Credit Store, Inc. released unaudited results for the second quarter of its fiscal year 1998, which ended Nov. 30, 1997.
For the three months ending Nov. 30, 1997, Credit Store, Inc. reported revenues of $4.510 million, a 22 percent increase over the first quarter. Operating expenses were $5.456 million, and general and administrative expenses were $4.877 million, which together increased 25 percent over the first quarter. Net interest and other expenses for the quarter totaled $1.198 million. The net loss applicable to common stock for the second quarter was $7.121 million, equal to loss of $0.22 per common share, versus $5.415 million or $0.17 per share in the first quarter. The weighted average number of common shares outstanding remained unchanged for the period at 32,207,465.
In the second quarter, Credit Store, Inc. purchased $245 million in non-performing consumer debt portfolios versus $619 million in the previous quarter. The total gross principal of non-performing consumer debt acquired by the Company since its inception in Oct., 1996 is approximately $1.9 billion. The Company originated $25.230 million in new credit card receivables during the quarter versus $29.626 million the previous quarter. Credit card receivables balances before reserves increased 20 percent during the second quarter from $59.815 million to $71.933 million. As of Nov. 30, 1997, the Company had approximately 49,000 credit cards outstanding.
For the six months ended Nov. 30, 1997 (unaudited), Credit Store, Inc. reported revenues of $8.204 million, operating expenses of $9.909 million and general and administrative expenses of $8.711 million. Net interest and other expenses were $1.919 million. The net loss applicable to common stock for the period was $12.535 million, or $0.39 per share. For the six months period, the Company purchased $864 million in non-performing consumer debt portfolios and originated $55 million in new credit card accounts.
There are no comparative results for the previous fiscal year since operations commenced in October, 1996.
On Dec. 29, 1997, Credit Store, Inc. announced that a major institutional investor had committed to fund a $5 million private placement of new capital into the Company. The Company reports that this capital commitment has now been fully funded through the purchase of $2.5 million of common stock in January and $2.5 million of common stock in February. The proceeds will be used for general corporate purposes.
Credit Store, Inc. also announced implementation of workplace changes that improved operating efficiencies and will reduce cash expenses significantly. The changes included a 16 percent work force reduction put in place in January 1998, made possible by more effective procedures and continued investment in technology.
“We have now completed what we consider our start-up phase,” said Vice Chairman and CEO Martin Burke. “On entering the next phase, we undertook a complete operational review of the Company, with the goal of lowering our costs of originating new credit cards and of servicing our growing credit card portfolio. This review yielded significant results, allowing us to reduce our monthly operating costs without negatively affecting our origination capabilities.”
Credit Store Inc. is a nationwide financial services company that markets credit cards to consumers who previously had had an interruption in the repayment of their debts and may be excluded from the more traditional sources of consumer finance. The Company uses sophisticated methods to analyze, value and purchase portfolios of non-performing consumer debt from major institutional lenders at a substantial discount. The Company then uses its direct marketing expertise to contact and negotiate settlements with the consumer, most of the time placing the settlement on the new unsecured credit cards offered through The Credit Store. The Company offers an innovative and practical way for the consumer to rebuild their creditworthiness and gain access to an unsecured credit card.
Credit Store Inc.’s stock trades on the Electronic Bulletin Board under the symbol “PLCR”. The unaudited consolidated financial statements for the quarter and six months ending Nov. 30, 1997 are available from the Company upon request.
This press release contains forward-looking statements that involve uncertainties, including, but not limited to, risks and uncertainties related 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 environment and other risks. Future trends and results may differ materially from disclosures contained in this release.Details