Longfin Corp. Reports 2017 Financial Results

New York, New York, UNITED STATES


New York, April 03, 2018 (GLOBE NEWSWIRE) -- Longfin Corp. (“Longfin” or the “Company”) (NASDAQ CM: LFIN), a finance and technology company, released its financial results for the period ended December 31, 2017.

Highlights

  • Consolidated revenue of $75.0 million for the period commencing February 1, 2017 (inception) and ending December 31, 2017 (“Fiscal 2017”).

Fiscal 2017 Results

Revenue

For  Fiscal 2017, the Company reported revenue of $75.0 million, consisting of:

  • Physical Commodities - Revenue primarily consisted of $66.6 million related to the sale of physical commodities, including $12.2 million of sales to related parties.
     
  • Technology - Technology revenue of $8.4 million comprised of fees paid by third parties for using the Company’s proprietary risk management and trading infrastructure technology.
     
  • Other Revenue - Other revenue consisted of incentive income from trading exchanges for transaction execution, recognized when earned.       

Operating Expenses

Operating expenses primarily consisted of $65.1 million of expenses directly related to the Company’s sale of physical commodities (including $10.0 million of related party purchases), $33.3 million of employee related expenses consisting of $26.0 million of one-time non-cash stock-based compensation expense and $0.4 million of wages and benefits, $3.8 million of fees related to the Company’s technology revenue, $3.3 million of amortization expense related to the intangible assets acquired with the Stampede acquisition, $1.3 million of depreciation and amortization related to the Company’s computer equipment, and $0.8 million of other operations and administrative expenses including legal and professional fees.

Income tax expense

Income tax expense of $0.7 million includes current tax expense of $0.5 million which includes U.S. federal income tax expense of $0.6 million related to the treatment of foreign income upon transition to a participation exemption system of taxation (“Transition Tax”) offset a by foreign tax benefit of $0.1 million and deferred tax expense of $0.2 million related to foreign deferred tax liabilities.

Net Loss

The Company has net loss of approximately $(26.4) million for the year ended December 31, 2017, due primarily to one-time employee stock compensation charges.

Cash and Liquidity Position

As of December 31, 2017, the Company had $2.2 million in cash and $36.8 million in accounts receivable and total liabilities of $39.3 million. In management’s opinion, the Company’s cash position, the initial $5.0 million and the remaining expected amounts to be received of $42.6 million pursuant to the January 2018 convertible note financing and forecasted cash generated from operations is sufficient to fund the Company’s expenses and growth strategy over the next year.


LONGFIN CORP. AND SUBSIDIARIES

Consolidated Statement of Operations

For the period from February 1, 2017 (inception) through December 31, 2017

(In thousands, except share and per share amounts)

Revenue:   
Sale of physical commodities (includes sales to related parties of $12,249) $66,603 
Technology revenue  8,413 
Other revenue  32 
Total revenue  75,048 
     
Operating expenses:    
Cost of physical commodities revenues (includes related parties purchases of $10,047)  65,062 
Cost of technology revenue (includes related party cost of $3,838)  3,840 
Stock-based compensation  25,986 
Employee compensation and payroll taxes  409 
Operations and administrative  786 
Depreciation and amortization  1,308 
Amortization of acquired intangible assets  3,295 
Total operating expenses  100,686 
     
Loss from operations  (25,638)
     
Other income (expenses)    
Other income , net  5 
Total other income, net  5 
Loss before income taxes  (25,633)
Income tax expense  736 
Net loss $(26,369)
     
Net loss per common share, basic $(0.58)
Net loss per common share, diluted $(0.58)
     
Weighted average common shares outstanding, basic  45,236,287 
Weighted average common shares outstanding, diluted  45,236,287 

Consolidated Balance Sheet
December 31, 2017
(in thousands, except share data)

ASSETS   
Current assets    
Cash and cash equivalents $2,189 
Accounts receivable  36,805 
Due from related parties  4,721 
Other current assets  336 
Total current assets  44,051 
Property, plant and equipment, net  8,429 
Intangibles, net  35,305 
Goodwill  90,474 
Total assets $178,259 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities    
Accounts payable $21,987 
Accrued expenses  3,369 
Due to related parties  5,843 
Income taxes  305 
Total current liabilities  31,504 
Income taxes  354 
Deferred taxes  7,435 
Total liabilities  39,293 
     
Commitments and contingencies    
     
Stockholders’ equity    
Class A voting common stock, $0.00001 par value; 100,000,000 shares authorized; 46,540,989 shares issued and outstanding as of December 31, 2017  1 
Class B voting common stock, $0.00001 par value; 75,000,000 shares authorized; 30,000,000 shares issued and outstanding as of December 31, 2017  - 
Class C voting common stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of December 31, 2017  - 
Additional paid-in capital  165,334 
Accumulated deficit  (26,369)
Total stockholders’ equity  138,966 
Total liabilities and stockholders’ equity $178,259 

Consolidated Statement of Cash Flows
For the period from February 1, 2017 (inception) through December 31, 2017
(in thousands)

Cash flows from operating activities   
Net loss $(26,369)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization  4,603 
Deferred income tax expense  286 
Stock compensation  25,986 
Changes in operating assets and liabilities:    
Accounts receivable  (24,871)
Due from related parties  (3,512)
Other current assets  (106)
Accounts payable  21,312 
Accrued expenses  3,332 
Due to related parties  2,413 
Income taxes  451 
Other current liabilities  (16)
Net cash provided by operating activities  3,509 
     
Cash flows from investing activities    
Purchase of computer software (includes $4,515 from a related party)  (6,283)
Cash acquired from Stampede acquisition  14 
Net cash (used in) investing activities  (6,269)
     
Cash flows from financing activities    
Proceeds from public offering, net of cash expenses  4,949 
Net cash provided by financing activities  4,949 
     
Net increase in cash and cash equivalents  2,189 
Cash and cash equivalents at the beginning of the period  - 
Cash and cash equivalents at the end of the period $2,189 
     
Supplemental disclosure of cash flow information:    
Cash paid for income taxes $- 
     
Supplemental disclosure of noncash investing and financing activities:    
Investment in Stampede, net of cash acquired    
Accounts receivable $11,934 
Due from related parties  1,209 
Property, plant and equipment  3,454 
Intangible assets  38,600 
Goodwill  90,474 
Other assets  231 
Accounts payable  (675)
Accrued expenses  (37)
Due to related parties  (3,431)
Accrued income taxes  (208)
Other current liabilities  (16)
Deferred tax liability  (7,149)
  $134,386 
     
Equity issuance costs for public offering $4,192 
     
Class A and B common shares issued for Stampede acquisition $134,400 

Safe Harbor Statement

Certain information in this communicative statement contains “forward-looking statements” about the Company, as defined within the Private Securities Litigation Reform Act of 1995 or under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, “forward-looking statements”); these may not be based on historical fact, but instead relate to future events. Forward-looking statements are generally identified by words such as “projects,” “may,” “will,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “potential” or similar expressions. Such forward-looking statements include, without limitation, statements regarding new and existing services, technologies and opportunities, statements regarding market and industry segment growth and demand and acceptance of new and existing services, any projections of sales, earnings, revenue, margins or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements regarding future economic conditions, regulatory environment or performance, any statements of belief or intention, and any statements or assumptions underlying any of the foregoing. Risk factors and other material information concerning the Company are described in the Annual Report on Form 10-K filed with the SEC on April 2, 2018 and other Company filings, including subsequent current and periodic reports, information statements and registration statements filed with the SEC. You are cautioned to review such reports and other filings at www.sec.gov. Given these risks, uncertainties and factors, you are cautioned not to place undue reliance on such forward-looking statements and information, which are qualified in their entirety by this cautionary statement. All forward-looking statements and information made herein are based on the Company’s current expectations and does not undertake an obligation to revise or update such forward-looking statements and information to reflect subsequent events or circumstances, except as required by law.

About Longfin Corp.

Longfin Corp (NASDAQ CM: LFIN) is a finance and technology company powered by artificial intelligence (AI) and machine learning. The Company, through its wholly-owned subsidiary, Longfin Tradex Pte. Ltd, delivers FX and alternative finance solutions to importers/exporters and SME’s. Ziddu.com owned by the company is a marketplace for smart contracts on Ethereum blockchain. Ziddu Ethereum ERC20 blockchain Token uses a technology stack running in distributed virtual machines, and is being designed to provide solutions to warehouse / international trade financing, micro-lending, FX OTC derivatives, bullion finance, and structured products. Currently, the company has operations in Singapore and New York.

IR Contact:

Dragon Gate Investment Partners LLC

Tel: +1(646)-801-2803

Email: lfin@dgipl.com