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Liquid Holdings Group Reports Third Quarter 2013 Results

Stocks in this article: LIQD

Any forward-looking statements speak only as of the date of this release.  We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

LIQUID HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
     
   (Unaudited)   
   September 30, 2013  December 31, 2012
ASSETS    
Current assets:    
Cash and cash equivalents  $13,537,015  $1,380,078
Note receivable from related party - QuantX Management, LLP  --  2,250,000
Deferred offering costs  --  3,476,427
Accounts receivable  652,171  467,507
Prepaid expenses and other current assets  1,150,840  1,288,985
Total current assets  15,340,026  8,862,997
     
Property and equipment, net  448,515  325,285
     
Other assets:    
Due from related parties  659,030  359,030
Deposits  607,982  478,258
Other intangible assets, net of amortization  13,326,779  18,740,125
Goodwill  13,182,936  13,182,936
Deferred tax asset  459,780  -- 
Total other assets  28,236,507  32,760,349
     
TOTAL ASSETS  $44,025,048  $41,948,631
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable and accrued expenses  $3,842,680 $3,199,869
Due to related parties  43,930  61,873
Deferred income  1,696  2,062
Deferred tax liability  2,282,737  268,160
Total current liabilities  6,171,043  3,531,964
     
Long-term liabilities:    
Deferred rent  104,893  51,338
Contingent consideration payable on Fundsolve acquisition  --  1,561,000
Deferred tax liability  --  429,100
     
Total liabilities  6,275,936  5,573,402
     
Commitments and contingencies     
     
Stockholders' equity:    
Preferred stock  --  --
Common stock  2,448  1,779
Additional paid-in capital  116,136,741  74,637,387
Retained earnings  (77,271,532)  (38,245,864)
Treasury stock  (1,029,078)  --
Accumulated other comprehensive income (loss)  (89,467)  (18,073)
Total stockholders' equity  37,749,112  36,375,229
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $44,025,048 $41,948,631
 
LIQUID HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
         
         
  Three Months  Ended  September 30, 2013  Three Months  Ended  September 30, 2012   Nine Months Ended  September 30, 2013    Period from April 24, 2012 to September 30, 2012 
Revenues:        
Brokerage activities  $--   $251,803  $1,872,647  $415,354
Software services  732,388  424,143  2,016,159  424,143
   732,388  675,946  3,888,806  839,497
Cost of revenues:        
Brokerage activities  --   151,989  1,248,192  234,876
Software services  402,623  115,445  1,006,682  115,445
   402,623  267,434  2,254,874  350,321
Gross profit  329,765  408,512  1,633,932  489,176
         
Operating expenses:        
Compensation  6,065,772  328,665  14,928,963  8,591,039
Consulting fees  221,333  169,679  12,182,417  2,992,145
Depreciation and amortization  1,817,081  758,158  5,455,016  942,908
Professional fees  1,259,884  218,185  2,262,022  1,346,061
Rent  319,390  197,417  926,711  323,028
Computer related and software development  609,676  124,641  1,643,663  172,555
Other  497,240  189,494  1,621,821  405,454
Impairment of goodwill and intangible assets  --   1,550,652  --   1,550,652
Total operating expenses  10,790,376  3,536,891  39,020,613  16,323,842
Loss from operations  (10,460,611)  (3,128,379)  (37,386,681)  (15,834,666)
         
Non-operating income (expense):        
Unrealized gain (loss) on contingent consideration payable  44,129  43,000  --   43,000
Gain (loss) on contingent consideration payable  (649,688)  1,545,000  (649,688)  1,545,000
Interest and other, net  126,909  (90,797)  136,398  (80,078)
Total non-operating expense  (478,650)  1,497,203  (513,290)  1,507,922
Loss before income taxes  (10,939,261)  (1,631,176)  (37,899,971)  (14,326,744)
Income tax expense (benefit)  1,309,903  (4,404)  1,125,697  (38,682)
Net loss  (12,249,164)  (1,626,772)  (39,025,668)  (14,288,062)
Other comprehensive income (loss):        
Foreign currency translation  (88,312)  (3,671)  (71,394)  (10,815)
Total comprehensive loss  $(12,337,476)  $(1,630,443)  $(39,097,062)  $(14,298,877)
         
Basic and diluted earnings (loss) per share  $(0.52)  $(0.11)  $(1.82)  $(1.02)
         
Weighted average number of common shares outstanding during the period - basic and diluted  23,533,756  15,136,725  21,470,866  14,009,224
         
Supplemental Information to the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
Software services revenues from related parties  $ 604,682  $ 360,889  $ 1,690,735  $ 360,889
Software services cost of revenues to related parties  $ 87,268  $ 24,291  $ 248,808  $ 24,291
Share-based compensation included in compensation  $ 1,902,154  $ --   $ 7,430,087  $ 8,121,888
Share-based compensation included in consulting fees  $ --   $ --   $ 11,649,693  $ 2,404,992
 
LIQUID HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
     
     
   Nine Months  Ended  September 30, 2013  Period from April 24, 2012 to  September 30, 2012 
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss   $(39,025,668)  $(14,288,062)
Adjustments to reconcile net loss to net cash used in operating activities:     
Impairment of goodwill and intangible assets    1,550,652
Unrealized (gain) loss on contingent consideration payable  --   (43,000)
(Gain) loss on settlement of contingent consideration payable  649,688  (1,545,000)
Depreciation and amortization expense  5,472,329  943,109
Share-based compensation  7,430,087  8,121,888
Share-based payments for consulting services  11,649,693  2,404,992
Other  47,740  19,241
Deferred taxes  1,125,697  (38,682)
Changes in operating assets and liabilities   3,246,353  (408,389)
 NET CASH USED IN OPERATING ACTIVITIES   (9,404,081)  (3,283,251)
     
 NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES   2,060,958  (5,243,694)
     
 NET CASH PROVIDED BY FINANCING ACTIVITIES   19,558,810  11,250,000
     
 Effect of exchange rate changes on cash   (58,750)  (10,815)
     
 NET INCREASE IN CASH AND CASH EQUIVALENTS   12,156,937  2,712,240
     
 CASH AND CASH EQUIVALENTS - Beginning   1,380,078  -- 
     
 CASH AND CASH EQUIVALENTS - Ending   $13,537,015  $2,712,240

LIQUID HOLDINGS GROUP, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Unaudited)

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP adjusted net loss and non-GAAP adjusted net loss per share. Non-GAAP adjusted net loss excludes share-based compensation and amortization of acquisition-related intangible assets, as well as the related income tax effect. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, the adjustments to our GAAP financial measures reflect the exclusion of items, specifically share-based compensation expense, amortization of acquisition-related intangible assets and the related income tax effect, that are recurring and will be reflected in our financial results for the foreseeable future as well as non-recurring that we do not expect to report going forward. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures.

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