Exhibit 99

 

 

 

Cachet Financial Solutions Reports Record Third Quarter 2015 Results

 

MINNEAPOLIS, Minn.  ̶  November 5, 2015  ̶  Cachet Financial Solutions, Inc. (OTCQB: CAFN), a leading financial technology provider of cloud-based mobile money management solutions to banks, credit unions and other financial services organizations, reported results for the third quarter ended September 30, 2015.

 

Management Commentary

 

“We experienced another record quarter in Q3,” said Cachet’s CEO Jeffrey Mack. “In fact, we set all-time highs in several metrics, including revenue and recurring revenue, transactions and billings.

 

“These achievements demonstrate our ongoing success in upselling and cross-selling to our customer base of more than 500 banks and credit unions. In fact, of the 49 new products we sold in Q3, 20 were to 14 existing customers; with the remainder sold to 29 new customers, like SOLE Financial and 1st Century Bank. This activity resulted in a 53% year-over-year increase in products sold and 30% increase in cumulative contract value.

 

“We remain focused on executing on our plan to capitalize on the fast growing, multi-billion dollar mobile banking and payment markets. Our success will be measured by the number of sign new customers signed, as well as our ability to upsell and cross-sell existing customers. Our success operationally will influence our financial goals, which include expanding recurring revenue to more than 80% of total revenue and achieving cash flow profitability during the fourth quarter. Longer term, our goal is for recurring revenue to cover our corporate operating costs.

 

“Looking ahead, we expect 2015 to be another growth year with improved profitability. Our operational progress this year, coupled with our expanding product portfolio and sales pipeline, have set the stage for an even stronger financial position in 2016.”

 

Q3 2015 Operational Highlights

 

●	Partnered with Advanced Fraud Solutions, a leader in fraud prevention and risk management software, to provide financial institutions the ability to check deposited items against all RDC channels in real-time.
●	Deployed Select Mobile™ Money platform for SOLE Financial’s Visa Paycard.
●	Partnered with Access Development to deliver the nation’s largest private collection of mobile coupons to Cachet’s network of financial institutions.
●	Integrated Select Business™ Merchant Capture platform for 1st Century Bank, a full-service business bank.
●	Selected by Denarii Systems, a global payment solutions provider, to integrate Select Mobile Money into Denarii’s prepaid debit card programs.
●	Launched an express version of Select Mobile™ Deposit, providing smaller banks and credit unions with an affordable, market-ready mobile deposit solution to offer to their customers and members.
●	Selected by CU Mobile Apps as its preferred mobile deposit provider.

 

 

Q3 2015 Performance Indicators

 

RDC Solutions		Q3 2015				vs. Q2 2015				Change				vs. Q3 2014				Change
Total Transactions			1,619,713				1,513,472				7	%			1,193,326				36	%
Products Sold (through the end of each period)			486				437				11	%			318				53	%
Live Product Implementations (through the end of each period)			353				312				13	%			208				70	%

 

Mobile Money Solutions		9/30/15				vs. 8/30/15				Change				vs. 7/31/15				Change
Monthly Active Users			31,788				31,468				1	%			30,453				4	%

 

Q3 2015 Financial Results

 

Revenue in the third quarter of 2015 increased 20% to a record $1.0 million from $855,600 in the same year-ago quarter. The increase was driven by growing adoption of the company’s Select Mobile and Select Business RDC solutions.

 

Recurring revenue from the company’s RDC products increased 55% to a record $752,000 (73% of revenue) in the third quarter of 2015 from $486,000 (57% of total revenue) in the same year-ago period.

 

At the end of the third quarter of 2015, the company’s total cumulative contract value increased 30% to a record $66.4 million from $50.9 million in the same year-ago period, with nearly the entire amount representing recurring revenue versus one-time setup or hosting fees. The company defines cumulative contract value as the estimated aggregate 36-month revenue potential of product and service contracts that the company signed with bank and credit union customers over the trailing 24-month period.

 

Billings, defined as the dollar amount of invoices sent to customers, totaled a record $1.4 million, an increase of 12% from $1.2 million in the prior quarter and increased 33% from $1.0 million in Q3 2014.

 

Cost of revenues in the third quarter of 2015 totaled $944,600 (92% of revenue), compared to $830,000 (97% of revenue) in the same year-ago period. Gross profit in the third quarter of 2015 improved to $85,300 from a gross profit of $25,800 in the same year-ago period.

 

Total operating expenses for the third quarter of 2015 decreased 4% to $2.3 million from $2.4 million in Q3 2014.

 

Net loss attributable to common stockholders in the third quarter of 2015 totaled $7.1 million, or $(0.29) per basic and diluted share, compared to a net loss of $5.2 million, or $(0.33) per basic and diluted share, in the third quarter of 2014.

 

Adjusted EBITDA loss (a non-GAAP term defined as net loss before interest, taxes, depreciation, amortization, stock-based compensation, and non-recurring items) for the third quarter of 2015 totaled $1.6 million compared to an adjusted EBITDA loss of $2.5 million in the same year-ago period (see further discussion about the use of adjusted EBITDA, below).

 

Non-GAAP loss for the third quarter of 2015 totaled $2.1 million, or $(0.09) per basic and diluted share, an improvement from a non-GAAP loss of $2.3 million, or $(0.15) per basic and diluted share, in the same year-ago period.

 

Conference Call

 

Cachet Financial Solutions will hold a conference call today (November 5, 2015) at 4:30 p.m. Eastern time (3:30 p.m. Central time) to discuss these results. Cachet’s president and CEO, Jeffrey Mack, and EVP and CFO, Darin McAreavey, will host the presentation, followed by a question and answer period.

 

Date: Thursday, November 5, 2015

Time: 4:30 p.m. Eastern time (3:30 p.m. Central time)

U.S. dial-in: 877-705-6003

International dial-in: 201-493-6725

 

 

The conference call will be broadcast simultaneously and available for replay via the investor section of the company’s website. During the conference call, Cachet management will refer to a supplementary slide presentation, which is also available for download in the investor section of the company’s website.

 

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

 

A replay of the call will be available after 7:30 p.m. Eastern time on the same day through December 5, 2015.

 

U.S. replay dial-in: 877-870-5176

International replay dial-in: 858-384-5517

Replay ID: 13623071

 

About Cachet Financial Solutions, Inc.

 

Cachet Financial Solutions is a leading cloud-based, SaaS technology provider serving the financial services industry with mobile money and remote deposit capture solutions for PC, Mac and mobile. Founded in early 2010, Cachet has quickly grown into a technology leader and trusted partner of some of the world’s largest and most respected financial organizations. With remarkable growth, an impressive client base and award-winning technologies, Cachet continues to drive innovation and deliver world-class solutions to financial institutions of all sizes.

 

The company’s industry-leading solutions help clients to increase customer engagement, grow revenues and gain competitive advantage. Cachet’s cloud-based technology platform simplifies development, deployment and servicing of consumer and commercial solutions—minimizing cost and accelerating speed-to-market and ROI. Enabled by Cachet’s complete suite of business and consumer solutions, financial institutions can better serve the needs of all their customers. For more information, visit www.cachetfinancial.com.

 

Use of Non-GAAP Information

 

In evaluating the Company’s financial performance and operating trends, management considers information concerning the Company’s net sales, adjusted gross margins, adjusted operating expenses, and adjusted EBITDA, among other items, which are not calculated in accordance with generally accepted accounting principles (“GAAP”) in the United States of America. The Company’s management believes these non-GAAP measures are useful to investors because they provide supplemental information that facilitates comparisons to prior periods and for the evaluation of financial results. Management uses these non-GAAP measures to evaluate its financial results, develop budgets and manage expenditures. The method the Company uses to produce non-GAAP results is not computed according to GAAP, is likely to differ from the methods used by other companies and should not be regarded as a replacement for corresponding GAAP measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which is attached to this release and can also be found on the Company’s website at www.cachetfinancial.com.

 

Reconciliation of Net Loss to Adjusted EBITDA

 

		Three Months Ended								Nine Months Ended
		September 30, 2015				September 30, 2014				September 30, 2015				September 30, 2014
Net loss, as reported		$	(6,963,421	)		$	(5,157,549	)		$	(19,015,214	)		$	(12,276,234	)
Interest expense and non-cash financing charges			4,791,719				2,500,678				7,861,495				4,997,379
Share price conversion adjustment			-				-				3,704,683				-
Inducement of convert debt and warrants			-				370,308				-				378,214
Depreciation and Amortization			243,262				202,530				669,797				500,818
Share-based compensation			147,994				68,131				302,302				151,574
Warrants issued for professional services			160,000				18,845				178,612				20,611
Adjusted EBITDA		$	(1,620,446	)		$	(1,997,057	)		$	(6,298,325	)		$	(6,227,638	)

 

 

Forward-Looking Statements

 

This press release contains certain statements that would be deemed “forward-looking statements” under Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1933 and includes, among other things, discussions of our business strategies, future operations and capital resources. Words such as “may,” “likely,” “anticipate,” “expect”, “plan” and “believes” indicate forward-looking statements.

 

These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements include statements about the anticipated closing of our initial public offering and the number of shares to be sold in the offering.

 

Forward-looking statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. We discuss many of these risks in greater detail in our Current Report on Form 10K filed with the Securities and Exchange Commission on April 14, 2015 under the heading “Risk Factors” and in the other reports we file with the Commission. Given these uncertainties, you should not attribute undue certainty to these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this press release. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

 

Contact Information:

 

Darin McAreavey

EVP & CFO

Cachet Financial Solutions

952-698-5214

dmcareavey@cachetfinancial.com

 

Investor Relations:

Matt Glover or Najim Mostamand

Liolios Group, Inc.

949-574-3860

CAFN@liolios.com

 

 

CACHET FINANCIAL SOLUTIONS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

 

		Three Months Ended								Nine Months Ended
		September 30, 2015				September 30, 2014				September 30, 2015				September 30, 2014
REVENUE		$	1,029,958			$	855,631			$	3,036,648			$	1,941,030
COST OF REVENUE			944,632				829,878				2,812,825				2,165,172
GROSS PROFIT (LOSS)			85,326				25,753				223,823				(224,142	)
OPERATING EXPENSES
Sales and Marketing			734,070				777,564				2,489,869				1,969,712
Research and Development			487,613				731,433				2,133,842				1,742,239
General and Administrative			1,035,345				843,319				3,034,773				2,999,547
TOTAL OPERATING EXPENSES			2,257,028				2,352,316				7,658,484				6,711,498
OPERATING LOSS			(2,171,702	)			(2,326,563	)			(7,434,661	)			(6,935,640	)
INTEREST EXPENSE AND NON-CASH FINANCING CHARGES			4,791,719				2,500,678				7,861,495				4,997,379
SHARE PRICE CONVERSION ADJUSTMENT			-				-				3,704,683				-
INDUCEMENT TO CONVERT DEBT AND WARRANTS			-				370,308				-				378,214
OTHER (INCOME) EXPENSE			-				(40,000	)			14,375				(34,999	)
NET LOSS			(6,963,421	)			(5,157,549	)			(19,015,214	)			(12,276,234	)
LESS: CUMULATIVE UNPAID PREFERRED DIVIDENDS			(109,773	)			(1,203	)			(143,551	)			(1,203	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		$	(7,073,194	)		$	(5,158,752	)		$	(19,158,765	)		$	(12,277,437	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and fully diluted			24,649,163				15,545,567				30,563,917				9,413,335
Net loss per common share - basic and fully diluted		$	(0.29	)		$	(0.33	)		$	(0.63	)		$	(1.30	)

 

 

CACHET FINANCIAL SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

		As of
		September 30, 2015				December 31, 2014
		(unaudited)				(audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	123,197			$	112,221
Accounts receivable, net			563,377				314,743
Deferred commissions			71,518				80,348
Prepaid expenses			452,895				402,040
TOTAL CURRENT ASSETS			1,210,987				909,352
PROPERTY AND EQUIPMENT, net			649,807				295,925
GOODWILL			204,000				204,000
INTANGIBLE ASSETS, NET			995,254				1,437,001
DEFERRED COMMISSIONS			41,906				103,312
DEFERRED FINANCING COSTS			143,262				61,153
TOTAL ASSETS		$	3,245,216			$	3,010,743
LIABILITIES AND SHAREHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable		$	1,160,055			$	746,554
Accrued expenses			170,641				201,768
Accrued interest			225,816				182,184
Deferred revenue			980,277				747,113
Warrant liability			-				163,570
Current maturities of capital lease obligations			335,556				-
Current portion of long-term debt			2,165,935				2,070,217
TOTAL CURRENT LIABILITIES			5,038,280				4,111,406
CAPITAL LEASE OBLIGATIONS, net of current maturities			386,048				-
LONG TERM DEBT, net of current portion			2,492,000				2,566,486
WARRANT LIABILITY			7,159,193				146,000
DEFERRED REVENUE			470,482				412,219
ACCRUED INTEREST			312,301				160,593
ACCRUED RENT			66,658				25,333
TOTAL LIABILITIES			15,924,962				7,422,037
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ DEFICIT
Convertible preferred stock, $.0001 Par Value, 20,000,000 shares authorized, 44,030 and 2,229,702 issued and outstanding			4				223
Common shares, $.0001 Par Value, 500,000,000 shares authorized, 30,802,179 and 16,934,497 issued and outstanding			3,080				1,694
ADDITIONAL PAID-IN-CAPITAL			58,138,889				47,307,314
ACCUMULATED DEFICIT			(70,821,719	)			(51,720,525	)
TOTAL SHAREHOLDERS’ DEFICIT			(12,679,746	)			(4,411,294	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT		$	3,245,216			$	3,010,743

 

 

CACHET FINANCIAL SOLUTIONS, INC.

GAAP TO NON-GAAP RECONCILIATION CONSOLIDATED STATEMENT OF OPERATIONS

 

		Three Months Ended												Nine Months Ended
		GAAP								Non-GAAP				GAAP								Non-GAAP
		September 30, 2015				Adjustments				September 30, 2015				September 30, 2015				Adjustments				September 30, 2015
REVENUE		$	1,029,958			$	-			$	1,029,958			$	3,036,648			$	-			$	3,036,648
COST OF REVENUE			944,632	(1)			(147,249	)			780,322				2,812,825	(1)			(441,747	)			2,337,579
				(2)			(17,061	)								(2)			(33,499	)
GROSS PROFIT (LOSS)			85,326				164,310				249,636				223,823				475,246				699,069
OPERATING EXPENSES
Sales and Marketing			734,070	(2)			(26,951	)			707,119				2,489,869	(2)			(58,012	)			2,431,857
Research and Development			487,613	(2)			(23,822	)			463,791				2,133,842	(2)			(62,963	)			2,070,879
General and Administrative			1,035,345	(2)			(80,160	)			955,185				3,034,773	(2)			(147,828	)			2,886,945
TOTAL OPERATING EXPENSES			2,257,028				(130,933	)			2,126,095				7,658,484				(268,803	)			7,389,681
OPERATING LOSS			(2,171,702	)			295,243				(1,876,459	)			(7,434,661	)			744,049				(6,690,612	)
INTEREST EXPENSE and non-cash Financing Charges			4,791,719	(3)			(4,663,589	)			128,130				7,861,495	(3)			(7,467,954	)			393,541
SHARE PRICE CONVERSION ADJUSTMENT			-				-				-				3,704,683	(3)			(3,704,683	)			-
OTHER (INCOME) EXPENSE			-				-				-				14,375				-				14,375
NET LOSS			(6,963,421	)			4,958,832				(2,004,589	)			(19,015,214	)			11,916,686				(7,098,528	)
LESS: CUMULATIVE UNPAID PREFERRED DIVIDENDS			(109,773	)			-				(109,773	)			(143,551	)			-				(143,551	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		$	(7,073,194	)		$	4,958,832			$	(2,114,362	)		$	(19,158,765	)		$	11,916,686			$	(7,242,079	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and fully diluted			24,649,163				24,649,163				24,649,163				30,563,917				30,563,917				30,563,917
Net loss per common share - basic and fully diluted		$	(0.29	)		$	0.20			$	(0.09	)		$	(0.63	)		$	0.39			$	(0.24	)

 

(1) - Non-cash amortization expense related to identified intangible assets

(2) - Non-cash stock based compensation expense

(3) - Non-cash interest expense and other non-cash one-time charges

 

 

CACHET FINANCIAL SOLUTIONS, INC.

GAAP TO NON-GAAP RECONCILIATION CONSOLIDATED STATEMENT OF OPERATIONS

 

		Three Months Ended												Nine Months Ended
		GAAP								Non-GAAP				GAAP								Non-GAAP
		September 30, 2014				Adjustments				September 30, 2014				September 30, 2014				Adjustments				September 30, 2014
REVENUE		$	855,631			$	-			$	855,631			$	1,941,030			$	-			$	1,941,030
COST OF REVENUE			829,878	(1)			(159,501	)			664,867				2,165,172	(1)			(332,750	)			1,823,166
				(2)			(5,510	)								(2)			(9,256	)
GROSS PROFIT (LOSS)			25,753				165,011				190,764				(224,142	)			342,006				117,864
OPERATING EXPENSES
Sales and Marketing			777,564	(2)			(17,944	)			759,620				1,969,712	(2)			(21,961	)			1,947,751
Research and Development			731,433	(2)			(9,628	)			721,805				1,742,239	(2)			(13,007	)			1,729,232
General and Administrative			843,319	(2)			(35,049	)			808,270				2,999,547	(2)			(107,350	)			2,892,197
TOTAL OPERATING EXPENSES			2,352,316				(62,621	)			2,289,695				6,711,498				(142,318	)			6,569,180
OPERATING LOSS			(2,326,563	)			227,632				(2,098,931	)			(6,935,640	)			484,324				(6,451,316	)
INTEREST EXPENSE AND NON-CASH FINANCING CHARGES			2,500,678	(3)			(2,263,436	)			237,242				4,997,379	(3)			(3,425,526	)			1,571,853
INDUCEMENT TO CONVERT DEBT AND WARRANTS			370,308	(3)			(370,308	)			-				378,214	(3)			(378,214	)			-
OTHER (INCOME) EXPENSE			(40,000	)			-				(40,000	)			(34,999	)			-				(34,999	)
NET LOSS			(5,157,549	)			2,861,376				(2,296,173	)			(12,276,234	)			4,288,064				(7,988,170	)
LESS: CUMULATIVE UNPAID PREFERRED DIVIDENDS			(1,203	)			-				(1,203	)			(1,203	)			-				(1,203	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		$	(5,158,752	)		$	2,861,376			$	(2,297,376	)		$	(12,277,437	)		$	4,288,064			$	(7,989,373	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and fully diluted			15,545,567				15,545,567				15,545,567				9,413,335				9,413,335				9,413,335
Net loss per common share - basic and fully diluted		$	(0.33	)		$	0.18			$	(0.15	)		$	(1.30	)		$	0.46			$	(0.85	)

 

(1) - Non-cash amortization expense related to identified intangible assets

(2) - Non-cash stock based compensation expense

(3) - Non-cash interest expense and other non-cash one-time charges