10-K/A 1 form10ka.htm FLEXSHOPPER, INC. FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A

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

| For the fiscal year ended December 31, 2013 |

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. Employer
incorporation or organization) |  | Identification Number)
10801 Johnston Road, Suite 210 |  |
Charlotte, North Carolina |  | 28226
(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 [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes  No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No __.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ] No [ ]
1

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A [X].
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: smaller reporting company [X].
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
As of June 30, 2013, the number of shares of Common Stock held by non-affiliates was approximately 7,400,000 shares (excluding 376,387 shares of Series A Preferred Stock convertible into 1,919,574 common shares). The approximate market value based on the last sale (i.e. $0.35 per share as of June 28, 2013) of the Company’s Common Stock held by non-affiliates was approximately $2,600,000.
The number of shares outstanding of the Registrant’s Common Stock, as of March 1, 2014, was 21,148,862. The Registrant also has outstanding 376,387 shares of Series 1 Preferred Stock convertible into 1,919,574 shares of Common Stock.
Documents incorporated by reference: None.
2

EXPLANATORY NOTE
The purpose of this Amendment to FlexShopper, Inc.’s Form 10-K for the fiscal year ended December 31, 2013 is to correct certain typographical errors in the “Notes to Consolidated Financial Statements” in Item 8 and in Item 11 as it pertains to the bonus agreement for Brad Bernstein, President of the Company. Mr. Bernstein’s bonus agreement equal to 5% of annual net income provided net income is equal to or greater than $200,000 expired at the end of 2013 and the original filing made reference to applying to fiscal 2014, which was an error. The Form 10-K filed for the Registrant’s fiscal year ended December 31, 2013, is being corrected herein to eliminate the error by filing amended Items 8 and 11 herein together with the exhibit list contained in Item 15, signature page and certifications. Accordingly, the Registrant’s Form 10-K consists of the original Form 10-K filed on March 31, 2014, as amended by the filing of this Form 10-K/A with respect to Items 8, 11 and 15 as set forth herein.
There are no other changes to the Form 10-K other than as set forth above. This Amendment does not reflect events occurring after the March 31, 2014 filing of our Form 10-K or modify or update the disclosures set forth in the Form 10-K in any way. As a result, this Amendment contains forward-looking information that has not been updated for events subsequent to the March 31, 2014 filing of our Form 10-K, and we direct you to our SEC filings made subsequent to March 31, 2014 for additional information.
3

PART II
Item 8. Financial Statements and Supplementary Data.
Consolidated Financial Statements
The report of the Independent Registered Public Accounting Firm, Consolidated Financial Statements and Schedules are set forth beginning on the following page.
4

FLEXSHOPPER, INC.
CONTENTS

YEARS ENDED DECEMBER 31, 2013 AND 2012 |  | PAGE |
FINANCIAL STATEMENTS |  |  |
Report of Independent Registered Public Accounting Firm |  |  | F-1 |
Consolidated Balance Sheets as of December 31, 2013 and 2012 |  |  | F-2 |
Consolidated Statements of Operations |  |  | F-3 |
Consolidated Statements of Stockholders' Equity |  |  | F-4 |
Consolidated Statements of Cash Flows |  |  | F-5 |
Notes to Consolidated Financial Statements |  |  | F-6 - F-17 |

Report of Independent Registered Public Accounting Firm
_____
The Board of Directors and Stockholders
FlexShopper, Inc. and Subsidiaries (formerly Anchor Funding Services, Inc.)
We have audited the accompanying consolidated balance sheets of FlexShopper, Inc. and subsidiaries (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America.
/s/ Scott and Company LLC
Columbia, South Carolina
March 31, 2014
F-1

FLEXSHOPPER, INC.
CONSOLIDATED BALANCE SHEETS
December 31,

ASSETS |  |  |  |  |  |
|  | 2013 |  |  | 2012 |
CURRENT ASSETS: |  |  |  |  |  |
Cash |  | $ | 960,032 |  |  | $ | 610,439 |
Retained interest in purchased accounts receivable, net |  |  | 4,966,338 |  |  |  | 7,019,463 |
Due from clients |  |  | 256,313 |  |  |  | - |
Earned but uncollected fee income |  |  | 138,480 |  |  |  | 168,805 |
Prepaid expenses and other |  |  | 52,904 |  |  |  | 100,998 |
Lease merchandise |  |  | 8,004 |  |  |  | - |
Total current assets |  |  | 6,382,071 |  |  |  | 7,899,705 |
PROPERTY AND EQUIPMENT, net |  |  | 58,079 |  |  |  | 14,257 |
OTHER ASSETS: |  |  |  |  |  |  |  |
Intangible assets – patent costs |  |  | 30,760 |  |  |  | - |
Security deposits |  |  | 9,485 |  |  |  | 6,023 |
|  |  | 40,245 |  |  |  | 6,023 |
|  | $ | 6,480,395 |  |  | $ | 7,919,985 |

LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |
CURRENT LIABILITIES: |  |  |  |  |  |
Due to financial institution |  | $ | 3,240,942 |  |  | $ | 4,977,763 |
Accounts payable |  |  | 47,314 |  |  |  | 86,772 |
Accrued payroll and related taxes |  |  | 68,141 |  |  |  | 69,338 |
Accrued expenses |  |  | 55,412 |  |  |  | 59,252 |
Collected but unearned fee income |  |  | 12,328 |  |  |  | 28,642 |
Total current liabilities |  |  | 3,424,137 |  |  |  | 5,221,767 |
COMMITMENTS AND CONTINGENCIES |  |  |  |  |  |  |  |
CONVERTIBLE PREFERRED STOCK, net of issuance |  |  |  |  |  |  |  |
costs of $1,209,383 |  |  | 671,409 |  |  |  | 671,409 |
COMMON STOCK |  |  | 4,363 |  |  |  | 1,863 |
ADDITIONAL PAID IN CAPITAL |  |  | 8,545,914 |  |  |  | 7,496,693 |
ACCUMULATED DEFICIT |  |  | (6,165,428 | ) |  |  | (5,471,747 | )
|  |  | 3,056,258 |  |  |  | 2,698,218 |
|  | $ | 6,480,395 |  |  | $ | 7,919,985 |

The accompanying notes to consolidated financial statements are an integral part of these statements.
F-2

FLEXSHOPPER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

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

The accompanying notes to consolidated financial statements are an integral part of these statements.
F-3

FLEXSHOPPER, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 2013 and 2012

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

The accompanying notes to consolidated financial statements are an integral part of these statements.
F-4

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

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

The accompanying notes to consolidated financial statements are an integral part of these statements.
F-5

FLEXSHOPPER, INC.
Notes To Consolidated Financial Statements
December 31, 2013 and 2012

1. BACKGROUND AND DESCRIPTION OF BUSINESS:

The consolidated financial statements include the accounts of FlexShopper, Inc. (formerly Anchor Funding Services, Inc. the "Company") and its wholly owned subsidiaries, Anchor Funding Services, LLC ("Anchor") and FlexShopper, LLC ("FlexShopper").
FlexShopper, Inc. is a Delaware holding corporation. FlexShopper, Inc. has no operations; substantially all operations of the Company are the responsibility of Anchor.
Anchor is a North Carolina limited liability company. Today, the Company operates in two industry segments designated as Anchor and FlexShopper. Anchor purchases company’s accounts receivable, which provide businesses with critical working capital so they can meet their operational costs and obligations while waiting to receive payment from their customers. Anchor also provides back office services to businesses located throughout the United States of America. The Company is actively pursuing the sale of this business. FlexShopper 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 is a North Carolina limited liability company. FlexShopper is developing a business that will directly provide certain categories of durable goods to consumers on a lease-to-own basis and currently provides lease-to-own terms to consumers of third party retailers. FlexShopper began generating revenues in December 2013; the amount of these revenues is immaterial to the financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation - The accompanying consolidated financial statements include FlexShopper, Inc. (formerly Anchor Funding Services, Inc. the "Company") and its wholly owned subsidiaries, Anchor Funding Services, LLC ("Anchor") and FlexShopper, LLC ("FlexShopper").
Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition – Anchor charges fees to its customers in one of two ways as follows:

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

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

For both Fixed and Variable Transaction fees, Anchor recognizes revenue by using one of two methods depending on the type of customer. For new customers Anchor recognizes revenue using the cost recovery method. For established customers Anchor recognizes revenue using the accrual method.
Under the cost recovery method, all revenue is recognized upon collection of the entire amount of purchased accounts receivable.
Anchor considers new customers to be accounts whose initial funding has been within the last three months or less. Management believes it needs three months of history to reasonably estimate a customer’s collection period and accrued revenues. If three months of history has a limited number of transactions, the cost recovery method will continue to be used until a reasonable revenue estimate can be made based on additional history. Once Anchor obtains sufficient historical experience, it will begin using the accrual method to recognize revenue.
F-6

For established customers Anchor uses the accrual method of accounting. Anchor applies this method by multiplying the historical yield, for each customer, times the amount advanced on each purchased invoice outstanding for that customer, times the portion of a year that the advance is outstanding. The customers’ historical yield is based on the Anchor last six months of experience with the customer along with the Company’s experience in the customer’s industry, if applicable.
The amounts recorded as revenue under the accrual method described above are estimates. As purchased invoices and purchase order advances are collected, Anchor records the appropriate adjustments to record the actual revenue earned on each purchased invoice and purchase order advance. Adjustments from the estimated revenue to the actual revenue have not been material.
Revenue Recognition FlexShopper – Lease revenues are recognized in the month they are due on the accrual basis of accounting. For internal management reporting purposes, lease revenues from sales and lease ownership agreements are recognized as revenue in the month the cash is collected. On a monthly basis, we record an accrual for lease revenues due but not yet received, net of allowances, and a deferral of revenue for lease payments received prior to the month due. Our revenue recognition accounting policy matches the lease revenue with the corresponding costs, mainly depreciation, associated with the leased merchandise.
Retained Interest in Purchased Accounts Receivable – Retained interest in purchased accounts receivable represents the gross amount of invoices purchased and advances on purchase orders from clients less amounts maintained in a reserve account. For factoring transactions, Anchor purchases a customer’s accounts receivable and advances them a percentage of the invoice total. The difference between the purchase price and amount advanced is maintained in a reserve account. The reserve account is used to offset any potential losses Anchor may have related to the purchased accounts receivable. For purchase order transactions the company advances and pays for 100% of the product’s cost.
Anchor’s factoring and security agreements with their customers include various recourse provisions requiring the customers to repurchase accounts receivable if certain conditions, as defined in the factoring and security agreement, are met.
Senior management reviews the status of uncollected purchased accounts receivable and purchase order advances monthly to determine if any are uncollectible. Anchor has a security interest in the accounts receivable and inventory purchased and, on a case-by-case basis, may have additional collateral. Anchor files security interests in the property securing their advances. Access to this collateral is dependent upon the laws and regulations in each state where the security interest is filed. Additionally, Anchor has varying types of personal guarantees from their customers relating to the purchased accounts receivable and purchase order advances.
Management considered approximately $3,000 of their December 31, 2013 and $80,500 of their December 31, 2012 retained interest in purchased accounts receivable to be uncollectible.
Management believes the fair value of the retained interest in purchased accounts receivable approximates its recorded value because of the relatively short-term nature of the purchased receivable and the fact that the majority of these invoices have been subsequently collected.
Intangible Assets - Intangible assets, primarily patent costs, are stated at cost less any accumulated amortization and any provision for impairment. Patent costs are amortized by using the straight line method over the shorter of their legal (20 years) or useful lives from the time they are first available for use.
Advertising Costs – The Company charges advertising costs to expense as incurred. Total advertising costs were approximately $282,000 and $267,000 for the years ended December 31, 2013 and 2012, respectively.
Earnings per Share (“EPS”) – Basic net income per share is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period. Dilutive earnings per share include the potential impact of dilutive securities, such as convertible preferred stock, stock options and stock warrants. The dilutive effect of stock options and warrants is computed using the treasury stock method, which assumes the repurchase of common shares at the average market price.
F-7

Under the treasury stock method, options and warrants will have a dilutive effect when the average price of common stock during the period exceeds the exercise price of options or warrants.

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

Stock Based Compensation - The fair value of transactions in which the Company exchanges its equity instruments for employee services (share-based payment 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 vesting period. We have elected to use the Black-Scholes-Merton (BSM) pricing model to determine the fair value of all stock option awards.
See Note 9 for the impact on the operating results for the years ended December 31, 2013 and 2012.
Fair Value of Financial Instruments – The carrying value of cash equivalents, retained interest in purchased accounts receivable, due to financial institution, accounts payable and accrued liabilities approximates their fair value.
Cash and Cash Equivalents – Cash and cash equivalents consist primarily of highly liquid cash investment funds with original maturities of three months or less when acquired.
Income Taxes – Effective January 31, 2007, the Company became a “C” corporation for income tax purposes. In a “C” corporation income taxes are provided for the tax effects of transactions reported in the consolidated financial statements plus deferred income taxes related to the differences between financial statement and taxable income.
The primary differences between financial statement and taxable income for the Company are as follows:
· Expenses related to the issuance of equity instruments
· Use of the reserve method of accounting for bad debts
· Net operating loss carryforwards.
The deferred tax asset represents the future tax return consequences of utilizing these items. Deferred tax assets are reduced by a valuation reserve, when management is uncertain if the net deferred tax assets will ever be realized.
The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. The Company applied this guidance to all its tax positions, including tax positions taken and those expected to be taken, under the transition provision of the interpretation. For the years ended December 31, 2013 and 2012, the Company concluded that it had no material uncertain tax positions.
The Company classifies interest accrued on unrecognized tax benefits with interest expense. Penalties accrued on unrecognized tax benefits are classified with operating expenses.
F-8

Recent Accounting Pronouncements
The FASB amended the Comprehensive Income topic of the ASC in February 2013 with ASU No. 2013-02. The amendment addresses reporting of amounts reclassified out of accumulated other comprehensive income. Specifically, the amendment does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendment does require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, in certain circumstances an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. The amendment was effective for the Company on a prospective basis for fiscal year 2013. This amendment did not have a material effect on the Company’s financial statements.
In February 2013, the FASB Issued ASU No. 2013-04, "Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date". ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for obligations within the scope of this ASU, which is effective January l, 2014. Upon adoption, we do not expect this ASU to impact our financial statements.
In July 2013, the FASB issued ASU 2013-11 , "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, " which among other things, require an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as denoted within the ASU. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. We are currently evaluating the impact on our financial statements with respect to ASU 2013-11.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact in the Company’s financial position, results of operations or cash flows.

3. RETAINED INTEREST IN PURCHASED ACCOUNTS RECEIVABLE: |

Retained interest in purchased accounts receivable consists of the following:

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

Retained interest in purchased accounts receivable consists, excluding the allowance for uncollectible invoices, of United States companies in the following industries:

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

F-9

Adjustments to the allowance for uncollectible invoices were as follows:

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

Total purchased invoices and purchase order advances were as follows:

|  | For the years ending December 31, |
|  |  | 2013 |  |  | 2012 |
Purchased invoices |  | $ | 83,653,644 |  |  | $ | 95,875,787 |
Purchase order advances |  |  | 843,193 |  |  |  | 435,928 |
|  | $ | 84,496,837 |  |  | $ | 96,311,715 |

4. DUE FROM CLIENT
As of December 31, 2013, Anchor was owed approximately $250,000 from a Food Service Company from whom Anchor had purchased invoices. In July 2013, Anchor determined that the Food Service Company had misdirected certain payments due to Anchor, and Anchor ceased funding this client. On August 8, 2013, the Food Service Company filed Chapter 11 Bankruptcy. At the time of the bankruptcy filing, Anchor's total funding employed to the Food Service Company was approximately $1,453,500. Under a Court Order approved settlement with the Food Service Company, Anchor collected approximately $1,153,500 of the Food Service Company’s accounts receivable. By Court Order, the final balance of $300,000 is to be paid to Anchor in twelve monthly installments of $25,000 beginning November 8, 2013.
5. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:

| Estimated |  |  |  |  |  |
| Useful Lives |  | December 31, 2013 |  |  | December 31, 2012 |
Furniture and fixtures | 2-5 years |  | $ | 64,945 |  |  | $ | 46,818 |
Computers and software | 3-7 years |  |  | 251,525 |  |  |  | 187,505 |
|  |  |  | 316,470 |  |  |  | 234,323 |
Less: accumulated depreciation |  |  |  | (258,391 | ) |  |  | (220,066 | )
|  |  | $ | 58,079 |  |  | $ | 14,257 |

Depreciation expense was $38,326 and $19,804 for the years ended December 31, 2013 and 2012, respectively.

6. DUE TO FINANCIAL INSTITUTION:
On November 8, 2011, Anchor entered into a Rediscount Credit Facility with a Commercial Bank that was effective November 30, 2011 and replaced its prior credit facility. The maximum amount that can be borrowed under the facility is $10 million and the Bank will advance up to 80% of Anchor's advances to its clients. Anchor pays interest on advances monthly at the 90 Day Libor Rate plus 6.25% and various other monthly fees as defined in the agreement. The agreement requires that Anchor maintain at all times a ratio of debt to tangible net worth of not higher than four to one (4:1). As of December 31, 2013, the Company was in compliance. The agreement contains customary representations and warranties, events of default and limitations, among other provisions. The agreement is collateralized by a first lien on all Anchors' assets. The agreement’s next anniversary date is November 30, 2014 and automatically renews each year for an additional year provided that the Company has not provided 60 days’ notice to the Bank in advance of the anniversary date. The facility was renewed through November 30, 2014. This facility contains certain standard covenants, representations and warranties for loans of this type. In the event that we fail to comply with the covenant(s) and the lender does not waive such non-compliance, we could be in default of our credit facility, which could subject us to penalty rates of interest and accelerate the maturity of the outstanding balances in addition to other legal remedies, including foreclosure on collateral. The Company’s President and CEO have provided validity guarantees to the Bank. Anchor owed this financial institution $3,240,942 and $4,977,763 as of December 31, 2013 and 2012, respectively.
F-10

7. 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 determines the rights and preferences of its preferred stock.
On January 31, 2007, the Company filed a Certificate of Designation with the Secretary of State of Delaware. Effective with this filing, 2,000,000 preferred shares became Series 1 Convertible Preferred Stock. Series 1 Convertible Preferred Stock will rank senior to Common Stock.
Series 1 Convertible Preferred Stock is convertible into 5.1 shares of the Company’s Common Stock. The holder of the Series 1 Convertible Preferred Stock has the option to convert the shares to Common Stock at any time. Upon conversion all accumulated and unpaid dividends will be paid as additional shares of Common Stock.
The dividend rate on Series 1 Convertible Preferred Stock is 8%. Dividends are paid annually on December 31st in the form of additional Series 1 Convertible Preferred Stock unless the Board of Directors approves a cash dividend. Dividends on Series 1 Convertible Preferred Stock shall cease to accrue on the earlier of December 31, 2009, or on the date they are converted to Common Shares. Thereafter, the holders of Series 1 Convertible Preferred Stock have the same dividend rights as holders of Common Stock, as if the Series 1 Convertible Preferred Stock had been converted to Common Stock.
Common Stock – The Company is authorized to issue 65,000,000 shares of $.0001 par value Common Stock. Each share of Common Stock entitles the holder to one vote at all stockholder meetings. Dividends on Common Stock will be determined annually by the Company’s Board of Directors.
During the last quarter of 2013, the Company raised $1,000,000 from the sale of its restricted Common Stock at $.40 per share. An aggregate of 2,500,000 shares of Common Stock were sold under Rule 506 and/or Section 4(2) of the Securities Act of 1933 as amended. The Company also issued 14,493 shares to consultants for services rendered.
The changes in Series 1 Convertible Preferred Stock and Common Stock shares for the years ended December 31, 2013 and 2012 is summarized as follows:

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

| 8. RELATED PARTY TRANSACTIONS:

Promissory notes payable
On March 19, 2014, FlexShopper entered into two Promissory Notes totaling $1,000,000, one with Morry Rubin and the other with a major shareholder and Director of the company. Each demand Promissory Note is for $500,000 and earns interest (payable monthly) at 10% per annum. The Promissory Notes are to assist FlexShopper in purchasing merchandise for lease to support FlexShopper’s growth.
F-11

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

Options granted to officers and directors.

On March 20, 2012, M. Rubin and B. Bernstein were each granted 10 year options to purchase 250,000 shares of common stock each for a total of 500,000 shares, with the options vesting over a period of 10 years. Due to the anti-dilution provisions of our Series 1 Convertible Preferred Stock, this grant caused an adjustment of our preferred stock into common stock. Each share of Series 1 Preferred Stock is now convertible into 5.1 shares of the Company’s Common Stock. The holders of the Series 1 Convertible Preferred Stock have the option to convert the shares to Common Stock at any time. See Note 7.
In June 2012, Paul Healy was granted 10-year non-statutory stock options to purchase 180,000 shares of Anchor’s common stock exercisable at $.25 per share. The options vest one-third immediately and one-third on each of the successive anniversary dates from Mr. Healy joining the board until fully vested.
In June 2013, the Company granted the Chief Information Officer of F1exShopper, which is a non-executive officer position, 10-year Incentive Stock Options to purchase 100,000 shares of Anchor's Common Stock, exercisable at $.35 per share. The options vest one-third immediately, and one-third on each of the successive anniversary dates from the date the FlexShopper Chief Information Officer commenced work.

9. EMPLOYMENT AND STOCK OPTION AGREEMENTS:

On January 31, 2007, the Board adopted our 2007 Omnibus Equity Compensation Plan (the “Plan”), with 2,100,000 common shares authorized for issuance under the Plan. In October 2009 the Company's stockholders approved an increase in the number of shares covered by the Plan to 4,200,000 shares.
The general purpose of the plan is to provide an incentive to the Company’s employees, directors and consultants by enabling them to share in the future growth of the business.
At closing of the exchange transaction described above, M. Rubin and Brad Bernstein (“B. Bernstein”), the President of the Company, entered into employment contracts and stock option agreements. Additionally, at closing two non-employee directors entered into stock option agreements.
The following summarizes M. Rubin’s employment agreement and stock options:

· | The employment agreement with M. Rubin currently retains his services as Co-chairman and Chief Executive Officer through January 31, 2015.

F-12

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

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

The following summarizes B. Bernstein’s employment agreement and stock options:

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

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

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

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

The following table summarizes information about stock options as of December 31, 2013:

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

The Company measured the fair value of each option award on the date of grant using the Black Scholes option pricing model (BSM) with the following assumptions:

Exercise price |  | $ | .17 to $1.25 |
Term |  | 10 years |
Volatility |  | 0.38 to 2.50 |
Dividends |  |  | 0 | %
Discount rate |  | 0.02% to 4.75% |

The fair value amounts recorded for these options in the statement of operations was $49,805 and $10,229 for the years ended December 31, 2013 and 2012, respectively.
Stock option activity and weighted average exercise price is summarized as follows:

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

F-13

10. WARRANTS:
In March, 2007, the Company’s placement agent was issued warrants to purchase 1,342,500 shares of the Company’s common stock. These warrants were due to expire on January 31, 2013, but were extended on the condition that each warrant holder accept a new exercise price of $1.35 per share. Currently, these warrants are scheduled to expire on January 31, 2018 and are currently exercisable at the original price of $1.10 per share. The following information was input into BSM to compute a per warrant price of $.023:

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

For the year ended December 31, 2013, the Company recorded compensation expense of $1,916 related to the issuance of these warrants.
On December 7, 2009, the Company received gross proceeds of $500,002 from the sale of 500,002 shares of common stock and ten year warrants to purchase 2,000,004 shares of common stock exercisable at $1.00 per share. BSM was used to compute the fair value of the warrants.
The following table summarizes information about stock warrants as of December 31, 2013:

|  |  |  |  | Weighted Average |  |  |
Exercise |  |  | Number |  | Remaining |  | Number |
Price |  |  | Outstanding |  | Contractual Life |  | Exercisable |
$ | 1.10 |  |  |  | 1,342,500 |  | 1 Month |  |  | 1,342,500 |
$ | 1.00 |  |  |  | 2,000,004 |  | 7 years |  |  | 2,000,004 |

11. CONCENTRATIONS:
Revenues – The Company recorded revenues from United States companies in the following industries as follows:

Industry |  | For the year ending December 31, |
|  | 2013 |  |  | 2012 |
Staffing |  | $ | 80,780 |  |  | $ | 69,773 |
Transportation |  |  | 627,095 |  |  |  | 782,058 |
Service |  |  | 1,365,379 |  |  |  | 1,426,583 |
Other |  |  | 20,357 |  |  |  | 105,483 |
Manufacturing |  |  | 173,844 |  |  |  | - |
Apparel |  |  | 96,673 |  |  |  | 142,729 |
|  | $ | 2,364,128 |  |  | $ | 2,526,626 |

Major Customers – The Company did not have any major customers for the years ending December 31, 2013 and 2012 that represented 10% or more of its revenues.
Client Accounts - As of December 31, 2013, Anchor has five clients that account for an aggregate of approximately 36.1% of its accounts receivable portfolio and approximately 16.3% of its revenues for the year ended December 31, 2013. The transactions and balances with these clients as of and for the year ended December 31, 2013 are summarized below:
F-14

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

Cash – The Company places its cash and cash equivalents on deposit with financial institutions in the United States. The Federal Deposit Insurance Corporation (FDIC) provides coverage up to $250,000 per depositor at FDIC-insured depository institutions. At December 31, 2013, the Company had approximately $546,000 on deposit in excess of the insured limits.
12. SUPPLEMENTAL DISCLOSURES OF CASH FLOW:
Cash paid for interest was as follows:

|  | For the year ending December 31, |
|  | 2013 |  |  | 2012 |
To a financial institution |  | $ | 369,487 |  |  | $ | 446,922 |
To a related party |  |  | - |  |  |  | 15,123 |
Total |  | $ | 369,487 |  |  | $ | 462,045 |

Non-cash financing and investing activities consisted of the following:
For the year ending 2013 –
None
For the year ending 2012 –
None

13. INCOME TAXES:

For the year ended December 31, 2013, the Company had losses from continuing operations, therefore no current taxes were incurred. For the year ended December 31, 2012, the Company was able to offset its taxable income through the utilization of net operating loss carryforwards, therefore no current taxes were incurred.
The following table reconciles the total provision for income taxes from continuing operations recorded in the consolidated statement of operations with the amounts computed at the statutory federal tax rate of 34%:

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

Temporary differences between the amounts reported in the financial statements and the tax bases of assets and liabilities resulted in deferred taxes. Deferred tax assets at December 31, 2013 and 2012 were as follows; certain prior year numbers have been reclassified to conform to current year presentation.
F-15

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

Primarily due to a taxable loss in 2013 the Company’s gross deferred tax asset increased to $1,763,000. All available evidence, both positive and negative, was considered to determine whether any impairment of this asset should be recognized. Based on consideration of the available evidence including historical losses which must be treated as substantial negative evidence and the potential of future taxable income, a $1,744,000 valuation allowance has been recognized to adjust deferred tax assets and liabilities to the amount of net operating losses that are expected to be realized. If realized, the tax benefit for this item will reduce current tax expense for that period as it did for the year ended December 31, 2012.
The Company has the following net operating loss carryforwards available to offset future taxable income:

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

The Company files tax returns in the U.S. federal jurisdiction and various states. At December 31, 2013, federal tax returns remained open for Internal Revenue 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 were no federal or state income tax audits being conducted as of December 31, 2013.
14. SEGMENT INFORMATION:
The Company’s reportable segments consist of Anchor and FlexShopper. Anchor purchases company’s accounts receivable, which provide businesses with critical working capital so they can meet their operational costs and obligations while waiting to receive payment from their customers. FlexShopper 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.
Information for the Company’s segments is as follows:

|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |
Assets: |  |  |  |  |  |
FlexShopper |  | $ | 718,896 |  |  | $ | − |
Anchor |  |  | 5,761,499 |  |  |  | 7,919,985 |
Total |  | $ | 6,480,395 |  |  | $ | 7,919,985 |

Revenues: |  |  |  |  |  |  |  |
FlexShopper |  | $ | 119 |  |  | $ | − |
Anchor |  |  | 2,364,009 |  |  |  | 2,526,626 |
Total |  | $ | 2,364,128 |  |  | $ | 2,526,626 |
Net (loss) income: |  |  |  |  |  |  |  |
FlexShopper |  | $ | (655,474 | ) |  | $ | − |
Anchor |  |  | (38,207 | ) |  |  | 378,859 |
Total |  | $ | (693,681 | ) |  | $ | 378,859 |

F-16

15. COMMITMENTS AND CONTINGENCIES:

Lease Commitments
The Company has lease agreements for office space in Charlotte, NC, and Boca Raton, FL. All lease agreements are with unrelated parties.
The Company has two Charlotte leases for adjoining space that expire May 31, 2014. The monthly rent for the combined space is approximately $2,340.
Beginning November 1, 2009, the company entered into a 24 month lease for office space in Boca Raton, FL, and on November 1, 2012 renewed for another two years. This lease expired on September 30, 2013 and was not renewed. The monthly rent was approximately $1,413.
On August 1, 2013, FlexShopper entered into a 39 month lease for additional office space in Boca Raton, FL to accommodate the FlexShopper business and its additional employees. The monthly rent was approximately $6,800. This lease agreement was amended in January 2014 to reflect a 63 month term for a larger suite in an adjoining building. Upon commencement the monthly base rent including operating expenses for the first year will be approximately $15,800 with annual three percent increases throughout the lease term.
Anchor had a lease for office space in Medley, FL, which was to expire on May 12, 2014. Anchor terminated this lease in 2 013 and forfeited its security deposit.
The rental expense for the years ended December 31, 2013 and 2012 was approximately $58,921 and $46,571, respectively. The future minimum lease payments are approximately as follows:

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

Contingencies
We are not a party to any pending material legal proceedings except as described below. To our knowledge, no governmental authority is contemplating commencing a legal proceeding in which we would be named as a party.
On October 22, 2010, Anchor filed a complaint in the Superior Court of Stamford/Norwalk, Connecticut against the Administrators of the Estate of David Harvey (“Harvey”) to recoup a credit loss incurred by the Company’s former subsidiary, Brookridge Funding Services, LLC. Harvey was the owner of a Company that caused the credit loss and the Company is pursuing its rights under the personal guarantee that Harvey provided. The Complaint is demanding principal of approximately $485,000 plus interest and damages.
16. SUBSEQUENT EVENTS
On March 6, 2014, Anchor signed a non-binding letter of intent with a financial institution to sell its factoring business. There can be no assurances given that the Company will sell its Anchor factoring business on terms satisfactory to the Company, if at all.
On March 19, 2014 upon approval of the Board, FlexShopper entered into two Promissory Notes totaling $1,000,000, one with Morry Rubin and the other with a major shareholder and Director of the company. Each demand Promissory Note is for $500,000 and earns interest (payable monthly) at 10% per annum. The Promissory Notes are to assist FlexShopper in purchasing merchandise for lease to support FlexShopper’s growth.
F-17

PART III
Item 11. Executive Compensation.
The following table sets forth the overall compensation earned over the fiscal years ended December 31, 2013 and 2012 by (1) each person who served as the principal executive officer of the Company or its subsidiary during fiscal year 2013; (2) our most highly compensated (up to a maximum of two) executive officers as of December 31, 2013 with compensation during fiscal year ended 2013 of $100,000 or more; and (3) those two individuals, if any, who would have otherwise been in included in section (2) above but for the fact that they were not serving as an executive of us as of December 31, 2013.

|  | Fiscal Year |  |  | Salary ($) |  |  | Bonus ($) |  |  | Stock Awards ($) |  |  | Options Awards ($)(1) |  | Non-Equity Incentive Plan Compensation ($) | Non-quali- fied Deferred Compensation Earnings ($) | All Other Compen- sation ($) (2)(3) | Total ($)
Morry F. Rubin |  |  | 2012 |  |  | $ | 1.00 |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | 21,000 |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | 18,000 |  |  | $ | 39,001 |
Chief Executive Officer (4) |  |  | 2013 |  |  | $ | 67,308 |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | 18,000 |  |  | $ | 85,308 |
Brad Bernstein |  |  | 2012 |  |  | $ | 240,000 |  |  | $ | 20,021 |  |  | $ | -0- |  |  | $ | 39,000 |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | 12,000 |  |  | $ | 311,021 |
President |  |  | 2013 |  |  | $ | 240,000 |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | -0- |  |  | $ | 12,000 |  |  | $ | 252,000 |

________________

(1) | Topic 718 requires the company to determine the overall full grant date fair value of the restricted stock awards and options as of the date of grant based upon the Black-Scholes method of valuation which total amounts are set forth in the table above under the year of grant, and to then expense that value over the service period over which the restricted stock awards and options become vested. As a general rule, for time-in-service-based restricted stock awards and options, the company will immediately expense any restricted stock awards and option or portion thereof which is vested upon grant, while expensing the balance on a pro rata basis over the remaining vesting term of the restricted stock awards and options. For a description Topic 718 and the assumptions used in determining the value of the restricted stock awards and options under the Black-Scholes model of valuation, see the notes to the consolidated financial statements included with this Form 10-K/A.

(2) | Includes all other compensation not reported in the preceding columns, including (i) perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is less than $10,000; (ii) any “gross-ups” or other amounts reimbursed during the fiscal year for the payment of taxes; (iii) discounts from market price with respect to securities purchased from the company except to the extent available generally to all security holders or to all salaried employees; (iv) any amounts paid or accrued in connection with any termination (including without limitation through retirement, resignation, severance or constructive termination, including change of responsibilities) or change in control; (v) contributions to vested and unvested defined contribution plans; (vi) any insurance premiums paid by, or on behalf of, the company relating to life insurance for the benefit of the named executive officer; and (vii) any dividends or other earnings paid on stock or option awards that are not factored into the grant date fair value required to be reported in a preceding column.

(3) Includes compensation for service as a director described under Director Compensation, below.
(4) Does not include monies paid to Mr. Rubin on an investment in the Company as described under "Item 13".
For a description of the material terms of each named executive officers’ employment agreement, including the terms of any contract, agreement, plan or other arrangement that provides for any payment to a named executive officer in connection with his or her resignation, retirement or other termination, or a change in control of the company see section below entitled “Employment Agreements.”
No outstanding common share purchase option or other equity-based award granted to or held by any named executive officer in 2013 were repriced or otherwise materially modified, including extension of exercise periods, the change of vesting or forfeiture conditions, the change or elimination of applicable performance criteria, or the change of the bases upon which returns are determined, nor was there any waiver or modification of any specified performance target, goal or condition to payout.
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Executive Officer Outstanding Equity Awards At Fiscal Year-End
The following table provides certain information concerning any common share purchase options, stock awards or equity incentive plan awards held by each of our named executive officers that were outstanding, exercisable and/or vested as of December 31, 2013.

|  | Option Awards |  | Stock Awards |
Name |  | Number of Securities Under- lying Unexer- cised Options (#) Exercis- able |  |  | Number of Securities Underly- ing Unexe- rcised Options (#) Unexercisable |  |  | Equity Incentive Plan Awards: Number of Securities Underly- ing Unexer- cised Unearned Options (#) |  |  | Option Exercise Price ($) |  | Option Expiration Date |  | Number of Shares or Units of Stock That Have Not Vested (#) |  |  | Market Value of Shares or Units of Stock That Have Not Vested |  |  | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |  |  | Equity Incentive Plan Awards: Market or Payout Value Of Unearned Shares, Units Or Other Rights That Have Not Vested |
Morry F. Rubin |  |  | 650,000 |  |  |  | - 0 - |  |  |  | -0- |  |  |  | 1.25 |  | 01/31/2017 |  |  | -0- |  |  |  | N/A |  |  |  | -0- |  |  |  | N/A |
Morry F. Rubin |  |  | 250,000 |  |  |  | - 0 - |  |  |  | -0- |  |  |  | 0.62 |  | 03/23/2019 |  |  | -0- |  |  |  | N/A |  |  |  | -0- |  |  |  | N/A |
Morry F. Rubin |  |  | 250,000 |  |  |  | - 0 - |  |  |  | -0- |  |  |  | 0.17 |  | 03/20/2022 |  |  | -0- |  |  |  | N/A |  |  |  | -0- |  |  |  | N/A |
Brad Bernstein |  |  | 950,000 |  |  |  | - 0 - |  |  |  | -0- |  |  |  | 1.25 |  | 01/31/2017 |  |  | -0- |  |  |  | N/A |  |  |  | -0- |  |  |  | N/A |
Brad Bernstein |  |  | 250,000 |  |  |  | - 0 - |  |  |  | -0- |  |  |  | 0.62 |  | 03/23/2019 |  |  | -0- |  |  |  | N/A |  |  |  | -0- |  |  |  | N/A |
Brad Bernstein |  |  | 250,000 |  |  |  | - 0 - |  |  |  | -0- |  |  |  | 0.17 |  | 03/20/2022 |  |  | -0- |  |  |  | N/A |  |  |  | -0- |  |  |  | N/A |

Each of the following executive officers is a party to an employment agreement with the Company.

Name | Position |  | 2014 Annual Salary(1) |  | 2014 Bonus (2)
Morry F. Rubin | Chief Executive Officer |  | $ | 125,000 (1) |  | None.
Brad Bernstein | President |  | $ | 240,000 (2) |  | None.

____________

| N/A – Not applicable.

(1) | On August 8, 2013, the Board agreed to modify M. Rubin’s employment agreement and approved an annual salary of $125,000. Previously, M. Rubin received an annual salary of $1.00. M. Rubin is eligible to receive periodic review of his base salary.

(2) | The Company pays Mr. Bernstein a fixed base salary of $240,000. The Board may periodically review Mr. Bernstein’s Base Salary and may determine to increase (but not decrease) the Base Salary, in accordance with such policies as the Company may hereafter adopt from time to time, if it deems appropriate. The Board approved an annual bonus program for Mr. Bernstein commencing with the 2012 fiscal year and ending with the 2013 fiscal year. The annual bonus was equal to 5% of annual net income provided net income is equal to or greater than $200,000. The bonus was calculated on the Company’s audited GAAP financial statements.

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

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

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

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

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

· | Each Executive shall be entitled to participate in such Executive benefit and other compensatory or non-compensatory plans that are available to similarly situated executives of the Company and shall be entitled to be reimbursed for up to $25,000 of medical costs not covered by the Company’s health insurance per year.

· | The Company shall, to the extent such benefits can be obtained at a reasonable cost, provide the Executive with disability insurance benefits of at least 60% of his gross Base Salary per month; provided that for purposes of the foregoing, prior to the date on which M. Rubin’s Base Salary was adjusted above $1.00 as described above, M. Rubin’s Base Salary shall be deemed to be $300,000. In the event of the Executive’s Disability, the Executive and his family shall continue to be covered by all of the Company’s Executive welfare benefit plans at the Company’s expense, to the extent such benefits may, by law, be provided, for the lesser of the term of such Disability and 24 months, in accordance with the terms of such plans; and

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

Termination of Employment.
Each Executive’s employment with the Company may be terminated by mutual agreement. The following description summarizes the severance pay (exclusive of base salary, car allowances and benefits due up to the date of termination), if any, of each Executive in the event of termination (other than by mutual agreement) and the treatment of each Executive’s options:
Termination for Cause. In the event of any termination for cause (as defined in the agreement), the Executive shall not receive any severance pay and any and all stock options granted to the Executive shall terminate according to their terms of grant with any such vested options being exercisable for the shorter of (i) 90 days from the date of termination and (ii) the exercise term of each relevant option grant.
Termination for Disability or Death. In the event of termination for disability (as defined in the agreement) or death, Executive shall receive all bonuses then earned, six months severance pay in the case of death, and the acceleration of certain options. Such options may be exercised for the longer of (i) 12 months from the date of the date of termination and (ii) the exercise term of each relevant option grant.
Termination without Cause. The Executive's employment with the Company may be terminated by the Company, in the absence of Cause and by Executive for Good Reason (as defined in the agreement). In such event, Executive shall receive 12 months severance pay, targeted bonuses, continuation of certain benefits and full vesting of all options. Such options may be exercised for the longer of (i) 12 months from the date of termination and (ii) the exercise term of each relevant option grant.
Voluntary Resignation. The Executive’s employment with the Company may be terminated by the Executive without Good Reason. In such event, the Executive shall not receive any severance pay and unless termination occurs in the first year of employment, all vested options shall be retained by the Executive for the full exercise term of each relevant option.
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Option Grants.
Messrs. M. Rubin and Bernstein are each eligible to receive stock options and other compensation as determined at the discretion of the board. See “Executive Officer Outstanding Equity Awards at Fiscal Year-End” above for a description of outstanding options granted to Messrs. M. Rubin and Bernstein as of December 31, 2013.
Review of Risks Arising from Compensation Policies and Practices
We have reviewed our compensation policies and practices for all employees and concluded that any risks arising from our policies and practices are not reasonably likely to have a material adverse effect on the Company.
DIRECTOR COMPENSATION
Cash Fees and Options
Currently the Company has no audit, compensation, corporate governance, nominating or other committee of the Board of Directors, although it intends to establish an audit, compensation and corporate governance committee in the near future. The chairman of each committee that is formed by us at a later date will be entitled to an annual fee of $6,500 and each non-executive director will receive an annual fee of $6,500 as a member of the Board, a fee of $1,000 per Board or Committee meeting (or consent in lieu of a meeting), and an activity fee of $1,000 per day for services rendered by the Board member. George Rubin is receiving the same health and dental insurance benefits as those provided to our executive officers to the extent permitted by the rules and regulations applicable thereto and an additional medical reimbursement of up to $25,000 per annum. Members of the Board of Directors are eligible to participate under one or more of our company’s stock option plan(s). On January 31, 2007, we established a stock option plan and granted non-statutory stock options to purchase 950,000, shares and 650,000 shares to Brad Bernstein and Morry F. Rubin, respectively, exercisable at $1.25 per share. These options have a term of ten years and vest one-third on the date of grant, one-third on February 29, 2008 and one-third on February 28, 2009. On March 23, 2009, we granted non-statutory stock options to purchase 250,000 shares to each of Rubin and Bernstein, exercisable at $0.62 per share; these options have a term of 10 years and vested on the date of grant. On March 20, 2012, we granted non-statutory stock options to purchase 250,000 shares to each of Rubin and Bernstein, exercisable at $0.17 per share; these options have a term of 10 years and vested. On June 14, 2012, we granted Paul B. Healy options to purchase 180,000 shares, exercisable at $0.25 per share from the vesting date through June 14, 2022, with one-third vesting on June 14, 2012, one third vesting on June 14, 2013 and the remaining one-third vesting on June 14, 2014. In the event that a director is no longer serving on the Board of Directors, the director has 90 days to exercise all vested options. Equity incentive awards and cash payments to directors will be determined in the sole discretion of the Board and/or compensation committee of the Board at such times and in such amounts as the Board or a committee thereof determines to make such awards.
Travel Expenses
All directors shall be reimbursed for their reasonable out of pocket expenses associated with attending the meetings.
2013 Compensation
The following table shows the overall compensation earned for the 2013 fiscal year with respect to each non-employee and non-executive directors of the Company as of December 31, 2013.

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

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(1) | Topic 718 requires the company to determine the overall full grant date fair market value of the restricted stock awards and the options as of the date of grant based upon the Black-Scholes method of valuation which total amounts are set forth in the table above under the year of grant, and to then expense that value over the service period over which the restricted stock awards and the options become exercisable vested. As a general rule, for time-in-service-based restricted stock awards and options, the company will immediately expense any restricted stock award or option or portion thereof which is vested upon grant, while expensing the balance on a pro rata basis over the remaining vesting term of the restricted stock award and option. For a description of Topic 718 and the assumptions used in determining the value of the restricted stock awards and options under the Black-Scholes model of valuation, see the notes to the consolidated financial statements included with this Form 10-SB/A.

(2) | Excludes awards or earnings reported in preceding columns.

(3) | Includes all other compensation not reported in the preceding columns, including (i) perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is less than $10,000; (ii) any “gross-ups” or other amounts reimbursed during the fiscal year for the payment of taxes; (iii) discounts from market price with respect to securities purchased from the company except to the extent available generally to all security holders or to all salaried employees; (iv) any amounts paid or accrued in connection with any termination (including without limitation through retirement, resignation, severance or constructive termination, including change of responsibilities) or change in control; (v) contributions to vested and unvested defined contribution plans; (vi) any insurance premiums paid by, or on behalf of, the company relating to life insurance for the benefit of the director; (vii) any consulting fees earned, or paid or payable; (viii) any annual costs of payments and promises of payments pursuant to a director legacy program and similar charitable awards program; and (ix) any dividends or other earnings paid on stock or option awards that are not factored into the grant date fair value required to be reported in a preceding column.

(4) | All other compensation includes the payment of health insurance which is not provided to other non-employee directors. Mr. Rubin's compensation excludes monies earned as an investor. See "Item 13" for a description of certain transactions involving George Rubin.

Indemnification; Director and Officer Liability Insurance.
The Company has agreed to indemnify (and advance the costs of defense of) each director (and his legal representatives) to the fullest extent permitted by the laws of the state in which the Company is incorporated, as in effect at the time of the subject act or omission, or by the Certificate of Incorporation and Bylaws of the Company, whichever affords greater protection to each director, and both during and after termination (for any reason). The Company shall cause each director to be covered under a directors and officers' liability insurance policy for his acts (or non-acts) as an officer or director of the Company or any of its affiliates. Such policy shall be maintained by the Company at its expense in an amount of at least $5 million during the term each director serves the Company (including the time period of coverage after each director’s service terminates for any reason whatsoever).
In the event of any litigation or other proceeding between the Company and a director with respect to enforcement of a director’s rights to indemnification and director and officer liability insurance and such litigation or proceeding results in final judgment or order in favor of the Director, which judgment or order is substantially inconsistent with the positions asserted by the Company in such litigation or proceeding, the losing party shall reimburse the prevailing party for all of his/its reasonable costs and expenses relating to such litigation or other proceeding, including, without limitation, his/its reasonable attorneys' fees and expenses.
2007 Omnibus Equity Compensation Plan
On January 31, 2007, the Board adopted our 2007 Omnibus Equity Compensation Plan (the “Plan”), with 2,100,000 common shares authorized for issuance under the Plan. In October 2009 the Company's stockholders approved an increase in the number of shares covered by the Plan to 4,200,000 shares.
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The following table shows the amounts that have been granted under the Plan as of December 31, 2013:

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

______________

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

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

The following is a summary of the material features of the Plan:
Shares Subject to the Plan
The maximum number 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 stock split, reverse stock split, stock dividend, recapitalization, reclassification or other similar event or transaction, the Compensation Committee will make such equitable adjustments to the number, kind and price of shares subject to outstanding grants and to the number of shares available for issuance under the Plan as it deems necessary or appropriate. Shares subject to forfeiture, cancelled or expired awards granted under the Plan will again become available for issuance under the Plan. In addition, shares surrendered in payment of any exercise price or in satisfaction of any withholding obligation arising in connection with an award granted under the Plan will again become available for issuance under the Plan.
Administration
A committee of two or more directors appointed by the Board will administer the Plan (the “Committee”); however, until the Committee is appointed, the Board administers the Plan. The Committee interprets the Plan, selects award recipients, determines the number of shares subject to each award and establishes the price, vesting and other terms of each award. While there are no predetermined performance formulas or measures or other specific criteria used to determine recipients of awards under the Plan, awards are based generally upon consideration of the grantee's position and responsibilities, the nature of services provided, the value of the services to us, the present and potential contribution of the grantee to our success, the anticipated number of years of service remaining and other factors which the Board or the Committee deems relevant.
Eligibility
Employees, directors, consultants and other service providers of our Company and its affiliates are eligible to participate in the Plan, provided; however, that only employees of our Company are eligible to receive incentive stock options. Other than consultants and other service providers, the number of currently eligible employees in the Plan is five. The maximum number of shares that are the subject of grants made under the Plan to any individual during any calendar year may not exceed 1,000,000 shares, subject to certain adjustments. A participant in the Plan may not accrue dividend equivalents during any calendar year in excess of $500,000.
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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 stockholder approval if such approval is required in order to comply with the Code or applicable laws or to comply with applicable stock exchange requirements. The Plan will terminate on the day immediately preceding the tenth anniversary of the Plan’s effective date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the stockholders.
Grants
Grants made under the Plan may consist of incentive stock options, non-qualified stock options, stock appreciation rights or “SARs”, stock awards, stock unit awards, dividend equivalents and other stock-based awards. Each grant is subject to the terms and conditions set forth in the Plan and to those other terms and conditions specified by the Committee and memorialized in a written grant agreement between our Company and grant recipient (the “Grant Instrument”).
Stock Options
The Plan permits the grant of incentive stock options (“ISOs”) to our employees and the employees of our subsidiaries. The Plan also provides for the grant of non-qualified stock options (“NQSOs”) to our employees, directors, and consultants and other individuals who perform services for us (as well as to employees, directors, consultants and service providers of our subsidiaries). The exercise price of any stock option granted under the Plan will be equal to or greater than the fair market value of such stock on the date the option is granted, provided, however, that the exercise price of any incentive stock options granted under the Plan to an employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of our stock or any parent or subsidiary of us, may not be less than 110% of the fair market value of our common stock on the date of grant. Generally, payment of the option price may be made (i) in cash, (ii) with the Committee’s consent, by approval of the Committee, by delivering shares of Company Stock owned by the Optionee (including Company Stock acquired in connection with the exercise of an Option, subject to such restrictions as the Committee deems appropriate) and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation (on a form prescribed by the Committee) to ownership of shares of Company Stock having a Fair Market Value on the date of exercise equal to the Exercise Price, (iii) through a broker in accordance with applicable laws, or (iv) with a combination of cash and shares. The participant must pay the option price and the amount of withholding tax due, if any, at the time of exercise. Shares of common stock will not be issued or transferred upon exercise of the option until the option price and the withholding obligation are fully paid.
Under the Plan, each option is exercisable at such time and to such extent as specified in the pertinent Grant Instrument between our Company and the option recipient. However, no option shall be exercisable with respect to any shares of common stock more than ten years after the date of grant of such award (except as otherwise determined by the Committee with respect to non-incentive options) and no incentive stock option that is granted to an employee, who at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of our Company, or any parent or subsidiary of ours, may be exercised more than five years from the date of grant. Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with the applicable securities laws, according to such terms as the Committee may determine; provided that the Grantee receives no consideration for the transfer of an Option and the transferred Option shall continue to be subject to the same terms and conditions as were applicable to the Option immediately before the transfer.
Effects of Termination of Service with our Company
Generally, unless provided otherwise in the Grant Instrument, the right to exercise any option or SAR (described below) terminates ninety (90) days following termination of the participant’s relationship with the Company for reasons other than death, disability or termination for “cause” as defined in the Plan. If the participant’s relationship with us terminates due to death or disability, unless provided otherwise in the Grant Instrument, the right to exercise an option or SAR will terminate the earlier of one year following such termination or the original expiration date. If the participant’s relationship with us is terminated for “cause” any option or SAR not already exercised will automatically be forfeited as of the date such termination.
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 consideration and 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) as determined by the Committee and set forth in the Grant Instrument governing the stock award. If a participant’s employment terminates before the vesting condition is fulfilled, the shares will be forfeited. While the shares remain unvested, a participant may not sell, assign, transfer, pledge or otherwise dispose of the shares. Unless otherwise determined by the Committee, a stock award entitles the participant to all of the rights of a stockholder of our Company, including the right to vote the shares and the right to receive any dividends thereon.
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Stock Units
The Plan provides for the grant of stock units to employees, non-employee directors, or consultants or other individuals who perform services for us, subject to any terms and conditions, including the fulfillment of specified performance goals or other conditions, as may be established by the Committee. Each stock unit represents one hypothetical share of common stock and the right of the grantee to receive an amount based on the value of a share of our common stock. Payments with respect to stock units may be made in cash or in shares of common stock, or in combination of the two as determined by the appointed committee.
Stock Appreciation Rights
The Plan also provides for the grant of SARs, either alone or in tandem with stock options. An SAR entitles its holder to a cash payment of the excess of the fair market value of our common stock on the date of exercise, over the fair market value of our common stock on the date of grant. An SAR issued in tandem with a stock option will have the same terms as the stock option. The terms of an SAR granted alone, without an option, will be established by the Committee, in the Grant Instrument governing the SAR.
Other Stock-Based Award
The Committee may grant other stock-based awards, other than those described herein, that are based on, measured by or payable in shares of common stock on such terms and conditions as the Committee may determine. Such awards may be subject to the achievement of performance goals or other conditions 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 as contingent cash obligations and may be payable in cash or shares of common stock, and upon such terms as the appointed committee may establish, including the achievement of specific performance goals.
Change of Control of the Company
In the event of a Change of Control, as that term is defined in the Plan, of our Company, the Committee has discretion to, among other things, accelerate the vesting of outstanding grants, cashout outstanding grants or exchange outstanding grants for similar grants of a successor company. A Change of Control of our Company will be deemed to have taken place upon:

| • | the acquisition by any person of direct or indirect ownership of securities representing more than 50% of the voting power of our then outstanding stock;
| • | a consolidation or merger of our Company resulting in the stockholders of the Company immediately prior to such event not owning at least a majority of the voting power of the resulting entity’s securities outstanding immediately following such event;
| • | the sale of substantially all of our assets; or
| • | the liquidation or dissolution of our Company.

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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/A as the financial statements of the Company for the years ended December 31, 2013 and 2012:
Report of Independent Registered Public Accounting Firms
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statement of Stockholders’ Equity
Consolidated Statement of Cash Flows
Consolidated Notes to Financial Statements
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Exhibits
The following exhibits are all previously filed in connection with our Form 10-SB, as amended, unless otherwise noted.

2.1 | Exchange Agreement
3.1 | Certificate of Incorporation-BTHC,INC.
3.2 | Certificate of Merger of BTHC XI, LLC into BTHC XI, Inc.
3.3 | Certificate of Amendment
3.4 | Designation of Rights and Preferences-Series 1 Convertible Preferred Stock
3.5 | Amended and Restated By-laws
4.1 | Form of Placement Agent Warrant issued to Fordham Financial Management
10.1 | Directors’ Compensation Agreement-George Rubin
10.2 | Employment Contract-Morry F. Rubin
10.3 | Employment Contract-Brad Bernstein
10.4 | Agreement-Line of Credit
10.5 | Fordham Financial Management-Consulting Agreement
10.6 | Facilities Lease – Florida
10.7 | Facilities Lease – North Carolina
10.8 | Loan and Security Agreement (1)
10.9 | Revolving Note (1)
10.10 | Debt Subordination Agreement (1)
10.11 | Guaranty Agreement (Morry Rubin) (1)
10.12 | Guaranty Agreement (Brad Bernstein)(1)
10.13 | Continuing Guaranty Agreement (1)
10.14 | Pledge Agreement (1)
10.16 | Asset Purchase Agreement between the Company and Brookridge Funding LLC (2)
10.17 | Senior Credit Facility between the Company and MGM Funding LLC (2)
10.18 | Senior Credit Facility Guarantee - Michael P. Hilton and John A. McNiff III (4)
10.19 | Employment Agreement - Michael P. Hilton (4)
10.20 | Employment Agreement - John A. McNiff (4)
10.21 | Accounts Receivable Credit Facility with Greystone Commercial Services LP (3)
10.22 | Memorandum of Understanding - Re: Rescission Agreement(5)
10.23 | Rescission Agreement and Exhibits Thereto (5)
10.24 | Termination Agreement by and between Brookridge Funding Services LLC and MGM Funding LLC.(5)
10.25 | First Amendment to Factoring Agreement (6)
10.26 | Promissory Note dated April 26, 2011 between Anchor Funding Services, Inc. and MGM Funding, LLC (7)
10.27 | Rediscount Facility Agreement with TAB Bank (8)
10.28 | Form of Validity Warranty to TAB Bank (8)
10.29 | Amendment to Employment Agreement of Morry F. Rubin (9)
21.21 | Subsidiaries of Registrant listing state of incorporation (4)
31.1 | Rule 13a-14(a) Certification – Principal Executive Officer *
31.2 | Rule 13a-14(a) Certification – Principal Financial Officer *
32.1 | Section 1350 Certification – Principal Executive Officer *
32.2 | Section 1350 Certification – Principal Financial Officer *
99.1 | 2007 Omnibus Equity Compensation Plan
99.2 | Form of Non-Qualified Option under 2007 Omnibus Equity Compensation Plan
99.3 | Amendment to 2007 Omnibus Equity Compensation Plan increasing the Plan to 4,200,000 shares (9)
99.4 | Press Release – Year End Results of Operations (10)
101.INS | XBRL Instance Document,XBRL Taxonomy Extension Schema *
101.SCH | Document, XBRL Taxonomy Extension *
101.CAL | Calculation Linkbase, XBRL Taxonomy Extension Definition *
101.DEF | Linkbase,XBRL Taxonomy Extension Labels *
101.LAB | Linkbase, XBRL Taxonomy Extension *
101.PRE | Presentation Linkbase *
| ___________________
| * Filed herewith.

(1) | Incorporated by reference to the Registrant’s Form 8-K filed November 24, 2008 (date of earliest event November 21, 2008).

(2) | Incorporated by reference to the Registrant's Form 8-K filed December 8, 2009 (date of earliest event -December 4, 2009).

(3) | Incorporated by reference to the Registrant's Form 8-K filed December 2, 2009 (date of earliest event -November 30, 2009).

(4) | Incorporated by reference to the Registrant's Form 10-K for the fiscal year ended December 31, 2009.

(5) | Incorporated by reference to the Registrant's Form 8-K filed October 12, 2010 (date of earliest event -October 6, 2010).

(6) | Incorporated by reference to the Registrant's Form 10-K for the fiscal year ended December 31, 2010.

(7) | Incorporated by reference to the Registrant's Form 8-K filed April 28, 2011 (date of earliest event -April 26, 2011).

(8) | Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2011.

(9) | Incorporated by reference to Registrant’s Form 10-K for the fiscal year ended December 31, 2012.

(10) | Incorporated by reference to Registrant’s form 10-K for the fiscal year ended December 31, 2013.

(b) | Financial Statement Schedules

We are not filing any financial statement schedules as part of this Form 10-K/A because such schedules are either not applicable or the required information is included in the financial statements or notes thereto.
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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 its behalf by the undersigned, thereunto duly authorized.

| FLEXSHOPPER, INC. |
| By: | /s/ Brad Bernstein |
|  | Brad Bernstein, President |
|  | and Principal Financial Officer |

Dated: Boca Raton, Florida
April 25, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signatures |  | Title |  | Date
/s/ Brad Bernstein |  | President and |  | April 25, 2014
Brad Bernstein |  | Principal Financial Officer |  |
/s/ Morry F. Rubin |  | Principal Executive Officer |  | April 25, 2014
Morry F. Rubin |  | Director and Co-Chairman of the Board |  |
/s/ George Rubin |  | Co-Chairman of the Board |  | April 25, 2014
George Rubin |  |  |  |
/s/ Paul B. Healy |  | Director |  | April 25, 2014
Paul B. Healy |  |  |  |

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