Credit Store, Inc., a national credit card company that markets unsecured credit cards to individuals who have experienced difficulty in meeting their debt obligations, today released unaudited results for the first quarter of its fiscal year 1998, which ended Aug. 31, 1997.
For the three months ending Aug. 31, 1997, the first quarter of the 1998 fiscal year, Credit Store, Inc. reported revenues of $3.834 million. Net interest and other expenses of $4.453 million, and general and administrative expenses of $3.834 million. Net interest and other expenses for the quarter was $721,674.
The company reports that a significant portion of the operating, general and administrative expenses were attributable to costs associated with continuing to expand the work force and to build infrastructure to keep pace with business needs and expansion plans. The net loss for the period applicable to common stock was $5.415 million, or a loss of $0.17 per common share. Although the net loss for the period was $5.415 million, the cash used in operating activities was $3.512 million, principally because of non-cash expenses represented by provision for credit card losses, deprecation and amortization and cost recovery of the investment in credit cards.
Reviewing the period Jan. 1, 1997 through Aug. 31, 1997, Credit Store, Inc. accounced the following highlights and trends:
–More than $913 million in non-performing consumer debt portfolios have been acquired since Jan., 1997 (purchased at substantial discounts).
–Monthly gross cash-flow-before-expenses from credit card payments has increased from $670,000 in Jan. 1997 to $1,657,792 in Aug. 1997. In addition, monthly gross cash-flow-before-expenses from non-card holders increased from $36,516 in January, to $138,485 in August. Thus, total gross cash-flow-before-expenses increased from approximately $706,000 in January to $1.796 million in August.
–The amount of cash needed monthly to fund credit card purchases and cash advances increased at a slower rate than gross payments, from $405,000 in Jan., 1997 to $1.309 million in August. This has allowed monthly net cash flow (monthly gross credit card and non-credit payments, less monthly funding of credit card purchases and cash advances) to increase from $301,000 in January to $487,000 in August.
–Since Jan. 1, 1997, the Company has generated $39.0 million in face value of new credit card receivables before reserves, increasing the Company’s face value of total receivables outstanding before reserves to $59.8 million at Aug. 31, 1997. The Company has increased the number of its credit cards outstanding from 16,131 at Jan. 1, 1997, to 39,998 at Aug. 31, 1997.
–As of Aug. 31, 1997, the Company’s net investment in non-performing consumer debt portfolios, based upon purchase price, was $25.9 million. At the same time, the Company’s face value of gross credit card receivables before reserves was $59.8 million. In addition to interest collected on the face value of the credit card recievables, the Company expects to record a gain net of reserves and other expenses based on part of the difference between the company’s gross credit card receivables and its investment in the purchase of consumer debt portfolios.
Credit Store, Inc., based in Sioux Falls, S.D., extends unsecured credit cards to persons who, because of a change in their economic fortunes, have been unable to meet their debt obligations. The Company purchases charged-off debt from major national credit institutions at a fraction of their face value, and through a sophisticated process of sorting and marketing, converts the charged-off debt into performing credit cards that generate interest and fee income for the company.
“Given the rapid growth in consumer debt delinquencies and defaults, Credit Store is positioned to take advantage of expanding opportunities to purchase charged-off consumer debt,” Burke said. “And by offering consumers access to unsecured credit cards, we are giving them an innovative and practical way to restore their credit worthiness and their financial dignity.”
Credit Store, Inc.’s stock trades on the Electronic Bulletin Board under the symbol “PLCR”
The unaudited consolidation financial statements for the first quarter are available from the Company upon request.
This press release contains forward-looking statements that involve risks and uncertainties, including but not limited to, risks and uncertainties relating to financing, timing and management of growth, historic and future default and delinquency rates and losses, the market for and market value of the Company’s credit card receivables, the competitive enviornment and other risks. Future trends and results may differ materially from disclosures contained in this press release.