Fintech Investing

Solution Financial Inc. (TSXV: SFI) (the “Company”) a leading provider of luxury automotive and yacht leasing in British Columbia, today announced its financial results for its third quarter ending July 31, 2018 and the close of an initial tranche of $1.38 Million in convertible debentures.

Solution Financial Inc. (TSXV: SFI) (the “Company”) a leading provider of luxury automotive and yacht leasing in British Columbia, today announced its financial results for its third quarter ending July 31, 2018 and the close of an initial tranche of $1.38 Million in convertible debentures.

Highlights for the Quarter

  • – Net loss for the quarter of $2.0 million

    – Adjusted net income of $103,127(1)

    – Gross in-house leasing, lease brokering and sales transactions of $11.4 million(1)

    – Net revenues of $1.3 million

    – Operating lease asset portfolio $9.2 million

    – Book value per share of $0.11 per share

    – Raised net proceeds of $3.3 million at $0.25 per Unit

“We are very excited to present our first quarterly results as a public company and welcome all our new shareholders to the Company. Despite the net loss from the RTO listing process we were satisfied with the quarters results,” said Bryan Pang, Solution’s CEO. “This quarter’s luxury car sales picked up from earlier in the year which had been impacted by the new BC luxury sales taxes, higher interest rates and tighter restrictions on overseas money coming to Canada but our business model is adaptable to those types of challenges,” he continued. “Success in our business requires a good balance between underwriting new deals and ensuring there is value in each deal. We provide leasing to the best luxury car retailers in Vancouver and we deliver smart, fast leasing solutions that meets everyone’s needs. This keeps a steady pace of business no matter what cyclical trends are happening. We finished the quarter with a record volume of in-house deals and kept our operating income positive which is always our primary goal”, Bryan concluded.

Financial Results

Solution is reporting a net loss of $2.0 million, or 0.032, per share for the third quarter of 2018. This compares to net income of $224,962, or 0.004, for the same period in 2017.

Net loss for the nine months ended July 31, 2018 was $1.8M or $0.033 per share, compared to net income of $630,166, or $0.012, for the nine months ended July 31, 2017.

Adjusted Net Income was $103,127 for the third quarter ending July 31, 2018, or $0.002 per share compared to $224,962, or $0.004, for the same period in 2017. This decrease was a result of higher administration and professional services fees associated with preparing to become a public company and the significant increase in the in-house leasing portfolio during the quarter. When the Company brokers leases, it recognizes brokerage revenue immediately but when it leases directly, the Company recognizes higher long-term earnings but over the term of the lease. This strategy will impact short-term earnings while the Company expands its in-house lease portfolio but is expected to increase the aggregate long-term earnings potential of the Company. Adjusted Net Income excludes the one-time listing expense of $1,603,258 and the share-based compensation expense of $526,313 that was incurred at the time of the going public transaction and may not be indicative of the Company’s ongoing financial performance.

Lease Portfolio

At July 31, 2018, Solution had 172 vehicles on lease, a 16% increase compared to last fiscal year.

At July 31, 2018, the average remaining lease term for the portfolio was 2.25 years, weighted by net book value for each vehicle. At July 31, 2018, Solutions 172 leases were generating annualized rental payments of approximately $2.6 million.

Convertible Debentures

On September 14, 2018, the Company announced a $2 million unsecured convertible debenture financing to support ongoing in-house leasing business opportunities. The Company is closing on $1,380,000 of that financing, with the intention of continuing to market this investment opportunity to qualifying investors subject to TSX Venture approval. The Debentures will mature on the second anniversary of the date of issuance and bear interest at a rate of 3.99% per annum, calculated and paid semi-annually. The principal amount and any accrued and unpaid interest on the Debenture may be convertible into Common shares, in whole or in part, at any time following the Issue Date but on or before the Maturity Date at a conversion price of $0.40 per Share.

About Solution

Solution Financial was incorporated under the provisions of the Business Corporations Act (British Columbia) in 2004 and specializes in sourcing and leasing luxury and exotic vehicles, yachts and other high value assets. Solution works with a select group of automotive and marine dealerships providing lending solutions to clients who cannot obtain leasing terms with traditional Canadian financial institutions or other sub-prime lenders. Typical customers include new immigrants, business owners and international students. Solution Auto provides a unique leasing experience whereby it partners with its clients to help them navigate the challenges of acquiring, insuring, maintaining and upgrading vehicles and luxury assets in Canada.

Note 1- Non-IFRS Financial Metrics

Solution provides all financial information in accordance with International Financial Reporting Standards (“IFRS”). To supplement our consolidated financial statements presented in accordance with IFRS, we are also providing with this press release, certain non-IFRS financial measures, including Adjusted Net Income. In calculating these non-IFRS financial measures, we have excluded certain transactions that are not necessarily indicative of our ongoing operations. These transactions included the listing expense associated with the Company completing the RTO transaction with Shelby Ventures and the expense of stock options at the time of the Company becoming a public Company.

No securities of the Company (including, for greater certainty, the Shares issued to the former Solution shareholder, on conversion of the Subscription Receipts or pursuant to the Non-Brokered Placement) have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or the securities laws of any state, district or commonwealth of the United States (as defined in Regulation S under the U.S. Securities Act). Accordingly, these securities may not be offered or sold, directly or indirectly, within the United States or to or for the account or benefit of any “U.S. Person” (as defined in Regulation S under the U.S. Securities Act), absent an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described in this news release in the United States or any jurisdiction where such offer or sale would be unlawful, or for the account or benefit of any U.S. Person or person within the United States.

Cautionary Statement Regarding Forward- Looking Statements

This press release contains “forward-looking information” as defined under applicable Canadian securities laws. This information includes, but is not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements made with respect to management’s beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. Forward-looking information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in this press release.

Solution’s primary business activities are both competitive and subject to various risks. These risks include market, credit, liquidity, operational and legal and regulatory risks and other risk factors including, without limitation: volume of new financings and mergers and acquisitions, dependence on key personnel and sustainability of fees. Other factors, such as general economic conditions, including interest rate fluctuations, may also have an effect on Solution’s results of operations. Many of these risks and uncertainties can affect Solution’s actual results and could cause its actual results to materially differ from those expressed or implied in any forward-looking information disclosed by management or on its behalf. For a description of additional risks that could cause our actual results to materially differ from our current expectations, see “Risk Management” and “Risk Factors” in the Third Quarter 2018 MD&A and “Risk Factors”. These risks and uncertainties are not the only ones facing Solution. Additional risks and uncertainties not currently known to us or that we currently consider immaterial may also impair the operations of the Solution.

Material assumptions or factors underlying the forward-looking information contained in this press release include, but are not limited to, “Third Quarter 2018 Financial Highlights” and “Liquidity and Capital Resources” sections of the Third Quarter 2018 MD&A. Although forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forwardlooking information. Certain statements included in this press release may be considered a “financial outlook” for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this press release.

The forward-looking information contained in this press release is made as of the date of this press release, and should not be relied upon as representing Solution’s views as of any date subsequent to the date of this press release. Except as required by applicable law, management and Solution’s Board of Directors undertake no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

For further information please contact Sean Hodgins at (778) 318-1514.


(signed) “Bryan Pang”
Brian Pang
President, CEO and Director

Click here to connect with Solution Financial Inc. (TSXV: SFI) for an Investor Presentation.




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