SOURCE: EFactor Group Corp.

EFactor Group Corp.

November 18, 2015 16:29 ET

EFactor Group Corp. Reports Third Quarter 2015 Financial Results

Third Quarter Revenues of $1.4 Million Represent a 293% Increase Year Over Year and 30% Increase Sequentially; All Business Divisions Report Increased Revenues Year Over Year and Sequentially

NEW YORK, NY--(Marketwired - Nov 18, 2015) -  EFactor Group Corp. (OTCQB: EFCT) ("EFactor Group" or the "Company"), the premier business network for entrepreneurs designed to provide a variety of tools and business services to help drive business success, today announced financial results for its third quarter and nine months ended September 30, 2015.

Third Quarter and Nine Months 2015 Highlights and CEO Commentary

  • Consolidated revenues from the Company's three divisions reach a record $1.4 million, the highest quarterly revenue recorded to date and representing 293% growth year over year
  • Each business division -- Social Networks, Business Services, Funding -- reports year over year and sequential quarterly growth
  • Social Networks revenues increase 443% year over year and 21% quarter over quarter to $0.7 million
  • Business Services revenues increase 168% year over year and 25% quarter over quarter to $0.6 million
  • The Funding Division contributes $0.1 million in revenues in its first full quarter of operations under EFactor Group
  • For the nine month period of 2015, revenues increased 459% to $3.5 million year over year

"While our year over year revenue growth figures are impressive, the sequential double-digit growth quarter over quarter is the result with which we are most pleased," began Adriaan Reinders, CEO of EFactor Group. "Sequential growth, quarter over quarter, demonstrates the operational improvements of each of our business divisions. It furthermore shows the business opportunities EFactor Group is providing to our members in our Social Networks division. Servicing our Social Networks members and connecting them to complementary entrepreneurial services in marketing, advertising, staffing, mentoring and funding, is the backbone of our business model and strategy. Subsequent to the end of the quarter, we also reported the opening of two new offices in Dubai and Hong Kong, and reaching 2.0 million members in our Social Networks division. These events and achievements also demonstrate that the content and services provided though our Social Networks division is generating more entrepreneurial following, increasing attendance at events and producing new member registrations. Simply put, more members equals more revenues and for this reason, increasing membership is our number one goal."

Third Quarter and Nine Months 2015 Business Division Revenues and Comparison

             
    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
DIVISION   2015   2014   Change     2015   2014   Change  
Social Networks   $ 694,649   $ 127,845   443 %   $ 1,756,011   $ 191,748   816 %
Business Services   $ 606,897   $ 226,058   168 %   $ 1,583,946   $ 427,286   271 %
Funding   $ 87,529     -   -     $ 118,516     -   -  
  GROUP TOTAL   $ 1,389,075   $ 353,903   293 %   $ 3,458,413   $ 619,034   459 %

Total consolidated revenue for the third quarter ended September 30, 2015 was $1,389,075 versus $353,903 for the same period in 2014. The 443% increase in revenues was attributed to organic growth for each division as well as acquisitions. 

The Social Networks division increased revenues for the third quarter ended September 30, 2015 to $694,649 versus $127,845 during the same period in 2014. The Social Networks division's 443% growth in revenues for the quarter was achieved through the Company's acquisitions of GroupCard and ELEQT in 2014 and each business' increases in memberships, membership fees, event sponsorships, advertising and sales of their respective service offerings. Sequentially, the Social Networks division grew 21% in the third quarter versus the second quarter 2015. EFactor Group's Social Networks division hosted and monetized 60 member events in the third quarter of 2015, including events in Europe, the Middle East, North America, South America and Asia. 

The Business Services division recorded third quarter 2015 revenues of $606,897 versus $226,058 in the third quarter of 2014. The 168% increase in revenues for the quarter was related to the division's ability secure new business opportunities through marketing their services on EFactor.com and the division's organic growth. The division's operating businesses provide mentoring, staffing, public relations, advertising and marketing services to dedicated customers and new customers who have been presented their resources via EFactor Group's Social Networking platforms and the Company's proprietary algorithm, "EScore."

The Funding division includes RocketHub, which the Company acquired in April 2015. In its first full quarter of reported operations under EFactor Group, the division recorded $87,529 in revenues. The division's revenues are derived from commissions from RocketHub's donation-based crowdfunding platform. The Company intends to apply on January 29th 2016 for SEC approval to use the platform for equity based crowdfunding following the SEC's recent approval of rules relating to equity crowdfunding.

Nine Month Period Ended September 30th, 2015

Consolidated revenues for the nine months ended September 30th, 2015 were $3.5 million, representing a 459% increase year over year. Social Networks revenues were $1.8 million, versus $0.2 million in the same period 2014, an 816% increase. The Business Services division increased revenues 271% to $1.6 million versus $0.4 million in 2014. 

On a year over year basis, EFactor Group also increased its Social Network membership base 53% to 2.0 million member, versus 1.3 members for the same period in 2014.

Cash and Non-Cash Expenses

EFactor Group's total operating expenses are a combination of cash, and non-cash items. Costs of revenues including sales and marketing expenses to support EFactor Group's three business divisions totaled $0.6 million for the quarter. The increase is mainly attributable to a direct result of increased sales for the three months ended September 30, 2015.

General and administrative costs for the quarter were $2.5 million, versus $3.4 million in 2014. Excluding $0.4 million and zero of non-cash, stock-based compensation captured in each respective quarter, the adjusted, non-GAAP general and administrative expenses were $2.1 million for the third quarter, representing an increase of 100% mainly attributable to the added entities within EFactor Group, the new design and marketing platform for the Company's website, and legal, accounting and investment banking fees related to public market expenses and EFactor's goals to up-list to a national securities exchange in the US.

Also included in GAAP expense for the quarter is $0.4 million in non-cash, goodwill impairment adjustments that reflect the Company's re-assessment of goodwill value. When accounting for these non-cash expenses, the Company's adjusted, non-GAAP operating expenses were $2.7 million for the quarter ended September 30th, 2015 versus $1.3 million for the same period in 2014.

GAAP and Adjusted Earnings

Third quarter 2015 GAAP net loss decreased to $2.8 million from a loss of $3.7 million for the three month period ended September 30, 2014. The decrease in net loss compared to the prior year period is primarily a result of increased revenues in the Company's divisions, related operating expenses and $1.1 million of derivative related gain resulting from the change in the fair value of the Company's derivative related liabilities. 

Excluding the non-cash components of expenses outlined earlier, adjusted net loss for the quarter was $1.4 million or a loss of $0.43 per share based on a weighted average of 2,875,426 shares as of September 30, 2015.

Use of Non-GAAP Financial Measures

To supplement the Company's condensed financial statements presented in accordance with GAAP, EFactor Group Corp. uses certain non-GAAP measures of certain components of financial performance. These non-GAAP measures include; Adjusted Expense and Adjusted, Non-GAAP net income and earnings per share. These adjusted numbers exclude certain non-cash charges relating to derivative adjustments, value of stock based compensation and changes in value of goodwill. "Adjusted," or "Non-GAAP," measures are provided to enhance investors' overall understanding of the Company's current financial performance, prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes that these non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results. The Company believes the non-GAAP measures that exclude such items when viewed with GAAP results and the accompanying reconciliation, enhance the comparability of results against prior periods and allow for greater transparency of financial results. The Company believes non-GAAP measures facilitate management's internal comparison of the Company's financial performance to that of prior periods as well as trend analysis for budgeting and planning purposes. The presentation of non-GAAP measures are not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

About EFactor Group Corp.

EFactor Group Corp. is the premier business network for entrepreneurs designed to provide a variety of tools and business services to help drive business success. Through its wholly owned business services subsidiaries, EFactor Group provides its growing entrepreneurial community of over 2.0 million members with social networking and education, entrepreneur-focused business services, and financing opportunities including crowd funding. A proprietary selection and matching algorithm to offer specific content and resources tailored to each entrepreneur's unique business needs. With members in every country in all 196 countries in the world across 240 industry groups, EFactor Group has built the only comprehensive entrepreneurial community that serves as a source of inspiration and ideas on platform that also consolidates essential services to foster business growth.

EFactor Group's operations are categorized by the following Business Divisions:

1. Social Networking
2. Business Services
3. Funding options.

For more information about EFactor Group Corp. (EFCT), please visit: http://efactorgroup.com. Or see our company video here: http://ir.efactorgroup.com/videos/view/4/efactor-video

Cautionary Note on Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not statements of historical fact and often contain words such as "may," "will," "expect," "believe," "anticipate," "plan," "estimate," "seek," "could," "should," "intend," "potential," or words of similar meaning. Forward-looking statements are based on management's current expectations, beliefs, assumptions and estimates regarding our company, industry, economic conditions, government regulations, energy policies and other factors. These statements are subject to significant risks, uncertainties, and assumptions that are difficult to predict and could cause actual results to differ materially and adversely from those expressed or implied in the forward-looking statements. These risks include risk factors described from time to time in the reports and registration statements we file with the Securities and Exchange Commission, including those in our most recent Form 10-K and any updates thereto in our Forms 10-Q. There may be other risks and uncertainties that are not currently known to us or that we currently believe are not material. We make forward-looking statements based on currently available information, and we assume no obligation to, and expressly disclaim any obligation to, update or revise publicly any forward-looking statements made in this release, whether as a result of new information, future events or otherwise, except as required by law.

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