Vancouver, B.C. / TheNewswire / February 26, 2019 – Solution Financial Inc. (TSX-V: SFI) (the “Company”) a leading provider of luxury automotive and yacht leasing in British Columbia, today announced its financial results for the quarter ending October 31, 2018.  

Earnings Highlights for the Quarter

• - Operating lease revenues grew 21% to a record $960,063.

  - Operating lease asset portfolio grew 33% to $12.3 Million.

  - Gross in house, brokering and sales transactions of $8.2 Million.

  - Net book value per share increased to $0.12 per share.

  - Raised convertible debenture financing totaling $3.4 Million

“The fourth quarter of 2018 remained steady with gross leasing and sales transactions consistent at approximately $2.7 Million per month despite a continuing slow down in the luxury and ultra luxury car market,” said Bryan Pang, Solution’s CEO.  “We continued to earmark capital to our in-house lease portfolio from on our operating cash flows and ongoing financing efforts which led to the record operating lease revenues during the quarter.  This did impact our profitability because the revenue from operating leases is recognized over the lease term rather than immediately when we broker lease transactions. We give up 6-7% when we broker leases so in the longer term, this strategy will generate higher returns for our shareholders.  Additionally, we continued to make enhancements to our leasing program including launching our new online dealer quoting system and our online customer vehicle lease and maintenance system. Our continued focus for 2019 will be on supporting our dealer network by raising additional lease capital which includes the recently extended 5% convertible debentures of which we’ve closed $2,000,000 thus far”, Bryan concluded.

Financial Results

Solution is reporting a net loss of $92,976, or $0.001, per share for the fourth quarter of 2018.  This compares to net income of $236,856, or $0.005 per share for the same period in 2017.  

Net loss for the year ended October 31, 2018 was $1,917,707 or $0.031 per share, compared to net income of $867,002 or $0.017 per share for the year ended October 31, 2017.

Adjusted net income for the year ended October 31, 2018 was $267,952 or $0.004 per share compared to $867,002 or $0.017 per share for the same period in 2017.  Adjusted Net Income excludes the one-time listing expense of $1,592,749 and the share-based compensation expense of $574,862 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 October 31, 2018, Solution had 207 vehicles on lease, a net increase of 35 vehicles and $3 Million added during the quarter to bring the total operating lease portfolio to $12.3 Million.

 

At October 31, 2018, the average remaining lease term for the portfolio remained at 2.25 years, weighted by net book value for each vehicle.  At October 31, 2018, Solutions’ 207 leases were generating annualized rental revenue of approximately $3.2 Million, a 23% increase during the quarter.

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.

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.

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.

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 Fourth 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, “Fourth Quarter 2018 Financial Highlights” and “Liquidity and Capital Resources” sections of the Fourth 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 forward-looking 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.

ON BEHALF OF THE BOARD

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

 

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval.  Where applicable, the Qualifying Transaction cannot close until the required shareholder approval is obtained.  There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

The Exchange has in no way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.  Trading in the securities of a capital pool company should be considered highly speculative.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States.  The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

All information contained in this news release with respect to Shelby and Solution Auto was supplied by the parties, respectively, for inclusion herein, and Shelby and its directors and officers have relied on Solution Auto for any information concerning such party.

This news release contains forward-looking statements relating to the timing and completion of the Proposed Transaction, the future operations of the Company, Solution Auto, and the Resulting Issuer and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Proposed Transaction and the future plans and objectives of the Company, Solution Auto, and the Resulting Issuer are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's, Solution Auto’s, and the Resulting Issuer’s expectations include the failure to satisfy the conditions to completion of the Proposed Transaction set forth above and other risks detailed from time to time in the filings made by the Company, Solution Auto, and the Resulting Issuer with securities regulations.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, Solution Auto, and the Resulting Issuer. As a result, the Company, Solution Auto, and the Resulting Issuer cannot guarantee that the Proposed Transaction will be completed on the terms and within the time disclosed herein or at all. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company, Solution Auto, and the Resulting Issuer will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.

 

Use of Non-GAAP Financial Information

In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, we present Adjusted EBITDA, which is a non-GAAP measure. Adjusted EBITDA, which is based upon the adjusted EBITDA which we report to our lenders, is a key measurement monitored by management, and is determined by taking net (loss) income (the nearest GAAP measure) and adding interest, taxes, depreciation, amortization, impairment charges, stock based compensation, bank fees, losses from extraordinary, unusual or nonrecurring items, noncash items, merger and other onetime expenses and severance. We believe that this non-GAAP measure, viewed in addition to and not in lieu of our reported GAAP results, provides useful information to investors by providing a more focused measure of operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measure presented herein may not be comparable to similarly titled measures presented by other companies.

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