SOURCE: EFactor Group Corp.

EFactor Group Corp. Logo

August 15, 2014 12:00 ET

EFactor Group Corp. Reports Second Quarter 2014 Results

EFactor.com Service Revenues, Advertising Revenues and Number of Subscribers Increase Significantly; Company Closes on Four Strategic Acquisitions

SAN FRANCISCO, CA--(Marketwired - August 15, 2014) - EFactor Group Corp. (OTCQB: EFCT) ("EFactor Group Corp." or "the Company"), the owner of a group of entrepreneur-focused service companies and EFactor.com, a niche social network providing content and resources for entrepreneurs worldwide, today announced financial results for the second quarter ended June 30, 2014.

Second Quarter 2014 Highlights and Recent Events

  • Membership services revenues continued to increase on a sequential and year-over-year comparison.
  • Advertising revenues on EFactor.com reach $30,645, a three-fold sequential increase versus the first quarter of the year and a 100% increase year over year.
  • Total number of subscribers on EFactor.com increase 20% to more than 1.2 million.
  • In July, EFactor Group Corp. closed four strategic acquisitions to increase support and services to entrepreneurs; HT Skills, Ltd., Member Digital, Inc., Business Growth Systems, Ltd., and GroupCard, BV.

"Now that we have completed our targeted four acquisitions, we will re-focus our attention on building each of our business units and significantly expanding the subscriber base of EFactor.com, which will in turn have a positive impact on the new acquisitions' revenue," began Adriaan Reinders, CEO of EFactor Group Corp. "Each of our acquisitions have been carefully chosen to match our ethos at EFactor which is a focus on; knowledge, business development, cost reduction and funding for entrepreneurs. We were pleased to see an uptick in both our number of subscribers and the services they are buying from EFactor such as mentoring and participation at our live events and will continue to work on increasing these numbers. We have also seen a boost in advertising revenues in the quarter from EFactor.com which helped offset a year-over-year decline in our advisory services at EQ Mentor," Reinders concluded.

EFactor Group Corp. currently generates revenue from four primary sources: (1) member services; (2) advertising; (3) advisory services; and (4) public relations. For the second quarter of the year, combined revenues for the period ended June 30, 2014 was $148,586 compared to $116,545 in the first quarter of the year and $228,175 in the corresponding period a year ago, a sequential increase of 27.5% and decrease of 53.6% year-over-year. Specifically, EQmentor revenues which were $114,343 in the second quarter of 2013 were merely $1,437 in the second quarter of 2014. During the first and second quarter of 2014, EQmentor's service offering was being repositioned for long-term, sustainable growth and a re-launch of their services throughout the second quarter of 2014. EQmentor has reinitiated business relationships with its long-standing clientele, many of which include U.S. blue-chip companies. EQmentor expects to realize these contracts and their revenues in the third and fourth quarter of the year.

Despite the temporary setback in EQmentor's quarterly revenue contribution, EFactor Group's subsidiaries and business lines exceeded expectations. EFactor.com's membership fees were up 16 times year-over-year, adverting sales on EFactor.com totaled approximately $30,654 versus a base of zero in 2013 and public relations revenues from EFactor Group Corp.'s MCC International totaled $106,254. EFactor Group Corp's operating subsidiaries are built around EFactor's social network of entrepreneurs who are subscribers to EFactor.com.

EFactor.com is the Company's flagship operating subsidiary and is one of the leading niche social networks designed to service entrepreneurs with valuable and cost-saving business tools, content, on-line and live events hosted by well-known business leaders, funding strategies, and an active social network of more than 1.3 million entrepreneur-subscribers. In the second quarter of the year, EFactor added 200,000 new subscribers to EFactor.com and an additional 100,000 in July alone. EFactor.com's live events such as Pitch-It-In-Person have hosted more than 483 participants through the first two quarters of the year and is poised to grow this number in the second half of 2014. Events are scheduled on a regular basis in cities worldwide for EFactor.com members.

EFactor continues with the marketing of its unique EScore™ system which is designed to measure entrepreneurial process and begin preparing entrepreneurs for raising capital. EScore™ members can benchmark their skill level and progress in five distinct business categories; Finance, Technology, Sales & Marketing, Leadership and last but not least -- Social Value. Through a unique set of questions and tasks, members can not only achieve a score but continue to measure it as they gain experience or bring in valuable members to their team. In addition, EFactor will help each entrepreneur build a strong business based on the information provided through the EScore™ system and unique matching that takes place which helps entrepreneurs build and strengthen a business plan.

Operating expenses for the three months ended June 30, 2014 were $1,085,702 compared to $1,000,029 for the three months ended June 30, 2013. These increases were primarily due to additional depreciation and amortization of the Company's website of $59,228 in 2014 and loss on extinguishment of debt of $32,778.

Interest expense increased to $475,215 for the three month period ended June 30, 2014, compared to $141,041 for the three month period ended June 30, 2013. Interest expenses includes non-cash amortization of $391,318 for share issuance expense to satisfy debtholder enhancements as part of the consideration for entering into these investments. The Company expects to repay or convert into common stock the majority of its outstanding notes subject to the raising further capital and increasing revenues over the course of the next 18 months.

Net loss increased to $1,428,503 from $912,865, for the three month period ended June 30, 2014. The increase in net loss compared to the prior year period is primarily a result of the increase in operating expenses of $85,595 and the increase in interest expense and amortization of debt discount of $334,204, as described above. A component of the increase in operating costs is caused by the need to continue to attract top-notch personnel, which increases our payroll costs.

For the Six Months Ended June 30, 2014

Revenues for the six month period ended June 30, 2014 was $265,131 versus $426,937 for the six month period in 2013. The decrease was directly attributed to revenues from EQmentor which were $250,906 in 2013 versus $2,874 in 2014. As mentioned above, EQmentor has enhanced its service offering, market position, and Website services to more properly market to its blue-chip clientele. The Company expects sales from EQmentor to rebound in the second half of the year.

Offsetting the decline in revenues from EQmentor, revenues from EFactor.com membership services increased 72.4% to $17,969, EFactor.com advertising revenues are up 100% from a base of zero to $42,524, and MCC's public relations revenues are up 30.5% to $198,353 for the six month period ended June 30, 2014.

The Company had $126,326 in cash at June 30, 2014. Accounts receivable were $80,334 and notes receivable were $150,250 on June 30, 2014.

Recent Events

EFactor strengthened its offering to its subscriber base by acquiring four additional operating business to support and serve its customers and to direct EFactor.com subscribers to its portfolio of entrepreneur-focused, operating companies. On a proforma basis, combined revenue contribution to EFactor Group Corp. from the acquisitions are estimated at approximately $6.0 million on a 12-month basis. EFactor Group Corp. acquired;

  1. HT Skills, Ltd. - an European-based provider of high-quality apprenticeships and work-based vocational learning, and is also an experienced welfare-to-work job-broker.
  2. Member Digital, Inc. - a firm that helps entrepreneurs build their business through two distinct member-centric service offerings. They are; SubHub -- a leading solution for building and managing paid subscription and membership websites, and MemberCore -- an easy-to-build database and CRM for organizations and associations to manage and record member data.
  3. Business Growth Systems, Ltd. - a training and education company that conducts more than 20 seminars each month in different cities around the United Kingdom. The training provided helps entrepreneurs to grow sales, increase profits and manage time more effectively.
  4. GroupCard, B.V. - a marketing and communication firm founded in 2010 with the goal of helping local sporting clubs and associations create additional revenue streams. Leveraging strong connections and following between local sporting clubs and the sponsors who support such teams, GroupCard encourages fan spending and loyalty of select and participating sponsors.

Second Quarter Earnings Conference Call

DATE: Monday, August 18, 2014
TIME: U.S. 9:00 a.m. ET
DIAL IN: U.S. 1-877-407-0784
INTERNATIONAL 1-201-689-8560
CONFERENCE ID: 13589079
WEBCAST: http://public.viavid.com/index.php?id=110600

A replay of the call will be available beginning two hours after the call through midnight August 25, 2014 by telephone at +1-877-870-5176 (US Domestic) or +1-858-384-5517 (International). The conference ID number is 13589079. This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this http://public.viavid.com/index.php?id=110600 or at ViaVid's website at http://www.viavid.com, where the webcast can be accessed through August 18, 2015.

About EFactor Group Corp.

EFactor Group Corp. (OTCQB: EFCT) has at its core EFactor.com, a niche social network for entrepreneurs. EFactor.com provides its members with the people, tools, marketing and expertise to succeed and make real, trustworthy and lasting connections. At the core of the network lies a strong algorithm that allows members to not only connect with a lot of people, but with the right people. In addition, EFactor.com provides knowledge, facilitates preparing for funding and resources to reduce business costs, delivered through a mix of online social networking and offline domestic and international events.

EFactor.com has over one million members in 222 territories across 240 industries. It is incorporated in Nevada and headquartered in San Francisco. For more information, visit http://www.efactor.com

EFactor Group Corp. also has various subsidiary service organizations including a UK communications and public relations agency and a company that delivers matching software for mentees to get matched to the perfect mentor. For more information about EFactor Group Corp. please visit, http://efactorgroup.com/

The EFactor.com Value - The Entrepreneurs Wingman

EFactor.com is a social network designed to support you as your business grows, along every step of your journey. We'll be there to congratulate you every time you win and will coach and inspire you whenever you feel frustrated by setbacks. You can count on us to connect you with the right people for you and your company and offer you the resources and talent that will help you succeed. We are highly motivated everyday people who genuinely care about our team and customers. We cheer each other on and have each other's back. We get to see our ideas come to life every single day. We're entrepreneurs, contributing our expertise to the community.

See our Company Video here: http://ir.efactorgroup.com/videos/view/4/efactor-video

Forward-Looking Statements:

Safe Harbor: This press release contains forward-looking information within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934 and is subject to the Safe Harbor created by those sections. This material contains statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of EFactor Corp., to be materially different from the statements made herein.

- FINANCIAL TABLES -

 
EFACTOR GROUP CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
 
   June 30,    December 31,  
   2014    2013  
ASSETS              
               
CURRENT ASSETS:              
 Cash  $ 126,326    $ 43,377  
 Accounts receivable, net of allowance for doubtful accounts of $6,318    80,334      75,071  
 Notes receivable    150,250      -  
 Other current assets    8,986      8,878  
  Total current assets    365,896      127,326  
               
 Property, website and equipment, net of accumulated depreciation of $1,293,676 and $1,102,939    474,817      461,499  
 Goodwill    3,646,994      3,646,994  
 Deferred Financing Costs    219,594      347,764  
 TOTAL ASSETS  $ 4,707,301    $ 4,583,583  
               
LIABILITIES AND STOCKHOLDERS' DEFICIT              
               
CURRENT LIABILITIES:              
 Accounts payable  $ 1,461,498    $ 1,085,122  
 Accounts payable - related party    735,709      657,806  
 Accrued expenses    946,672      882,758  
 Operating line of Credit    1,110,005      1,110,005  
 Deferred revenue    68,730      71,836  
 Current portion of note payable - third parties, net of discount    277,131      318,711  
 Current portion of convertible note payable - third parties, net of discount    1,221,442      650,762  
 Current portion of note payable - related parties, net of discount    288,678      285,860  
  Total current liabilities    6,109,865      5,062,860  
               
 Other Long-term obligations    116,587      155,895  
 Non-current portion of convertible note payable - third parties net of discount    10,294      13,598  
  Total Non-Current Liabilities    126,881      169,493  
               
 TOTAL LIABILITIES    6,236,746      5,232,353  
               
Commitments and contingencies    -      -  
               
STOCKHOLDERS' DEFICIT              
 Preferred stock, $0.001 par value, 20,000,000 shares authorized, 2,500,000 issued and outstanding as of June 30, 2014 and December 31, 2013 respectively.  $ 2,500    $ 2,500  
 Common stock, $0.001 par value, 175,000,000 shares authorized, 64,556,120 and 59,573,174 issued and outstanding at June 30, 2014 and December 31, 2013 respectively.    64,556      59,573  
 Accumulated other comprehensive income    (29,943 )    (5,244 )
 Additional paid-in capital    21,455,815      16,978,361  
 Accumulated deficit    (23,022,373 )    (17,683,960 )
  Total stockholders' deficit    (1,529,445 )    (648,770 )
                
 TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT  $ 4,707,301    $ 4,583,583  
         
         
 
EFACTOR GROUP CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Other Comprehensive Loss
(Unaudited)
 
   Three Months Ended    Six Months Ended  
   June 30,    June 30,  
   2014    2013    2014    2013  
                     
Net revenues  $ 148,586    $ 228,175    $ 265,131    $ 416,937  
                             
Operating expenses                            
 Cost of revenue    46,549      27,921      77,755      58,356  
 Sales and marketing    64,081      62,883      119,407      168,508  
 General and administrative    882,988      991,361      3,169,520      1,824,400  
 Depreciation and amortization    59,228      2,693      114,866      181,088  
 (Gain) loss on forgiveness/settlement of liabilities    32,778      (84,829 )    32,778      (84,829 )
  Total operating expenses    1,085,624      1,000,029      3,514,326      2,147,523  
                              
Loss from operations    (937,038 )    (771,854 )    (3,249,195 )    (1,730,586 )
                             
Other income (expense):                            
 Interest expense    (475,215 )    (141,011 )    (1,463,149 )    (309,397 )
 Loss on conversion of debt    -             (49,926 )       
 Derivative loss    (16,250 )    -      (576,143 )    -  
 Other income (expense)    -      -      -      -  
  Total other income (expense), net    (491,465 )    (141,011 )    (2,089,218 )    (309,397 )
                             
Net loss  $ (1,428,503 )  $ (912,865 )  $ (5,338,413 )  $ (2,039,983 )
                             
Other comprehensive gain (loss):                            
 Gain (loss) on foreign exchange    (4,720 )    4,590      (24,699 )    9,131  
                             
Comprehensive gain (loss)  $ (1,433,223 )  $ (908,275 )  $ (5,363,112 )  $ (2,030,852 )
                             
Basic and diluted net loss per common share  $ (0.02 )  $ (0.03 )  $ (0.08 )  $ (0.06 )
                             
Weighted average shares used in completing basic and diluted net loss per common share    63,334,907      36,381,882      62,853,156      36,381,882  
                 
                 

.

 
EFACTOR GROUP CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
   For the six months ended June 30,  
   2014    2013  
CASH FLOWS FROM OPERATING ACTIVITIES:              
 Net loss  $ (5,338,413 )  $ (2,039,983 )
 Adjustments to reconcile net loss to net cash used in operating activities:              
  Depreciation and amortization    114,866      181,088  
  Stock option expense    67,869      186,620  
  Amortization of debt discount    1,331,004      250,883  
  Stock compensation expense    1,355,598      329,631  
  (Gain) loss on forgiveness/settlement of liabilities    32,778      (84,829 )
  Loss on conversion of debt    49,926      -  
  Derivative loss    576,143      -  
 Changes in operating assets and liabilities:              
  Accounts receivables    (5,263 )    (76,323 )
  Other current assets    (150,358 )    664  
  Accounts payable    416,376      223,857  
  Accounts payable - related party    118,642      -  
  Accrued expenses    77,939      162,662  
  Accrued expenses - related party    -      219,463  
  Deferred revenue    (3,106 )    29,610  
NET CASH USED IN OPERATING ACTIVITIES:  $ (1,355,999 )  $ (616,657 )
               
CASH FLOWS FROM INVESTING ACTIVITIES:              
 Cash paid for acquisition of property, website and equipment    (128,184 )    (225,001 )
 Cash acquired in reverse merger with acquisitions    -      24,444  
  Net cash used in investing activities  $ (128,184 )  $ (200,557 )
               
CASH FLOWS FROM FINANCING ACTIVITIES:              
 Proceeds from notes payable    1,143,452      629,208  
 Proceeds from issuance of shares    478,520      167,002  
 Repayment of notes payable    (30,143 )    (2,713 )
  Net cash provided by financing activities  $ 1,591,829    $ 793,497  
               
Effect of foreign currency exchange rate on cash    (24,699 )    9,131  
Net increase (decrease) in cash    82,947      (14,586 )
               
Cash at beginning of period    43,377      46,870  
Cash at the end of the period  $ 126,326    $ 32,284  
               
Supplemental Disclosure of Cash Flows Information:              
 Cash paid for interest  $ 7,298    $ 17,878  
 Cash paid for income taxes  $ 1,600    $ -  
Non-cash Investing and Financing Activities:              
Debt discount due to beneficial conversion feature  $ 826,032    $ 9,791  
Debt discount due to shares issued with debt  $ 311,245    $ 175,573  
Reclass of accounts payable - related party to debt  $ 40,739    $ -  
Shares issued for conversion of debt and accrued interest  $ 737,368    $ 214,000  
Shares issued for settlement of accounts payable  $ 20,000    $ -  
         

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