Troubled entrepreneur network EFactor Group Corp. plans to include M&A as part of a growth strategy. The business recently announced a reverse stock split that it hopes will allow it to move its publicly-traded shares to the Nasdaq Exchange, and provide it with a way to raise money and potentially make acquisitions.
The news follows the company's April $15 million all-stock acquisition of RocketHub Inc., a New York-based crowdfunding service. RocketHub has teamed up with television network A&E for "A&E Project Startup," a television show that documents entrepreneurs.
EFactor, also headquartered in New York, aims to help entrepreneurs build businesses through providing algorithm-curated content and resources to users. The company, in addition to its social network, provides education, mentoring, business services and funding assistance. EFactor announced the reverse stock split in a filing with the U.S. Securities and Exchange Commission on June 15.
The group says it plans to acquire strategically compatible companies as part of an expansion strategy.
"We believe we will grow faster through further acquisitions over the next 12 to 18 months by acquiring companies that offer a product or service that is of interest to entrepreneurs, have a scalable product or service to offer to our members, have substantial revenue and profit or will be of strategic importance and are able to run independently but provide a new revenue stream for us," the company says in an SEC filing.
EFactor has a history of acquisitions, which it has made entirely through all-stock deals, according to SEC filings. EFactor bought MCC International Ltd. in February 2013; HT Skills Ltd. in July 2014; Member Digital Ltd. in July 2014; GroupCard BV in July 2014; Eleqt Ltd. in October 2014; and Robson Dowry Associates Ltd in November 2014.
The business also aims to expand internationally and grow its member base. EFactor raised about $1 million in cash proceeds from private placements so far this year, which is how it's been funding working capital requirements.
EFactor has suffered losses from operations and has a working capital deficit, which raises substantial doubt about its ability to continue as a going concern, or without the threat of liquidation, the company says in its latest quarterly filing with the SEC on May 14. The company listed a $48 million deficit in that filing.
Even with money concerns, EFactor's site demonstrates growth. In the three months ended March 31, the site had more than 7.3 million visitors, a 30.6 percent increase over the 5.6 million it drew for the first three months of 2014, according to a filing with the SEC.