SAN LUIS OBISPO, Calif.--(BUSINESS WIRE)--SpendSmart Networks, Inc. (OTC:SSPC) (“SpendSmart” or “the Company”) today announced that the Company is discontinuing its under-performing prepaid card business to focus solely on in its mobile loyalty marketing business and the corresponding growth opportunities.
- SpendSmart will wind down the card business over the next 60 days, including closing individual accounts and the corresponding call center, banking relationships, and card website. All card division-related operations are expected to cease on or about Jan. 26, 2015.
- Following the transition, the Company expects to realize annualized net savings of approximately $2.1 million.
- SpendSmart expects to incur a total of approximately $1.2 million in expenses and charges, consisting primarily of personnel-related and operating expenses, in the fourth quarter ending Dec. 31, 2014, and the first quarter ending March 31, 2015.
Alex Minicucci, CEO of SpendSmart, stated, “We are experiencing strong growth in our mobile loyalty marketing business, and see substantial opportunity going forward. The prepaid card business has not performed well, and is experiencing increased regulatory pressure and associated costs. We are confident that focusing SpendSmart’s resources on the growing, scalable mobile marketing business is the best use of our capital, and positions the Company for enhanced profit potential. We have expanded our licensee network from 53 in October 2013 to 164 currently, and we are seeing continued strong demand for our service-based licensee model throughout the U.S., as well as in Canada and Mexico.
“Our subscriber base is just shy of 3 million consumers, which is indicative that our value proposition to small businesses and their customers is certainly resonating. During the 2014 third quarter, our mobile loyalty marketing business achieved a 153% year-over-year increase in revenues, and we saw continued strong growth in October/November. We have built a scalable, capital-light business model that we feel has a very attractive upside. As a result of the growth and prospects in our mobile marketing business, and after a thorough review of the prepaid card business and outlook, we determined it is in the best interest of our shareholders to discontinue the prepaid card business.”
Mr. Minicucci concluded, “While 2014 has been a transitional period for the Company, we believe 2015 will be a significant year as we continue to develop our licensee network, set the roadmap for licensees to penetrate their markets, and roll out our new turnkey web solutions stemming from our recent acquisition of TechXpress. We feel strongly that our multi-channel digital loyalty marketing solutions represent best practices for driving engagement and transactions, making for a scalable business model through which we can build value for shareholders. We look forward to reporting on the Company’s continued development.”
For additional information, please refer to the Form 8-K filed with the U.S. Securities and Exchange Commission (“SEC”) on Nov. 28, 2014. SpendSmart’s filings can be accessed on the SEC’s website at www.sec.gov.
SpendSmart Networks provides proprietary loyalty systems and a suite of digital engagement and marketing services that help local merchants build relationships with consumers and drive revenues. These services are implemented and supported by a vast network of certified digital marketing specialists, aka “Certified Masterminds,” who drive revenue and consumer relationships for merchants via loyalty programs, mobile marketing, mobile commerce and financial tools, such as prepaid card and reward systems. Consumers’ dollars go further when they spend it with merchants in the SpendSmart network of merchants, as they receive exclusive deals, earn rewards and ultimately build a connection with their favorite merchants. For more information on SpendSmart, please visit www.spendsmartinc.com.
Safe Harbor Statement
Certain matters discussed in this news release and oral statements made from time to time by representatives of SpendSmart Networks, Inc. (the “Company” or “SpendSmart”) including, statements regarding our expectations of SpendSmart’s operating plans, deliveries under contracts and strategies generally; statements regarding our expectations of the performance of our business; expectations regarding costs and revenues, future operating results, additional orders, future business opportunities and continued growth, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. Although SpendSmart believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.
Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Many of these factors are beyond SpendSmart’s ability to control or predict. Important factors that may cause actual results to differ materially and that could impact SpendSmart and the statements contained in this news release can be found in SpendSmart’s filings with the Securities and Exchange Commission including quarterly reports on Form 10-Q, current reports on Form 8-K, annual reports on Form 10-K, transition reports on Form 10-K and its other periodic reports. For forward-looking statements in this news release, SpendSmart claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. SpendSmart assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise.