (1)Morry Rubin’s beneficial ownership includes 4,901,759 shares of Common Stock and options/warrants to purchase 1,816,672 shares of Common Stockgranted to him and 262,000 shares in which Morry Rubin’s wife and George Rubin are co-trustees of certain family trusts. George Rubin’s beneficialownership includes 3,968,259 shares of Common Stock and 262,000 shares in which Morry Rubin’s wife and George Rubin are co-trustees of certainfamily trusts and warrants to purchase 666,672 shares. 34 (2)Of the 3,700,000 shares beneficially owned by them, 2,000,000 common are owned by Ilissa Bernstein, Brad Bernstein’s wife. The remaining1,700,000 shares represent vested options to purchase a like amount of shares of Common Stock granted to Brad Bernstein. (3)Includes vested options to purchase 60,000 shares of Common Stock. (4)Includes options to purchase 60,000 shares, 62,500 shares owned in trust and 125,000 shares in a limited liability company owned by Mr. Pradelli andhis spouse. (5)Includes 11,319,518 shares of Common Stock and all options and warrants (described in (1) through (4) above) to purchase an aggregate of 4,303,344shares. (6)Includes 1,442,725 shares of Common Stock and 31,812 Preferred shares convertible into 201,370 shares of Common Stock. The Buechel Family LtdPartnership is a Family Partnership, the General Partner of whom is Frederick Buechel. This partnership is being shown in the table since it may bedeemed to be under common control of Dr. Frederick Buechel, who is also a principal of the Buechel Patient Care Research & Education Fundreferenced in footnote (7). The address for this investor is c/o Fordham Financial Management, Inc., 17 Battery Place South, Suite 643, New York, NY10004. (7)Includes 1,092,725 shares of Common Stock and 31,712 Preferred shares convertible into 200,737 shares of Common Stock. The Buechel Patient CareResearch & Education Fund is a 501(c)(3) organization, the principals of which are Drs. Frederick Buechel Sr. and Jr. and Mr. Mark Buechel. Thiseducation fund is being shown in the table since it may be deemed to be under common control of Dr. Frederick Buechel who is the general partnerreferenced in footnote (6) of the Buechel Family Ltd Partnership. The address for this investor is c/o Fordham Financial Management, Inc., 17 BatteryPlace South, Suite 643, New York, NY 10004. (8) Includes 1,914,941 common shares, warrants to purchase 666,672 shares, options to purchase 250,000 shares and 431,795 shares of Common Stockissuable upon conversion of 68,214 shares of Series 1 Preferred Stock.Waterfall Eden Master. (9)Waterfall Eden Master Fund, Ltd. owns 7,882,774 shares of Common Stock, or approximately 15.2% of the outstanding shares of Common Stock.Waterfall Delta Offshore Master Fund, LP owns 4,420,646 shares of Common Stock, or approximately 8.5% of the outstanding shares of CommonStock. Waterfall Delta GP, LLC, as general partner of Waterfall Delta Offshore Master Fund, LP, may be deemed to share beneficial ownership of theshares owned by Waterfall Delta Offshore Master Fund, LP. Waterfall Sandstone Fund, LP owns 2,242,035 shares of Common Stock, or approximately4.3% of the outstanding shares of Common Stock. Waterfall Sandstone GP, LLC, as general partner of Waterfall Sandstone Fund, LP, may be deemed toshare beneficial ownership of the shares owned by Waterfall Sandstone Fund, LP. Waterfall, as the investment adviser to the Waterfall Funds, andMessrs. Capasse and Ross, as members of Waterfall, may be deemed to share beneficial ownership of the 14,545,455 shares of Common Stock owned bythe Waterfall Funds, or approximately 28.0% of the outstanding shares of Common Stock. Because of the relationships described above, the ReportingPersons may be deemed to constitute a “group” within the meaning of Rule 13d-5 under the Securities Exchange Act of 1934, as amended, and as such,each member of the group could be deemed to beneficially own, in the aggregate, all of the shares of Common Stock held by members of the group.The Reporting Persons do not admit that they constitute a group within the meaning of Rule 13d-5. Each of the Reporting Persons disclaims beneficialownership of the shares of Common Stock referred to herein that such Reporting Person does not hold directly. Waterfall and Messrs. Capasse and Rossshare the power to vote and direct the disposition of the shares owned by the Waterfall Funds. Waterfall Delta GP, LLC may be deemed to share thepower to vote and direct the disposition of the shares owned by the Waterfall Delta Offshore Master Fund, LP, and Waterfall Sandstone GP, LLC may bedeemed to share the power to vote and direct the disposition of the shares owned by Waterfall Sandstone Fund, LP. The address for each of theWaterfall associated companies is c/o Waterfall Management, LLC, 1140 Avenue of the Americas, 7th Floor, New York, NY 10036. This informationhas been obtained from a Schedule 13-D filed by Waterfall with the SEC on March 15, 2015. Securities Authorized for Issuance under Equity Compensation Plans. The following summary information is as of December 31, 2014 and relates to our 2007 Plan described elsewhere herein pursuant to which we have grantedoptions to purchase our Common Stock: (a) (b) (c) Plan category Number ofshares ofCommonStock to beissued uponexercise ofoutstandingoptions Weightedaverage exercise priceof outstanding options Number ofsecurities remainingavailable for futureissuance underequitycompensationplans(excludingsharesreflected incolumn (a)) Equity Compensation Plans covering 4,200,000 shares 3,755,000 $.87 445,000 Item 13. Certain Relationships and Related Transactions and Director Independence. Due to Institutional Lender/Personal Guarantees of Messrs. M. Rubin and Bernstein On November 8, 2011, Anchor entered into a Rediscount Credit Facility with a commercial bank that was effective November 30, 2011 and replacedits prior credit facility. The facility was repaid and terminated with the sale of Anchor Assets between April and June, 2014. The maximum amount that couldbe borrowed under the facility was $10 million, and the Bank advanced up to 80% of Anchor's advances to its clients. Anchor paid interest on advancesmonthly at the 90 Day Libor Rate plus 6.25% and various other monthly fees as defined in the agreement. The agreement required that Anchor maintain at alltimes a ratio of debt to tangible net worth of no more than four to one (4:1). The agreement contained customary representations and warranties, events ofdefault and limitations, among other provisions. The agreement was collateralized by a first lien on all Anchors' assets. FlexShopper’s President and CEO hadprovided validity guarantees to the Bank. Anchor owed this financial institution $3,240,942 as of December 31, 2013 and $-0- as of December 31, 2014. 35 Related Party Notes FlexShopper entered into a promissory Note for $1,000,000, with a shareholder and executive of the Company. The note is payable on demand. Thenote was funded in increments of $500,000 on December 8th and 18th and earned interest at 15% per annum which amounted to $7,083 for the year endedDecember 31, 2014. The Promissory Note was to assist FlexShopper in purchasing merchandise for lease and was paid in full with interest on March 11, 2015.(See Note 13) 2014 Private Placement Offering From May 8, 2014 through October 2014, FlexShopper received gross proceeds of $6,501,101 from the sale of 11,820,187 shares offered throughthree co-placement agents in a private placement offering at an offering price of $.55 per share. The foregoing excludes the issuance at the final closing dateof October 9, 2014 of seven year warrants to purchase 15% of the number of shares sold in the offering, which warrants were issued to the placement agents topurchase 1,773,027 shares, each at an exercise price of $.55 per share. In addition, pursuant to the terms of the private placement offering, George Rubin and Morry F. Rubin, officers, directors and founders ofFlexShopper, each completed the funding of their $500,000 loan to FlexShopper and converted these loans into shares of FlexShopper’s Common Stock atthe same offering price per share as that paid by investors in the offering. An aggregate of 1,818,182 shares of FlexShopper’s Common Stock were issued tothe Rubins from the conversion of their notes totaling $1,000,000. 2015 Credit and Equity FinancingsOn March 6, 2015, FlexShopper, Inc. (“FlexShopper”), through a wholly-owned subsidiary (the “Borrower”), entered into a credit agreement (the“Credit Agreement”) with WE 2014-1, LLC, an affiliate of Waterfall Asset Management, LLC (“Waterfall”), and certain other lenders thereunder from time totime (collectively, the “Lender”). The Borrower is permitted to borrow funds under the Credit Agreement based on the Borrower’s cash on hand and theAmortized Order Value of the Borrower’s Eligible Leases (as such terms are defined in the Credit Agreement) less certain deductions described in the CreditAgreement. Under the terms of the Credit Agreement, subject to the satisfaction of certain conditions, the Borrower may borrow up to $25,000,000 from theLender for a term of two years. The borrowing term may be extended for an additional twelve months in the sole discretion of the Lender. The CreditAgreement contemplates that the Lender may provide additional debt financing to the Borrower, up to $100 million in total, under two uncommittedaccordions following satisfaction of certain covenants and other terms and conditions. The Lender will receive security interests in certain leases as collateralunder the Credit Agreement. For the term of the Credit Agreement, FlexShopper and its subsidiaries may not incur additional indebtedness (other than certainindebtedness expressly permitted under the Credit Agreement) without the permission of the Lender. Waterfall and its affiliates will have a right of firstrefusal on certain subsequent FlexShopper transactions involving leases or other financial products during the term of the Credit Agreement and up to threemonths following the termination thereof.Pursuant to the Credit Agreement, amounts borrowed by the Borrower will bear interest at the rate of LIBOR plus a mid-teen percent per annum, anda small non-usage fee will be assessed on any undrawn amount if the facility is less than 80% drawn on average in any given measurement periodcommencing three months after the closing of the facility.The Credit Agreement includes customary events of default, including, among others, failures to make payment of principal and interest, breaches ordefaults under the terms of the Credit Agreement and related agreements entered into with the Lender, breaches of representations, warranties or certificationsmade by or on behalf of the Borrower in the Credit Agreement and related documents (including certain financial and expense covenants), deficiencies in theborrowing base, certain judgments against the Borrower and bankruptcy events. If an event of default occurs and is continuing, the Lender may, among otherthings, terminate any remaining commitments available to the Borrower, declare all outstanding principal and interest immediately due and payable andenforce any and all liens created in connection with the Credit Agreement. In connection with the closing under the Credit Agreement, the Company will payplacement agent fees totaling $850,000.36 In connection with entering into the Credit Agreement, on March 6, 2015, FlexShopper raised approximately $8.6 million in net proceeds throughdirect sales of 17.0 million shares of FlexShopper common stock, par value $0.0001 per share (the “Shares”), to certain affiliates of Waterfall and otheraccredited investors (the “Investors”) for a purchase price of $0.55 per share (the “Equity Purchases”). The Shares were placed pursuant to Rule 506 ofRegulation D under the Securities Act of 1933. The Shares were not registered under the Securities Act of 1933 and may not be offered or sold absentregistration or an applicable exemption from registration requirements.In connection with the issuance of the Shares to the Investors, on March 6, 2015, FlexShopper entered into Investor Rights Agreements with certainof the Investors. The Investor Rights Agreement entered into with affiliates of Waterfall provides that, so long as the those Investors beneficially own at least10% of FlexShopper common stock then issued and outstanding, Waterfall will have the right to nominate one director to the FlexShopper Board of Directors(the “Board”). Upon the closing of the Equity Purchases, those Investors beneficially own more than 10% of FlexShopper common stock then issued andoutstanding and thus are entitled to nominate one director to the Board. On March 26, 2015, the Board of Directors elected Philip Gitler to the board as anominee of the Lender effective April 1, 2015. The Investor Rights Agreement with affiliates of Waterfall also entitles those Investors to certain demandregistration rights and certain preemptive rights on future sales of equity securities of FlexShopper. The Waterfall Investor Rights Agreement and the InvestorRights Agreements entered into with other Investors entitle all Investors to certain piggyback registration rights.Independent DirectorsCurrently, FlexShopper has no audit, compensation, corporate governance, nominating or other committee of the Board of Directors. Under theNASDAQ definition, an “independent director” means a person other than an officer or employee of FlexShopper or its subsidiaries or any other individualshaving a relationship that, in the opinion of FlexShopper’s board of directors, would interfere with the exercise of independent judgment in carrying out theresponsibilities of the director. The board’s discretion in determining director independence is not completely unfettered. Further, under the NASDAQdefinition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the pastthree years (or whose immediate family members have not been over the past three years), employed by FlexShopper; (2) has not (or whose immediate familymembers have not) been paid more than $120,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been apartner in or controlling stockholder or executive officer of an organization which FlexShopper made, or from which FlexShopper received, payments inexcess of the greater of $200,000 or 5% of that organizations consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whoseimmediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer ofFlexShopper has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and hasnot been over the past three years (or whose immediate family members have not been over the past three years) a partner of FlexShopper’s outside auditor.Currently, T. Scott King and Carl Pradelli are each deemed by management to be an “independent director” and “Financial Expert” (as defined herein under“Lack of Committees”) of FlexShopper. Mr. Gitler would have been considered an independent director, except for his relationship and affiliation with ourinstitutional lender. Item 14. Principal Accounting Fees and Services.Audit Fees During fiscal 2013, the aggregate fees billed for professional services rendered by Scott and Company LLC (the “Independent Auditors”) for the2012 audit of the Company's annual consolidated financial statements totaled approximately $49,500, excluding expenses. During fiscal 2014, theaggregate fees billed for professional services rendered by Scott and Company LLC for the 2013 audit of the Company’s annual consolidated financialstatements totaled approximately $54,450, excluding expenses. The audit fees for the 2014 audit of the Company’s annual financial statement rendered byEisnerAmper LLP is anticipated to be $55,000. Financial Information Systems Design and Implementation Fees During 2014 and 2013, there were no fees billed for professional services by Scott and Company LLC, rendered in connection with, directly orindirectly, operating or supervising the operation of its information system or managing its local area network. All Other Fees During 2013, there were $24,000 in fees, excluding expenses, billed for professional services rendered by Scott and Company, LLC for review of theCompany’s quarterly filings with the Securities and Exchange Commission. During fiscal year 2014, there were $17,000 in fees billed for professionalservices rendered by Scott and Company LLC for review of the Company's first two quarterly filings with the Commission. During fiscal 2014, there was$10,000 in fees billed for professional services rendered by EisnerAmper LLP for review of the Company’s quarterly filings for the third quarter of 2014. Inthe first quarter of 2015, the Company paid $10,000 to Scott and Company, LLC for their review and the issuance of its consent which was filed with the S-1Registration Statement which is currently pending with the Securities and Exchange Commission. 37 PART IV Item 15. Exhibits, Financial Statement Schedules (a) Financial Statements The following documents are filed under “Item 8. Financial Statements and Supplementary Data” and are included as part of this Form 10-K asthe financial statements of the Company for the years ended December 31, 2014 and 2013: Reports of Independent Registered Public Accounting FirmsConsolidated Balance SheetsConsolidated Statements of OperationsConsolidated Statement of Stockholders’ EquityConsolidated Statement of Cash FlowsConsolidated Notes to Financial Statements 38 Exhibits The following exhibits are all previously filed in connection with our Form 10-SB , as amended, unless otherwise noted 2.1Exchange Agreement3.1Certificate of Incorporation-BTHC,INC.3.2Certificate of Merger of BTHC XI, LLC into BTHC XI, Inc.3.3Certificate of Amendment3.4Designation of Rights and Preferences-Series 1 Convertible Preferred Stock3.5Certificate of Amendment dated October 16, 2013(11)3.6Amended and Restated By-laws4.1Placement Agent Warrant issued to Fordham Financial Management on October 9, 2014(13)4.2Placement Agent Warrant issued to Paulson Investment Company, Inc. on October 9, 2014(13)4.3Placement Agent Warrant issued to Spartan Capital Securities, LLC on October 9, 2014(13)10.1Directors’ Compensation Agreement-George Rubin10.2Employment Contract-Morry F. Rubin10.3Employment Contract-Brad Bernstein10.4Agreement-Line of Credit10.5Fordham Financial Management-Consulting Agreement10.6Facilities Lease – Florida10.7Facilities Lease – North Carolina10.8Loan and Security Agreement (1)10.9Revolving Note (1)10.10Debt Subordination Agreement (1)10.11Guaranty Agreement (Morry Rubin) (1)10.12Guaranty Agreement (Brad Bernstein)(1)10.13Continuing Guaranty Agreement (1)10.14Pledge Agreement (1)10.16Asset Purchase Agreement between Anchor and Brookridge Funding LLC (2)10.17Senior Credit Facility between Anchor and MGM Funding LLC (2)10.18Senior Credit Facility Guarantee - Michael P. Hilton and John A. McNiff III (4)10.19Employment Agreement - Michael P. Hilton (4)10.20Employment Agreement - John A. McNiff (4)10.21Accounts Receivable Credit Facility with Greystone Commercial Services LP (3)10.22Memorandum of Understanding - Re: Rescission Agreement (5)10.23Rescission Agreement and Exhibits Thereto (5)10.24Termination Agreement by and between Brookridge Funding Services LLC and MGM Funding LLC.(5)10.25First Amendment to Factoring Agreement (6)10.26Promissory Note dated April 26, 2011 between Anchor Funding Services, Inc. and MGM Funding, LLC (7)10.27Rediscount Facility Agreement with TAB Bank (8)10.2810.29Form of Validity Warranty to TAB Bank (8)Amendment to Employment Agreement of Morry F. Rubin (10)10.30Asset Purchase Agreement dated April 30, 2014 *10.31Credit Agreement, dated as of March 6, 2015, among FlexShopper 2, LLC, Wells Fargo Bank, N.A., various Lenders from time to time partythereto and WE 2014-1, LLC. (14)10.32Investor Rights Agreement, dated as of March 6, 2015, by and among FlexShopper, Inc., the Management Stockholders and affiliates of Waterfall(14)10.33Form of Investor Rights Agreement, dated as of March 6, 2015, by and among FlexShopper, Inc. and the Investors party thereto (14)10.34January 2014 amendment to Boca Raton, Florida lease*14.1Code of Ethics for Senior Financial Officers*21.0Subsidiaries of Registrant*31.1Rule 13a-14(a) Certification – Principal Executive Officer *31.2Rule 13a-14(a) Certification – Principal Financial Officer *32.1Section 1350 Certification – Principal Executive Officer *32.2Section 1350 Certification – Principal Financial Officer *99.12007 Omnibus Equity Compensation Plan99.2Form of Non-Qualified Option under 2007 Omnibus Equity Compensation Plan99.3Amendment to 2007 Omnibus Equity Compensation Plan increasing the Plan to 4,200,000 shares (9)99.4Press Release - March 31, 2015*101.INSXBRL Instance Document,XBRL Taxonomy Extension Schema *101.SCHDocument, XBRL Taxonomy Extension *101.CALCalculation Linkbase, XBRL Taxonomy Extension Definition *101.DEFLinkbase,XBRL Taxonomy Extension Labels *101.LABLinkbase, XBRL Taxonomy Extension *101.PREPresentation Linkbase * ___________________ * Filed herewith. 39 (1) Incorporated by reference to the Registrant’s Form 8-K filed November 24, 2008 (date of earliest event November 21, 22008). (2) Incorporated by reference to the Registrant's Form 8-K filed December 8, 2009 (date of earliest event - December 4, 2009). (3) Incorporated by reference to the Registrant's Form 8-K filed December 2, 2009 (date of earliest event -November 30, 2009). (4) Incorporated by reference to the Registrant's Form 10-K for the fiscal year ended December 31, 2009. (5) Incorporated by reference to the Registrant's Form 8-K filed October 12, 2010 (date of earliest event - October 6, 2010). (6) Incorporated by reference to the Registrant's Form 10-K for the fiscal year ended December 31, 2010. (7) Incorporated by reference to the Registrant's Form 8-K filed April 28, 2011 (date of earliest event - April 26, 2011). (8) Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2011. (9) Incorporated by reference to the Registrant's Form 10-K for the fiscal year ended December 31, 2011. (10)Incorporated by reference to the Registrant's Form 10-K for the fiscal year ended December 31, 2012.(11)Incorporated by reference to the Registrant’s Form 8-K dated October 16, 2013.(12)Incorporated by reference to the Registrant’s Form 8-K dated April 30, 2014.(13)Incorporated by reference to the Registrant’s Form S-1 Registration Statement filed in January 2015.(14)Incorporated by reference to the Registrant’s form 8-K dated March 6, 2015. (b) Financial Statement Schedules We are not filing any financial statement schedules as part of this Form 10-K because such schedules are either not applicable or the requiredinformation is included in the financial statements or notes thereto. 40 SIGNATURES Pursuant to the requirements Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this Report to be signed on itsbehalf by the undersigned, thereunto duly authorized. FLEXSHOPPER, INC. By:/s/ Brad Bernstein Brad Bernstein, President and Principal Executive Officer Dated: Boca Raton, FloridaMarch 31, 2015 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of theRegistrant and in the capacities and on the dates indicated: Signatures Title Date /s/ Brad Bernstein President and March 31, 2015Brad Bernstein Principal Executive Officer /s/ Morry F. Rubin Chairman of the Board March 31, 2015Morry F. Rubin /s/ T. Scott King Director March 31, 2015T. Scott King /s/ Carl Pradelli Director March 31, 2015Carl Pradelli /s/ Frank Matasavage Principal Financial Officer March 31, 2015Frank Matasavage Morry F. Rubin, Brad Bernstein, T. Scott King and Carl Pradelli represent all the current members of the Board of Directors. 41 Exhibit 10.30Execution Version ASSET PURCHASE AND SALE AGREEMENTDATED AS OF April 30, 2014BY AND BETWEENANCHOR FUNDING SERVICES, LLCANDTRANSPORTATION ALLIANCE BANK INC. 1 TABLE OF CONTENTSPage 1ARTICLE I DEFINITIONS; MATTERS OF CONSTRUCTION 11.1 Definitions 11.2 Matters of Construction 7ARTICLE II PURCHASE AND SALE 72.1 Purchased Assets 72.2 Assumed Obligations 8ARTICLE III PURCHASE PRICE 93.1 Purchase Price 93.2 Closing Payments; Use of Proceeds 93.3 Determination of Preliminary Closing Payment 93.4 Adjustment of Preliminary Closing Payment 103.5 Determination of Purchase Price 113.6 Adjustment of Payment in Respect of Closing Payment 123.7 Earn-Out Statements and Seller Right to Review 123.8 Off-Sets 13ARTICLE IV CLOSING 134.1 Closing Mechanics 134.2 Payment of the Purchase Price 144.3 The Buyer's Deliveries 154.4 The Seller's Deliveries 154.5 Additional Seller Delivery for Initial Closing 164.6 The Seller's Post-Closing Deliveries 164.7 The Buyer’s Post-Closing Deliveries 16ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLER 175.1 Organization 175.2 Authority 175.3 Consents 175.4 Portfolio and Portfolio Documents 185.5 Other Matters Relating to Portfolio 185.6 Governmental Permits 205.7 Title to Property 205.8 No Violation, Litigation or Regulatory Action 205.9 No Finder 205.10 Full Disclosure 20ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER 216.1 Organization of the Buyer 216.2 Authority of the Buyer 216.3 Consents 21 2 TABLE OF CONTENTS(continued)Page 2 6.4 No Violation, Litigation or Regulatory Action 226.5 Ability to Perform; Availability of Funds 226.6 No Finder 226.7 The Seller's Name 226.8 Status of the Buyer 226.9 Independent Evaluation 226.10 Reports 22ARTICLE VII ACTION PRIOR TO CLOSING DATES 237.1 Preserve Accuracy of Representations and Warranties 237.2 Consents of Third Parties; Approval by Governmental Bodies 237.3 Actions Prior to Closing Dates 237.4 Withdrawal of Portfolio Accounts 23ARTICLE VIII ADDITIONAL AGREEMENTS 248.1 Post-Closing Remittances and Adjustments; Further Assurances 248.2 Taxes; Prorations 268.3 Non-Compete and Non-Solicitation 26ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER 279.1 No Misrepresentation or Breach of Covenants and Warranties 279.2 Consents 289.3 Obligations Performed 289.4 Delivery of Closing Documents 28ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER 2810.1 No Misrepresentation or Breach of Covenants and Warranties 2810.2 Necessary Consents and Approvals 2810.3 Obligations Performed 2810.4 Payment of Closing Payment; Delivery of Closing Documents 28ARTICLE XI INDEMNIFICATION 2911.1 Indemnification by the Seller 2911.2 Indemnification by the Buyer 2911.3 Notice of Claims 3011.4 Third Party Claims 3011.5 General 3111.6 Survival of Representations and Warranties; Bar Date for Indemnification Claims 3111.7 Limitations on Indemnification by Seller 3211.8 Payment of Claims 3211.9 Limited Remedies 3211.10 Subrogation 32 3 TABLE OF CONTENTS(continued)Page 3 ARTICLE XII TERMINATION 3212.1 Termination 3312.2 Notice of Termination 3312.3 Effect of Termination 33ARTICLE XIII GENERAL PROVISIONS 3413.1 Confidential Nature of Information 3413.2 No Partnership 3413.3 No Public Announcement 3513.4 Notices 3513.5 Successors and Assigns 3613.6 Access to Records after Closing 3613.7 Entire Agreement; Exhibits and Schedules; Amendments 3713.8 Interpretation 3713.9 Waivers 3713.10 Expenses 3813.11 Partial Invalidity 3813.12 Execution in Counterparts 3813.13 Further Assurances 3813.14 Dispute Resolution 3813.15 Jurisdiction; Governing Law; Waiver of Jury Trial 3913.16 Governing Law 3913.16 Termination of Rediscount Facility Agreement 39 4 ASSET PURCHASE AND SALE AGREEMENTTHIS ASSET PURCHASE AND SALE AGREEMENT (this "Agreement"), is dated as of April 30, 2014 (the "Signing Date") and is made betweenANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company (the "Seller"), and TRANSPORTATION ALLIANCE BANK INC., dbaTAB Bank, a Utah industrial bank (the "Buyer").WITNESSETH:WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller (and to assume certain liabilities associated with), the Portfolio(as defined below), all on the terms and subject to the conditions set forth herein;NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, and other good and valuableconsideration, the receipt and sufficiency of which is hereby acknowledged, the Seller and the Buyer agree as follows:ARTICLE IDEFINITIONS; MATTERS OF CONSTRUCTION1.1 Definitions. In this Agreement, the following terms have the meanings specified or referred to in this Section 1.1 and shall be equallyapplicable to both the singular and plural forms."Accounting Firm" means Tanner LLC, a Utah limited liability company."Accounts" means any right to payment for services rendered or goods sold by a Customer to a Debtor."Adjusted Preliminary Closing Payment" has the meaning specified in Section 3.4."Adjustment Notice Date" has the meaning specified in Section 3.4."Affiliate" means, with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common controlwith such Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policiesof a Person, whether through the ownership of voting securities, by contract or otherwise."Agreed Accounting Principles" means generally accepted accounting principles, consistently applied to the Portfolio and consistent with Seller’sFactorSoft information technology system's calculations."Agreed Adjustments" has the meaning specified in Section 3.5(b)."Agreed Rate" means the mean of the high and low bids quoted for Federal Funds in the Money Rates section of The Wall Street Journal, as thatrate may vary from time to time, or if that rate is no longer published, a comparable rate.1 "Agreement" has the meaning set forth in the initial recitals to this Agreement."Assignment and Assumption Agreement" means each Assignment and Assumption Agreement delivered with respect to each Closing, in the formof Exhibit A, pursuant to which the Seller sells, transfers, assigns, conveys and delivers to the Buyer the Purchased Assets with respect to the PortfolioAccounts subject to such Closing, and the Buyer assumes and agrees to pay, perform or otherwise discharge the Assumed Obligations relating thereto."Assumed Obligations" has the meaning specified in Section 2.2."Basket" has the meaning specified in Section 11.7."Business Day" means any day excluding Saturday, Sunday and any other day that is a legal holiday under the laws of the State of Utah or is a dayon which banking institutions located in either such state are closed."Buyer" has the meaning set forth in the initial recitals to this Agreement."Buyer Ancillary Agreements" means all agreements, instruments and documents being or to be executed and delivered by the Buyer under thisAgreement or in connection herewith, including without limitation, any Side Letters."Buyer Indemnified Parties" has the meaning specified in Section 11.1."Capitalized Charges" means, in the case of any Portfolio Account as of any date, all fees, charges, interest, and other monetary obligationschargeable to the Customer under such Portfolio Account as of such date."Closing" and "Closings" have the meanings specified in Section 4.1(a)."Closing Date" has the meaning specified in Section 4.1(a)."Closing Payment" has the meaning specified in Section 3.2."Closing Schedule" means the schedule attached hereto as Schedule 1.1A setting forth the Portfolio Accounts the Buyer will purchase at eachClosing (with respect to the Portfolio Accounts purchased and sold at a particularly Closing, the “Purchased Portfolio”) and the corresponding anticipatedClosing Dates."Code" means the Internal Revenue Code of 1986, as amended."Court Order" means any judgment, order, decision, award, injunction, ruling, subpoena, verdict or decree of any foreign, federal, state, local orother court, tribunal or administrative agency and any award in any arbitration proceeding."Customers" means those Persons who constitute “customers” or “borrowers” under the Portfolio Documents or from whom the Seller purchasesAccounts under the Portfolio Documents.2 "Cut-off Time" means, with respect to any Closing, 5:00 p.m. (prevailing Ogden, Utah time) on the Business Day immediately prior to the ClosingDate with respect thereto."Debtor" means an account debtor or other obligor on an Account."Earn-out Payment" has the meaning specified in Section 3.7(a)."Earn-out Period" has the meaning specified in Section 3.7(a)."Earn-out Statement" has the meaning specified in Section 3.7(b)."Encumbrance" means any lien, security interest, mortgage, deed of trust, pledge, conditional sale or other title retention agreement, other thanliens and encumbrances respecting the Portfolio Collateral."Excluded Materials" means, with respect to the Portfolio, any and all documents, notes, correspondence (including electronic mail or othercorrespondence) or other writings that relate to the Portfolio and that the Seller reasonably and in good faith determines (i) are subject to the attorney-clientprivilege or work product doctrine or other evidentiary privilege in favor of the Seller, (ii) are proprietary to the Seller's business (including the methodologyor basis for formulation of the Seller's internal risk rating profiles for the Customers or any Guarantors), or (iii) comments upon the character, talent or abilitiesof any Person employed by or on behalf of any Customer, Guarantor or other obligor under any of the Portfolio Documents."Expenses" means all reasonable expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding(including, without limitation, court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel,investigators, expert witnesses, consultants, accountants and other professionals)."Files" means all Third-Party Reports and all credit and transaction files of the Seller relating to the Portfolio, including all documents, files, notes,records, underwriting memoranda, credit analyses and other internally prepared credit-related documents of the Seller that relate to the Portfolio. For purposeshereof, the term "Files" shall not be deemed to include (i) any internal electronic mail or other internal correspondence or any electronically-stored data orother computerized records of the Seller, which originally constituted electronically-stored data, (ii) any personal or "shadow" files of any employee of theSeller, or (iii) any files of counsel or other representatives of the Seller."Final Closing Date" has the meaning specified in Section 4.1(a)."Final Closing Payment Computation Schedule" has the meaning specified in Section 3.5(a)."Funded Accounts" means all Accounts purchased or funded by the Seller pursuant to any of the Portfolio Documents, but excluding any Accountsthat the Seller has charged back to a Customer pursuant to any of the Portfolio Documents.3 "Governmental Body" means any foreign, federal, state or local governmental authority or regulatory body."Governmental Permits" has the meaning specified in Section 5.6."Guarantors" has the meaning specified in Section 2.1(a)(ii)."Indemnified Party" has the meaning specified in Section 11.3."Indemnifying Party" has the meaning specified in Section 11.3."Initial Closing Date" has the meaning specified in Section 4.1(a).“Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (a) trademarks and service marks, including allapplications and registrations and the goodwill connected with the use of and symbolized by the foregoing; (b) copyrights, including all applications andregistrations, and works of authorship, whether or not copyrightable; (c) trade secrets and confidential know-how; (d) patents and patent applications; (e)websites and internet domain name registrations; and (f) all other intellectual property and industrial property rights and assets, including, but not limited to,any licenses, and all rights, interests and protections that are associated with, similar to, or required for the exercise of, any of the foregoing.“Intellectual Property Assets” means all Intellectual Property used by Seller in connection with the Portfolio, including but not limited to (a)Seller’s prospect and customer lists exported from Seller’s Salesforce database in a file format acceptable to Buyer; (b) all processes, plans and analyticspertaining to Seller’s advertising and marketing campaigns, including, but not limited to, satellite radio campaigns and web advertising campaigns, and anycontracts or invoices related thereto; (c) all trademarks and trade names associated with Seller, including, but not limited to, those listed on Schedule 2.1(b)(i); and (d) all domain names, telephone numbers, including, but not limited to, those listed on Schedule 2.1(b)(ii), social media profiles/accounts including,but not limited to, those listed on Schedule 2.1(b)(iii), websites, including content hosted on websites, user submission forms, and any media files relatedthereto.“IP Assignment” means the Assignment of Intellectual Property Assets in the form attached hereto as Exhibit A-1."Knowledge" or "knowledge" means, as to any matter relating to the Portfolio, (a) with respect to the Seller the actual knowledge after due inquiryof such matter that is possessed by a portfolio manager or account officer who is employed by the Seller as of the Signing Date and who has direct supervisoryauthority over the Portfolio; and (b) with respect to Buyer the actual knowledge after due inquiry of such matter that is possessed by a portfolio manager oraccount officer that is employed by Buyer as of the Signing Date and who has direct supervisory authority over Buyer’s due diligence and acquisitionactivities related to the Portfolio.4 "Losses" means any and all losses, claims, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, deficiencies,equitable relief granted, demands, offsets, defenses or counterclaims or other charges."Master Lockbox Account" means the Seller’s bank account maintained with Wells Fargo Bank, N.A., for the collection of payments with respectto the Portfolio Accounts, together with all of the Seller’s lockboxes related to the Portfolio that fund into such bank account."Net Funds Employed" of any Portfolio Account as of any specific date means the face amount of all Funded Accounts with respect to suchPortfolio Account, minus the reserves maintained by the Seller with respect to such Portfolio Account, minus any net balance due by the Seller to theapplicable Customer with respect to such Portfolio Account, plus any net balance due by the applicable Customer to the Seller with respect to such PortfolioAccount (reflected as a negative balance on each Customer’s settlement statement), in each case as calculated consistent with the terms of the applicablePortfolio Documents and the Portfolio Summary attached hereto as Schedule 3.1A."Notice of Assignment Letter" has the meaning specified in Section 4.4(f)."Outstanding Objections" has the meaning specified in Section 3.7(c)."Person" means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company,business trust, joint venture, association or other entity or Governmental Body."Portfolio" means the Portfolio Accounts as listed on Schedule 3.1A, less any and all Portfolio Accounts withdrawn at any time before any Closingunder the provisions of this Agreement. The Buyer acknowledges that the Seller has factoring and lending relationships with other customers that are notincluded in the Portfolio and are not subject to this Agreement."Portfolio Accounts" means the factoring relationships and obligations owing to the Seller from Customers included in the Portfolio and listed onthe Portfolio Summary."Portfolio Assets" has the meaning specified in Section 2.1(a)."Portfolio Collateral" has the meaning specified in Section 2.1(a)(ii)."Portfolio Documents" means the credit and factoring agreements, guarantees, subordination agreements, insurance loss payable endorsements,promissory notes, certificates of deposit, mortgages, deeds of trust, letters of credit (to the extent assignable), security agreements, blocked accountagreements, lock box agreements, securities, financing statements, certificates of title, intercreditor agreements and other instruments and documentsexecuted and delivered to or otherwise obtained by the Seller in connection with the Portfolio."Portfolio Summary" means the summary of the Portfolio prepared by the Seller as of the Signing Date, and attached hereto as Schedule 3.1A (andupdated, with respect to the Portfolio Accounts subject to each Closing, as of each Closing Date) which sets forth with respect to each applicable PortfolioAccount, as of such date, (i) the name of the Customer, and (ii) the Net Funds Employed with respect to such Portfolio Account.5 "Preliminary Closing Payment" has the meaning specified in Section 3.3."Preliminary Closing Payment Computation Schedule" has the meaning specified in Section 3.3."Purchase Documents" means this Agreement, the Buyer Ancillary Agreements, the Seller Ancillary Agreements, and all other documents,agreements and instruments executed and/or delivered pursuant to this Agreement."Purchase Price" has the meaning specified in Section 3.1."Purchased Assets" has the meaning specified in Section 2.1."Purchased Portfolio" has the meaning specified in the definition of Closing Schedule."Rediscount Facility Agreement" means that certain Rediscount Facility Agreement entered into as of November 30, 2011, by and between Buyerand Seller."Requirements of Laws" means any federal, state or local law, statute, regulation, rule, code or ordinance enacted, adopted, issued or promulgatedby any Governmental Body, including laws pertaining to usury, which shall either materially affect the enforceability or validity of the obligations of aCustomer under applicable Portfolio Documents or which shall subject the holder of Portfolio Documents to civil or criminal penalties for violations thereof."Restricted Business" has the meaning specified in Section 8.3(a)."Restricted Period" has the meaning specified in Section 8.3(a)."Retained Accounts" means the Seller's Accounts listed on Schedule 1.1B attached hereto and any additional Portfolio Accounts properlywithdrawn by Buyer or Seller in accordance with Section 7.4."Review Period" has the meaning specified in Section 3.7(b)."Seller" has the meaning set forth in the initial recitals to this Agreement."Seller Ancillary Agreements" means all agreements, instruments and documents being or to be executed and delivered by the Seller under thisAgreement or in connection herewith, including, without limitation, any Side Letters."Seller Indemnified Parties" has the meaning specified in Section 11.2."Side Letters" means each of the letter agreements, if any, dated as of any Closing Date between the Seller and the Buyer.6 "Signing Date" has the meaning set forth in the initial recitals to this Agreement."Tax" or "Taxes" means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp,occupation, premium, windfall profits, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability,real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever,including any interest, penalty or addition thereto, whether disputed or not."Third-Party Reports" means all reports, appraisals and other written materials prepared for and provided to the Seller with respect to the Portfolio,including all appraisals, environmental reports and audit or field examination reports of the Seller that relate to the Portfolio."UCC" means the Uniform Commercial Code (or any successor statute) as adopted and in force in the State of Utah or, when the laws of any otherstate govern the method or manner of the perfection or enforcement of any security interest in any of the Portfolio Collateral, the Uniform Commercial Code(or any successor statute) of such state.1.2 Matters of Construction. The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as awhole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. All references to statutes andrelated regulations shall include any amendments of same and any successor statutes and regulations; to any agreement, instrument or other documents shallinclude any and all modifications and supplements thereto and any and all restatements, extensions or renewals thereof; to any person or entity shall meanand include the successors and permitted assigns of such person or entity; to "including" and "include" shall be understood to mean "including, withoutlimitation" (and, for purposes of this Agreement, the parties agree that the rule of ejusdem generis shall not be applicable to limit a general statement, which isfollowed by or referable to an enumeration of specific matters to matters similar to the matters specifically mentioned); or to the time of day shall mean thetime of day on the day in question in Ogden, Utah, unless otherwise expressly provided in the Agreement.ARTICLE IIPURCHASE AND SALE2.1 Purchased Assets. Upon the terms and subject to the conditions of this Agreement, the Seller shall sell, transfer, assign, convey anddeliver to the Buyer good and valid title (free and clear of any Encumbrances) to, and the Buyer shall purchase from the Seller, the following, whereverlocated:(a) the Portfolio to be sold and purchased in separate tranches and closings on certain Closing Dates in accordance with Section4.1, including, without limitation, all of the following with respect to the Portfolio (collectively the “Portfolio Assets”):(i) all rights, remedies, title and interest of the Seller under the Portfolio Documents with respect to such Portfolio,including, without limitation, all of Seller’s presently existing and hereinafter arising accounts, accounts receivable, and proceeds directly related tothe Portfolio;7 (ii) any claims or causes of action with respect to such Portfolio against (i) Customers, (ii) Persons (other than Personsreferred to in (i)) who are parties to the Portfolio Documents or who have given guarantees, sureties, indemnities or made other agreements orundertakings in connection with such Portfolio or pledged, mortgaged or granted security interests in property to secure payment of such Portfolio(such Persons being referred to herein as "Guarantors"), (iii) the assets and properties securing payment of such Portfolio, including the applicablePortfolio Documents (all such assets and properties being referred to herein collectively as "Portfolio Collateral"), and (iv) any Person from whomthe Seller purchased any such Portfolio and all contractual rights and remedies of the Seller under any purchase agreement relating thereto, but onlyto the extent that any claims or causes of action against any Person described in this Section 2.1(a)(ii) are transferable by the Seller pursuant to theapplicable purchase agreement between the Seller and such Person;(iii) original, signed versions of any promissory notes issued to the order of the Seller evidencing indebtedness owing to theSeller for each Portfolio Account in the Portfolio, duly endorsed by the Seller to the order of the Buyer without recourse of any kind to the Seller andwithout any representation or warranty on the Seller's part, except as expressly provided in this Agreement, together with original, signed versions ofall other Portfolio Documents with respect to such Portfolio (unless and except to the extent that only copies of such documents are in the Seller'spossession or control);(iv) the Files with respect to such Portfolio, other than the Excluded Materials;(v) all cash reserves of unapplied funds with respect to such Portfolio, if any (to the extent not reflected in the calculationof the Net Funds Employed with respect thereto); and(b) all Intellectual Property Assets, including but not limited to those set forth in Schedules 2.1(b)(i)-(iii).The Portfolio Assets and the Intellectual Property Assets are collectively referred to as the "Purchased Assets." The Buyer acknowledges that,notwithstanding anything to the contrary contained herein, the Purchased Assets shall not include any asset relating to factoring and lending relationships ofthe Seller with customers that are not included in the Portfolio, it being the expressed intent of the Seller and the Buyer that the relationships, obligations andindebtedness subject to this Agreement are strictly limited to those arising out of the Portfolio.2.2 Assumed Obligations. On each Closing Date, the Buyer shall execute and deliver to the Seller an Assignment and AssumptionAgreement pursuant to which the Buyer shall assume and agree to pay, perform, discharge or defend, in accordance with their respective terms and subject tothe respective conditions thereof, all funding and other contractual obligations of the Seller to be performed on or after such Closing Date under the PortfolioDocuments with respect to the Portfolio Accounts sold on such Closing Date. All other liabilities and obligations are expressly excluded. All of the liabilitiesand obligations to be assumed by the Buyer hereunder are herein called the "Assumed Obligations."8 ARTICLE IIIPURCHASE PRICE3.1 Purchase Price. The aggregate purchase price for the Purchased Assets (the "Purchase Price") shall be equal to the sum of the following:(a) the sum of all Closing Payments, and(b) the sum of all Earn-Out Payments.3.2 Closing Payments; Use of Proceeds. A “Closing Payment” shall be the payment made at each Closing and, with respect to each Closing,shall be equal to (i) the Net Funds Employed of each Portfolio Account in the Purchased Portfolio outstanding as of the applicable Cut-off Time, plus (ii)10% of the average daily balance of the aggregate Net Funds Employed of each Portfolio Account in the Purchased Portfolio existing during the 60 dayperiod immediately preceding the Cut-off Time.The Buyer acknowledges that the Portfolio Documents authorize the Seller to charge interest, fees and other monetary obligations due and owing inconnection with the Portfolio Accounts to the Customer’s account established for each Portfolio Account, which charges are thereafter deemed to be principalor other monetary obligations under the affected Portfolio Account. All such charges accruing in connection with each Portfolio Account through andincluding the applicable Cut-off Time shall be added to the Net Funds Employed of each Portfolio Account as of the applicable Cut-off Time.Seller shall use the proceeds of each Closing Payment to first pay Buyer the amount of Availability (as defined in Section 6.1 of the RediscountFacility Agreement) related to the applicable Purchased Portfolio. Seller agrees that Buyer may offset and retain from each Closing Payment an amount equalto the amount of Availability with respect to the relevant Purchased Portfolio, provided that Buyer apply such offset amount to pay any outstanding amountsowed by Seller to Buyer under the Rediscount Facility Agreement. Any remaining proceeds of each Closing Payment shall be paid to Seller withoutlimitation or restriction.3.3 Determination of Preliminary Closing Payment. Promptly after the applicable Cut-off Time with respect to each and before the time ofeach Closing, the Seller shall deliver to the Buyer a preliminary closing statement and supporting information for such Closing (each, a "Preliminary ClosingPayment Computation Schedule"), reflecting the Seller's best efforts to determine the Closing Payment applicable to such Closing using information as of theapplicable Cut-off Time (each, a "Preliminary Closing Payment”), which shall include, in any event, the Net Funds Employed of each Portfolio Account inthe Purchased Portfolio subject to such Closing, inclusive of all Capitalized Charges, as of the applicable Cut-off Time, plus 10% of the average dailybalance of the aggregate Net Funds Employed of each Portfolio Account in the Purchased Portfolio existing during the 60 day period immediately precedingthe applicable Cut-off Time.9 3.4 Adjustment of Preliminary Closing Payment. Within forty-five (45) days after each Closing Date, the Seller may notify the Buyer of anyadjustments to the Preliminary Closing Payment with respect to such Closing (each, an "Adjusted Preliminary Closing Payment") necessitated by theimposition of any Capitalized Charges made on or after the applicable Cut-off Time and any adjustments to the Preliminary Closing Payment due to activitypursuant to the Portfolio Documents with respect to the applicable Portfolio Accounts on the applicable Closing Date. Without limiting the generality of theforegoing, each Adjusted Preliminary Closing Payment shall take into account (i) any increase in the Net Funds Employed of any applicable PortfolioAccount after the applicable Cut-off Time due to the imposition of Capitalized Charges on the applicable Closing Date (including accrued fees, charges andinterest (including charges accruing in connection with the applicable Portfolio Accounts prior to such Closing Date, but payable after such Closing Date)with respect to the applicable Portfolio Accounts on such Closing Date), (ii) any increase in the Net Funds Employed of any applicable Portfolio Account onthe applicable Closing Date due to the purchase by the Seller of any Funded Accounts from the Customer thereunder on the applicable Closing Date or themaking of any loan or advance by the Seller to the Customer thereunder on the applicable Closing Date that was not included in the Preliminary ClosingPayment with respect to such Closing but which are part of the Net Funds Employed of any applicable Portfolio Account as of the applicable Closing Date,and (iii) any decrease in the Net Funds Employed of any applicable Portfolio Account on the applicable Closing Date due to any collections received by theSeller with respect thereto on the applicable Closing Date and the application of any unapplied cash to the Net Funds Employed of any applicable PortfolioAccount on the applicable Closing Date. Each date on which the Seller provides the Buyer notice of such adjustments shall be referred to as an “AdjustmentNotice Date”.Within fifteen (15) days after an Adjustment Notice Date with respect to any Closing,(i) if the Adjusted Preliminary Closing Payment with respect to such Closing exceeds the Preliminary Closing Paymentwith respect thereto, the Buyer shall pay to the Seller by wire transfer of immediately available funds an amount equal to the excess of (A) suchAdjusted Preliminary Closing Payment over (B) such Preliminary Closing Payment, plus interest on such excess from the applicable Closing Date tothe date of payment at the Agreed Rate; or(ii) if the Preliminary Closing Payment with respect to such Closing exceeds the Adjusted Preliminary Closing Paymentwith respect thereto, the Seller shall pay to the Buyer by wire transfer of immediately available funds an amount equal to the excess of (A) suchPreliminary Closing Payment over (B) such Adjusted Preliminary Closing Payment, plus interest on such excess from the applicable Closing Date tothe date of payment at the Agreed Rate.Each such Adjusted Preliminary Closing Payment with respect to a Closing shall thereafter be the "Preliminary Closing Payment" with respect to suchClosing for purposes of this Agreement, including for the purposes of Section 3.5.10 3.5 Determination of Purchase Price.(a) Within fifteen (15) days after the earlier of (i) the Adjustment Notice Date for the final Closing or (ii) forty-five (45) days afterthe Final Closing Date, either the Seller or the Buyer may notify the other party of its objections to the Preliminary Closing Payment Computation Scheduleand Preliminary Closing Payment for any Closing by submitting a certificate (signed by an authorized officer of such party) setting forth its objections,together with a summary of the reasons therefor and calculations which, in its view, are necessary to eliminate such objections, and such party's determinationof the actual Closing Payment for such Closing. If the other party does not deliver to the objecting party a written notice of objection to the objecting party'scertificate within thirty (30) days after such other party's receipt thereof, the certificate's declared closing statement and Closing Payment with respect to eachClosing specified therein shall be final and binding as the "Final Closing Payment Computation Schedule" and the Closing Payment, respectively, for eachsuch Closing for purposes of this Agreement. If neither the Seller nor the Buyer notifies the other party of any objections to the Preliminary Closing PaymentComputation Schedule and Preliminary Closing Payment for any Closing within such fifteen (15) day period specified in the first sentence of this Section3.5(a), the Preliminary Closing Payment Computation Schedule and Preliminary Closing Payment with respect to such Closing shall be final and binding asthe Final Closing Payment Computation Schedule and the Closing Payment, respectively, for such Closing for purposes of this Agreement.(b) If the other party delivers to the objecting party a written notice of objection to the objecting party's certificate within suchthirty (30) day period, the Buyer and the Seller shall use their reasonable efforts to resolve by written agreement (the "Agreed Adjustments") any differencesas to the Preliminary Closing Payment Computation Schedule and Preliminary Closing Payment with respect to each Closing and, in the event the Seller andthe Buyer so resolve any such differences, each closing statement and each Preliminary Closing Payment as adjusted by the Agreed Adjustments shall befinal and binding as the Final Closing Payment Computation Schedule and the Closing Payment, respectively, for each such Closing for purposes of thisAgreement.(c) If any objections raised by the Buyer or the Seller are not resolved by Agreed Adjustments within the thirty (30) day periodfollowing the original thirty (30) day objection period provided for in Sections 3.5(a) and 3.5(b) above, then the Buyer and the Seller shall submit theobjections that are then unresolved to the Accounting Firm for purposes of resolving the dispute. The Accounting Firm will be provided with a brief summaryof the dispute by both the Buyer and the Seller, and asked to provide its written estimate of the fees and expenses that it believes will be charged by it forresolving the dispute. If the estimated fees and expenses are less than the amount in dispute between the parties, then the Accounting Firm will be directed toproceed with resolving the unresolved objections (based solely on the presentations by the Buyer and by the Seller as to whether any disputed matter hadbeen determined in a manner consistent with the Agreed Accounting Principles) as promptly as reasonably practicable and to deliver written notice to theBuyer and the Seller setting forth its resolution of the disputed matters. Each Preliminary Closing Payment Computation Schedule and Preliminary ClosingPayment, after giving effect to any Agreed Adjustments and to the resolution of disputed matters by the Accounting Firm, shall be final and binding as theFinal Closing Payment Computation Schedule and the Closing Payment, respectively, for purposes of this Agreement. If the Accounting Firm's estimated feesand expenses exceed the amount that is in dispute hereunder, then the Buyer and the Seller will divide the amount in dispute in half and adjust the ClosingPayment for each applicable Closing accordingly.11 (d) The parties hereto shall make available to the Buyer, the Seller and, if applicable, the Accounting Firm, such books, records andother information (including work papers) as any of the foregoing reasonably may request to prepare or review any Preliminary Closing PaymentComputation Schedule or any matters related thereto submitted to the Accounting Firm.3.6 Adjustment of Payment in Respect of Closing Payment. Within five (5) days after the final determination of all Closing Payments:(a) if the aggregate Closing Payments as determined by the Final Closing Payment Computation Schedule exceeds the aggregatePreliminary Closing Payments, the Buyer shall pay to the Seller by wire transfer of immediately available funds an amount equal to the excess of (A) theaggregate Closing Payments over (B) the aggregate Preliminary Closing Payments, plus interest on such excess from the Final Closing Date to the date ofpayment at the Agreed Rate; or(b) if the aggregate Preliminary Closing Payment exceeds the aggregate Closing Payments as determined by the Final ClosingPayment Computation Schedule, the Seller shall pay to the Buyer by wire transfer of immediately available funds an amount equal to the excess of (A) theaggregate Preliminary Closing Payments over (B) the aggregate Closing Payments, plus interest on such excess from the Final Closing Date to the date ofpayment at the Agreed Rate.12 3.7 Earn-Out Statements and Seller Right to Review.(a) As additional consideration and a component of the Purchase Price, the Seller shall be entitled to receive, and the Buyer shallpay to Seller an amount equal to 50% of the factoring fee and interest income earned by Buyer from each Purchased Portfolio as determined in accordancewith the Agreed Accounting Principles (the “Earn-Out Payment”) for the period beginning on the applicable Closing Date and ending twelve (12) monthsthereafter (the “Earn-Out Period”) subject to any offsets permitted by Section 3.8. For the avoidance of doubt, the factoring fee and interest income used tocalculate the amount of the Earn-Out Payment shall specifically exclude (i) administrative or servicing fees, including without limitation, early terminationfees, wire fees, treasury management, and similar fees, and (ii) any fees or income related to any accounts the Customer has with Buyer that were originatedprior to the Initial Closing Date and are unrelated to any Portfolio Account in the Purchased Portfolio.(b) Buyer shall, within fifteen (15) days after the end of each calendar month during the Earn-Out Period, (i) prepare and deliver toSeller a monthly statement of the Earn-Out Payment due for such calendar month (each an “Earn-Out Statement”) and (ii) pay to Seller the Earn-OutPayment. Buyer shall provide Seller with reasonable access to the relevant books and records of Buyer relating to Buyer’s calculation of each monthly Earn-Out Payment and to Buyer’s relevant personnel as Seller may reasonably request for the purpose of reviewing such calculations. If after the date that is thirty(30) days after Seller has received an Earn-Out Statement for the last full or partial calendar month of the Earn-Out Period (the “Review Period”) Sellerobjects to Buyer’s determination of the calculation of a monthly Earn-Out Payment, Seller shall notify Buyer of such objection by delivering to Buyer awritten statement setting forth Seller’s objections in reasonable detail. To the extent Seller fails to deliver any objections prior the expiration of the ReviewPeriod, the amount of any Earn-Out Payment (or any determination that none is payable) contained in the Earn-Out Statement shall be deemed to have beenaccepted by Seller. If Seller delivers objections before the expiration of the Review Period, Buyer and Seller shall negotiate in good faith to resolve theobjections stated therein within thirty (30) days after the date of delivery to Buyer of such objections, and, if the same are so resolved within such period, thedetermination of the amount for any Earn-Out Payment contained in such Earn-Out Statement, with such changes as are agreed to in writing between Buyerand Seller, shall be final and binding on the Parties.(c) If Buyer and Seller fail within the 30 day resolution period to reach an agreement with respect to all of the objections set forth inany notice of objections by Seller, then the objections of Seller that remain unresolved, to the extent such unresolved matters are of an accounting nature,(the “Outstanding Objections”) shall be submitted for resolution to the Accounting Firm in accordance with the procedures outlined in Section 3.5(c). Uponthe Accounting Firm’s final determination of the amount of an Earn-Out Payment the parties shall pay such amounts as applicable to effect such finaldetermination.3.8 Off-Sets. Buyer shall be entitled to offset any amounts owed by Seller against any payments made to Seller (other than any ClosingPayment) that are attributable to any period of time after the Closing Date.ARTICLE IVCLOSING4.1 Closing Mechanics.(a) The purchase and sale of the Purchased Assets and the assumption of the Assumed Obligations will take place in a series ofclosings at the offices of Buyer (each a “Closing” and, collectively, the “Closings”), with the first such Closing to take place on April ___, 2014 (the "InitialClosing Date"), and subsequent Closings to take place on such dates set forth on the Closing Schedule, or as otherwise designated by the Buyer, until thefinal Closing, which must occur on or before May 31, 2014. As used herein, the date of the final Closing shall be referred to as the "Final Closing Date" andthe date of any Closing shall be referred to as a “Closing Date”. Each Closing shall be effective as of 11:59 p.m. on the Closing Date applicable to suchClosing.(b) On the Initial Closing Date, Seller shall sell and deliver to Buyer, and Buyer shall purchase from Seller good and valid title (freeand clear of any Encumbrances) to the Intellectual Property Assets and the Portfolio Assets identified to be transferred and sold on the Closing Schedule to besold on the Initial Closing Date, other than any Portfolio Assets related to any Portfolio Accounts properly withdrawn by Buyer or Seller in accordance withSection 7.4.13 (c) On all Closing Dates other than the Initial Closing Date, Seller shall sell and deliver to Buyer, and Buyer shall purchase fromSeller good and valid title (free and clear of any Encumbrances) to the Portfolio Assets identified to be transferred and sold on the Closing Schedule to besold on such Closing Date, other than any Portfolio Assets related to any Portfolio Accounts properly withdrawn by Buyer or Seller in accordance withSection 7.4.(d) On the Final Closing Date, the Seller shall sell and deliver to Buyer, and the Buyer shall purchase from Seller good and validtitle (free and clear of any Encumbrances) to the Portfolio Assets related to all Portfolio Accounts that have not been purchased by the Buyer prior thereto,other than any Portfolio Account properly withdrawn by Buyer or Seller in accordance with Section 7.4.(e) The Buyer shall not be permitted to purchase any Portfolio Accounts with respect to a particular Customer at a Closing unlessthe Buyer purchases all Portfolio Accounts with respect to such Customer at such Closing.(f) The Seller hereby agrees that, during the period from the Signing Date through each applicable Closing Date, the Seller willcooperate in good faith with the Buyer in making joint communications from the Seller and the Buyer to each Customer whose Portfolio Accounts are to besold to the Buyer on such Closing Date, which communications shall be subject to the Seller’s reasonable approval and shall contain notice of the pendingsale of such Customer’s Portfolio Accounts to the Buyer and such other information as may be necessary in order to assist with an orderly transition ofresponsibilities as lender/factor with respect to such Portfolio Accounts from the Seller to the Buyer. The Buyer hereby agrees that, until the Closing of thesale of the Portfolio Accounts with respect to a particular Customer in accordance with the terms hereof, the Buyer shall not make or have anycommunications with such Customer except for the joint communications described in the preceding sentence.(g) At each Closing, the Buyer will pay the Preliminary Closing Payment and assume the Assumed Obligations corresponding tothe Portfolio Accounts specified in the Closing Schedule for such Closing, such Closing Payment to be paid in accordance with Section 4.2.4.2 Payment of the Purchase Price. The Purchase Price shall be paid as follows:(a) On each Closing Date (including the Initial Closing Date), the Buyer shall pay to the Seller an amount equal to the PreliminaryClosing Payment applicable to such Closing by wire transfer of immediately available funds to such account as the Seller shall designate in writing to theBuyer; and(b) For one (1) year after the Final Closing Date, the Earn-Out Payment shall be paid together with the delivery of an Earn-OutStatement monthly no later than fifteen (15) days after the end of each calendar month.14 4.3 The Buyer's Deliveries. Subject to fulfillment or waiver of the conditions set forth in Article IX, at each Closing, the Buyer shall deliverto the Seller all of the following:(a) A certificate of the Buyer, dated as of the Initial Closing Date, as to the authority of the authorized representatives of the Buyerexecuting this Agreement and Buyer Ancillary Agreements;(b) An Assignment and Assumption Agreement;(c) The certificate, dated as of the applicable Closing Date, contemplated by Section 10.1 duly executed by an authorizedrepresentative of the Buyer, substantially in the form of Exhibit B; and(d) A duly executed version of all applicable Buyer Ancillary Agreements (including, without limitation, any Side Letters).4.4 The Seller's Deliveries. Subject to fulfillment or waiver of the conditions set forth in Article X, at each Closing (or at such later dateprovided below) the Seller shall deliver to the Buyer all of the following:(a) A certificate of the Seller, dated as of the Initial Closing Date, as to the authority of the authorized representatives of the Sellerexecuting this Agreement and Seller Ancillary Agreements;(b) An Assignment and Assumption Agreement;(c) The certificate, dated as of the applicable Closing Date, contemplated by Section 9.1 duly executed by an authorizedrepresentative of the Seller, substantially in the form of Exhibit C;(d) All consents, waivers or approvals obtained by the Seller from third parties with respect to the assignment of the PortfolioAccounts subject to such Closing or consummation of the transactions contemplated hereby;(e) A limited power of attorney, with respect to each Portfolio Account subject to such Closing, to take those actions appropriate toeffect any transfer of such Portfolio Accounts and to enable the Buyer to bill, collect, service and administer such Portfolio Accounts, each of which shall besubstantially in the form contained in Exhibit D;(f) A Notice of Assignment Letter, in the form attached hereto as Exhibit E (“Notice of Assignment Letter”);(g) A final accounts receivable aging report for all Portfolio Accounts subject to such Closing;(h) A Portfolio Summary prepared as of the applicable Closing Date;15 (i) Copies of any approvals or other actions by a Governmental Body required for the Seller's sale of the Portfolio Accounts subjectto such Closing, other than Excluded Materials;(j) Copies of any and all Portfolio Documents with respect to the Portfolio Accounts subject to such Closing, including allpromissory notes endorsed in favor of the Buyer, and within three (3) Business Days after the applicable Closing Date, originals of the same;(k) A duly executed version of all applicable Seller Ancillary Agreements (including, without limitation, any Side Letters);(l) Copies of the Files applicable to the Portfolio Accounts subject to such Closing, other than Excluded Materials, and withinthree (3) Business Days after the applicable Closing Date, originals of the same;(m) Copies of all Portfolio Collateral with respect to the Portfolio Accounts subject to such Closing of which the Seller has actualphysical possession on the applicable Closing Date, and within three (3) Business Days after the applicable Closing Date, originals of the same; and(n) Copies of all Third-Party Reports with respect to the Portfolio Accounts subject to such Closing, and within three (3) BusinessDays after the applicable Closing Date, originals of the same.4.5 Additional Seller Deliveries for Initial Closing. In addition to the deliveries referenced in Section 4.4, at the initial Closing, Seller shalldeliver to Buyer, the IP Assignment duly executed by Seller.4.6 The Seller's Post-Closing Deliveries. Within 10 Business Days after the Final Closing Date, the Seller shall deliver to the Buyer all of theFiles (other than Excluded Materials) and Portfolio Documents not already delivered pursuant to Section 4.4. Additionally, for a period of one hundred andeighty (180) days following the Final Closing Date, Seller shall:(a) Remit within two (2) days from receipt or discovery thereof, all monies that Buyer may be entitled to receive from Seller relativeto the Purchased Assets; and(b) Identify and remit within two (2) days of receipt, any collections on any Portfolio Account which Seller receives on or after eachapplicable Closing Date.Any transmittal pursuant to this Section 4.6 shall be sent via overnight delivery to Buyer at Buyer’s expense.4.7 The Buyer’s Post-Closing Deliveries. For a period of one hundred and eighty (180) days following the Final Closing Date, Buyer shall:(a) Remit within two (2) days from receipt or discovery thereof, all monies that Seller may be entitled to receive from Buyer relativeto the Purchased Assets; and16 (b) Identify and remit within two (2) days of receipt, any collections on any Retained Account received by Buyer.Buyer may offset any remittance pursuant to Section 4.7(a): (i) against any amounts owed by Seller to Buyer pursuant to the Rediscount FacilityAgreement; and (ii) against any amounts owed by Seller to Buyer in accordance with Section 3.8. Any transmittal pursuant to this Section 4.7 shall be sentvia overnight delivery to Seller at Seller's expense.ARTICLE VREPRESENTATIONS AND WARRANTIES OF THE SELLERAs an inducement to the Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, the Seller represents andwarrants to the Buyer and agrees as follows:5.1 Organization. The Seller is a limited liability company duly organized, validly existing and in good standing under the laws of itsjurisdiction with full power and authority to own the Purchased Assets and to consummate the transactions contemplated hereby.5.2 Authority. The Seller has full power and authority to execute, deliver and perform this Agreement and all of the Seller AncillaryAgreements. All corporate action required to be taken by the Seller to authorize the execution, delivery and performance of this Agreement and the SellerAncillary Agreements has been taken and does not require any further authorization or consent of the Seller or the Seller's [Manager/Managing Members].This Agreement has been duly authorized, executed and delivered by the Seller and is the legal, valid and binding obligation of the Seller, enforceableagainst the Seller in accordance with its terms, and each of the Seller Ancillary Agreements has been duly authorized by the Seller and, upon execution anddelivery by the Seller, will be a legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, in each casesubject to bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor's rights generally, and any limitation imposed by generalequity principles, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in aproceeding at law or in equity).5.3 Consents. Neither the execution nor delivery of this Agreement nor any of the Seller Ancillary Agreements nor the consummation of anyof the transactions contemplated hereby or thereby nor compliance by the Seller with or fulfillment of the terms, conditions and provisions hereof or thereofwill:(a) conflict with, result in a material breach of the terms, conditions or provisions of, or constitute a default, an event of default oran event creating rights of acceleration, termination or cancellation or a loss of rights under, or result in the creation or imposition of any Encumbrance uponany of the Purchased Assets under, (i) the Articles of Organization or Operating Agreement of the Seller, (ii) any other material note, instrument, agreement,mortgage, deed of trust, lease, license, franchise, permit or other authorization, right, restriction or obligation to which the Seller is a party or by which theSeller is bound and which affects any Purchased Asset, (iii) any Court Order to which the Seller is a party or any of the Purchased Assets is subject or by whichthe Seller is bound, or (iv) any Requirements of Laws applicable to the Seller; or17 (b) require the approval, consent, authorization or act of, or the making or giving by the Seller of any notice, declaration, filing,report or registration with, any Person or any consents, licenses, permits, authorizations or approvals required to be obtained by the Seller from anyGovernmental Body or any other Person in connection with the execution and delivery by the Seller of this Agreement or any of the Seller AncillaryAgreements, the consummation of any of the transactions contemplated hereby or thereby or compliance by the Seller with, or fulfillment by the Seller of, theterms, conditions and provisions hereof or thereof.5.4 Portfolio and Portfolio Documents.(a) The information set forth on the Portfolio Summary attached hereto as Schedule 3.1A as to the Net Funds Employed in respect ofeach Portfolio Account, and the average daily balance of the Net Funds Employed during the 60 day period immediately preceding the applicable ClosingDate, is true, accurate and complete in all material respects.(b) All information in the Files and all data Seller has provided to Buyer related to the Portfolio from Seller’s FactorSoft informationtechnology system used by Seller to manage the Portfolio Accounts and general reports is accurate, true, and correct in all material respects.(c) The Seller is not in breach or default in any material respect of its obligations under any of the Portfolio Documents.(d) The entire agreement between Seller and each Customer, as in effect on each relevant Closing Date, is contained in the PortfolioDocuments and there are no warranties, agreements or options not set forth therein. Other than the Portfolio Documents, there are no agreements with respectto the Portfolio Account between the Seller and any Customer, which agreements are in effect as of the Closing Date. The Portfolio Documents are genuineand represent the legal, valid and binding obligation of the relevant Customer party thereto, enforceable against such Customer in accordance with its termsexcept as such enforcement may be limited by the application of bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement ofcreditors’ rights generally and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law).5.5 Other Matters Relating to Portfolio.(a) Each Portfolio Account arises from a bona fide transaction in the ordinary course of the Seller's business.(b) Seller has made an adequate credit investigation of the Customers of each Portfolio Account and has determined that (i) eachsuch Customer’s credit complies in all material respects with its underwriting and credit guidelines on the date of origination or acquisition of such PortfolioAccount, which underwriting guidelines are consistent with those of a prudent lender engaged in the similar lending activities, and (ii) each PortfolioAccount has a perfected first priority lien on its underlying collateral.18 (c) Except as would not be expected to have a material adverse impact, no Portfolio Account is delinquent, beyond any applicablegrace period set forth in the Portfolio Documents therefor, in payment of any amounts payable by the Customer thereunder to the Seller under the PortfolioDocuments.(d) No Customer or Guarantor has asserted in writing nor does any Customer or Guarantor have any basis to assert (i) that anyPortfolio Account is subject to any right of rescission, set-off, counterclaim or defense, including any defense of usury, or (ii) any valid claim against Seller asholder of such Portfolio Account, in each case, which, in the aggregate, would have a material adverse impact.(e) Each Portfolio Account is not subject to any type of retainage by the Debtor; does not arise from goods placed on consignment,guaranteed sale, or other terms by reason of which the payment by the Account Debtor may be conditional; has not been pre-billed or progress-billed bySeller; and is not conditional upon Debtor’s approval or otherwise subject to any bonding, credit hold, short payment, rebate accrual, repurchase obligation,return right or haulback.(f) To the Knowledge of Seller, there are no actions pending in which one of the Customers or Guarantors (to the extent suchGuarantor was material to the Seller's credit decision to make advances to the applicable Customer) has (i) filed, or consented (by answer or otherwise) to thefiling against it of, a petition for relief under any bankruptcy or insolvency law of any jurisdiction, (ii) made an assignment for the benefit of its creditors, (iii)consented to the appointment of a custodian, receiver, trustee, liquidator or other judicial officer with similar power over itself or of any substantial part of itsproperty, (iv) been adjudicated by a court to be insolvent, or (v) taken corporate or partnership action for the purpose of authorizing any of the foregoing.(g) There has been no act or omission, or error by Seller or any employee, agent or representative acting on Seller’s behalf, withrespect to the origination, underwriting, servicing or sale of any Portfolio Account which are not in conformity with all applicable federal, state and locallaws, statutes, rules, regulations and ordinances applicable to Seller and each Portfolio Account in all material respects. Each Portfolio Account has beenoriginated, underwritten, sold and serviced in material compliance with all Requirements of Law in all material respects. Seller is not otherwise in defaultwith respect to any of Seller’s obligations under any of the Portfolio Accounts.(h) Except as set forth on Schedule 5.5(H), since the earlier of the date Seller last provided Buyer with the Portfolio Documents andthe Files or December 31, 2013, Seller has administered and serviced each Portfolio Account in the ordinary course of its business, consistent with pastpractices, and has not (i) amended, modified, altered, satisfied, impaired, cancelled, rescinded or waived any provision of, or extended, renewed,supplemented, reduced, subordinated, or terminated the term of, any Portfolio Account, (ii) commenced or initiated any lawsuit, action or proceeding withrespect to any Portfolio Account, or (iii) released any Customer under any Portfolio Account.19 (i) The Portfolio Accounts were originated without any fraud or misrepresentation on the part of the Seller, or to the best of Seller’sknowledge, the Customer.5.6 Governmental Permits. The Seller owns, holds or possesses those licenses, franchises, permits and other authorizations from aGovernmental Body which are reasonably necessary for the Seller to own the Purchased Assets and to carry on and conduct its business relating theretosubstantially as currently conducted, except where the failure by the Seller to own, hold or possess any such license, franchise, permit or other authorizationwould not be reasonably likely to have a material adverse effect on the Seller or the Purchased Assets ("Governmental Permits").5.7 Title to Property. The Seller has good title to all of the Purchased Assets. Upon delivery to the Buyer on each Closing Date of theinstruments of transfer contemplated by Section 4.4, the Seller will transfer to the Buyer good title to the Purchased Assets to be purchased on such ClosingDate, subject to no other Encumbrances created by, through or under the Seller. Seller has not assigned or transferred the Purchased Assets or obligations toany Person, and upon Seller’s receipt of the Closing Payment, the Client and account debtor relating to any Purchased Asset will not be indebted to Seller,and if any such indebtedness shall arise in the future, Seller will not assert against Buyer that such indebtedness is secured by the Purchased Assets.5.8 No Violation, Litigation or Regulatory Action.(a) The Seller has received no written notification of its failure to comply in any material respect with any Requirement of Lawapplicable to the Purchased Assets where the Seller's failure to comply therewith could be reasonably expected to have a material adverse effect upon thePurchased Assets.(b) There are no material actions, suits, or proceedings pending against the Seller by any Customer, Guarantor or third Person inrespect of the Purchased Assets, and there are no material actions, suits, or proceedings pending in which the Seller is the plaintiff or claimant and whichrelate to any of the Purchased Assets.(c) There is no action, suit, or proceeding pending or, to the Knowledge of Seller, threatened which questions the legality orpropriety of the transactions contemplated by this Agreement.5.9 No Finder. Neither the Seller nor any Person acting (with the Seller's knowledge) on its behalf has paid or become obligated to pay anyfee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement.5.10 Full Disclosure. No representation or warranty by Seller in this Agreement and no statement contained in the Seller Ancillary Documentsor any certificate or other document furnished or to be furnished to Buyer pursuant to this Agreement contains any untrue statement of a material fact, oromits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.20 ARTICLE VIREPRESENTATIONS AND WARRANTIES OF BUYERAs an inducement to the Seller to enter into this Agreement and to consummate the transactions contemplated hereby, the Buyer hereby representsand warrants to the Seller and agrees as follows:6.1 Organization of the Buyer. The Buyer is a corporation or other legal entity, duly organized, validly existing and in good standing underthe laws of its jurisdiction of organization, with full power and authority to consummate the transactions contemplated hereby.6.2 Authority of the Buyer. The Buyer has full power and authority to execute, deliver and perform this Agreement and all of the BuyerAncillary Agreements. All corporate or other legal action required to be taken by the Buyer to authorize the execution, delivery and performance of thisAgreement and the Buyer Ancillary Agreements has been taken and does not require any further authorization or consent of the Buyer or its stockholders.This Agreement has been duly authorized, executed and delivered by the Buyer and is the legal, valid and binding obligation of the Buyer, enforceableagainst the Buyer in accordance with its terms, and each of the Buyer Ancillary Agreements has been duly authorized by the Buyer and upon execution anddelivery by the Buyer will be a legal, valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, in each casesubject to bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor's rights generally and any limitation imposed by generalequity principles, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in aproceeding at law or in equity).6.3 Consents. Neither the execution nor delivery of this Agreement or any of Buyer Ancillary Agreements or the consummation of any of thetransactions contemplated hereby or thereby nor compliance by the Buyer with or fulfillment of the terms, conditions and provisions hereof or thereof will:(a) conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default, an event of default or an eventcreating rights of acceleration, termination or cancellation or a loss of rights under (i) the organizational documents of the Buyer, (ii) any material note,instrument, agreement, mortgage, deed of trust, lease, license, franchise, permit or other authorization, right, restriction or obligation to which the Buyer is aparty or any of its assets or properties is subject or by which the Buyer is bound, (iii) any Court Order to which the Buyer is a party or by which it is bound, or(iv) any Requirements of Laws applicable to the Buyer; or(b) require the approval, consent, authorization or act of, or the making or giving by the Buyer of any notice, declaration, filing,report or registration with, any Person nor are any consents, licenses, permits, authorizations or approvals required to be obtained by the Buyer from anyGovernmental Body or any other Person in connection with the execution and delivery by the Buyer of this Agreement or any of the Buyer AncillaryAgreements, the consummation of any of the transactions contemplated hereby or thereby nor compliance by the Buyer with, or fulfillment by the Buyer of,the terms, conditions and provisions hereof or thereof.21 6.4 No Violation, Litigation or Regulatory Action. There is no action, suit, or proceeding pending and the Buyer is without knowledge ofany threatened action, suit, or proceeding which questions the legality or propriety of the transactions contemplated by this Agreement.6.5 Ability to Perform; Availability of Funds. The Buyer has the sophistication, operational capability, financial wherewithal, personnel,facilities, legal and accounting support and other resources to perform fully its obligations under this Agreement, the Assignment and Assumption Agreementand the other Buyer Ancillary Agreements. Without limiting the generality of the foregoing, the Buyer has sufficient funds to pay the Preliminary ClosingPayments at each Closing and to carry out the transactions contemplated by this Agreement.6.6 No Finder. Neither the Buyer nor any Person acting on its behalf has paid or become obligated to pay any fee or commission to anybroker, finder or intermediary for or on account of the transactions contemplated by this Agreement.6.7 The Seller's Name. Except with respect to actions which may be taken following the Closings pursuant to the power of attorney to bedelivered by the Seller at the Closings, the Buyer shall not institute any action in the Seller's name or purport to act as the Seller's agent in correspondence toor discussions with any Customers, other obligors, or any other Persons. The Buyer shall disclose fully to Customers and Debtors its identity following theClosings and shall not use any name or take any action that may confuse Customers or Debtors, other obligors, or any other Person as to its relationship withthe Seller.6.8 Status of the Buyer. The Buyer is (i) a financial institution, or (ii) an institutional purchaser, or a sophisticated purchaser that is in thebusiness of buying or originating loan and factoring accounts of the type being purchased or that otherwise deals in lending and factoring relationships inthe ordinary course of its business.6.9 Independent Evaluation. Buyer has conducted its own independent investigation, review and analysis of the Portfolio Accounts, andacknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records and other documents and data ofSeller for such purpose. Buyer acknowledges and agrees that in making its decision to enter into this Agreement and to consummate the transactionscontemplated hereby, Buyer has relied solely upon its own investigation and the express representations and warranties of Seller set forth in this Agreement.6.10 Reports. The Buyer acknowledges that the Seller makes no representation or warranty to the Buyer concerning the accuracy orcompleteness of Third-Party Reports that are in the Files, including appraisals, environmental audits, title abstracts, policies and reports, lien search reports,and other similar reports, of opinion letters of law firms and other similar Persons, or of any financial statements or reports of Customers prepared or auditedby accountants and other similar persons.22 ARTICLE VIIACTION PRIOR TO CLOSING DATESThe respective parties hereto covenant and agree to take the following actions between the Signing Date and the Closing Dates:7.1 Preserve Accuracy of Representations and Warranties. Each of the parties hereto shall refrain from taking any action which wouldrender any representation or warranty contained in Article V or VI of this Agreement inaccurate as of any Closing Date. Each party shall promptly notify theother of any action, suit or proceeding that shall be instituted or threatened against such party to restrain, prohibit or otherwise challenge the legality of anytransaction contemplated by this Agreement. The Seller shall promptly notify the Buyer of any action, suit or proceeding that may be threatened, brought,asserted or commenced against the Seller which would render Section 5.8 inaccurate as of any Closing Date.7.2 Consents of Third Parties; Approval by Governmental Bodies. Seller shall use commercially reasonable efforts to secure, before theapplicable Closing Date, the consent, approval or waiver, in form and substance reasonably satisfactory to the Buyer, from any party to any PortfolioDocument with respect to Portfolio Accounts subject to the Closing on such Closing Date required to be obtained in order to assign or transfer any suchPortfolio Document to the Buyer or otherwise required for the transactions contemplated hereby. The Buyer shall act diligently and reasonably to cooperatewith the Seller to obtain the consents, approvals and waivers contemplated by this Section 7.2.7.3 Actions Prior to Closing Dates. The Seller shall operate its business and manage the Purchased Assets consistent with its historical bestpractices and cause all related books, accounts and records to be true and complete in all material respects, and comply with the provisions set forth in theremainder of this Section 7.3. Except as otherwise expressly required by this Agreement, the Seller shall not (i) waive or modify any right if such waiver ormodification could reasonably be expected to have a material adverse effect on the Purchased Assets taken as a whole; (ii) mortgage, pledge or otherwiseencumber any Purchased Asset; (iii) take any action that would breach any of the Seller's representations, warranties or covenants contained in thisAgreement if such representation, warranty or covenant were made at the time of the action; or (iv) enter into an agreement, contract or commitment (otherthan this Agreement) to do any of the things prohibited by the foregoing clauses (i) through (iii).7.4 Withdrawal of Portfolio Accounts.(a) Subsequent to the Signing Date and other than as expressly permitted in accordance with Section 7.4(c), Seller shall not havethe right to withdraw any Portfolio Accounts from the Portfolio; provided however, that, notwithstanding the foregoing, if, prior to the sale of a PortfolioAccount to the Buyer in accordance with the terms hereof, such Portfolio Account is terminated by either the Seller or its Customer and all, or substantiallyall, indebtedness and obligations owing to the Seller in regard thereto are paid in full, then such Portfolio Account shall be withdrawn from the Portfolio bythe Seller, with a corresponding adjustment of the Purchase Price.23 (b) Prior to any Closing, if Buyer, in its good faith discretion, determines that any Portfolio Account breaches or is inconsistent withany of Seller’s representations and warranties in this Agreement, Buyer may upon written notice to Seller prior to the relevant Closing withdraw suchPortfolio Account from the Portfolio and elect not to purchase such Portfolio Account. If Buyer elects to withdraw a Portfolio Account for any one Closingand prior to the final Closing, Buyer shall have the right until the final Closing to elect to include such withdrawn Portfolio Account in a subsequentClosing.(c) Prior to each Closing, Buyer and Seller shall each use their respective reasonable and good faith efforts to notify the other Partyas soon as reasonably practicable after such Party first has Knowledge of any information or circumstance that the Seller may then be in breach of any of itsrepresentations or warranties in this Agreement or in any Seller Ancillary Agreement, or that at any Closing it will be in breach thereof, which breach wouldgive rise to a claim by the Buyer against the Seller for indemnification under Section 11.1 or would give rise to a right by the Buyer to terminate thisAgreement under Article XII. In the event of such notice, Buyer may elect to waive such breach in writing and any affected Portfolio Accounts shall not bewithdrawn from the Portfolio. If such breach is not waived by the earlier to occur of (i) ten (10) days after receipt of such notice and (ii) the applicable Cut-offTime, Seller or Buyer may, upon prior written notice to the other Party, withdraw any affected Portfolio Account from the relevant Closing. Notwithstandinganything to the contrary in this Section 7.4(c), Buyer’s failure to provide notice to Seller under this Section 7.4(c) shall not in any way limit Buyer’s rightsunder this Agreement with respect to any Portfolio Account purchased by Buyer, including without limitation, rights to indemnification or repurchasepursuant to Article XI.ARTICLE VIIIADDITIONAL AGREEMENTS8.1 Post-Closing Remittances and Adjustments; Further Assurances.(a) Except for amounts to which the Seller is entitled post-Closing in accordance with the terms of Article III, this Section 8.1,Section 11.2, or any other provision of this Agreement, amounts which are paid in respect of the Purchased Assets and are received by the Seller following theapplicable Closing with respect to such Purchased Assets shall be received by the Seller as agent, in trust for and on behalf of the Buyer and the Seller shallpay promptly all of such amounts over to the Buyer and shall provide to the Buyer information, to the extent known, as to the nature, source andclassification of such payments, including any invoice relating thereto. All amounts in respect of assets not transferred to the Buyer shall be received by theBuyer as agent, in trust for and on behalf of the Seller, and the Buyer shall promptly pay all of such amounts over to the Seller and shall provide to the Sellerinformation, to the extent known, as to the nature, source and classification of such payments, including any invoice relating thereto.(b) The Buyer agrees to pay to the Seller (in immediately available funds), within seven (7) days following the Seller’s writtendemand with respect thereto, the face amount of any check which is returned to the Seller unpaid to the extent such check has been credited to anyCustomer’s account and for which such Customer was given credit in calculating the Net Funds Employed used in determining the Purchase Price.24 (c) The Buyer hereby agrees to indemnify the Seller for, hold the Seller harmless from, and, promptly upon the Seller's demandtherefor, reimburse to the Seller, in immediately available funds, the amount of any claim asserted against the Seller arising (i) out of the Seller’s remittance ofany funds, or making of any payment, to the Buyer under Section 8.1(a) or any other provisions of this Agreement or (ii) under Sections 547 or 548 of theFederal Bankruptcy Code relating to a payment made to the Seller by a Debtor with respect to the Portfolio.(d) The Seller shall execute and deliver notices of assignment of each Portfolio Account substantially in the form attached hereto asExhibit F, such notices of assignment to be delivered at the applicable Closings. The Seller shall also execute, to the extent prepared as of the applicableClosing Date, and thereafter the Buyer will use, each power of attorney of the Seller delivered at the applicable Closing to (i) effect the sale, transfer andconveyance to the Buyer of the Purchased Assets subject to such Closing, including the applicable Portfolio Documents, (ii) to enable the Buyer to bill,collect, service and administer the Portfolio Accounts, and (iii) to endorse checks and execute such other assignments, transfer documents, instruments offurther assurance, approvals and consents as are necessary or proper in order to complete, ensure and perfect the sale, transfer and conveyance to the Buyercontemplated hereby of Purchased Assets and the consummation of the other transactions contemplated hereby with respect to the Portfolio Accounts;provided that the execution of any such assignments, transfer documents, instruments of further assurance, approvals, consents and any other documents bythe Buyer under such power of attorney described hereinabove shall be without recourse of any kind to the Seller and without any representation or warrantyon the Seller's part, except as expressly provided in this Agreement. Any other assignments, in particular any additional assignments of any lien instruments,any transfer documents, instruments of further assurance, approvals and consents as are necessary or proper in order to complete, ensure and perfect the sale,transfer and conveyance to the Buyer contemplated hereby of Purchased Assets and the consummation of the other transactions contemplated hereby withrespect to the Portfolio shall be prepared by the Buyer, at the Buyer's expense, and submitted to the Seller for execution, if necessary, within sixty (60) daysafter the Initial Closing Date. The Buyer shall be responsible for the preparation and filing of, and any costs associated with the preparation of, suchadditional assignments and for any costs or filing fees associated with the recording thereof. Within sixty (60) days after the Initial Closing Date, the Sellershall also provide the Buyer with any affidavits of loss the Buyer may reasonably request with respect to any Portfolio Documents for which originals are notavailable.(e) The Seller and the Buyer acknowledge that (i) substantially all payments by Debtors in connection with the Portfolio Accountsare made to the Master Lockbox Account, and (ii) the Seller is not assigning its interest in the Master Lockbox Account to the Buyer. The Seller shall, for upto one hundred eighty (180) days after the Final Closing Date and at the Buyer’s expense, remit to the Buyer, on a weekly basis, any immediately availablefunds received by the Seller from the Master Lockbox Account solely to the extent relating to Portfolio Accounts. Seller shall close the Master LockboxAccount on the one hundred eightieth (180th) day after the Final Closing Date, or on an earlier date if instructed to do so by Buyer, in its sole discretion.25 (f) Within a reasonable period after each Closing Date, the Buyer and the Seller agree to prepare and send to the Customers, theDebtors and applicable third parties the Notice of Assignment Letter. All costs associated therewith shall be borne by the Buyer.8.2 Taxes; Prorations.(a) Any documentary stamp Tax, transfer or similar Tax directly attributable to the sale or transfer of the Purchased Assets or theAssumed Obligations shall be paid by the Seller.(b) Each party hereto shall provide reimbursement for any Tax which is the responsibility of such party in accordance with the termsof this Section 8.2 and which is paid by the other party. Within a reasonable time prior to the payment of any such Tax, the party paying such Tax shall givenotice to the other party of the Tax payable and the portion which is the liability of each party, although failure to do so will not relieve the other party fromits liability hereunder.(c) Nothing herein shall be construed as obligating the Seller in any way to pay any taxes which are the liability of a Customer orwhich shall be due with respect to any Portfolio Collateral.8.3 Non-Compete and Non-Solicitation.(a) For thirty-six (36) months after the Final Closing Date (the “Restricted Period”), the Seller shall not, and shall not permit any ofits Affiliates to, directly or indirectly (i) engage or assist in factoring or otherwise financing the Accounts of any Person (whether or not a Customer),providing any asset-based loan or other credit facility to any Customer, refinancing Portfolio Accounts or originating new Portfolio Accounts, or otherwisecreating, selling, or profiting from commercial lending or working capital financial products in direct competition to Buyer, together and all of the foregoing,the “Restricted Business” anywhere in the United States, (ii) have an interest in any Person that engages directly or indirectly in any Restricted Businessanywhere in the United States in any capacity, including as a partner, owner, member, employee, principal, agent, trustee or consultant or (iii) intentionallyinterfere in any material respect with the business relationships (whether formed prior to or after the date of this Agreement) of Buyer.(b) During the Restricted Period, the Seller shall not, and shall not permit any of its Affiliates to, directly or indirectly, hire or solicitany employee of Buyer or encourage any such employee to leave such employment or hire any such employee who has left such employment.(c) During the Restricted Period, the Seller shall not, and shall not permit any of its Affiliates to, directly or indirectly, solicit orentice, or attempt to solicit or entice, by means of direct mail, telephone, internet or personal solicitation, any Customers, clients or customers of Buyer orpotential clients or customers of Buyer for purposes of prepayment, origination, refinance or modification of any Accounts or for any financial services orproducts.26 (d) The Seller acknowledges that a breach or threatened breach of this Section 8.3 would give rise to irreparable harm to Buyer forwhich monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Seller or its Affiliates ofany such obligations, Buyer shall, in addition to any and all other rights and remedies that may be available to them in respect of such breach, be entitled toequitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court ofcompetent jurisdiction (without any requirement to post bond).(e) The Seller acknowledges that the restrictions contained in this Section 8.3 are reasonable and necessary to protect the legitimateinterests of Buyer and constitute a material inducement to each of them to enter into this Agreement and to consummate the transactions contemplated bythis Agreement. In the event that any covenant contained in this Section 8.3 should ever be adjudicated to exceed the time, geographic, product or service,or other limitations permitted by applicable law in any jurisdiction, then the parties hereto hereby agree to amend this Agreement to cause suchunenforceable provision (or any portion thereof) to be enforceable and enforced, in such jurisdiction to the maximum time, geographic, product or service, orother limitations permitted by applicable Law. The covenants contained in this Section 8.3 and each provision hereof are severable and separate and distinctcovenants and provisions. The invalidity or unenforceability of any such covenant or provision, or any part thereof, as written, shall not invalidate or renderunenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or renderunenforceable such covenant or provision in any other jurisdiction.(f) Notwithstanding the foregoing or any other provision of this Agreement to the contrary, nothing herein shall be deemed toprohibit, inhibit, limit or impair Seller's rights to collect the Retained Accounts, including, without limitation, the right to use any Intellectual PropertyAssets in connection therewith, and Buyer hereby grants Seller a limited license to use the Intellectual Property Assets for such purpose.ARTICLE IXCONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYERThe obligations of the Buyer under this Agreement, at the option of the Buyer, shall be subject to the satisfaction or waiver, on or prior to eachClosing Date, of the following conditions:9.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have been no material breach by the Seller in theperformance of any of its covenants and agreements herein; each of the representations and warranties of the Seller contained or referred to herein (other thanwith respect to any Portfolio Account that is withdrawn from the Purchased Assets in accordance with Section 7.4) shall be true and correct on the applicableClosing Date as though made on such Closing Date; and there shall have been delivered to the Buyer a certificate or certificates to such effect, dated as ofsuch Closing Date and signed on behalf of the Seller by an authorized officer of the Seller.27 9.2 Consents. Buyer shall have received all material consents and approvals necessary for the transactions contemplated hereby; all noticeand waiting periods required by law shall have passed; no proceeding to enjoin, restrain, prohibit or invalidate such transactions shall have been instituted orthreatened; and any material conditions of any regulatory approval shall have been met.9.3 Obligations Performed. The Seller shall perform and comply in all material respects with all the obligations and agreements required bythis Agreement to be performed or complied with by it prior to or on such Closing Date.9.4 Delivery of Closing Documents. Seller shall have delivered to the Buyer each document to be delivered pursuant to Section 4.4, togetherwith all documents that are customary or necessary, each in a form acceptable to and approved by Buyer.ARTICLE XCONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERThe obligations of the Seller under this Agreement, at the option of the Seller, shall be subject to the satisfaction or waiver, on or prior to eachClosing Date, of the following conditions:10.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have been no material breach by the Buyer in theperformance of any of its covenants and agreements herein; each of the representations and warranties of the Buyer contained or referred to in this Agreementshall be true and correct on the applicable Closing Date as though made on such Closing Date; and there shall have been delivered to the Seller a certificateto such effect, dated as of such Closing Date and signed on behalf of the Buyer by an authorized officer of the Buyer.10.2 Necessary Consents and Approvals. Seller shall have received all material consents and approvals necessary for the transactionscontemplated hereby; all notice and waiting periods required by law shall have passed; no proceeding to enjoin, restrain, prohibit or invalidate suchtransactions shall have been instituted or threatened; and any material conditions of any regulatory approval shall have been met.10.3 Obligations Performed. The Buyer shall have performed and complied in all material respects with all obligations and agreementsrequired by this Agreement to be performed or complied with by it prior to or on such Closing Date.10.4 Payment of Closing Payment; Delivery of Closing Documents. The Buyer shall have paid the Preliminary Closing Payment pursuant toSection 4.2 and delivered to the Seller each document to be delivered pursuant to Section 4.3, each in a form acceptable to and approved by Seller.28 ARTICLE XIINDEMNIFICATION11.1 Indemnification by the Seller. From and after the Initial Closing Date and subject to the limitations of this Article XI, the Seller agrees toindemnify and hold the Buyer and its Affiliates, their respective successors and assigns, and in each such case their respective present or former directors,officers, employees and agents ("Buyer Indemnified Parties") harmless from and against any and all Losses and Expenses incurred by any Buyer IndemnifiedParty in connection with, resulting from, related to or arising from:(a) any inaccuracy or breach by the Seller of any of its representations or warranties in this Agreement or in any Seller AncillaryAgreement;(b) any breach or nonfulfillment of any agreement or covenant to be performed by the Seller pursuant to this Agreement or anySeller Ancillary Agreement;(c) any action, complaint, investigation, petition, suit or other proceeding, whether civil, criminal or administrative, in law or inequity, or before any arbitrator or a Governmental Body (including but not limited to any counterclaim or cross claims), relating to any of the PortfolioAccounts or Portfolio Documents in a Purchased Portfolio, in each case arising out of or based upon or with respect to any action or event occurring prior tothe relevant Closing Date related to such Portfolio Account or Portfolio Document, whether or not pending or threatened on the Signing Date or at theapplicable Closing, and whether brought, made or instigated by any Governmental Body or any other Person; or(d) the operation or administration of any Purchased Portfolio prior to the Closing Date applicable thereto.11.2 Indemnification by the Buyer. From and after the Initial Closing Date and subject to the limitations of this Article XI, the Buyer agrees toindemnify and hold the Seller and its Affiliates, their respective successors and assigns, and in each such case their respective present or former directors,officers, employees and agents ("Seller Indemnified Parties") harmless from and against any and all Losses and Expenses at any time incurred by any SellerIndemnified Party in connection with, resulting from, related to or arising from:(a) any inaccuracy or breach by the Buyer of any of its representations or warranties in this Agreement or in any Buyer AncillaryAgreement;(b) any breach or nonfulfillment of any agreement or covenant to be performed by the Buyer pursuant to this Agreement or anyBuyer Ancillary Agreement;(c) any action, complaint, investigation, petition, suit or other proceeding, whether civil, criminal or administrative, in law or inequity, or before any arbitrator or a Governmental Body (including but not limited to any counterclaim or cross claims), relating to any of the PortfolioAccounts or Portfolio Documents in a Purchased Portfolio, in each case arising out of or based upon or with respect to any action or event occurring on orafter the relevant Closing Date related to such Portfolio Account or Portfolio Document, whether or not pending or threatened on the Signing Date or at theapplicable Closing, and whether brought, made or instigated by any Governmental Body or any other Person; or29 (d) the operation or administration of any Purchased Portfolio after the Closing Date applicable thereto.11.3 Notice of Claims. Promptly upon the sooner to occur of (a) a party's acquisition of knowledge of facts or circumstances which could serveas the basis for a claim under this Article XI or (b) receipt of notice of any claim, demand or assessment or the commencement of any suit, action, arbitrationor proceeding in respect of which indemnity may be sought on account of the indemnity agreement contained in this Article XI, the party seekingindemnification (the "Indemnified Party") shall give written notice to the party obligated to provide indemnification to such Indemnified Party (the"Indemnifying Party") describing in reasonable detail the facts giving rise to any claim for indemnification hereunder and a reference to the provision of thisAgreement or any other agreement, document or instrument executed hereunder or in connection herewith upon which such claim is based and withinsufficient time to respond to such claim or answer or otherwise plea in such action; provided that failure to give such notice shall not relieve theIndemnifying Party of its obligations hereunder except to the extent it shall have been materially prejudiced by such failure.11.4 Third Party Claims. In the event that any Person not a party to this Agreement shall make any demand or claim or file or threaten to fileany lawsuit, which demand, claim or lawsuit may result in any Losses or Expenses to one party hereto of the kind for which such party is entitled toindemnification pursuant to this Article XI, then, after written notice is provided by the Indemnified Party, the Indemnifying Party shall have the option, at itsExpense, to provide legal counsel for the Indemnified Party (such counsel shall be reasonably satisfactory to the Indemnified Party) to defend any suchdemand, claim or lawsuit. The Indemnifying Party agrees to compensate or reimburse the Indemnified Party for such reasonable legal fees as and when theyare incurred. In effecting the settlement of any such demand, claim or lawsuit, an Indemnified Party shall act in good faith, shall consult with theIndemnifying Party and shall enter into only such settlement as the Indemnifying Party shall approve, which approval shall not be unreasonably withheld(the Indemnifying Party's approval will be implied if it does not respond within ten (10) calendar days of its receipt of the notice of such settlement offer).Each party shall reasonably cooperate with the other party in connection with the defense of any such claim including, without limitation, by makingpersonnel available for interviews and as witnesses, providing books, records, files and other documents or materials relevant to such claim, designating aninternal point of contact to assist with and coordinate discovery requests and otherwise assist with the claim, and granting such authorizations or limitedpowers of attorney, or executing documents, agreements, orders or other instruments as such party may reasonably consider necessary, desirable or required inconnection with the defense of any such claim. The party providing the aforementioned assistance shall be reimbursed for its reasonable "out-of-pocket"expenses arising from such assistance including, without limitation, travel, lodging and copying, retrieval or reproduction costs.30 In the event of any third party demand, claim, lawsuit or threat of lawsuit for which the Seller shall be the Indemnifying Party, the Seller reserves theright, in its sole discretion, to repurchase the Purchased Asset(s) relating to the Portfolio Account which are the subject of the demand, claim or lawsuit. TheSeller shall notify the Buyer of the Seller's intention to repurchase the Purchased Asset(s) at the Seller's expense. At the closing of any such repurchase, theSeller shall pay to the Buyer as the repurchase price an amount equal to the sum of the Net Funds Employed of such Portfolio Account on the date ofrepurchase, plus any premium paid by Buyer on the original Closing Date by wire transfer of immediately available funds to such account as the Buyer shalldesignate in writing to the Seller, and the Buyer shall convey to the Seller all of the Buyer's right, title and interest in and to such repurchased PurchasedAsset(s) and the assignment and transfer documents relating to such Purchased Asset(s). The conveyance documents executed by the Buyer reconveying thePurchased Asset(s) to the Seller shall contain such representations and warranties by the Buyer in favor of the Seller concerning the Purchased Asset(s) whichmay be reasonably requested by the Seller to confirm, inter alia, that the Buyer shall have unencumbered title to the Purchased Asset(s) being reconveyed, theBuyer shall have the ability and authority to reconvey the Purchased Asset(s), the Buyer's compliance with Requirements of Law as in effect on the date ofreconveyance, and the Buyer's compliance with its obligations under the Assignment and Assumption Agreement during its ownership of the PurchasedAsset(s).No amounts paid by the Seller to repurchase any Purchased Assets hereunder shall be applied to the threshold amount for indemnification claimsagainst the Seller provided for in Section 11.7 below. 11.5 General. In addition, the Indemnified Party shall be obligated in connection with any claim for indemnification under this Article XI touse all commercially reasonable efforts to mitigate all Losses and Expenses upon and after becoming aware of any event which could reasonably be expectedto give rise to such Losses and Expenses. No party shall be entitled to bring or maintain an indemnification claim with respect to any inaccuracy or breach ofany representation or warranty of any other party contained in this Agreement, or with respect to any failure by any other party to perform or observe anycovenant, agreement or condition required by this Agreement, of which such party was aware or had knowledge on or prior to the Initial Closing Date.11.6 Survival of Representations and Warranties; Bar Date for Indemnification Claims. All representations, warranties, covenants andobligations in this Agreement and any other agreement, document or certificate delivered pursuant to this Agreement (other than the representations andwarranties set forth in Sections 5.4 and 5.5) will survive the Closings for a period ending on the eighteen (18) month anniversary of the Final Closing Date,and no claim for indemnification for any purpose under this Agreement shall be made after such date (unless notice of such claim or the basis for such claim isdelivered by a party hereto in strict compliance with this Article XI on or before the date that is the eighteen (18) month anniversary after the Final ClosingDate). The representations and warranties set forth in Sections 5.4 and 5.5 shall survive the Closings for a period ending on the twelve (12) month anniversaryof the Final Closing Date, and no claim for indemnification with respect such representations and warranties shall be made after such date (unless notice ofsuch claim or the basis for such claim is delivered by a party hereto in strict compliance with this Article XI on or before the date that is the twelve (12) monthanniversary after the Final Closing Date).31 11.7 Limitations on Indemnification by Seller. The Seller will have no liability with respect to the matters described in Section 11.1 until thetotal of all Losses and Expenses with respect to such matters exceeds $100,000 (the "Basket"), at which point the Seller will be obligated to indemnify theBuyer Indemnified Parties for all Losses and Expenses without regard to the Basket. The Seller's maximum aggregate liability with respect to the mattersdescribed in Section 11.1 will be limited to the Purchase Price.11.8 Payment of Claims. All claims for indemnity under this Article XI shall be paid on demand in immediately available funds in UnitedStates Dollars after such claim and the liability for Losses and Expenses thereunder have been finally determined. A claim, and the liability for Losses andExpenses thereunder, shall be deemed to be “finally determined” for purposes of this section when the parties have so determined by mutual agreement or, ifdisputed, when a final order of a court of competent jurisdiction or a final order of an arbitrator having competent jurisdiction, if one shall have been selectedby the parties, has been entered. Any indemnification payments made by any Indemnifying Party shall be deemed to be and treated for all purposes,including, without limitation, tax purposes, as adjustments to the Purchase Price. The liability of the Indemnifying Party with respect to any indemnificationclaim shall be reduced by the tax benefit actually realized and any insurance proceeds received by the Indemnified Party as a result of any Losses or Expensesupon which such indemnification claim is based.11.9 Limited Remedies. If the Closings occur, except for remedies based upon fraud and except for equitable remedies, the remedies andlimitations provided in this Article XI of this Agreement constitute the sole and exclusive remedies for recovery against the Indemnifying Party based uponthe inaccuracy, untruth, incompleteness or breach of any representation or warranty of any Indemnifying Party contained herein or in any certificate,Schedule or Exhibit furnished by any Indemnifying Party in connection herewith, or based upon the failure of any Indemnifying Party to perform anycovenant, agreement or undertaking required by the terms hereof to be performed by such Indemnifying Party. The foregoing shall not in any manner limit (a)any claims by either party with respect to the computation or payment of the Purchase Price pursuant to Sections 3.1 through 3.7 for any reason, any suchclaims to be subject exclusively to the provisions of Sections 3.1 through 3.7 or (b) any claims by the Seller pursuant to Section 8.1, any such claim to besubject exclusively to the provisions of Section 8.1.11.10 Subrogation. Upon payment in full of any indemnification claim or the payment of any judgment or settlement with respect to a third partyclaim under this Agreement, the Indemnifying Party shall be subrogated to the extent of such payment to the rights of the Indemnified Party against anyperson or entity with respect to the subject matter of such indemnification claim or third party claim.32 ARTICLE XIITERMINATION12.1 Termination. This Agreement may be terminated in any of the following ways on or prior to the Initial Closing Date:(a) by the mutual written consent of the Buyer and the Seller at any time on or prior to the Initial Closing Date;(b) by the Seller in writing if the conditions set forth in Article X of this Agreement with respect to the Initial Closing Date shall nothave been met by the Buyer or waived in writing by the Seller on or prior to the Initial Closing Date;(c) by the Buyer in writing if the conditions set forth in Article IX of this Agreement with respect to the Initial Closing Date shallnot have been met by the Seller or waived in writing by the Buyer on or prior to the Initial Closing Date; or(d) any time on or prior to the Initial Closing Date, by either the Seller or the Buyer in writing if the other party shall have been (i) inmaterial breach of any representation and warranty (as if such representation and warranty had been made on and as of the date hereof and on the date of thenotice of breach referred to below), other than any breach by the Seller with respect to a Portfolio Account that is withdrawn from the Purchased Assets inaccordance with Section 7.4, or (ii) in material breach of any covenant, undertaking or obligation contained herein, and such breach has not been cured bythe Initial Closing Date.12.2 Notice of Termination. Any party desiring to terminate this Agreement pursuant to Section 12.1 shall give prompt written notice of suchtermination to the other party.12.3 Effect of Termination.(a) In the event that this Agreement shall be terminated pursuant to this Article XII, all further obligations of the parties under thisAgreement (other than Sections 13.1, 13.10 and 13.14, and this Article XII), shall be terminated, provided that nothing herein shall relieve any party fromliability for its breach of this Agreement.(b) If this Agreement is terminated as provided herein:(i) each party will return all documents, work papers and other materials of the other party, including photocopies or otherduplications thereof, relating to the transactions contemplated herein, whether obtained before or after the execution hereof, to the party furnishingthe same;(ii) each party will destroy all analyses, studies, surveys, evaluations, reports and other internal documents used to evaluateor analyze the transactions contemplated herein, and shall certify to the other party of such destruction;(iii) all information received by either party hereto with respect to the business of the other party (other than informationwhich is a matter of public knowledge or which has heretofore been published in any publication for public distribution or filed as publicinformation with any Governmental Body) shall not at any time be used for any business purpose by such party or disclosed by such party to thirdpersons; and33 (iv) each party will pay its own expenses, except as otherwise provided in Section 12.3(c) and Section 12.3(d).(c) Neither the Buyer nor the Seller waives any right it may have to require the other to mitigate damages in connection with anydamage claim against the Buyer or the Seller made under this Article XII.(d) If the transactions contemplated hereby are not consummated because of a party's breach of this Agreement, in addition to suchdamages as may be recoverable in law or equity, the other party shall be entitled to recover from the breaching party upon demand, itemization anddocumentation, its reasonable outside legal, accounting, consulting and other out-of-pocket expenses. In the event of judicial proceedings brought by eitherparty in order to enforce its rights under this Article XII, the prevailing party shall be entitled to recover its reasonable attorneys' fees and expenses.ARTICLE XIIIGENERAL PROVISIONS13.1 Confidential Nature of Information. Each party hereto agrees that it will treat in confidence all documents, materials and otherinformation which it shall have obtained regarding the other party during the course of the negotiations leading to the consummation of the transactionscontemplated hereby (whether obtained before or after the date of this Agreement), the investigation provided for herein and the preparation of thisAgreement and other related documents, and, in the event the transactions contemplated hereby shall not be consummated, each party will return to the otherparty all copies of nonpublic documents and materials which have been furnished in connection therewith. Such documents, materials and information shallnot be disclosed to any other party or Person; provided that either party hereto may disclose such documents, materials and information to any of its counsel,accountants or financial advisors who are informed of the confidentiality provisions contained herein, it being understood that such disclosing party shall beliable to the other party hereto for any disclosure or use of such documents, materials and information in violation of the terms hereof by any of its counsel,accountants or financial advisors. Neither party hereto shall use any confidential information in any manner whatsoever except solely for the purpose ofevaluating the proposed purchase and sale of the Purchased Assets and the assumption of the Assumed Obligations. The obligation of each party to treat suchdocuments, materials and other information in confidence shall not apply to any information which (a) is or becomes available to such party from a sourceother than the other party, (b) is or becomes available to the public other than as a result of disclosure by such party or its agents, (c) is required to bedisclosed under applicable law or judicial process, or to any Governmental Body having regulatory authority over such party or its Affiliates, but only to theextent it must be disclosed, or (d) such party reasonably deems necessary to disclose in order to obtain any of the consents or approvals contemplated hereby.13.2 No Partnership. Nothing herein shall be construed as creating a partnership, joint venture or agency relationship between the Buyer andthe Seller, except to the extent the power of attorney to be delivered to the Buyer at each Closing by the Seller creates an agency relationship.34 13.3 No Public Announcement. No party hereto, without the approval of the other party hereto, shall make any press release or other generalpublic announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such party shall be so obligated bylaw, in which case the other party shall be advised and the parties shall use their best efforts to cause a mutually agreeable release or announcement to beissued; provided, however, that the foregoing shall not preclude communications or disclosures to employees and as necessary to implement the provisionsof this Agreement or to comply with accounting and Securities and Exchange Commission disclosure obligations.13.4 Notices. All notices required under this Agreement shall be in writing and shall be considered given upon: (a) personal delivery (includingdelivery by overnight courier) of the written notice; (b) sending the message by a telecopy or facsimile machine to the other party's telecopy or facsimilemachine, provided the sending machine automatically prints a message confirming that the message was received, and a copy thereof is forthwith mailed orsent by personal delivery to the addressee; or (c) if sent via United States mail, the third day following mailing, certified mail, return receipt requested,postage prepaid and appropriately addressed. Such addresses shall be:(a) If to the Seller, to:Anchor Funding Services, LLC2700 N. Military Trail Suite 200Boca Raton, FL 33431Attention: Brad BernsteinTelephone: 561-367-1504Facsimile: 212-214-0881With a Copy to (which shall not constitute Notice):K&L Gates LLPHearst Tower214 North Tryon Street, 47th FloorCharlotte, North Carolina 28202Attention: Mark Busch, Esq.Telephone: (704) 331-7440Facsimile: (704) 353-3203(b) If to the Buyer, to:Transportation Alliance Bank Inc.4185 Harrison Blvd., Suite 200Ogden, Utah 84403Attention: General CounselTelephone: (801) 624-4422Facsimile: (801) 395-8653With a Copy to (which shall not constitute Notice):Snell & Wilmer L.L.P.15 W South Temple #1200,Salt Lake City, Utah 84101Attention: Brad Merrill, Esq.Telephone: (801) 857-1900Facsimile: (801) 857-1800 or to such other address as such party may indicate by a notice delivered to the other parties hereto.35 13.5 Successors and Assigns. The rights of any party under this Agreement shall not be assignable by such party hereto prior to the FinalClosing Date without the written consent of the other party (except that if the Seller merges with or consolidates into an Affiliate of the Seller, or an Affiliateof the Seller acquires the stock or assets of the Seller, no consent thereto of the Buyer shall be required). Subject to the preceding sentence, this Agreementwill apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or referred toin this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy or claim under or withrespect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit ofthe parties to this Agreement and their permitted successors and assigns. Following the Final Closing Date, either party may assign any of its rights hereunder,but no such assignment shall relieve it of its obligations hereunder.13.6 Access to Records after Closing.(a) The Buyer agrees that on and after each applicable Closing Date it will permit the Seller and its representatives, during normalbusiness hours and on reasonable prior notice and without unreasonably interfering with the business of the Buyer, to have access to and to examine and takecopies of all applicable Files, whether with respect to transactions or events occurring prior to the applicable Closing Date or to transactions or eventsoccurring subsequent to the applicable Closing Date which arise out of transactions or events occurring prior to or after such Closing Date, other than thosedocuments or materials or work product in any of the Files reasonably determined by Buyer to constitute an attorney-client privileged communication. TheSeller and the Buyer agree that any such access to the Files shall be granted only in the event that the Seller or an Affiliate of the Seller is named as a party in,or is threatened with, any litigation or similar proceeding in connection with any Purchased Asset or to the extent that the Seller may require such access inconnection with any Tax, regulatory, accounting, corporate or similar matter relating to any Purchased Asset or its transfer hereunder.(b) The Buyer agrees that it shall preserve and keep the Files for a period at least equal to the period required by the Buyer's recordretention policy for similar materials. Notwithstanding any of the foregoing, the Buyer may destroy any or all of the Files without notice to the Seller at anytime after the seventh (7th) anniversary of the Signing Date.36 (c) The Seller agrees that on and after the applicable Closing Date it will permit the Buyer and its representatives, during normalbusiness hours and on reasonable prior notice and without unreasonably interfering with the business of the Seller, to have access to electronically-storeddata or other computerized records of the Seller (other than Excluded Materials) that relate exclusively to the applicable Portfolio Accounts. The Seller agreesthat it shall preserve and keep such electronically-stored data and computerized records relating exclusively to the Portfolio Accounts (other than ExcludedMaterials) for a period at least equal to the period required by the Seller's record retention policy for similar materials.(d) Each party agrees that its access to books and records of the other party pursuant to this Section 13.6 shall be subject to theconfidentiality provisions of Section 13.1.13.7 Entire Agreement; Exhibits and Schedules; Amendments. This Agreement and the Exhibits and Schedules referred to herein and theother Purchase Documents contain the entire understanding and agreement of the parties hereto with regard to the subject matter contained herein or therein,and supersede all prior agreements, inducements, understandings, disclosures, correspondence, offering memoranda or letters of intent between or among anyof the parties hereto, whether expressed or implied, oral or written, regarding the same subject matter. Each of the Exhibits and Schedules attached hereto areincorporated into this Agreement and by this reference made a part hereof. This Agreement shall not be amended, modified or supplemented except by awritten instrument signed by an authorized representative of each of the parties hereto.13.8 Interpretation. Article titles and section headings are inserted for convenience of reference only and are not intended to be a part of or toaffect the meaning or interpretation of this Agreement. The Schedules and Exhibits referred to herein shall be construed with and as an integral part of thisAgreement to the same extent as if they were set forth verbatim herein. Disclosure of any fact or item in any Schedule hereto referenced by a particular sectionin this Agreement shall be deemed to have been disclosed with respect to every other section in this Agreement.13.9 Waivers. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the party or partiesentitled to the benefit thereof. Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to any party, it isauthorized in writing by an authorized representative of such party. The failure of any party hereto to enforce at any time any provision of this Agreementshall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any partythereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequentbreach.37 13.10 Expenses.(a) Each party hereto will pay all costs and expenses incident to its negotiation and preparation of this Agreement and to itsperformance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expensesand disbursements of its counsel and accountants.(b) If the parties submit any matter involving the determination of the Purchase Price to an Accounting Firm, the fees and expensesof the Accounting Firm shall be paid by the parties hereto, with the responsibility of each party for payment of final fees and expenses being reduced by apercentage that is equal to the amount ultimately awarded by the Accounting Firm to that party divided by the total amount in dispute between the parties.(c) The Buyer will pay for all shipping and transportation costs for the Files to such location as directed by Buyer with respect toeach Closing.13.11 Partial Invalidity. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid underapplicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in anyrespect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating theremainder of such invalid, illegal or unenforceable provision or any other provisions hereof, unless such a construction would be unreasonable.13.12 Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered an originalinstrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed byeach of the parties hereto and delivered to the Seller and the Buyer.13.13 Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to eachother such other documents and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent ofthis Agreement and the documents referred to in this Agreement.13.14 Dispute Resolution. In the event of any dispute or controversy between the parties hereto, arising out of or in connection with theexecution, interpretation and performance of this Agreement (including the validity, scope and enforceability of this Section 13.14, but excluding anydispute as to the calculation of the Purchase Price which shall be subject exclusively to the provisions of Article III) or any documents or instruments relatinghereto, the parties shall use their reasonable efforts to settle such dispute or controversy amicably by negotiation for a period of thirty (30) days, commencingupon the receipt of written demand for negotiation setting forth the basis of the dispute. After the expiration of the thirty (30) day negotiation period, eitherparty may commence judicial action to resolve such dispute as set forth below. The provisions of this Section 13.14 shall not apply to the extent that eitherparty hereto reasonably believes that it needs to seek injunctive relief in a judicial proceeding in order to avoid irreparable harm.38 13.15 Jurisdiction; Governing Law; Waiver of Jury Trial.(a) Any controversy or claim between or among the parties, arising out of or relating to this Agreement or any agreements orinstruments relating hereto, including any claim based on or arising from an alleged tort (but excluding any dispute as to the calculation of the Purchase Pricewhich shall be subject exclusively to the provisions of Article III), shall be subject to the exclusive jurisdiction of the federal courts sitting in Salt Lake City,Utah or, if such courts do not have jurisdiction, in the state courts of Utah sitting in Salt Lake City, Utah, and each of the parties consents to the jurisdictionof such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Any such claim orcontroversy shall be governed by the substantive laws of the state of Utah, conflicts of laws principles notwithstanding.(b) Each party hereto hereby waives trial by jury in any action, proceeding or counterclaim arising out of or in any way concernedwith this Agreement or any of the agreements, instruments or documents contemplated hereby. No party hereto, nor any assignee or successor of any partyhereto shall seek a jury trial in any lawsuit, proceeding, counterclaim or any other litigation procedure based upon, or arising out of, this Agreement or any ofthe agreements, instruments or documents contemplated hereby. No party hereto will seek to consolidate any such action, in which a jury trial has beenwaived, with any other action in which a jury trial cannot be or has not been waived. The provisions of this Section 13.15 have been fully discussed by theparties hereto, and the provisions shall be subject to no exceptions. No party hereto has in any way agreed with or represented to any other party that theprovisions of this Section 13.15 will not be fully enforced in all instances.13.16 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws (as opposed to the conflicts oflaws provisions) of the State of Utah.13.17 Termination of Rediscount Facility Agreement. The Buyer hereby agrees that, upon its receipt of full repayment of all outstandingamounts owed by Seller to Buyer under the Rediscount Facility Agreement and other Obligations (as defined in Section 1 of the Rediscount FacilityAgreement) (other than contingent indemnification obligations for which no claim has been made), on and with effect from such date, without any furtheraction by it or any other person, (a) all obligations of the Seller with respect to the Rediscount Facility Agreement shall be paid and satisfied in full, (b) theRediscount Facility Agreement (and any agreements, documents or instruments relating thereto, including, without limitation, the Continuing Guaranty andWaivers granted by Anchor Funding Services, Inc. and Anchor Trade Finance, LLC and the Validity Warranties executed by Brad Bernstein and MorryRubin) shall be terminated and have no further force and effect and (c) any liens or encumbrances granted by the Seller to secure its obligations under theRediscount Facility Agreement shall be completely terminated and released. The Buyer hereby authorizes the Seller and its counsel, K&L Gates LLP, toprepare and file any and all releases and UCC termination statements as are necessary to terminate all lien filings of record associated with the RediscountFacility Agreement.[Signatures contained on following page]39 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. SELLER: ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liabilitycompany By: /s/ Brad Bernstein Brad Bernstein, its President/CFO BUYER: TRANSPORTATION ALLIANCE BANK INC., a Utah industrial bank By:/s/ Chris Abel Chris Abel, its Vice President [Asset Purchase Agreement]40 EXHIBIT AASSIGNMENT AND ASSUMPTION AGREEMENTTHIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made and entered into effective as of ___________, 2014 (the"Effective Date") by and between ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company (the "Seller"), andTRANSPORTATION ALLIANCE BANK INC., a Utah industrial bank (the "Buyer"). Capitalized terms used herein, but not otherwise defined herein, shallhave the meanings set forth in the Asset Sale Agreement (as defined below).WITNESSETH:WHEREAS, the Seller and the Buyer have entered into an Asset Purchase and Sale Agreement dated as of __________, 2014 (the "Asset SaleAgreement"); andWHEREAS, subject to the terms of the Asset Sale Agreement, the Seller has agreed to sell, transfer and convey to the Buyer all of the Seller's right,title and interest in the Purchased Assets relating to the Portfolio Accounts being purchased by the Buyer on the date hereof described on Schedule 1 attachedhereto (the “Subject Purchased Assets”); andWHEREAS, as a part of the Purchase Price for the Purchased Assets, the Buyer has agreed to assume the Assumed Obligations relating to the SubjectPurchased Assets (the “Subject Assumed Obligations”); andWHEREAS, this Agreement is designed to effectuate the assignment by the Seller and the assumption by the Buyer of the aforesaid rights,obligations and liabilities.NOW, THEREFORE, in consideration of the mutual covenants contained herein and in the Asset Sale Agreement, the receipt and legal sufficiencyof such consideration being hereby acknowledged, it is agreed as follows:1. The Seller hereby sells, transfers, assigns and delivers to the Buyer all of the Seller's right, title and interest in and to the SubjectPurchased Assets, and assigns to the Buyer the Seller's rights under the Subject Purchased Assets.2. The Buyer hereby assumes the Seller's obligations under the Subject Assumed Obligations, namely all purchase, funding and othercontractual obligations of the Seller to be performed on or after the date hereof under the Portfolio Documents relating to the Subject Purchased Assets.3. The Seller neither assigns, nor does the Buyer assume, any liabilities or obligations of the Seller whatsoever, except for those liabilitiesexpressly set forth in Paragraph 2 hereof and in the Asset Sale Agreement.4. The terms of the Asset Sale Agreement are expressly incorporated herein and made a part hereof by reference. 5. This instrument is executed by and shall be binding on the parties as of the Closing on the date hereof.6. This Agreement shall be governed by and construed in accordance with the laws of the State of Utah, notwithstanding any otherwiseapplicable conflicts of law principles.IN WITNESS WHEREOF, the Seller and the Buyer have caused this Agreement to be executed in their respective names by their duly authorizedofficers as of the day first above written. SELLER: ANCHOR FUNDING SERVICES, LLC By: [Manager/Managing Member] BUYER: TRANSPORTATION ALLIANCE BANK INC. By: [Senior Vice] President Exhibit A -- 2 SCHEDULE 1 Exhibit A -- 3 EXHIBIT A-1ASSIGNMENT OF INTELLECTUAL PROPERTY ASSETSTHIS ASSIGNMENT OF INTELLECTUAL PROPERTY ASSETS (the “Assignment”) is made, executed and delivered as of _______________,2014, between ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company (the "Assignor"), and TRANSPORTATION ALLIANCEBANK INC., dba TAB Bank, a Utah industrial bank (the "Assignee").RECITALSWHEREAS, this Assignment is being executed and delivered pursuant to that certain Asset Purchase and Sale Agreement by and among Assignorand Assignee and dated as of _________________, 2014 (“Purchase Agreement”); and WHEREAS, all initially capitalized terms used but not otherwise defined in this Assignment shall have the meanings assigned to such terms in thePurchase Agreement. AGREEMENTNOW, THEREFORE, in consideration of the mutual promises contained in this Assignment, and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties agree as follows:1. Assignor hereby assigns to Assignee all of its right, title and interest in, to and under the Intellectual Property Assets, including all goodwillassociated therewith, and including, without limitation, that certain Intellectual Property described in Exhibit A attached hereto, free and clear of allEncumbrances, with such assignment to further include all of the Assignor’s rights to (a) sue for infringement with respect to the Intellectual Property Assets,whether arising prior to or subsequent to the date of this Assignment, and (b) any and all renewals and extensions thereof that may hereafter be secured underthe laws now or hereafter in effect in the United States or in any other jurisdiction, the same to be held and enjoyed by the Assignee, its successors and assignsfrom and after the date hereof as fully and entirely as the same would have been held and enjoyed by the Assignor had this Assignment not been made.2. The Assignor agrees that at any time and from time to time, upon the written request of the Assignee, and without further remuneration, theAssignor shall promptly and duly execute and deliver any and all such further instruments and documents and take such further actions as the Assignee mayreasonably request in order to obtain the full benefit of this Assignment and of the rights and powers granted hereby.3. This Assignment may be executed in one or more counterparts, and each signatory hereto may sign on a separate counterpart, each of which shallbe deemed an original and all of which, when taken together, shall constitute one instrument. Signature pages may be detached from the counterparts andattached to a single copy of this Assignment to physically form one document. Facsimile signature pages will be acceptable and shall be conclusive evidenceof execution. 4. This Assignment is expressly made subject to the Purchase Agreement, and any conflict between the terms of this Assignment and the terms of thePurchase Agreement shall be construed in favor of the Purchase Agreement.IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. ASSIGNOR:ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company By:_____________, [Manager/Managing Member] ASSIGNEE:TRANSPORTATION ALLIANCE BANK INC. By:_____________, [Senior Vice] President Exhibit A-1 --2 EXHIBIT ADESCRIPTION OF INTELLECTUAL PROPERTY ASSETS [TO BE ATTACHED] Exhibit A-1 -- 341 EXHIBIT BBUYER'S OFFICER'S CERTIFICATEThis Certificate is prepared and delivered as required by Section 4.3(c) of the Asset Purchase and Sale Agreement, dated as of ___________, 2014(the "Agreement"), by and between ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company (the “Seller"), andTRANSPORTATION ALLIANCE BANK INC., a Utah industrial bank (the "Buyer"). All capitalized terms used herein, but not otherwise defined herein,shall have the meanings set forth in the Agreement.The undersigned, ____________________ , in his capacity as an officer of the Buyer and not in his individual capacity, does hereby certify to theSeller that (1) he is the duly elected, qualified and acting [Senior Vice] President of the Buyer, (2) all of the representations and warranties of the Buyer foundin Article VI of the Agreement are true and correct as of the date of this certificate with the same effect as though such representations and warranties weremade at and as of such time and (3) all conditions and covenants required to be performed by the Buyer have been performed prior to the Closing on the datehereof.Date: __________, 2014. TRANSPORTATION ALLIANCE BANK INC. By:________________, [Senior Vice] President EXHIBIT CSELLER'S OFFICER'S CERTIFICATEThis certificate is prepared and delivered as required by Section 4.4(c) of the Asset Purchase and Sale Agreement, dated as of ___________, 2014(the "Agreement"), by and between ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company (the "Seller"), andTRANSPORTATION ALLIANCE BANK INC., a Utah industrial bank (the "Buyer"). All capitalized terms used herein, but not otherwise defined herein,shall have the meanings set forth in the Agreement.The undersigned, ________________________, in his capacity as an officer of the Seller and not in his individual capacity, does hereby certify tothe Buyer that (1) he is the duly elected, qualified and acting [Manager/Managing Member] of the Seller, (2) all of the representations and warranties of theSeller found in Article V of the Agreement are true and correct as of the date of this certificate with the same effect as though such representations andwarranties were made at and as of such time and (3) all conditions and covenants required to be performed by the Seller have been performed prior to theClosing on the date hereof.Date: _____________, 2014 ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company By:________________, [Manager/Managing Member] EXHIBIT DPOWER OF ATTORNEYTHIS POWER OF ATTORNEY (this "Power of Attorney") is dated as of __________, 2014 by ANCHOR FUNDING SERVICES, LLC, a NorthCarolina limited liability company (the "Seller"), to be effective as of 11:59 p.m. on such date. Capitalized terms used herein, but not otherwise definedherein, shall have the meanings set forth in the Agreement (as defined below).WITNESSETH:WHEREAS, the Seller and TRANSPORTATION ALLIANCE BANK INC., a Utah industrial bank (the "Buyer") have entered into an AssetPurchase and Sale Agreement dated as of _________, 2014 (the "Agreement"), which provides for the sale by the Seller to the Buyer of certain personalproperty described therein; andWHEREAS, in the Agreement, the Seller has agreed, from time to time, at the request of the Buyer, to execute, acknowledge and deliver to theBuyer assignments, transfer documents, instruments of further assurance, approvals and consents that may be reasonably required to (i) transfer to the Buyercertain Purchased Assets (as defined in the Agreement) being acquired by the Buyer pursuant to the Agreement, including Portfolio Accounts and PortfolioCollateral therefor to the extent of the Seller's interest in such collateral, and Files (other than Excluded Materials) and records relating to such PortfolioAccounts, (ii) enable the Buyer to bill, collect, service and administer the Portfolio Accounts and other Purchased Assets transferred thereby, and (iii) give fullforce and effect to the intent and purpose of the Agreement.NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Seller herebyirrevocably appoints and authorizes the President, any Vice President or the Secretary of the Buyer as its attorney-in-fact to execute, endorse, file and recordany and all documents necessary to effect the proper transfer of title to the Purchased Assets relating to the Portfolio Accounts being purchased by the Buyeron the date hereof (the “Subject Purchased Assets”) and to enable the Buyer to bill, collect, service and administer the Subject Purchased Assets, including,but not limited to, the endorsement of checks and the endorsement, transfer and recording pursuant to the Agreement, of all financing statements and otherUCC filings, mortgages, deeds of trust, security agreements, pledges, certificates of title, and other collateral instruments and similar documents relating tothe Subject Purchased Assets. This Power of Attorney is not intended to and does not convey to the Buyer any right to endorse or record any documents oftitle relating to collateral or other assets other than the Subject Purchased Assets and does not authorize the Buyer to execute or endorse any document withrecourse to the Seller or with any representations and warranties on the part of the Seller, except as expressly provided in the Agreement. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be duly executed by a duly authorized officer as of the date firstwritten above. ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company By: ________________, [Manager/Managing Member] STATE OF _______ )) ss.COUNTY OF ______ )On ___________, 2014, before me appeared _______________, to me personally known, who being by me duly sworn, did say that he is a[Manager/Managing Member] of ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company, and said person acknowledgedexecution of the foregoing instrument to be the free act and deed of said corporation.IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal the day and year last above written.__________________________Notary Public _______________________ My Commission Expires: Exhibit D - Power of Attorney -- 2 EXHIBIT ENOTICE OF ASSIGNMENT LETTER[SEE ATTACHED] April 22, 2014 Dear Anchor Client: For over two years, Transportation Alliance Bank (TAB) has been our lender, enabling us to serve your daily funding needs consistently and timely. We havehad a great partnership with TAB, and I am pleased to announce that Anchor is selling its factoring portfolio to TAB. TAB is an FDIC insured bank thatspecializes in serving small and medium sizes businesses through factoring and asset based lending. Additionally, TAB offers equipment loans and a fullrange treasury services that you will now have access to. As our lender, TAB already has familiarity with your account, so you will continue to receive nothing less than the same great, responsive service. I believehaving a bank such as TAB as your direct funding source is a positive step for your company. In the next few days, we will be calling you, together with your new TAB Relationship Manager to transition your account. In the meantime, I wouldencourage you to visit TAB’s website at www.tabbank.com to learn more about the services now available to you. Thank you for letting Anchor serve you, and we wish you continued success! Brad BernsteinPresident HQ & Operations:10801 Johnston Road, Charlotte, NC 28226T: (866) 789-3863 F: (704) 542-4724 www.AnchorFundingServices.com EXHIBIT FASSIGNMENT OF PORTFOLIO ACCOUNTFOR VALUE RECEIVED, the undersigned ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company (the "Seller"),hereby sells, transfers, assigns, and sets over to TRANSPORTATION ALLIANCE BANK INC., a Utah industrial bank (the "Buyer"), without recourse orwarranty, express or implied, except only as specifically provided in that certain Asset Purchase and Sale Agreement dated as of ______________, 2014 (the“Asset Purchase and Sale Agreement”), between the Seller and the Buyer, all of its right, title, and interest in and to the Portfolio Account evidenced by thatcertain [Factoring Agreement] dated ________________, between ____________________________and the Seller, and any amendments thereto,together with all agreements, instruments, documents and other writings executed in connection therewith or relating thereto, and all of the Seller's rights andobligations thereunder, including, without limitation, all collateral and guaranties thereunder. Capitalized terms not defined herein shall have the meaningsascribed them in the Asset Purchase and Sale Agreement.All rights, obligations, liabilities, and responsibilities with respect to the Portfolio Account and the servicing thereof are hereby transferred,assigned, and conveyed to the Buyer, who hereby assumes and agrees to perform all obligations thereunder, and the Seller is hereby discharged from allliability therefor.EXCEPT AS EXPRESSLY SET FORTH IN THE ASSET PURCHASE AND SALE AGREEMENT, THE SELLER MAKES NOREPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY TYPE, KIND, CHARACTER, OR NATURE WITH RESPECT TO THEPORTFOLIO ACCOUNT OR ANYTHING RELATING THERETO.IN WITNESS WHEREOF, this Assignment of Portfolio Account is executed as of _________, 2014.SELLER:ANCHOR FUNDING SERVICES, LLC, a North Carolina limited liability company By:____________, [Manager/Managing Member] Schedule 1.1AClosing Schedule NameFunding dayYounghwe USA, Inc.4/30/14Direct Source, Inc.4/30/14A1 Medical Gas, Inc.4/30/14Safeway Transportation, Inc.4/30/14Kenney & Company Staffing, Inc.4/30/14Hernandez Trucking LLC4/30/14Marketing Solutions, Inc.4/30/14Kube, LLC4/30/14Healthcare Facility Solutions, LLC4/30/14Pacifica Systems Integration Group4/30/14Major Staffing Agency LLC4/30/14Martin Hauling LLC4/30/14Apollo Enterprises5/2/14Frick Transfer Inc*5/2/14Executive Plastics, Inc.5/2/14Elan Foods, Inc.5/2/14Barr Scientific, LLC5/2/14Unified Pallets Incorporated5/2/14T D Transport Inc*5/2/14Valley Pump & Supply, KS, Inc.5/2/14GetGreen, LTD.5/2/14Onsight Solutions of Dallas - Fort Worth TX, LLC5/2/14Inventas Group Inc5/2/14Cochhbha Enterprises, Inc.5/2/14JMJ Plumbing, LTD.5/2/14Hillsboro Taxi Inc5/6/14Bulwarkdata, LLC5/6/14Calvex, LLC5/6/14Arnold International, Inc.5/6/14G I M & C, LLC5/6/14AMS Technologies, LLC5/6/14Lock Systems Inc5/6/14West Way Logistics LLC.5/6/14Trinus Energy Service, LLC5/6/14Harbor Consulting Group, LLC5/6/14R W R Trucking Inc*5/6/14LTL Express Lines, Inc.5/6/14Timberland Pinestraw Specialists LLC5/6/14Shico Holdings LLC5/8/14ABS Fire Protection, LLC5/8/14Get It Right Tape Company, Inc.5/8/14Nikster Transport LLC*5/8/14Paul J Leger d/b/a PJL Auto Transportation5/8/14New Point Media, Inc.5/8/14CRWI, LLC5/8/14CSG Scientific, Inc.5/8/14E&S Medical Staffing, Inc.5/8/14Tec-Team Industries, Inc.5/8/14Solutions In Warehousing, Inc.5/8/14Onsight Solutions of Greater Atlanta Georgia LLC5/8/14Mudis USA, Inc.5/13/14Mission Support Specialists, Inc.5/13/14A L Baker Trucking LLC5/13/14American Marketing & Cable Services, Inc.5/13/14Fab Network Marketing Service LLC*5/13/14MMI Enterprises Inc5/13/14Robert Baux d/b/a Baux Transport*5/13/14E-Work.Com, Inc.5/13/14M R K Logistics LLC5/13/14Intelligent Security Protection LLC5/13/14Lillieroose Corp d/b/a Hi-Gear Express*5/13/14Ronnie A Deason d/b/a Deason Trucking*5/13/14RC Markeing & Promotions Inc.5/13/14 Ron's Texstyles LLC5/13/14Central Sea Coast Appraisals Inc5/13/14Onsight Solutions of Raleigh LLC5/13/14The Burris Enterprise, Inc.5/13/14Carter Transport Services5/13/14Apex Tarps & Systems, Incorporated5/13/14Acousta-Kleen of Central Florida Inc5/13/14Hobby Won Trucking Inc*5/13/14Extreme Expedite Inc5/15/14Applied Perceptions LLC5/15/14Underground Works Inc.5/15/14Paul L Brownridge d/b/a Brownridge Transportation*5/15/14D & D Enterprises of Deep Gap Inc*5/15/14Superior Automatic Fire Equipment, Inc.5/15/14Giddens Consulting, Inc.5/15/14Designer Frames Dental Laboratory LLC5/15/14Kenneth L Schweitzer d/b/a Ken Schweitzer Trucking*5/15/1488 Logistics Services Corp5/15/14Aardbark, Inc.5/15/14Best Services, Inc.5/15/14Brand Builders, LLC5/15/14Engineering & Cycle Co Inc5/15/14Five Star Services, Inc.5/15/14Masterpiece Arms Holding Company5/15/14P K Tech Inc5/15/14Porter House Inc5/15/14Professional Technical Inspections, Inc.5/15/14Resumeware Services Inc5/15/14Superior Energy & Control LLC5/15/14 Schedule 1.1BRetained Accounts NameAddressStateCityZip CodePremier Transfer and Storage, Inc.3101 Commerce StreetVABlacksburg24060Sparklean Unlimited, LLC17 Arthur Drive WestMDFort Washington20744Micro Printing Inc3230 W. Prospect Rd, Suite 140FLFt. Lauderdale33309E S I International Inc11440 West Bernardo CourtCASan Diego92127E.P. Engineering, L.L.C.15 Maiden LaneNYNew York10038Conservco Water Conservation Products, LLC.650 West Plumb LaneNVReno89509FrontEnd Holdings LLC4193 Industrial Parkway DriveCALebec93243Marvin Van Voorst d/b/a V-Bar-V*701 Main StIAIreton51027Falcon Dyeing & Finishing LLCP O Box 1383NCWindsor27983Distinct Deposition Services, Inc.2593 Siesta DrivePAPittsburgh15241Apex Carpet Cleaning13704 Pitkin CourtVAChantilly20151Cutler Enterprises, LLC209 Regency DrivePANorth Wales19454Sorensen Pest Management, Inc.988 West 41st StreetCOLoveland80538Diversified Vehicle Repair Center, Inc.3033 Waltham WayNVMcCarran89434Libration Systems Management, Inc.2700 Yale BlvdNMAlbuquerque87106LC Trucking2775 Wards Road NVAAltavista24517Rocket X-Press LLC Delstat Inc. Crespo Services Inc Iron Man Anchor Service LLC Matrix Installations, LLC Wye River Foods Products, LLC Quick-Turn Appraisals LLC EC Sourcing TB Trucking Valley Trucking Transpak Logistics DJ Vampire Life Prospective Payment Ox Engineer Schedule 2.1(b)(i)Trademarks and Trade Names TruckerFunds Schedule 2.1(b)(ii)Domain Names and Telephone Numbers Domain Names:anchorfundingservices.comtruckerfunds.comanchorfreightfunding.comanchorfreightfunds.comanchorsupportservices.comafs-cash.comafs-cash.netbankersfactor.comtruckerauthority.comtruckerfunds.nettruckerfunds.orgtruckerdinero.com Telephone Numbers:1-866-950-66691-877-70-Anchor (26246)1-866-789-38631-855-875-Fund (3863) Facsimile:1-704-542-4724 Schedule 2.1(b)(iii)Social Media Profiles/Accounts NONE ACTIVE Schedule 3.1(A)Portfolio Accounts NameNet Funds EmployedYounghwe USA, Inc.As provided in the respective preliminary computation schedulesDirect Source, Inc.A1 Medical Gas, Inc.Safeway Transportation, Inc.Kenney & Company Staffing, Inc.Hernandez Trucking LLCMarketing Solutions, Inc.Kube, LLCHealthcare Facility Solutions, LLCPacifica Systems Integration GroupMajor Staffing Agency LLCMartin Hauling LLCApollo EnterprisesFrick Transfer Inc*Executive Plastics, Inc.Elan Foods, Inc.Barr Scientific, LLCUnified Pallets IncorporatedT D Transport Inc*Valley Pump & Supply, KS, Inc.GetGreen, LTD.Onsight Solutions of Dallas - Fort Worth TX, LLCInventas Group IncCochhbha Enterprises, Inc.JMJ Plumbing, LTD.Hillsboro Taxi IncBulwarkdata, LLCCalvex, LLCArnold International, Inc.G I M & C, LLCAMS Technologies, LLCLock Systems IncWest Way Logistics LLC.Trinus Energy Service, LLCHarbor Consulting Group, LLC As provided in the respective preliminary computation schedules R W R Trucking Inc*LTL Express Lines, Inc.Timberland Pinestraw Specialists LLCShico Holdings LLCABS Fire Protection, LLCGet It Right Tape Company, Inc.Nikster Transport LLC*Paul J Leger d/b/a PJL Auto TransportationNew Point Media, Inc.CRWI, LLCCSG Scientific, Inc.E&S Medical Staffing, Inc.Tec-Team Industries, Inc.Solutions In Warehousing, Inc.Onsight Solutions of Greater Atlanta Georgia LLCMudis USA, Inc.Mission Support Specialists, Inc.A L Baker Trucking LLCAmerican Marketing & Cable Services, Inc.Fab Network Marketing Service LLC*MMI Enterprises IncRobert Baux d/b/a Baux Transport*E-Work.Com, Inc.M R K Logistics LLCIntelligent Security Protection LLCLillieroose Corp d/b/a Hi-Gear Express*Ronnie A Deason d/b/a Deason Trucking* RC Markeing & Promotions Inc.Ron's Texstyles LLCCentral Sea Coast Appraisals IncOnsight Solutions of Raleigh LLCThe Burris Enterprise, Inc.Carter Transport ServicesApex Tarps & Systems, IncorporatedAcousta-Kleen of Central Florida IncHobby Won Trucking Inc*Extreme Expedite IncApplied Perceptions LLCUnderground Works Inc.Paul L Brownridge d/b/a Brownridge Transportation* As provided in the respective preliminary computation schedules D & D Enterprises of Deep Gap Inc*Superior Automatic Fire Equipment, Inc.Giddens Consulting, Inc.Designer Frames Dental Laboratory LLCKenneth L Schweitzer d/b/a Ken Schweitzer Trucking*88 Logistics Services CorpAardbark, Inc.Best Services, Inc.Brand Builders, LLCEngineering & Cycle Co IncFive Star Services, Inc.Masterpiece Arms Holding CompanyP K Tech IncPorter House IncProfessional Technical Inspections, Inc.Resumeware Services IncSuperior Energy & Control LLC Schedule 5.5(H)Portfolio Account Changes Since December 31, 2013 None. Exhibit 10.34 FIRST AMENDMENT TO LEASE AGREEMENTThe parties to this First Amendment to Lease Agreement (the “Amendment”) are FOUNTAIN SQUARE ACQUISITION COMPANY LLC, a Delawarelimited liability company (the “Landlord”), and FLEXSHOPPER, LLC, a North Carolina limited liability company authorized to transact business in Florida(the “Tenant”), who, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, agree as follows:1. Background.1.1 Landlord and Tenant entered into that certain Office Lease dated August 7, 2013 (the “Lease”) for Suite 230, Fountain Square,2600 North Military Trail, Boca Raton, Florida.1.2 The parties have now agreed to relocate the Premises and extend the Lease Term.1.3 Landlord and Tenant now wish to amend the Lease on the terms and conditions contained in this Amendment.2. Definitions. Capitalized terms used but not defined in this Amendment shall have the same definitions given to them in the Lease, unlessthe context clearly indicates a contrary intent. If there is any conflict between the terms of this Amendment and the Lease, the terms of this Amendment shallcontrol. For purposes of this Amendment, the term “Date of this Amendment” shall mean the date on which this Amendment is executed by the last one ofthe parties to do so.3. Lease Term. The Lease Term is extended so that it shall now expire 63 full calendar months following the Relocation Date (as definedbelow) (plus any partial calendar month in which the Relocation Date falls), as extended or sooner terminated under the terms of the Lease.4. Relocation of Premises. Tenant presently occupies Suite 230 in the Building. Upon the Relocation Date, the definition of Premises forpurposes of the Lease shall be amended to delete Suite 230 (the “Prior Premises”) and to include Suite 200, 2700 North Military Trail, in the Project (the“Relocation Space”), which is depicted in the sketch attached to this Amendment as EXHIBIT “A” and made a part of this Amendment. On or before theRelocation Date, Tenant shall surrender broom-clean possession of the Prior Premises. The Rentable Floor Area of the Relocation Space is conclusivelydeemed for all purposes under this Amendment and the Lease to be 6,803 square feet. All other terms of the Lease based on the Rentable Floor Area of thePremises shall be adjusted accordingly. This square footage figure includes an add-on factor for common areas in the Building and has been agreed upon bythe parties as final and correct and is not subject to challenge or dispute by either party. From and after the Relocation Date, whenever the term Premises isused in the Lease or this Amendment it shall include only the Relocation Space.4.1 Continuing Liability. Tenant shall remain liable for all rent and other amounts owed under the Lease for the Prior Premisesthrough the Relocation Date and shall pay such amounts as they come due. Without limiting the generality of the foregoing, Tenant shall be responsible forany and all charges due under the Lease which accrue or are billed after the Relocation Date for the Prior Premises and relate to the period prior to andincluding the Relocation Date, such as additional rent for Operating Costs for the year in which the Relocation Date occurs in excess of the amountspreviously paid by Tenant on account of Operating Costs for that year, which additional Operating Costs shall be billed after the actual Operating Costs forthe year in which the Relocation Date occurs are finally determined.4.2 Relocation Date. The “Relocation Date” shall mean the earlier to occur of the date Tenant occupies any portion of theRelocation Space for the conduct of its business or the date Landlord delivers the Relocation Space to Tenant with the Tenant Improvements substantiallycompleted. Substantial completion shall be deemed to have occurred on the date on which the Tenant Improvements have been substantially completed sothat Tenant may use the Relocation Space for its intended purpose, notwithstanding that minor punch list items or insubstantial details concerningconstruction, decoration, or mechanical adjustment remain to be performed.1 5. Base Rent. The Base Rent effective as of the Relocation Date shall be:PeriodRate P/S/F Per AnnumMonthly Base RentPeriod Base RentMonths 1 – 12$17.00$9,637.58$115,651.00*Months 13 – 24$17.51$9,926.71$119,120.53Months 25 – 36$18.04$10,227.18$122,726.12Months 37 – 48$18.58$10,553.31$126,399.74Months 49 – 60$19.14$10,850.79$130,209.42Months 61 – 63$19.71$11,173.93$ 33,521.79 *Provided that Tenant is not in default of the Lease beyond any applicable grace period at any time during the abatement period, Tenant shall have a Rentcredit in the amount of the Base Rent owed for the first three full calendar months following the Relocation Date, which credit shall be applied to theinstallments of Base Rent due for those months. Accordingly, if the Relocation Date occurs on a day other than the first day of the month, the prorated Rentfor the first partial month of the Lease Term shall be due on the Relocation Date and the rent abatement period shall commence on the first day of the first fullcalendar month of the Lease Term following the Relocation Date and shall expire on the last day of the third full calendar month of the Lease Term followingthe Relocation Date. Tenant shall remain liable for all additional rent owed under the Lease during the rent abatement period, such as, but not limited to,Tenant’s Allocated Share of Operating Costs. The abatement of Base Rent provided for herein (“Free Rent”) is conditioned upon Tenant’s full and timelyperformance of all of its obligations under the Lease. At any time during the Lease Term, if Tenant is in default under the Lease beyond any applicable graceperiod provided therefor, then the abatement of Base Rent provided for herein shall immediately become void, and Tenant shall promptly pay to Landlord, inaddition to all other amounts due to Landlord under the Lease, the full amount of all Base Rent herein abated.Base Rent amounts do not include applicable sales tax. 6. Allocated Share. As of the Relocation Date, Tenant's Allocated Share shall be increased to 2.81%.7. Prepaid Rent. Upon execution of this Amendment by Tenant, Tenant shall deliver to Landlord the sum of $17,235.90 (Base Rent,Operating Costs and sales tax for the Relocation Space for the first month of the Lease Term following the Relocation Date for which rent is due and notabated, and rent and sales tax for the first month for the Temporary Space).8. Parking. Effective as of the Relocation Date, Tenant shall be entitled to 24 Unreserved Parking Spaces.9. Security Deposit. Upon execution of this Amendment by Tenant, Tenant shall deliver to Landlord the sum of $47,768.68 as an additionalSecurity Deposit to be held by Landlord in accordance with the provisions of Article 22 of the Lease, for a total of $55,003.29 (last month’s gross rent of$17,296.63, plus applicable sales tax in the amount of $1,037.80, multiplied by 3 = $55,003.29, less current Security Deposit of $7,234.61 = $47,768.68). IfTenant fully and faithfully complies with all of the terms, covenants, and conditions of the Lease during the 15-month period following the Relocation Date,and if Tenant’s financial condition is equal to or better than its financial condition on the Date of this Amendment, then upon Tenant’s written request, one-third of the Security Deposit shall be returned to Tenant by Landlord; provided that, in no event shall the remaining Security Deposit amount be less than$36,668.86 at the time of the reduction.10. Construction of Relocation Space/Tenant Improvements.10.1 Definitions. “Tenant Improvements” shall mean the work described on the attached EXHIBIT “B” and the approved spaceplan (the “Space Plan”) dated October 6, 2013 and detailed in the construction plans prepared by Landlord’s architect, if any (the “Plans”). All changes oradditions to the Tenant Improvements listed on Schedule 1 shall be considered a “change” under the Changes paragraph below.2 10.2 “Plans” shall mean the construction plans and specifications for the improvements to the Premises based on the approved spaceplan. Tenant will cooperate fully with Landlord and Landlord’s architect and engineer to facilitate the preparation of the construction Plans. Tenant willrespond promptly to any requests for information submitted by Landlord and Landlord’s architect and engineer. Upon request by Landlord, Tenant will meetpromptly with Landlord’s architect and engineer to review and discuss the construction Plans. Promptly following the completion of the Plans, Landlordshall cause the Plans to be delivered to Tenant for Tenant’s written approval. Tenant’s approval of the Plans shall not be unreasonably withheld. Tenant mustnotify Landlord of its approval or disapproval of the Plans within five business days of Landlord’s delivery thereof to Tenant. Tenant’s failure to respond toLandlord’s submission of the Plans within the five business-day period shall constitute a Delay as defined below.10.3 Contractor. Landlord shall, in its sole discretion, select a general contractor to perform the Tenant Improvements, at Landlord’ssole cost and expense. Other than as set forth in the preceding sentence, Landlord has made no representation or promise as to the condition of the RelocationSpace. Tenant has inspected the Relocation Space and is fully familiar with the physical condition of the Relocation Space, and shall, on completion of theTenant Improvements, accept the Relocation Space in its then existing “as-is,” “where-is” condition. Landlord warrants that the Tenant Improvements shallbe free from defects in materials and workmanship for a period of one year from the Relocation Date. Landlord shall correct any defects reported to it withinthe one year warranty period. Landlord has made no other warranty, express or implied, or representation as to fitness or suitability. Except under the expresswarranty provided in this paragraph, Landlord shall not be liable for any latent or patent defect in the Relocation Space. Subject to the provisions of Section7.3 in the Lease, Landlord shall be responsible to repair all damage caused to the Premises (but not to Tenant’s personal property located therein) arising fromdefective conditions within the Building, roof, and electrical, plumbing and HVAC systems.10.4 Building Standard/Conflicts. All of the Tenant Improvements to be performed by Landlord shall incorporate Building standardmaterials, provided that, Landlord shall have the right to make reasonable substitutions. No allowance or credit shall be granted for any unused materials orany portion of the Tenant Improvements which is waived by Tenant. In the case of any conflict between the Tenant Improvements described in thisAmendment and those shown in the Plans, the Plans shall control. Tenant acknowledges and agrees that Landlord shall have no obligation to perform anyTenant Improvements in the Relocation Space except for the Tenant Improvements expressly set forth in this Amendment and in the Plans.10.5 Changes. Tenant shall have the right to make changes in the Tenant Improvements by submitting to Landlord written requestsfor changes and shall pay to Landlord the Work Cost for any such changes upon receipt of notice from Landlord as to the amount. Such payments by Tenantto Landlord shall not be considered additional rent. For purposes of changes, the terms “Work Cost” shall mean the aggregate of (i) engineering andarchitectural fees for the changes, plus (ii) filing fees, permit costs, governmental testing, and requirements of applicable law and governmental authoritiesincurred for or necessitated by the changes, including costs of compliance with the ADA resulting from the changes, plus (iii) the actual cost of the changescharged by the general contractor, plus (v) 5% of the total actual costs of the applicable Tenant Improvements representing Landlord’s fee for overhead andsupervision.10.6 Tenant Delays. If Landlord or the general contractor is delayed in substantially completing the Tenant Improvements as a resultof the occurrence of any Tenant Delay (as hereafter defined), then, for purposes of determining the Relocation Date, the date of substantial completion shallbe deemed to be the day that the Tenant Improvements would have been substantially completed absent any Tenant Delay(s). For purposes of this provisioneach of the following shall constitute a “Tenant Delay”:10.6.1 the time in excess of four months that the Contractor estimates it will take to construct the Tenant Improvements inaccordance with the Plans if the delay is caused directly or indirectly by Tenant; or10.6.2 performance by Tenant or a person or entity employed by Tenant in the completion of any work not included in theTenant Improvements; or3 10.6.3 any delay resulting from Tenant's having taken possession of the Relocation Space for any reason before substantialcompletion of the Tenant Improvements; or10.6.4 Tenant's request for additional bidding or rebidding of the cost of all or a portion of the Tenant Improvements; or10.6.5 any error in the Plans or other documents caused by Tenant, or its employees, agents, independent contractors, orconsultants; or10.6.6 any other delay chargeable to Tenant, or its employees, agents, independent contractors, or consultants.10.7 Additional Work. Landlord shall, at Tenant’s expense, re-paint the walls of the Premises selected by Tenant and marked with an“x” on Schedule 1.1 attached hereto with dry erase whiteboard paint. The walls will be painted above the chair rail, or in the case of no chair rail, above chairrail height. Tenant shall pay to Landlord upon execution of this Amendment the sum of $8,500.00 in full payment to Landlord for all costs of such painting.Such payment by Tenant shall not be considered additional rent.10.8 Additional Space and Work Not Covered. This Section shall not apply to any additional space added to the originalRelocation Space at any time after the Date of this Amendment, whether under any options under the Lease or otherwise, or to any portion of the originalRelocation Space or any additions to the original Relocation Space in the event of a renewal or extension of the initial Lease Term, whether under anyoptions under the Lease or otherwise, unless expressly so provided in the Lease or an amendment to the Lease. Tenant shall perform all work not shown onSchedule I and the Plans at its sole expense.10.9 Ongoing Work. Tenant acknowledges that Landlord will be performing the Tenant Improvements while Tenant is in possession ofthe Relocation Space. Accordingly, Tenant agrees to the following: (a) Landlord shall not be liable for, and Tenant shall have no claims against Landlord asto, any damages, costs, or expenses whatsoever relating in any way to the prosecution of the work while the Tenant is in occupancy of the Relocation Space,including, but not limited to, any alleged consequential, special, or punitive damages, or loss of use or business interruption damages of any kind, and noentry or activity by Landlord or performance of any work shall be deemed to be a constructive or actual eviction, and (b) Tenant will not delay, hamper, orimpede in any manner the performance of the work, and at all times, Tenant shall grant access to the Relocation Space to Landlord, its employees, agents, andcontractors relating to Landlord’s performance of the Tenant Improvements in the Relocation Space, and (c) no delay in completion of any TenantImprovements described above shall affect or delay Tenant’s obligations to pay rent as and when set forth in this Amendment. Without limiting Tenant’sobligations, Tenant will relocate personnel from portions of the Relocations Space where work is being performed and will otherwise accommodate allrequests of Landlord and its employees, agents, and contractors relating to prosecution of the work.11. Temporary Space. From and after the Date of this Amendment, as an accommodation to Tenant, Tenant may occupy, on a temporary basis,Suite 210, 2650 North Military Trail, in the Project, containing approximately 1,351 rentable square feet of space as depicted on EXHIBIT “C” (the“Temporary Space”) through the Relocation Date. Landlord has made no representation or promise as to the condition of the Temporary Space. Landlordshall not perform any alterations, additions, or improvements in order to make the Temporary Space suitable for Tenant. Tenant shall accept the TemporarySpace “as-is, where-is,” and “with all faults,” without any warranty, express or implied, or representation as to fitness or suitability. Landlord shall not beliable for any latent or patent defect in the Temporary Space. Tenant shall pay rent in the amount of $500.00 per month for the Temporary Space. Except asotherwise provided in this article, Tenant’s occupancy and use of the Temporary Space shall be under all of the applicable provisions of the Lease. Tenantshall surrender broom clean possession of the Temporary Space to Landlord on or before the Relocation Date. If Tenant shall fail timely to vacate andsurrender the Temporary Space, then, in addition to Landlord’s right to regain possession of the Temporary Space as provided in the Default article of theLease, Tenant shall pay to Landlord, as liquidated damages, for each month or portion thereof during which Tenant continues to occupy the TemporarySpace after the Commencement Date, a sum equal to $4,090.15 ($36.33 per rentable square foot per annum), plus applicable sales tax, it being agreed that thedamage to Landlord resulting from the failure by Tenant to timely vacate and surrender the Temporary Space will be substantial and will be impossible ofaccurate measurement. Landlord may exhibit the Temporary Space to prospective tenants during Normal Business Hours. Tenant may not assign any of itsrights as to, or sublet, the Temporary Space.4 12. No Further Extension or Cancellation. Tenant acknowledges that the Lease contains no further rights to extend or renew the Lease Term,or to terminate the Lease early (any of which rights are hereby expressly deleted), and that Tenant possesses no other rights to occupy the Premises beyondthe date through which the Lease Term has been extended in this Amendment, and any such rights are hereby waived, void and of no further force or effect.13. Ratification. Except as modified by this Amendment, the Lease shall remain otherwise unmodified and in full force and effect and theparties ratify and confirm the terms of the Lease as modified by this Amendment. The Lease, as amended, contains the entire agreement between Landlord andTenant as to the Premises, and there are no other agreements, oral or written, between Landlord and Tenant relating to the Premises. Tenant certifies: (a) that ithas no offsets, defenses, or claims as to its obligations under the Lease; (b) that there are no defaults existing under the Lease on the part of either Landlord orTenant; and (c) there is no existing basis for Tenant to terminate the Lease. All future references to the Lease shall mean the Lease as modified by any and allprior amendments and by this Amendment.14. Broker. Tenant represents and warrants that it neither consulted nor negotiated with any broker or finder regarding the Premises, exceptMerin Hunter Codman, Inc. (“Landlord’s Broker”), who shall be paid by Landlord pursuant to a separate written agreement, provided that neither theforegoing nor anything else in the Lease is intended, or shall be construed, grant such Brokers any rights under the Lease or make them third partybeneficiaries hereof. Tenant shall indemnify, defend, and hold Landlord harmless from and against any claims for commissions from any real estate brokerother than the Landlord’s Broker with whom it has dealt in connection with this Amendment. The terms of this Article shall survive the expiration or earliertermination of the Lease.15. Miscellaneous Provisions. Submission of this Amendment by Landlord is not an offer to enter into this Amendment but rather asolicitation for such an offer by Tenant. Landlord shall not be bound by this Amendment until Landlord has executed it and delivered it to Tenant. ThisAmendment constitutes the final agreement between the parties. It is the complete and exclusive expression of the parties’ agreement on the matterscontained in this Amendment. All prior and contemporaneous negotiations and agreements between the parties on the matters contained in this Amendmentare expressly merged into and superseded by this Amendment. The provisions of this Amendment may not be explained, supplemented, or qualified throughevidence of trade usage or a prior course of dealings. In entering into this Amendment, neither party has relied upon any statement, representation, warranty,or agreement of the other party except for those expressly contained in this Amendment. The parties waive and release all claims and causes of action forfraud in the inducement or procurement of this Amendment it being their intent that this Amendment is incontestable on account of any claim of fraud, or forany other reason. The parties may amend this Amendment only by a written agreement of the parties that identifies itself as an amendment to this Amendmentor the Lease. The parties may execute this Amendment in multiple counterparts, each of which constitutes an original, and all of which, collectively,constitute only one agreement. The signatures of all of the parties need not appear on the same counterpart, and delivery of an executed counterpart signaturepage by facsimile or in PDF format is as effective as executing and delivering this Amendment in the presence of the other parties to this Amendment. ThisAmendment is effective upon delivery of one executed counterpart from each party to the other parties. In proving this Amendment, a party must produce oraccount only for the executed counterpart of the party to be charged. Whenever placed before one or more items, the words “include,” “includes,” and“including” shall mean considered as part of a larger group, and not limited to the item(s) recited. Each party has reviewed this Amendment and all of itsterms with legal counsel, or had an opportunity to review this Amendment with legal counsel, and is not relying on any representations made to him by anyother person concerning the effect of this Amendment. This Amendment shall be interpreted without regard to any presumption or rule requiring constructionagainst the party causing this Amendment to be drafted. No inference shall be drawn from the modification or deletion of versions of the provisions of thisAmendment contained in any drafts exchanged between the parties before execution of the final version of this Amendment that would be inconsistent in anyway with the construction or interpretation that would be appropriate if the prior drafts had never existed.5 IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of the Date of this Amendment.WITNESSES: ____________________________Signature of Witness 1____________________________Print name of Witness 1____________________________Signature of Witness 2____________________________Print name of Witness 2LANDLORD:FOUNTAIN SQUARE ACQUISITION COMPANY LLC, a Delaware limited liabilitycompany By: ____________________________________Name: _________________________________Title: __________________________________ Date Executed: _______________________________ ____________________________Signature of Witness 1 ____________________________Print name of Witness 1 ____________________________Signature of Witness 2 ____________________________Print name of Witness 2 TENANT: FLEXSHOPPER, LLC, a North Carolina limited liability company By: _________________________________________Name: ______________________________________Title: _______________________________________ Date Executed: _______________________________ 6 EXHIBIT “A”RELOCATION SPACE 7 EXHIBIT “B”SPACE PLAN 8 SCHEDULE 1TENANT IMPROVEMENTS Landlord shall build out the Premises using Building standard materials in accordance with the Space Plan, including: new bathroom per plan, renovation ofthe existing bathroom, new upper/lower cabinets in the existing break room, new carpet/vinyl throughout the Premises, construction of walls per Space Planand paint all walls within the Premises. 9 SCHEDULE 1.1 10 EXHIBIT “C”TEMPORARY SPACE REAFFIRMATION AND MODIFICATION OF GUARANTY The undersigned Guarantor joins in the execution of the First Amendment to Lease Agreement to which this agreement is attached and specificallyagrees as follows:The undersigned Guarantor acknowledges that he has read and agrees to be bound by all of the terms of the First Amendment to Lease Agreement.The undersigned Guarantor represents and warrants that he has no claims, offsets, or defenses whatsoever as to any of his obligations under theGuaranty executed by him in connection with the Lease.The undersigned Guarantor restates, reaffirms, and confirms all of the terms and provisions of the Guaranty, including, but not limited to, all of therepresentations and warranties set forth in the Guaranty, all of which shall remain unmodified and in full force and effect, except that the Guaranty shall nowinclude all amounts which may become due Landlord under the Lease, as modified by the First Amendment to Lease Agreement. The undersigned Guarantorguaranties payment of all such amounts in the manner and under the terms of the Guaranty.LANDLORD AND GUARANTOR KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY ACTION,PROCEEDING, OR COUNTERCLAIM INVOLVING ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THEGUARANTY AND THE LEASE WITNESSES: ____________________________Signature of Witness 1 ____________________________Print name of Witness 1 ____________________________Signature of Witness 2 ____________________________Print name of Witness 2 FLEXSHOPPER, INC., a Delaware corporation, f/k/a ANCHOR FUNDINGSERVICES, INC. By:____________________________________________Name:_________________________________________Title:__________________________________________ [CORPORATE SEAL] Guarantor’s Address:__________________________________________________________________________________________ Date:_________________________________________ 11 LIMITED LIABILITY COMPANY RESOLUTIONSThe undersigned Manager of FLEXSHOPPER, LLC, a North Carolina limited liability company (the “Company”) , hereby certifies that thefollowing is a true and correct copy of Resolutions adopted at a duly called meeting of the Members and Managers of the Company held on_________________, 2013, at which a quorum of Members and Managers were present and voting throughout:“BE IT RESOLVED that this Company enter into a First Amendment to Lease Agreement with FOUNTAIN SQUARE ACQUISITIONCOMPANY LLC, a Delaware limited liability company (‘Landlord’) for space in Fountain Square, 2600 North Military Trail, Boca Raton,Florida 33410.“BE IT FURTHER RESOLVED that the Manager or Managing Member or any other member of this Company, acting singly or together, beand hereby is and are authorized and directed to negotiate the specific terms and conditions of the Amendment and the Rent and charges inconnection therewith and to execute and deliver on behalf of this Company the Amendment, security agreements, financing statements,certificates, estoppels, subordination, attornment, and non-disturbance agreements, and such other documents as may be necessary orrequired by Landlord with respect to the Amendment.“BE IT FURTHER RESOLVED, that the foregoing Resolutions are in conformity with the Articles of Organization and theRegulations of the Company, and are within its powers. The authority given under these Resolutions shall be deemed retroactive to theextent necessary or convenient for the full effectuation of these Resolutions. In such event, all acts performed prior to the adoption of theseResolutions, but which are necessary or convenient for the full effectuation of these Resolutions, are hereby ratified, adopted, and affirmed.The authority conferred by these Resolutions shall continue in full force and effect until actual written notice of revocation of theseResolutions shall have been received by the Landlord.”I FURTHER CERTIFY (i) that the above Resolutions were duly and regularly enacted at a meeting of the Members and Managers called for thatpurpose and held in accordance with the Articles of Organization and Regulations of the Company and the statutes of the State of North Carolina; (ii) that theMembers and Managers of the Company have full power and authority to bind the Company pursuant thereto; and (iii) that the Resolutions are in full forceand effect and have not been altered, modified, or rescinded in any way.IN WITNESS WHEREOF, I have affixed my name as ________________ of the Company, and have affixed the seal of the Company this ____ dayof _________________, 2013. ___________________________________________ 12 Exhibit 14.1FlexShopper, Inc. CODE OF ETHICSFOR SENIOR FINANCIAL OFFICERS Introduction The honesty, integrity and sound judgment of the Senior Financial Officers of FlexShopper, Inc. (the “Company”) are essential to maintaining thesuccess and reputation of the Company and to balancing and protecting the interests of the Company’s stakeholders. Accordingly, this Code of Ethics forSenior Financial Officers provides general guidelines for conducting the business of the Company in accordance with high standards of business conduct. Itis designed to deter wrongdoing and to promote honest and ethical conduct, proper disclosure of financial information and compliance with applicable laws,rules and regulations. This Code of Ethics applies to the Company’s executive officers (collectively, the “Senior Financial Officers”) and is intended to qualify as a “codeof ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. Standards of Conduct The Senior Financial Officers of the Company are subject to the following standards of conduct. Each Senior Financial Officer will: 1.Engage in and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest in personal andprofessional relationships; 2.Avoid conflicts of interest and report any material transaction or relationship that reasonably could be expected to give rise to such a conflict; 3.Provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securitiesand Exchange Commission and in other public communications made by the Company; 4.Comply with applicable governmental laws, rules and regulations as well as the rules and regulations of any self-regulatory organizations of whichthe Company is a member; 5.Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing one’s independentjudgment to be subordinated; and 6.Take reasonable measures to protect the confidentiality of non-public information about the Company and to prevent the unauthorized disclosure ofsuch information unless such disclosure is required by applicable law or regulation or other legal or regulatory process. Reporting Violations Senior Financial Officers must promptly report any possible violation of this Code of Ethics, including transactions or relationships that reasonablycould be expected to give rise to a violation, to the Board of Directors. The Company strictly prohibits any retaliation against a Senior Financial Officer who,in good faith, reports known or suspected violations. Senior Financial Officers may choose to remain anonymous in reporting any violations of this Code ofEthics. Accountability and Adherence The Board of Directors or a committee thereof will investigate any reported violations of this Code of Ethics and will determine appropriatedisciplinary actions, up to and including termination of employment. Such disciplinary actions will be based on the facts and circumstances of eachparticular case and reasonably designed to deter wrongdoing and to promote accountability for adherence to the Code. Violations of this Code of Ethics mayalso constitute violations of law which may result in criminal or civil penalties. Waivers or Amendments Waivers of or amendments to this Code of Ethics must be approved by the Board of Directors or a committee thereof. Waivers will be granted on acase-by-case basis in the sole discretion of the Board of Directors or a committee thereof, and any such waiver or amendment shall be publicly disclosed asrequired by the Securities and Exchange Commission. Conclusion This Code of Ethics for Senior Financial Officers contains general guidelines for conducting the business of the Company in accordance with highstandards of business conduct. Please contact Frank Matasavage with any questions about compliance with this Code. This Code of Ethics and the matterscontained herein are neither a contract of employment nor a guarantee of continuing Company policy. The Company reserves the right to amend, supplementor discontinue this Code of Ethics and the matters addressed herein, without prior notice, at any time. Adopted March 26, 2105 2 Exhibit 21.0 Subsidiaries of Registrant FlexShopper, LLC incorporated as a limited liability company in Delaware in June 2013.Anchor Funding Services, LLC is a limited liability company formed originally in South Carolina in January 2003 and later reincorporated in North Carolinain August 2005. The operations of Anchor are shown as discontinued operations.FlexShopper 1, LLC and FlexShopper 2, LLC are wholly-owned subsidiaries formed under the laws of the State of Delaware in the first quarter of 2015. Exhibit 31.1CERTIFICATION PURSUANT TORULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Brad Bernstein certifies that: 1. I have reviewed this annual report on Form 10-K of FlexShopper, Inc.; 2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for externalpurposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarterthat has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors: a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: March 31, 2015 /s/ Brad Bernstein Brad Bernstein Principal Executive Officer Exhibit 31.2CERTIFICATION PURSUANT TORULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Frank Matasavage certifies that: 1. I have reviewed this annual report on Form 10-K of FlexShopper, Inc.; 2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for externalpurposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarterthat has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors: a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: March 31, 2015/s/ Frank Matasavage Frank Matasavage Principal Financial Officer Exhibit 32.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350 In connection with the Annual Report of FlexShopper Inc. (the “registrant”) on Form 10-K for the year ended December 31, 2014 as filed with the Securitiesand Exchange Commission on the date hereof (the “report”), I, Brad Bernstein, Chief Executive Officer of the registrant, certify, pursuant to 18 U.S.C. § 1350,as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant. March 31, 2015 /s/ Brad Bernstein Brad Bernstein Principal Executive Officer Exhibit 32.2 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350 In connection with the Annual Report of FlexShopper, Inc. (the “registrant”) on Form 10-K for the year ended December 31, 2014 as filed with the Securitiesand Exchange Commission on the date hereof (the “report”), I, Frank Matasavage, Chief Financial Officer of the registrant, certify, pursuant to18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant. March 31, 2015 /s/ Frank Matasavage Frank Matasavage Principal Financial Officer Exhibit 99.4 FLEXSHOPPER, INC.(FORMERLY ANCHOR FUNDING SERVICES, INC.)REPORTS FULL YEAR 2014 FINANCIAL RESULTS, INCREASE IN FOURTH QUARTER LEASE ORIGINATIONS AND GROWINGECOMMERCE BUSINESS Boca Raton, FL (March 31, 2014) - FlexShopper, Inc. (OTCQB Symbol: FPAY, “FlexShopper”) announced today its results of operations for the year endedDecember 31, 2014. For the twelve months ended December 31, 2014, total revenues were $5,014,620. FlexShopper began originating lease-to-owntransactions of durable goods in late December 2013 and, therefore, had no meaningful revenues for the comparable period of 2013. FlexShopper originated765 leases in the first quarter of 2014, 2,136 leases in the second quarter, 3,924 leases in the third quarter and 6,239 leases in the fourth quarter, resulting in13,064 lease originations in the year ended December 31, 2014. FlexShopper had costs of lease revenue and merchandise sold of $3,330,786, provision for doubtful accounts of $1,380,902 and operating expenses of$5,178,383, resulting in total costs and expenses of $9,890,071. FlexShopper had a net loss from continuing operations before an income tax benefit of$4,875,451 for the year ended December 31, 2014. Along with incurring expenses to launch its online channels in 2014, FlexShopper’s operating expensesinclude costs to build and expand the company’s infrastructure including its customer service and collections departments to support its growth in leaseoriginations. In addition, as 2014 was the Company’s first year of meaningful operations, the Company’s underwriting was continuously modified forimprovement throughout the year. In the second quarter of 2014, FlexShopper successfully sold its Anchor Funding Services business. The sale of the Anchor assets was completed on June 16,2014 and resulted in income from discontinued operations of $1,145,118 before income taxes for the year ended December 31, 2014. This income combinedwith the net loss from continuing operations resulted in a net loss of $3,730,333 for the year ended December 31, 2014. Brad Bernstein, CEO, stated, “We are pleased with the quarterly growth in lease originations that we experienced in 2014. We are also pleased that our lease-to-own ecommerce marketplace now features over 80,000 items and increasing, including brand name electronics, computers and appliances. Online ordersare also growing, representing approximately 86% of our lease originations in December. While fulfilling our vision of enabling lease to own consumers toshop online for what they want, where they want, we are also positioning ourselves as the only platform that can provide retailers and etailers with three waysof increasing their sales: in the store, online and on our marketplace. In 2014, we successfully launched all of our digital channels and now with the closingof our recent debt financing of up to $100 million (75% of which is uncommitted) and equity financing of $9.35 million, we are well positioned to executeon all of our channels." About FlexShopperFlexShopper, LLC, a wholly owned subsidiary of FlexShopper, Inc. (FPAY) is a financial and technology company that provides brand name durable goodsto consumers on a lease-to-own (LTO) basis through its ecommerce marketplace (www.FlexShopper.com) and patent pending LTO payment method.FlexShopper also provides LTO technology platforms to retailers and e-tailers to enter into transactions with consumers that want to obtain durable goods,but do not have sufficient cash or credit. FlexShopper also funds the LTO transactions by paying merchants for the goods and collecting from consumersunder an LTO contract. Forward-Looking StatementsSafe Harbor Statement Under the Private Securities Litigation Reform Act of 1995.Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-lookingstatements, as a result of various factors including those risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis ofFinancial Condition and Results of Operations sections of our most recently filed Annual Report on Form 10-K and our subsequently filed Quarterly Reportsof Form 10-Q. We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place unduereliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, wedisclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) toreflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Contact:FlexShopper, Inc.Brad Bernstein, CPACEO & President561-367-1504Brad.Bernstein@FlexShopper.com

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