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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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42-1709682
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.005 per share
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ONDK
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New York Stock Exchange
|
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Large accelerated filer
|
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¨
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Accelerated filer
|
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x
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Non-accelerated filer
|
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¨
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Smaller reporting company
|
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¨
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Emerging growth company
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x
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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x
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Page
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PART I
- FINANCIAL INFORMATION
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||
Item 1.
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Financial Statements (Unaudited)
|
|
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Unaudited Condensed Consolidated Balance Sheets
|
|
|
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
|
|
|
Unaudited Condensed Consolidated Statements of Changes in Equity and Redeemable Noncontrolling Interest
|
|
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
|
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Notes to Unaudited Condensed Consolidated Financial Statements
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
|
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Item 4.
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Controls and Procedures
|
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PART II - OTHER INFORMATION
|
||
Item 1.
|
Legal Proceedings
|
|
Item 1A
|
Risk Factors
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
Item 3.
|
Defaults Upon Senior Securities
|
|
Item 4.
|
Mine Safety Disclosures
|
|
Item 5.
|
Other Information
|
|
Item 6.
|
Exhibits
|
|
|
|
|
|
Signatures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
June 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
58,744
|
|
|
$
|
59,859
|
|
Restricted cash
|
43,336
|
|
|
37,779
|
|
||
Loans and finance receivables
|
1,207,609
|
|
|
1,169,407
|
|
||
Less: Allowance for credit losses
|
(145,739
|
)
|
|
(140,040
|
)
|
||
Loans and finance receivables held for investment, net
|
1,061,870
|
|
|
1,029,367
|
|
||
Property, equipment and software, net
|
17,088
|
|
|
16,700
|
|
||
Other assets
|
67,169
|
|
|
18,115
|
|
||
Total assets
|
$
|
1,248,207
|
|
|
$
|
1,161,820
|
|
Liabilities, mezzanine equity and stockholders' equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
5,819
|
|
|
$
|
4,011
|
|
Interest payable
|
2,687
|
|
|
2,385
|
|
||
Debt
|
841,602
|
|
|
816,231
|
|
||
Accrued expenses and other liabilities
|
65,135
|
|
|
36,708
|
|
||
Total liabilities
|
915,243
|
|
|
859,335
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
||||
Mezzanine equity:
|
|
|
|
||||
Redeemable noncontrolling interest
|
15,122
|
|
|
—
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock—$0.005 par value, 1,000,000,000 shares authorized and 79,338,337 and 78,412,291 shares issued and 76,301,387 and 75,375,341 outstanding at June 30, 2019 and December 31 2018, respectively.
|
401
|
|
|
396
|
|
||
Treasury stock—at cost
|
(5,656
|
)
|
|
(5,656
|
)
|
||
Additional paid-in capital
|
508,630
|
|
|
502,003
|
|
||
Accumulated deficit
|
(186,997
|
)
|
|
(196,959
|
)
|
||
Accumulated other comprehensive loss
|
(1,894
|
)
|
|
(1,832
|
)
|
||
Total On Deck Capital, Inc. stockholders' equity
|
314,484
|
|
|
297,952
|
|
||
Noncontrolling interest
|
3,358
|
|
|
4,533
|
|
||
Total stockholders' equity
|
317,842
|
|
|
302,485
|
|
||
Total liabilities, mezzanine equity and stockholders' equity
|
$
|
1,248,207
|
|
|
$
|
1,161,820
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Interest and finance income
|
$
|
105,641
|
|
|
$
|
92,209
|
|
|
$
|
211,440
|
|
|
$
|
178,438
|
|
Other revenue
|
4,605
|
|
|
3,247
|
|
|
8,781
|
|
|
7,158
|
|
||||
Gross revenue
|
110,246
|
|
|
95,456
|
|
|
220,221
|
|
|
185,596
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Provision for credit losses
|
42,951
|
|
|
33,293
|
|
|
86,242
|
|
|
69,586
|
|
||||
Interest expense
|
11,381
|
|
|
12,245
|
|
|
22,713
|
|
|
24,117
|
|
||||
Total cost of revenue
|
54,332
|
|
|
45,538
|
|
|
108,955
|
|
|
93,703
|
|
||||
Net revenue
|
55,914
|
|
|
49,918
|
|
|
111,266
|
|
|
91,893
|
|
||||
Operating expense:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
13,307
|
|
|
11,432
|
|
|
25,267
|
|
|
22,030
|
|
||||
Technology and analytics
|
16,681
|
|
|
12,799
|
|
|
33,487
|
|
|
23,806
|
|
||||
Processing and servicing
|
5,609
|
|
|
5,041
|
|
|
11,098
|
|
|
10,262
|
|
||||
General and administrative
|
16,353
|
|
|
16,034
|
|
|
30,382
|
|
|
33,759
|
|
||||
Total operating expense
|
51,950
|
|
|
45,306
|
|
|
100,234
|
|
|
89,857
|
|
||||
Income (loss) from operations, before provision for income taxes
|
3,964
|
|
|
4,612
|
|
|
11,032
|
|
|
2,036
|
|
||||
Provision for income taxes
|
1,796
|
|
|
—
|
|
|
3,536
|
|
|
—
|
|
||||
Net income (loss)
|
2,168
|
|
|
4,612
|
|
|
7,496
|
|
|
2,036
|
|
||||
Less: Net income (loss) attributable to noncontrolling interest
|
(2,127
|
)
|
|
(1,016
|
)
|
|
(2,465
|
)
|
|
(1,535
|
)
|
||||
Net income (loss) attributable to On Deck Capital, Inc. common stockholders
|
$
|
4,295
|
|
|
$
|
5,628
|
|
|
$
|
9,961
|
|
|
$
|
3,571
|
|
Net income (loss) per share attributable to On Deck Capital, Inc. common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.06
|
|
|
$
|
0.08
|
|
|
$
|
0.13
|
|
|
$
|
0.05
|
|
Diluted
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
0.13
|
|
|
$
|
0.05
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
76,137,751
|
|
|
74,385,446
|
|
|
75,840,604
|
|
|
74,182,929
|
|
||||
Diluted
|
78,901,601
|
|
|
78,288,267
|
|
|
79,013,757
|
|
|
77,786,748
|
|
||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
2,168
|
|
|
$
|
4,612
|
|
|
$
|
7,496
|
|
|
$
|
2,036
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||
Unrealized (loss) on derivative instrument
|
(124
|
)
|
|
—
|
|
|
(866
|
)
|
|
—
|
|
||||
Foreign currency translation adjustment
|
405
|
|
|
(395
|
)
|
|
771
|
|
|
(508
|
)
|
||||
Comprehensive income (loss)
|
2,449
|
|
|
4,217
|
|
|
7,401
|
|
|
1,528
|
|
||||
Less: Comprehensive income (loss) attributable to noncontrolling interests
|
(58
|
)
|
|
(179
|
)
|
|
(32
|
)
|
|
(229
|
)
|
||||
Less: Net income (loss) attributable to noncontrolling interest
|
(2,127
|
)
|
|
(1,016
|
)
|
|
(2,465
|
)
|
|
(1,535
|
)
|
||||
Comprehensive income (loss) attributable to On Deck Capital, Inc. common stockholders
|
$
|
4,634
|
|
|
$
|
5,412
|
|
|
$
|
9,898
|
|
|
$
|
3,292
|
|
|
On Deck Capital, Inc.'s stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Treasury
Stock
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Stockholders' Equity
|
|
Noncontrolling interest
|
|
Total
Equity
|
|
|
Redeemable Noncontrolling Interest
|
|||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||||||||||||||||||||
Balance at December 31, 2017
|
73,822,001
|
|
|
$
|
386
|
|
|
$
|
490,200
|
|
|
$
|
(224,047
|
)
|
|
$
|
(5,656
|
)
|
|
$
|
(52
|
)
|
|
$
|
260,831
|
|
|
$
|
4,011
|
|
|
$
|
264,842
|
|
|
|
$
|
—
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
3,122
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,122
|
|
|
—
|
|
|
3,122
|
|
|
|
—
|
|
|||||||||
Issuance of common stock through vesting of restricted stock units and option exercises
|
246,130
|
|
|
2
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
41
|
|
|
|
—
|
|
|||||||||
Employee stock purchase plan
|
196,360
|
|
|
1
|
|
|
918
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
919
|
|
|
—
|
|
|
919
|
|
|
|
—
|
|
|||||||||
Tax withholding related to vesting of restricted stock units
|
—
|
|
|
—
|
|
|
(118
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(118
|
)
|
|
—
|
|
|
(118
|
)
|
|
|
—
|
|
|||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63
|
)
|
|
(63
|
)
|
|
(50
|
)
|
|
(113
|
)
|
|
|
—
|
|
|||||||||
Net Income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,058
|
)
|
|
—
|
|
|
—
|
|
|
(2,058
|
)
|
|
(518
|
)
|
|
(2,576
|
)
|
|
|
—
|
|
|||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
|
—
|
|
|||||||||
Balance-March 31, 2018
|
74,264,491
|
|
|
$
|
389
|
|
|
$
|
494,161
|
|
|
$
|
(226,106
|
)
|
|
$
|
(5,656
|
)
|
|
$
|
(118
|
)
|
|
$
|
262,670
|
|
|
$
|
3,443
|
|
|
$
|
266,113
|
|
|
|
$
|
—
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
2,712
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
2,712
|
|
|
—
|
|
|
$
|
2,712
|
|
|
|
—
|
|
|||||||
Issuance of common stock through vesting of restricted stock units and option exercises
|
376,513
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|||||||||
Employee stock purchase plan
|
—
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
49
|
|
|
|
—
|
|
|||||||||
Tax withholding related to vesting of restricted stock units
|
—
|
|
|
—
|
|
|
(323
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(323
|
)
|
|
—
|
|
|
(323
|
)
|
|
|
—
|
|
|||||||||
Investment by noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,402
|
|
|
3,402
|
|
|
|
—
|
|
|||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(216
|
)
|
|
(216
|
)
|
|
(179
|
)
|
|
(395
|
)
|
|
|
—
|
|
|||||||||
Net Income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
5,628
|
|
|
—
|
|
|
—
|
|
|
5,628
|
|
|
(1,016
|
)
|
|
4,612
|
|
|
|
—
|
|
|||||||||
Balance-June 30, 2018
|
74,641,004
|
|
|
$
|
391
|
|
|
$
|
496,597
|
|
|
$
|
(220,478
|
)
|
|
$
|
(5,656
|
)
|
|
$
|
(334
|
)
|
|
$
|
270,520
|
|
|
$
|
5,650
|
|
|
$
|
276,170
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On Deck Capital, Inc.'s stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Treasury
Stock
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Stockholders' Equity
|
|
Noncontrolling interest
|
|
Total
Equity
|
|
|
Redeemable Noncontrolling Interest
|
|||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at December 31, 2018
|
75,375,341
|
|
|
$
|
396
|
|
|
$
|
502,003
|
|
|
$
|
(196,959
|
)
|
|
$
|
(5,656
|
)
|
|
$
|
(1,832
|
)
|
|
$
|
297,952
|
|
|
$
|
4,533
|
|
|
$
|
302,485
|
|
|
|
$
|
—
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
2,743
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,743
|
|
|
—
|
|
|
2,743
|
|
|
|
—
|
|
|||||||||
Issuance of common stock through vesting of restricted stock units and option exercises
|
264,364
|
|
|
2
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
47
|
|
|
|
—
|
|
|||||||||
Employee stock purchase plan
|
267,688
|
|
|
1
|
|
|
1,659
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,660
|
|
|
—
|
|
|
1,660
|
|
|
|
—
|
|
|||||||||
Tax withholding related to vesting of restricted stock units
|
—
|
|
|
—
|
|
|
(291
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(291
|
)
|
|
—
|
|
|
(291
|
)
|
|
|
—
|
|
|||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
340
|
|
|
340
|
|
|
26
|
|
|
366
|
|
|
|
—
|
|
|||||||||
Cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(742
|
)
|
|
(742
|
)
|
|
—
|
|
|
(742
|
)
|
|
|
—
|
|
|||||||||
Net Income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
5,666
|
|
|
—
|
|
|
—
|
|
|
5,666
|
|
|
(338
|
)
|
|
5,328
|
|
|
|
—
|
|
|||||||||
Balance-March 31, 2019
|
75,907,393
|
|
|
$
|
399
|
|
|
$
|
506,159
|
|
|
$
|
(191,293
|
)
|
|
$
|
(5,656
|
)
|
|
$
|
(2,234
|
)
|
|
$
|
307,375
|
|
|
$
|
4,221
|
|
|
$
|
311,596
|
|
|
|
$
|
—
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
2,965
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
2,965
|
|
|
$
|
—
|
|
|
$
|
2,965
|
|
|
|
—
|
|
||||||
Issuance of common stock through vesting of restricted stock units and option exercises
|
393,994
|
|
|
2
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
28
|
|
|
|
—
|
|
|||||||||
Employee stock purchase plan
|
—
|
|
|
—
|
|
|
335
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
335
|
|
|
—
|
|
|
335
|
|
|
|
—
|
|
|||||||||
Tax withholding related to vesting of restricted stock units
|
—
|
|
|
—
|
|
|
(844
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(844
|
)
|
|
—
|
|
|
(844
|
)
|
|
|
—
|
|
|||||||||
Fair value of redeemable noncontrolling interest resulting from business combination
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
16,444
|
|
|||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
463
|
|
|
463
|
|
|
(49
|
)
|
|
414
|
|
|
|
(9
|
)
|
|||||||||
Cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
|
(124
|
)
|
|
—
|
|
|
(124
|
)
|
|
|
—
|
|
|||||||||
Other
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|
|
—
|
|
|||||||||
Net Income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
4,295
|
|
|
—
|
|
|
—
|
|
|
4,295
|
|
|
(814
|
)
|
|
3,481
|
|
|
|
(1,313
|
)
|
|||||||||
Balance-June 30, 2019
|
76,301,387
|
|
|
$
|
401
|
|
|
$
|
508,630
|
|
|
$
|
(186,997
|
)
|
|
$
|
(5,656
|
)
|
|
$
|
(1,894
|
)
|
|
$
|
314,484
|
|
|
$
|
3,358
|
|
|
$
|
317,842
|
|
|
|
$
|
15,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
7,496
|
|
|
$
|
2,036
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Provision for credit losses
|
86,242
|
|
|
69,586
|
|
||
Depreciation and amortization
|
3,574
|
|
|
4,218
|
|
||
Amortization of debt issuance costs
|
1,573
|
|
|
3,756
|
|
||
Stock-based compensation
|
6,331
|
|
|
6,004
|
|
||
Amortization of net deferred origination costs
|
35,277
|
|
|
26,499
|
|
||
Changes in servicing rights, at fair value
|
69
|
|
|
188
|
|
||
Unfunded loan commitment reserve
|
452
|
|
|
640
|
|
||
Gain on lease termination
|
—
|
|
|
(1,481
|
)
|
||
Loss on disposal of fixed assets
|
1,537
|
|
|
5,668
|
|
||
Amortization of intangibles
|
189
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Other assets
|
(9,595
|
)
|
|
(1,999
|
)
|
||
Accounts payable
|
1,499
|
|
|
1,413
|
|
||
Interest payable
|
302
|
|
|
244
|
|
||
Accrued expenses and other liabilities
|
1,613
|
|
|
1,992
|
|
||
Net cash provided by operating activities
|
136,559
|
|
|
118,764
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property, equipment and software
|
(1,360
|
)
|
|
(695
|
)
|
||
Capitalized internal-use software
|
(4,220
|
)
|
|
(2,464
|
)
|
||
Originations of term loan, lines of credit and finance receivable, excluding rollovers into new originations
|
(1,029,348
|
)
|
|
(1,009,626
|
)
|
||
Payments of net deferred origination costs
|
(33,505
|
)
|
|
(29,958
|
)
|
||
Principal repayments of term loans, lines of credit and finance receivables
|
946,025
|
|
|
865,537
|
|
||
Purchase of loans
|
—
|
|
|
(801
|
)
|
||
Acquisition of shares in business combination
|
(3,004
|
)
|
|
$
|
—
|
|
|
Net cash used in investing activities
|
(125,412
|
)
|
|
(178,007
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Investments by noncontrolling interests
|
—
|
|
|
3,403
|
|
||
Tax withholding related to vesting of restricted stock units
|
(1,135
|
)
|
|
(441
|
)
|
||
Proceeds from exercise of stock options and warrants
|
71
|
|
|
39
|
|
||
Issuance of common stock under employee stock purchase plan
|
1,281
|
|
|
668
|
|
||
Proceeds from the issuance of debt
|
355,840
|
|
|
407,184
|
|
||
Payments of debt issuance costs
|
(2,812
|
)
|
|
(3,748
|
)
|
||
Repayments of debt principal
|
(359,392
|
)
|
|
(342,828
|
)
|
||
Net cash (used in) provided by financing activities
|
(6,147
|
)
|
|
64,277
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(558
|
)
|
|
(1,407
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
4,442
|
|
|
3,627
|
|
||
Cash, cash equivalents, and restricted cash at beginning of year
|
97,638
|
|
|
114,824
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
102,080
|
|
|
$
|
118,451
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Reconciliation to amounts on consolidated balance sheets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
58,744
|
|
|
$
|
74,262
|
|
Restricted cash
|
43,336
|
|
|
44,189
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
102,080
|
|
|
$
|
118,451
|
|
|
|
|
|
||||
Supplemental disclosure of other cash flow information
|
|
|
|
||||
Cash paid for interest
|
$
|
20,038
|
|
|
$
|
21,445
|
|
Supplemental disclosures of non-cash investing and financing activities
|
|
|
|
||||
Stock-based compensation included in capitalized internal-use software
|
$
|
109
|
|
|
$
|
130
|
|
Unpaid principal balance of term loans rolled into new originations
|
$
|
198,319
|
|
|
$
|
167,687
|
|
|
Fair Value
|
||
Loans and finance receivables
|
$
|
37,454
|
|
Intangibles and other assets
(1)
|
2,860
|
|
|
Debt and other liabilities
|
(34,437
|
)
|
|
Goodwill
(1)
|
10,844
|
|
|
Net assets acquired
|
$
|
16,721
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net Income (loss)
|
$
|
2,168
|
|
|
$
|
4,612
|
|
|
$
|
7,496
|
|
|
$
|
2,036
|
|
Less: Net income (loss) attributable to noncontrolling interest
|
(2,127
|
)
|
|
(1,016
|
)
|
|
(2,465
|
)
|
|
(1,535
|
)
|
||||
Net income (loss) attributable to On Deck Capital, Inc. common stockholders
|
$
|
4,295
|
|
|
$
|
5,628
|
|
|
$
|
9,961
|
|
|
$
|
3,571
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding, basic
|
76,137,751
|
|
|
74,385,446
|
|
|
75,840,604
|
|
|
74,182,929
|
|
||||
Net income (loss) per common share, basic
|
$
|
0.06
|
|
|
$
|
0.08
|
|
|
$
|
0.13
|
|
|
$
|
0.05
|
|
Effect of dilutive securities
|
2,763,850
|
|
|
3,902,821
|
|
|
3,173,153
|
|
|
3,603,819
|
|
||||
Weighted-average common shares outstanding, diluted
|
78,901,601
|
|
|
78,288,267
|
|
|
79,013,757
|
|
|
77,786,748
|
|
||||
Net income (loss) per common share, diluted
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
0.13
|
|
|
$
|
0.05
|
|
Anti-dilutive securities excluded
|
6,747,782
|
|
|
5,174,846
|
|
|
5,591,794
|
|
|
5,351,219
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
Dilutive Common Share Equivalents
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Weighted-average common shares outstanding
|
76,137,751
|
|
|
74,385,446
|
|
|
75,840,604
|
|
|
74,182,929
|
|
RSUs and PRSUs
|
489,080
|
|
|
1,018,066
|
|
|
755,731
|
|
|
768,172
|
|
Stock options
|
2,274,770
|
|
|
2,860,430
|
|
|
2,413,951
|
|
|
2,830,587
|
|
Employee stock purchase plan
|
—
|
|
|
24,325
|
|
|
3,471
|
|
|
5,060
|
|
Total dilutive common share equivalents
|
78,901,601
|
|
|
78,288,267
|
|
|
79,013,757
|
|
|
77,786,748
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Anti-Dilutive Common Share Equivalents
|
|
|
|
|
|
|
|
||||
Warrants to purchase common stock
|
—
|
|
|
22,000
|
|
|
—
|
|
|
22,000
|
|
RSUs and PRSUs
|
2,361,583
|
|
|
429,942
|
|
|
1,633,192
|
|
|
600,632
|
|
Stock options
|
4,176,551
|
|
|
4,722,904
|
|
|
3,958,602
|
|
|
4,728,587
|
|
Employee stock purchase plan
|
209,648
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total anti-dilutive common share equivalents
|
6,747,782
|
|
|
5,174,846
|
|
|
5,591,794
|
|
|
5,351,219
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest and finance income
|
$
|
122,799
|
|
|
$
|
106,090
|
|
|
$
|
246,234
|
|
|
$
|
204,845
|
|
Amortization of net deferred origination costs
|
(17,451
|
)
|
|
(13,913
|
)
|
|
(35,344
|
)
|
|
(26,459
|
)
|
||||
Interest and finance income, net
|
105,348
|
|
|
92,177
|
|
|
210,890
|
|
|
178,386
|
|
||||
Interest on deposits and investments
|
293
|
|
|
32
|
|
|
550
|
|
|
52
|
|
||||
Total interest and finance income
|
$
|
105,641
|
|
|
$
|
92,209
|
|
|
$
|
211,440
|
|
|
$
|
178,438
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Term loans
|
$
|
936,053
|
|
|
$
|
956,755
|
|
Lines of credit
|
238,105
|
|
|
188,199
|
|
||
Other loans and finance receivables
(1)
|
10,964
|
|
|
—
|
|
||
Total Unpaid Principal Balance
|
1,185,122
|
|
|
1,144,954
|
|
||
Net deferred origination costs
|
22,487
|
|
|
24,453
|
|
||
Total loans and finance receivables held for investment
|
$
|
1,207,609
|
|
|
$
|
1,169,407
|
|
(1)
|
Includes secured equipment loans and merchant cash advances.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Balance at beginning of period
|
$
|
147,406
|
|
|
$
|
118,921
|
|
|
$
|
140,040
|
|
|
$
|
109,015
|
|
Recoveries of previously charged off amounts
|
4,523
|
|
|
3,206
|
|
|
8,437
|
|
|
6,551
|
|
||||
Loans and finance receivables charged off
|
(49,141
|
)
|
|
(31,362
|
)
|
|
(88,980
|
)
|
|
(61,094
|
)
|
||||
Provision for credit losses
|
42,951
|
|
|
33,293
|
|
|
86,242
|
|
|
69,586
|
|
||||
Allowance for credit losses at end of period
|
$
|
145,739
|
|
|
$
|
124,058
|
|
|
$
|
145,739
|
|
|
$
|
124,058
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Current loans and finance receivables
|
$
|
1,060,465
|
|
|
$
|
1,031,449
|
|
Delinquent: paying (accrual status)
|
52,735
|
|
|
54,427
|
|
||
Delinquent: non-paying (non-accrual status)
|
71,922
|
|
|
59,078
|
|
||
Total
|
$
|
1,185,122
|
|
|
$
|
1,144,954
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
By delinquency status:
|
|
|
|
||||
Current loans and finance receivables
|
$
|
1,060,465
|
|
|
$
|
1,031,449
|
|
1-14 calendar days past due
|
23,798
|
|
|
27,655
|
|
||
15-29 calendar days past due
|
15,518
|
|
|
14,665
|
|
||
30-59 calendar days past due
|
23,931
|
|
|
21,470
|
|
||
60-89 calendar days past due
|
18,162
|
|
|
19,031
|
|
||
90 + calendar days past due
|
43,248
|
|
|
30,684
|
|
||
Total unpaid principal balance
|
$
|
1,185,122
|
|
|
$
|
1,144,954
|
|
|
|
|
|
|
Outstanding
|
||||||||
|
Type
|
|
Maturity Date
|
|
Weighted Average Interest
Rate at June 30, 2019 |
|
June 30, 2019
|
|
December 31, 2018
|
||||
Debt:
|
|
|
|
|
|
|
|
||||||
OnDeck Asset Securitization Trust II
|
Securitization
|
|
April 2022
|
(1)
|
3.8%
|
|
$
|
225,000
|
|
|
$
|
225,000
|
|
OnDeck Account Receivables Trust 2013-1
|
Revolving
|
|
March 2022
|
(2)
|
4.2%
|
|
111,827
|
|
|
117,664
|
|
||
Receivable Assets of OnDeck, LLC
|
Revolving
|
|
September 2021
|
(3)
|
4.8%
|
|
101,453
|
|
|
113,631
|
|
||
OnDeck Asset Funding II LLC
|
Revolving
|
|
August 2022
|
(4)
|
5.4%
|
|
110,202
|
|
|
109,568
|
|
||
Prime OnDeck Receivable Trust II
|
Revolving
|
|
March 2022
|
(5)
|
4.4%
|
|
108,949
|
|
|
108,816
|
|
||
Loan Assets of OnDeck, LLC
|
Revolving
|
|
October 2022
|
(6)
|
4.2%
|
|
98,469
|
|
|
100,000
|
|
||
Corporate Debt
|
Revolving
|
|
January 2021
|
|
5.4%
|
|
20,000
|
|
|
—
|
|
||
Other Agreements
|
Various
|
|
Various
|
(7)
|
6.8%
|
(8)
|
72,909
|
|
(9)
|
47,318
|
|
||
|
|
|
|
|
4.6%
|
|
848,809
|
|
|
821,997
|
|
||
Deferred debt issuance cost
|
|
|
|
|
|
|
(7,207
|
)
|
|
(5,766
|
)
|
||
Total Debt
|
|
|
|
|
|
|
$
|
841,602
|
|
|
$
|
816,231
|
|
(1)
|
The period during which new loans may be
purchased under this securitization transaction
expires in
March 2020
.
|
(2)
|
The period during which new borrowings may be made under this facility expires in
March 2021
.
|
(3)
|
The period during which new borrowings of Class A revolving loans may be made under this debt facility expires in
December 2020
. The
$19.7 million
of Class B borrowing capacity matures in
December 2019
.
|
(4)
|
The period during which new borrowings may be made under this facility expires in
August 2021
.
|
(5)
|
The period during which new borrowings may be made under this facility expires in
March 2021
.
|
(6)
|
The period during which new borrowings may be made under this debt facility expires in
April 2022
.
|
(7)
|
The periods during which new borrowings may be made under the various agreements expire between
September 2019
and
June 2020
.
Maturity dates range from
September 2019
through
December 2022
.
|
(8)
|
Weighted average interest rate as of June 30, 2019 reflects the credit facilities assumed as a part of the combination with Evolocity Financial Group.
|
(9)
|
Outstanding amounts as of June 30, 2019 reflects the credit facilities assumed as a part of the combination with Evolocity Financial Group.
|
|
December 31, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
:
|
|
|
|
|
|
|
|
||||||||
Interest rate cap
|
$
|
—
|
|
|
$
|
1,253
|
|
|
$
|
—
|
|
|
$
|
1,253
|
|
Total assets
|
$
|
—
|
|
|
$
|
1,253
|
|
|
$
|
—
|
|
|
$
|
1,253
|
|
|
June 30, 2019
|
||||||||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans and finance receivables, net
|
$
|
1,061,870
|
|
|
$
|
1,191,009
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,191,009
|
|
Total assets
|
$
|
1,061,870
|
|
|
$
|
1,191,009
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,191,009
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed-rate debt
|
$
|
240,238
|
|
|
$
|
236,026
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
236,026
|
|
Total fixed-rate debt
|
$
|
240,238
|
|
|
$
|
236,026
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
236,026
|
|
|
December 31, 2018
|
||||||||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans and finance receivables, net
|
$
|
1,029,367
|
|
|
$
|
1,155,464
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,155,464
|
|
Total assets
|
$
|
1,029,367
|
|
|
$
|
1,155,464
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,155,464
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed-rate debt
|
$
|
232,972
|
|
|
$
|
226,965
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
226,965
|
|
Total fixed-rate debt
|
$
|
232,972
|
|
|
$
|
226,965
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
226,965
|
|
|
Number of
Options |
|
Weighted-
Average Exercise Price |
|
Weighted-
Average Remaining Contractual Term (in years) |
|
Aggregate
Intrinsic Value (in thousands) |
||||||
Outstanding at January 1, 2019
|
7,932,782
|
|
|
$
|
5.86
|
|
|
—
|
|
|
—
|
|
|
Exercised
|
(389,335
|
)
|
|
$
|
2.63
|
|
|
—
|
|
|
—
|
|
|
Expired
|
(508,557
|
)
|
|
$
|
11.24
|
|
|
—
|
|
|
—
|
|
|
Outstanding at June 30, 2019
|
7,034,890
|
|
|
$
|
5.65
|
|
|
5.5
|
|
|
$
|
9,043
|
|
Exercisable at June 30, 2019
|
6,093,122
|
|
|
$
|
5.63
|
|
|
5.1
|
|
|
$
|
9,043
|
|
Vested or expected to vest as of June 30, 2019
|
6,984,662
|
|
|
$
|
5.65
|
|
|
5.5
|
|
|
$
|
9,043
|
|
|
Number of RSUs and PRSUs
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested at January 1, 2019
|
3,307,561
|
|
|
$
|
6.00
|
|
RSUs and PRSUs granted
|
1,984,378
|
|
|
$
|
5.64
|
|
RSUs and PRSUs vested
|
(585,312
|
)
|
|
$
|
6.57
|
|
RSUs and PRSUs forfeited/expired
|
(294,195
|
)
|
|
$
|
5.78
|
|
Unvested at June 30, 2019
|
4,412,432
|
|
|
$
|
5.78
|
|
Expected to vest after June 30, 2019
|
3,594,305
|
|
|
$
|
5.76
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Sales and marketing
|
$
|
474
|
|
|
$
|
505
|
|
|
$
|
1,033
|
|
|
$
|
1,040
|
|
Technology and analytics
|
889
|
|
|
657
|
|
|
1,717
|
|
|
1,253
|
|
||||
Processing and servicing
|
49
|
|
|
94
|
|
|
139
|
|
|
201
|
|
||||
General and administrative
|
1,836
|
|
|
1,538
|
|
|
3,442
|
|
|
3,510
|
|
||||
Total
|
$
|
3,248
|
|
|
$
|
2,794
|
|
|
$
|
6,331
|
|
|
$
|
6,004
|
|
Derivative Type
|
|
Classification
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Assets:
|
|
|
|
|
|
|
||||
Interest rate cap agreement
|
|
Other Assets
|
|
$
|
41
|
|
|
$
|
1,253
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Amount Recognized in OCI on Derivative:
|
|
|
|
||||
Interest rate cap agreement
|
$
|
866
|
|
|
$
|
456
|
|
|
|
Location and Amount of Gain or (Loss) Recognized in Income on Cash Flow Hedging Relationships
|
||||||||||||||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest expense
|
|
$
|
(204
|
)
|
|
$
|
—
|
|
|
$
|
(338
|
)
|
|
$
|
—
|
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||
Loans and finance receivables
|
$
|
1,169,157
|
|
|
$
|
250
|
|
|
$
|
1,169,407
|
|
Total assets
|
$
|
1,161,570
|
|
|
$
|
250
|
|
|
$
|
1,161,820
|
|
Accrued expenses and other liabilities
|
$
|
34,654
|
|
|
$
|
2,054
|
|
|
$
|
36,708
|
|
Total liabilities
|
$
|
857,281
|
|
|
$
|
2,054
|
|
|
$
|
859,335
|
|
Accumulated deficit
|
$
|
(195,155
|
)
|
|
$
|
(1,804
|
)
|
|
$
|
(196,959
|
)
|
Total On Deck Capital, Inc. stockholders' equity
|
$
|
299,756
|
|
|
$
|
(1,804
|
)
|
|
$
|
297,952
|
|
Total stockholders' equity
|
$
|
304,289
|
|
|
$
|
(1,804
|
)
|
|
$
|
302,485
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
Interest and finance income
|
$92,371
|
|
$(162)
|
|
$92,209
|
|
$178,740
|
|
$(302)
|
|
$178,438
|
Gross revenue
|
$95,618
|
|
$(162)
|
|
$95,456
|
|
$185,898
|
|
$(302)
|
|
$185,596
|
Net revenue
|
$50,080
|
(1)
|
$(162)
|
|
$49,918
|
|
$92,195
|
(1)
|
$(302)
|
|
$91,893
|
Income (loss) from operations, before provision for income taxes
|
$4,774
|
(1)
|
$(162)
|
|
$4,612
|
|
$2,338
|
(1)
|
$(302)
|
|
$2,036
|
Net income (loss)
|
$4,774
|
|
$(162)
|
|
$4,612
|
|
$2,338
|
|
$(302)
|
|
$2,036
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
|
|
As of or for the Three Months Ended June 30,
|
|
As of or for the Six Months
Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in thousands)
|
|
(dollars in thousands)
|
||||||||||||
Originations
|
$
|
591,848
|
|
|
$
|
586,728
|
|
|
$
|
1,227,354
|
|
|
$
|
1,177,313
|
|
Portfolio Yield
(a)
|
35.0
|
%
|
|
36.1
|
%
|
|
35.3
|
%
|
|
35.8
|
%
|
||||
Cost of Funds Rate
|
5.5
|
%
|
|
6.6
|
%
|
|
5.4
|
%
|
|
6.7
|
%
|
||||
Net Interest Margin
(a)
|
29.0
|
%
|
|
28.2
|
%
|
|
29.3
|
%
|
|
28.1
|
%
|
||||
Provision Rate
|
7.3
|
%
|
|
5.7
|
%
|
|
7.0
|
%
|
|
5.9
|
%
|
||||
Reserve Ratio
|
12.3
|
%
|
|
12.1
|
%
|
|
12.3
|
%
|
|
12.1
|
%
|
||||
15+ Day Delinquency Ratio
|
8.5
|
%
|
|
6.8
|
%
|
|
8.5
|
%
|
|
6.8
|
%
|
||||
Net Charge-off Rate
|
15.1
|
%
|
|
11.2
|
%
|
|
13.6
|
%
|
|
11.1
|
%
|
||||
Efficiency Ratio
(a)
|
47.1
|
%
|
|
47.5
|
%
|
|
45.5
|
%
|
|
48.4
|
%
|
||||
Adjusted Efficiency Ratio*
(a)
|
44.2
|
%
|
|
43.1
|
%
|
|
42.6
|
%
|
|
41.7
|
%
|
||||
Return on Assets
(a)
|
1.4
|
%
|
|
2.2
|
%
|
|
1.6
|
%
|
|
0.7
|
%
|
||||
Adjusted Return On Assets*
(a)
|
2.2
|
%
|
|
3.7
|
%
|
|
2.5
|
%
|
|
3.1
|
%
|
||||
Return on Equity
(a)
|
5.5
|
%
|
|
8.4
|
%
|
|
6.5
|
%
|
|
2.7
|
%
|
||||
Adjusted Return On Equity*
(a)
|
8.8
|
%
|
|
14.7
|
%
|
|
9.8
|
%
|
|
12.1
|
%
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
51,530
|
|
|
$
|
55,516
|
|
|
$
|
48,356
|
|
|
$
|
50,128
|
|
Restricted cash
|
45,677
|
|
|
54,859
|
|
|
47,258
|
|
|
55,251
|
|
||||
Loans and finance receivables
|
1,206,503
|
|
|
1,025,337
|
|
|
1,205,250
|
|
|
1,003,845
|
|
||||
Less: Allowance for credit losses
|
(146,612
|
)
|
|
(121,899
|
)
|
|
(146,002
|
)
|
|
(118,290
|
)
|
||||
Loans and finance receivables held for investment, net
|
1,059,891
|
|
|
903,438
|
|
|
1,059,248
|
|
|
885,555
|
|
||||
Property, equipment and software, net
|
17,413
|
|
|
17,182
|
|
|
17,064
|
|
|
19,248
|
|
||||
Other assets
|
58,022
|
|
|
15,783
|
|
|
48,404
|
|
|
14,773
|
|
||||
Total assets
|
$
|
1,232,533
|
|
|
$
|
1,046,778
|
|
|
$
|
1,220,330
|
|
|
$
|
1,024,955
|
|
Liabilities, mezzanine equity and stockholders' equity
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
5,120
|
|
|
$
|
3,627
|
|
|
$
|
5,121
|
|
|
$
|
3,269
|
|
Interest payable
|
2,812
|
|
|
2,519
|
|
|
2,718
|
|
|
2,407
|
|
||||
Debt
|
834,582
|
|
|
737,099
|
|
|
835,926
|
|
|
717,662
|
|
||||
Accrued expenses and other liabilities
|
63,690
|
|
|
31,400
|
|
|
59,792
|
|
|
32,257
|
|
||||
Total liabilities
|
906,204
|
|
|
774,645
|
|
|
903,557
|
|
|
755,595
|
|
||||
Mezzanine equity:
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interest
(1)
|
11,634
|
|
|
—
|
|
|
6,647
|
|
|
—
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
|
|
||||||||
Total On Deck Capital, Inc. stockholders' equity
|
310,858
|
|
|
266,711
|
|
|
305,990
|
|
|
264,585
|
|
||||
Noncontrolling interest
|
3,837
|
|
|
5,422
|
|
|
4,136
|
|
|
4,775
|
|
||||
Total stockholders' equity
|
314,695
|
|
|
272,133
|
|
|
310,126
|
|
|
269,360
|
|
||||
Total liabilities, mezzanine equity and stockholders' equity
|
$
|
1,232,533
|
|
|
$
|
1,046,778
|
|
|
$
|
1,220,330
|
|
|
$
|
1,024,955
|
|
|
|
|
|
|
|
|
|
||||||||
Memo:
|
|
|
|
|
|
|
|
||||||||
Unpaid Principal Balance
|
$
|
1,183,056
|
|
|
$
|
1,006,133
|
|
|
$
|
1,180,831
|
|
|
$
|
985,321
|
|
Interest Earning Assets
|
$
|
1,303,709
|
|
|
$
|
1,135,713
|
|
|
$
|
1,300,864
|
|
|
$
|
1,109,224
|
|
Loans and Finance Receivables
|
$
|
1,206,503
|
|
|
$
|
1,025,337
|
|
|
$
|
1,205,250
|
|
|
$
|
1,003,845
|
|
•
|
Adjusted Net Income (Loss) does not reflect the potentially dilutive impact of stock-based compensation; and
|
•
|
Adjusted Net Income (Loss) excludes charges we are required to incur in connection with real estate dispositions, severance obligations, debt extinguishment costs and sales tax refunds.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands, except shares and per share data)
|
|
(in thousands, except shares and per share data)
|
||||||||||||
Reconciliation of Net Income (Loss) Attributable to OnDeck to Adjusted Net Income (Loss)
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to On Deck Capital, Inc. common stockholders
|
$
|
4,295
|
|
|
$
|
5,628
|
|
|
$
|
9,961
|
|
|
$
|
3,571
|
|
Adjustments (after tax):
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
2,581
|
|
|
2,794
|
|
|
5,017
|
|
|
6,004
|
|
||||
Real estate disposition charges
|
—
|
|
|
—
|
|
|
—
|
|
|
4,187
|
|
||||
Severance and executive transition expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
911
|
|
||||
Debt extinguishment costs
|
—
|
|
|
1,384
|
|
|
—
|
|
|
1,384
|
|
||||
Adjusted Net Income (Loss)
|
$
|
6,876
|
|
|
$
|
9,806
|
|
|
$
|
14,978
|
|
|
$
|
16,057
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Net Income (Loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
$
|
0.20
|
|
|
$
|
0.22
|
|
Diluted
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
$
|
0.19
|
|
|
$
|
0.21
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
76,137,751
|
|
|
74,385,446
|
|
|
75,840,604
|
|
|
74,182,929
|
|
||||
Diluted
|
78,901,601
|
|
|
78,288,267
|
|
|
79,013,757
|
|
|
77,786,748
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(per share)
|
|
(per share)
|
||||||||||||
Reconciliation of Net Income (Loss) per Basic Share to Adjusted Net Income (Loss) per Basic Share
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per basic share attributable to On Deck Capital, Inc. common stockholders
|
$
|
0.06
|
|
|
$
|
0.08
|
|
|
$
|
0.13
|
|
|
$
|
0.05
|
|
Add / (Subtract):
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
0.03
|
|
|
0.04
|
|
|
0.07
|
|
|
0.08
|
|
||||
Real estate disposition charges
|
—
|
|
|
—
|
|
|
—
|
|
|
0.06
|
|
||||
Severance and executive transition expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
||||
Debt extinguishment costs
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.02
|
|
||||
Adjusted Net Income (Loss) per Basic Share
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
$
|
0.20
|
|
|
$
|
0.22
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(per share)
|
|
(per share)
|
||||||||||||
Reconciliation of Net Income (Loss) per Diluted Share to Adjusted Net Income (Loss) per Diluted Share
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per diluted share attributable to On Deck Capital, Inc. common stockholders
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
0.13
|
|
|
$
|
0.05
|
|
Add / (Subtract):
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
0.04
|
|
|
0.04
|
|
|
0.06
|
|
|
0.08
|
|
||||
Real estate disposition charges
|
—
|
|
|
—
|
|
|
—
|
|
|
0.05
|
|
||||
Severance and executive transition expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
||||
Debt extinguishment costs
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.02
|
|
||||
Adjusted Net Income (Loss) per Diluted Share
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
$
|
0.19
|
|
|
$
|
0.21
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Reconciliation of Efficiency Ratio to Adjusted Efficiency Ratio
|
|
|
|
|
|
|
|
||||||||
Total operating expense
|
$
|
51,950
|
|
|
$
|
45,306
|
|
|
$
|
100,234
|
|
|
$
|
89,857
|
|
Gross revenue
|
$
|
110,246
|
|
|
$
|
95,456
|
|
|
$
|
220,221
|
|
|
$
|
185,596
|
|
Efficiency Ratio
|
47.1
|
%
|
|
47.5
|
%
|
|
45.5
|
%
|
|
48.4
|
%
|
||||
Adjustments (pre-tax):
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
$
|
3,249
|
|
|
$
|
2,794
|
|
|
$
|
6,331
|
|
|
$
|
6,004
|
|
Real estate disposition charges
|
—
|
|
|
—
|
|
|
—
|
|
|
4,187
|
|
||||
Severance and executive transition expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
911
|
|
||||
Debt extinguishment costs
|
—
|
|
|
1,384
|
|
|
—
|
|
|
1,384
|
|
||||
Operating expenses less noteworthy items
|
$
|
48,701
|
|
|
$
|
41,128
|
|
|
$
|
93,903
|
|
|
$
|
77,371
|
|
Gross revenue
|
$
|
110,246
|
|
|
$
|
95,456
|
|
|
$
|
220,221
|
|
|
$
|
185,596
|
|
Adjusted Efficiency Ratio
|
44.2
|
%
|
|
43.1
|
%
|
|
42.6
|
%
|
|
41.7
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Reconciliation of Return on Assets to Adjusted Return on Assets
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to On Deck Capital, Inc. common stockholders
|
$
|
4,295
|
|
|
$
|
5,628
|
|
|
$
|
9,961
|
|
|
$
|
3,571
|
|
Average total assets
|
$1,232,533
|
|
$1,046,778
|
|
$1,220,330
|
|
$1,024,955
|
||||||||
Return on Assets
|
1.4
|
%
|
|
2.2
|
%
|
|
1.6
|
%
|
|
0.7
|
%
|
||||
Adjustments (after tax):
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
$
|
2,581
|
|
|
$
|
2,794
|
|
|
$
|
5,017
|
|
|
$
|
6,004
|
|
Real estate disposition charges
|
—
|
|
|
—
|
|
|
—
|
|
|
4,187
|
|
||||
Severance and executive transition expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
911
|
|
||||
Debt extinguishment costs
|
—
|
|
|
1,384
|
|
|
—
|
|
|
1,384
|
|
||||
Adjusted Net Income (Loss)
|
$
|
6,876
|
|
|
$
|
9,806
|
|
|
$
|
14,978
|
|
|
$
|
16,057
|
|
Average total assets
|
$1,232,533
|
|
$1,046,778
|
|
$1,220,330
|
|
$1,024,955
|
||||||||
Adjusted Return on Assets
|
2.2
|
%
|
|
3.7
|
%
|
|
2.5
|
%
|
|
3.1
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Reconciliation of Return on Equity to Adjusted Return on Equity
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to On Deck Capital, Inc. common stockholders
|
$
|
4,295
|
|
|
$
|
5,628
|
|
|
$
|
9,961
|
|
|
$
|
3,571
|
|
Average OnDeck stockholders' equity
|
$
|
310,858
|
|
|
$
|
266,711
|
|
|
$
|
305,990
|
|
|
$
|
264,585
|
|
Return on Equity
|
5.5
|
%
|
|
8.4
|
%
|
|
6.5
|
%
|
|
2.7
|
%
|
||||
Adjustments (after tax):
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
$
|
2,581
|
|
|
$
|
2,794
|
|
|
$
|
5,017
|
|
|
$
|
6,004
|
|
Real estate disposition charges
|
—
|
|
|
—
|
|
|
—
|
|
|
4,187
|
|
||||
Severance and executive transition expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
911
|
|
||||
Debt extinguishment costs
|
—
|
|
|
1,384
|
|
|
—
|
|
|
1,384
|
|
||||
Adjusted Net Income (Loss)
|
$
|
6,876
|
|
|
$
|
9,806
|
|
|
$
|
14,978
|
|
|
$
|
16,057
|
|
Average total On Deck Capital, Inc. stockholders' equity
|
$
|
310,858
|
|
|
$
|
266,711
|
|
|
$
|
305,990
|
|
|
$
|
264,585
|
|
Adjusted Return on Equity
|
8.8
|
%
|
|
14.7
|
%
|
|
9.8
|
%
|
|
12.1
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
Percentage of Originations (Dollars)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Direct
|
42
|
%
|
|
44
|
%
|
|
42
|
%
|
|
45
|
%
|
Strategic Partner
|
32
|
%
|
|
27
|
%
|
|
31
|
%
|
|
26
|
%
|
Funding Advisor
|
26
|
%
|
|
29
|
%
|
|
27
|
%
|
|
29
|
%
|
•
|
the business must be approximately 50% paid down on its existing loan;
|
•
|
the business must be current on its outstanding OnDeck loan with no material delinquency history; and
|
•
|
the business must be fully re-underwritten and determined to be of adequate credit quality.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
Percentage of Originations (Dollars)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
New
|
47
|
%
|
|
50
|
%
|
|
48
|
%
|
|
49
|
%
|
Repeat
|
53
|
%
|
|
50
|
%
|
|
52
|
%
|
|
51
|
%
|
Portfolio Yield
|
||||||||||||||||||||
For the Year
|
|
For the Quarter
|
||||||||||||||||||
2016
|
|
2017
|
|
2018
|
|
Q1 2018
|
|
Q2 2018
|
|
Q3 2018
|
|
Q4 2018
|
|
Q1 2019
|
|
Q2 2019
|
||||
33.1%
|
|
33.7%
|
|
36.2%
|
|
35.5
|
%
|
|
36.1
|
%
|
|
36.4
|
%
|
|
36.5
|
%
|
|
35.6%
|
|
35.0%
|
•
|
Channel Mix
- In general, loans originated from the strategic partner channel have lower Portfolio Yields than loans from the direct and funding advisor channel. This is primarily due to the strategic partner channel's higher commissions as compared to the direct channel, and lower pricing as compared to the funding advisor channel.
|
•
|
Term Mix
- In general, term loans with longer durations have lower annualized interest rates. Despite lower Portfolio Yields, total revenues from customers with longer loan durations are typically higher than the revenue of customers with shorter-term, higher Portfolio Yield loans because total payback is typically higher compared to a shorter length term for the same principal loan amount. Following the introduction of our 24-month and 36-month term loans, the average length of new term loan originations had increased from
10.8
months for the year ended December 31, 2014 to
13.3
months for the year ended December 31, 2016. As part of our 2017 credit tightening, when appropriate, the offered duration of term loans to certain customers was shortened to control duration risk. For the
three months ended June 30, 2019
, the average length of new term loan originations was
12.3
months which increased from
11.4
months for the three months ended March 31, 2019 and
11.3
months for the three months ended June 30, 2018. The increase in average term length reflects the increased booking rate of longer term loans with larger balances of higher credit quality loans as our credit policy has recently been further optimized for loans with those specific characteristics.
|
•
|
Customer Type Mix
- In general, loans originated from repeat customers historically have had lower Portfolio Yields than loans from new customers. This is primarily because repeat customers typically have a higher OnDeck
Score
and are therefore deemed to be lower risk. In addition, repeat customers are more likely to be approved for longer terms than new customers given their established payment history and lower risk profiles. Finally, origination fees can be reduced or waived for repeat customers, contributing to lower Portfolio Yields.
|
•
|
Loan Mix
- In general, lines of credit have lower Portfolio Yields than term loans. For the
three months ended June 30, 2019
, the weighted average line of credit APR was
34.4%
, compared to
48.4%
for term loans. Draws by line of credit customers increased to
22.8%
of total originations for the
three months ended June 30, 2019
from
20.7%
in
three months ended June 30, 2018
.
|
|
For the Year
|
|
For the Quarter
|
|||||||
|
2015
|
2016
|
2017
|
|
Q1 2018
|
Q2 2018
|
Q3 2018
|
Q4 2018
|
Q1 2019
|
Q2 2019
|
Principal Outstanding as of June 30, 2019 by Period of Origination
|
—%
|
—%
|
0.3%
|
|
1.1%
|
3.2%
|
10.2%
|
26.4%
|
56.0%
|
86.6%
|
|
For the Year
|
|
For the Quarter
|
||||||||||||||||||||||||||||
Originations
|
2015
|
2016
|
2017
|
2018
|
|
Q1 2018
|
Q2 2018
|
Q3 2018
|
Q4 2018
|
Q1 2019
|
Q2 2019
|
||||||||||||||||||||
All term loans
(in millions)
|
$
|
1,704
|
|
$
|
2,052
|
|
$
|
1,697
|
|
$
|
1,972
|
|
|
$
|
469
|
|
$
|
465
|
|
$
|
520
|
|
$
|
517
|
|
$
|
486
|
|
$
|
457
|
|
Weighted average term (months) at origination
|
12.4
|
|
13.2
|
|
12.1
|
|
11.8
|
|
|
11.8
|
|
11.8
|
|
11.9
|
|
11.8
|
|
11.7
|
|
12.2
|
|
•
|
Demand for Our Loans
. Generally, we believe a strong economic climate tends to increase demand for our loans as consumer spending increases and small businesses seek to expand and more potential customers may meet our underwriting requirements, although some small businesses may generate enough additional cash flow that they no longer require a loan. In that climate, traditional lenders may also approve loans for a higher percentage of our potential customers.
|
•
|
Credit Performance
. In a strong economic climate, our customers may experience improved cash flow and liquidity, which may result in lower loan losses. In a weakening economic climate or recession, the opposite may occur. We factor economic conditions into our loan underwriting analysis and reserves for loan losses, but changes in economic conditions, particularly sudden changes, may affect our actual loan losses. These effects may be partially mitigated by the short-term nature and repayment structure of our loans, which should allow us to react more quickly than if the terms of our loans were longer.
|
•
|
Loan Losses
. Our underwriting process is designed to limit our loan losses to levels consistent with our risk tolerance and financial model. Our 2017 loan loss levels were also higher than our financial targets largely because we were taking corrective action throughout the first half of the year to address the higher 2016 loan losses. Our 2018 loan loss levels are consistent with our financial targets. Our overall loan losses are affected by a variety of factors, including external factors such as prevailing economic conditions, general small business sentiment and unusual events such as natural disasters, as well as internal factors such as the accuracy of our loan decisioning, the effectiveness of our underwriting process and the introduction of new loan types or features with which we have less experience to draw upon when forecasting their loss rates. Our loan loss rates may vary in the future.
|
•
|
Interest Expense.
Changes in monetary and fiscal policy may affect generally prevailing interest rates. Interest rates may also change for reasons unrelated to economic conditions. To the extent that interest rates rise, our interest expense will increase and the spread between our Portfolio Yield and our Cost of Funds Rate may narrow to the extent we cannot correspondingly increase the interest rates we charge our customers or reduce the credit spreads in our borrowing facilities.
|
|
Three Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest and finance income
|
$
|
105,641
|
|
|
95.8
|
%
|
|
$
|
92,209
|
|
|
96.6
|
%
|
|
$
|
13,432
|
|
|
14.6
|
%
|
Other revenue
|
4,605
|
|
|
4.2
|
|
|
3,247
|
|
|
3.4
|
|
|
1,358
|
|
|
41.8
|
|
|||
Gross revenue
|
110,246
|
|
|
100.0
|
|
|
95,456
|
|
|
100.0
|
|
|
14,790
|
|
|
15.5
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for credit losses
|
42,951
|
|
|
39.0
|
|
|
33,293
|
|
|
34.9
|
|
|
9,658
|
|
|
29.0
|
|
|||
Interest expense
|
11,381
|
|
|
10.3
|
|
|
12,245
|
|
|
12.8
|
|
|
(864
|
)
|
|
(7.1
|
)
|
|||
Total cost of revenue
|
54,332
|
|
|
49.3
|
|
|
45,538
|
|
|
47.7
|
|
|
8,794
|
|
|
19.3
|
|
|||
Net revenue
|
55,914
|
|
|
50.7
|
|
|
49,918
|
|
|
52.3
|
|
|
5,996
|
|
|
12.0
|
|
|||
Operating expense:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales and marketing
|
13,307
|
|
|
12.1
|
|
|
11,432
|
|
|
12.0
|
|
|
1,875
|
|
|
16.4
|
|
|||
Technology and analytics
|
16,681
|
|
|
15.1
|
|
|
12,799
|
|
|
13.4
|
|
|
3,882
|
|
|
30.3
|
|
|||
Processing and servicing
|
5,609
|
|
|
5.1
|
|
|
5,041
|
|
|
5.3
|
|
|
568
|
|
|
11.3
|
|
|||
General and administrative
|
16,353
|
|
|
14.8
|
|
|
16,034
|
|
|
16.8
|
|
|
319
|
|
|
2.0
|
|
|||
Total operating expense
|
51,950
|
|
|
47.1
|
|
|
45,306
|
|
|
47.5
|
|
|
6,644
|
|
|
14.7
|
|
|||
Income (loss) from operations, before provision for income taxes
|
3,964
|
|
|
3.6
|
|
|
4,612
|
|
|
4.8
|
|
|
(648
|
)
|
|
(14.1
|
)
|
|||
Provision for income taxes
|
1,796
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
1,796
|
|
|
—
|
|
|||
Net income (loss)
|
$
|
2,168
|
|
|
2.0
|
%
|
|
$
|
4,612
|
|
|
4.8
|
%
|
|
$
|
(2,444
|
)
|
|
(53.0
|
)%
|
|
Three Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|||||||||||||||||||
Interest and finance income
|
$
|
105,641
|
|
|
95.8
|
%
|
|
$
|
92,209
|
|
|
96.6
|
%
|
|
$
|
13,432
|
|
|
14.6
|
%
|
Other revenue
|
4,605
|
|
|
4.2
|
|
|
3,247
|
|
|
3.4
|
|
|
1,358
|
|
|
41.8
|
|
|||
Gross revenue
|
$
|
110,246
|
|
|
100.0
|
%
|
|
$
|
95,456
|
|
|
100.0
|
%
|
|
$
|
14,790
|
|
|
15.5
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for credit losses
|
$
|
42,951
|
|
|
39.0
|
%
|
|
$
|
33,293
|
|
|
34.9
|
%
|
|
$
|
9,658
|
|
|
29.0
|
%
|
Interest expense
|
11,381
|
|
|
10.3
|
|
|
12,245
|
|
|
12.8
|
|
|
(864
|
)
|
|
(7.1
|
)
|
|||
Total cost of revenue
|
$
|
54,332
|
|
|
49.3
|
%
|
|
$
|
45,538
|
|
|
47.7
|
%
|
|
$
|
8,794
|
|
|
19.3
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Sales and marketing
|
$
|
13,307
|
|
|
12.1
|
%
|
|
$
|
11,432
|
|
|
12.0
|
%
|
|
$
|
1,875
|
|
|
16.4
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Technology and analytics
|
$
|
16,681
|
|
|
15.1
|
%
|
|
$
|
12,799
|
|
|
13.4
|
%
|
|
$
|
3,882
|
|
|
30.3
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Processing and servicing
|
$
|
5,609
|
|
|
5.1
|
%
|
|
$
|
5,041
|
|
|
5.3
|
%
|
|
$
|
568
|
|
|
11.3
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
General and administrative
|
$
|
16,353
|
|
|
14.8
|
%
|
|
$
|
16,034
|
|
|
16.8
|
%
|
|
$
|
319
|
|
|
2.0
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Provision for Income Taxes
|
$
|
1,796
|
|
|
1.6
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
1,796
|
|
|
—
|
%
|
|
Six Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest and finance income
|
$
|
211,440
|
|
|
96.0
|
%
|
|
$
|
178,438
|
|
|
96.1
|
%
|
|
$
|
33,002
|
|
|
18.5
|
%
|
Other revenue
|
8,781
|
|
|
4.0
|
|
|
7,158
|
|
|
3.9
|
|
|
1,623
|
|
|
22.7
|
|
|||
Gross revenue
|
220,221
|
|
|
100.0
|
|
|
185,596
|
|
|
100.0
|
|
|
34,625
|
|
|
18.7
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for credit losses
|
86,242
|
|
|
39.2
|
|
|
69,586
|
|
|
37.5
|
|
|
16,656
|
|
|
23.9
|
|
|||
Interest expense
|
22,713
|
|
|
10.3
|
|
|
24,117
|
|
|
13.0
|
|
|
(1,404
|
)
|
|
(5.8
|
)
|
|||
Total cost of revenue
|
108,955
|
|
|
49.5
|
|
|
93,703
|
|
|
50.5
|
|
|
15,252
|
|
|
16.3
|
|
|||
Net revenue
|
111,266
|
|
|
50.5
|
|
|
91,893
|
|
|
49.5
|
|
|
19,373
|
|
|
21.1
|
|
|||
Operating expense:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales and marketing
|
25,267
|
|
|
11.5
|
|
|
22,030
|
|
|
11.9
|
|
|
3,237
|
|
|
14.7
|
|
|||
Technology and analytics
|
33,487
|
|
|
15.2
|
|
|
23,806
|
|
|
12.8
|
|
|
9,681
|
|
|
40.7
|
|
|||
Processing and servicing
|
11,098
|
|
|
5.0
|
|
|
10,262
|
|
|
5.5
|
|
|
836
|
|
|
8.1
|
|
|||
General and administrative
|
30,382
|
|
|
13.8
|
|
|
33,759
|
|
|
18.2
|
|
|
(3,377
|
)
|
|
(10.0
|
)
|
|||
Total operating expense
|
100,234
|
|
|
45.5
|
|
|
89,857
|
|
|
48.4
|
|
|
10,377
|
|
|
11.5
|
|
|||
Income (loss) from operations, before provision for income taxes
|
11,032
|
|
|
5.0
|
|
|
2,036
|
|
|
1.1
|
|
|
8,996
|
|
|
441.8
|
|
|||
Provision for income taxes
|
3,536
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
3,536
|
|
|
—
|
|
|||
Net income (loss)
|
$
|
7,496
|
|
|
3.4
|
%
|
|
$
|
2,036
|
|
|
1.1
|
%
|
|
$
|
5,460
|
|
|
268.2
|
%
|
|
Six Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|||||||||||||||||||
Interest and finance income
|
$
|
211,440
|
|
|
96.0
|
%
|
|
$
|
178,438
|
|
|
96.1
|
%
|
|
$
|
33,002
|
|
|
18.5
|
%
|
Other revenue
|
8,781
|
|
|
4.0
|
|
|
7,158
|
|
|
3.9
|
|
|
1,623
|
|
|
22.7
|
|
|||
Gross revenue
|
$
|
220,221
|
|
|
100.0
|
%
|
|
$
|
185,596
|
|
|
100.0
|
%
|
|
$
|
34,625
|
|
|
18.7
|
%
|
|
Six Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for credit losses
|
$
|
86,242
|
|
|
39.2
|
%
|
|
$
|
69,586
|
|
|
37.5
|
%
|
|
$
|
16,656
|
|
|
23.9
|
%
|
Interest expense
|
22,713
|
|
|
10.3
|
|
|
24,117
|
|
|
13.0
|
|
|
(1,404
|
)
|
|
(5.8
|
)
|
|||
Total cost of revenue
|
$
|
108,955
|
|
|
49.5
|
%
|
|
$
|
93,703
|
|
|
50.5
|
%
|
|
$
|
15,252
|
|
|
16.3
|
%
|
|
Six Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Sales and marketing
|
$
|
25,267
|
|
|
11.5
|
%
|
|
$
|
22,030
|
|
|
11.9
|
%
|
|
$
|
3,237
|
|
|
14.7
|
%
|
|
Six Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Technology and analytics
|
$
|
33,487
|
|
|
15.2
|
%
|
|
$
|
23,806
|
|
|
12.8
|
%
|
|
$
|
9,681
|
|
|
40.7
|
%
|
|
Six Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Processing and servicing
|
$
|
11,098
|
|
|
5.0
|
%
|
|
$
|
10,262
|
|
|
5.5
|
%
|
|
$
|
836
|
|
|
8.1
|
%
|
|
Six Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
General and administrative
|
$
|
30,382
|
|
|
13.8
|
%
|
|
$
|
33,759
|
|
|
18.2
|
%
|
|
$
|
(3,377
|
)
|
|
(10.0
|
)%
|
|
Six Months Ended June 30,
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
Period-to-Period Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Provision for income taxes
|
$
|
3,536
|
|
|
1.6
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
3,536
|
|
|
—
|
%
|
|
Maturity
Date |
|
Weighted
Average Interest Rate |
|
Borrowing
Capacity |
|
Principal
Outstanding |
||||
|
|
|
|
|
(in millions)
|
||||||
Debt:
|
|
|
|
|
|
||||||
OnDeck Asset Securitization Trust II LLC
|
April 2022
|
(1)
|
3.8%
|
|
$
|
225.0
|
|
|
$
|
225.0
|
|
OnDeck Account Receivables Trust 2013-1 LLC
|
March 2022
|
(2)
|
4.2%
|
|
180.0
|
|
|
111.8
|
|
||
Receivable Assets of OnDeck, LLC
|
September 2021
|
(3)
|
4.8%
|
|
119.7
|
|
|
101.5
|
|
||
OnDeck Asset Funding II LLC
|
August 2022
|
(4)
|
5.4%
|
|
175.0
|
|
|
110.2
|
|
||
Prime OnDeck Receivable Trust II, LLC
|
March 2022
|
(5)
|
4.4%
|
|
180.0
|
|
|
108.9
|
|
||
Loan Assets of OnDeck, LLC
|
October 2022
|
(6)
|
4.2%
|
|
150.0
|
|
|
98.5
|
|
||
Corporate Debt
|
January 2021
|
|
5.4%
|
|
85.0
|
|
(7)
|
20.0
|
|
||
Other Agreements
|
Various
|
(8)
|
6.8%
|
(9)
|
113.7
|
|
(10)
|
72.9
|
|
||
Total Debt
|
|
|
4.6%
|
|
$
|
1,228.4
|
|
|
$
|
848.8
|
|
(1)
|
The period during which new loans may be
purchased under this securitization transaction
expires in
March 2020
.
|
(2)
|
The period during which new borrowings may be made under this facility expires in
March 2021
.
|
(3)
|
The period during which new borrowings of Class A revolving loans may be made under this debt facility expires in
December 2020
. The
$19.7 million
of Class B borrowing capacity matures in
December 2019
.
|
(4)
|
The period during which new borrowings may be made under this facility expires in
August 2021
.
|
(5)
|
The period during which new borrowings may be made under this facility expires in
March 2021
.
|
(6)
|
The period during which new borrowings may be made under this debt facility expires in
April 2022
.
|
(7)
|
On July 19, 2019, the Company entered into an agreement which increased the commitment under its corporate revolving debt facility by $20 million, refer to Note 13 of Notes to Consolidated Financial Statements for additional information.
|
(8)
|
The periods during which new borrowings may be made under the various agreements expire between
September 2019
and
June 2020
.
Maturity dates range from
September 2019
through
December 2022
.
|
(9)
|
Weighted Average Interest Rate as of June 30, 2019 reflects the credit facilities assumed as a part of the combination with Evolocity.
|
(10)
|
Outstanding amounts as of June 30, 2019 reflects the credit facilities assumed as a part of the combination with Evolocity.
|
|
As of or for the Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
58,744
|
|
|
$
|
74,262
|
|
Restricted cash
|
$
|
43,336
|
|
|
$
|
44,189
|
|
Loans and finance receivables held for investment, net
|
$
|
1,061,870
|
|
|
$
|
922,731
|
|
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
136,559
|
|
|
$
|
118,764
|
|
Investing activities
|
$
|
(125,412
|
)
|
|
$
|
(178,007
|
)
|
Financing activities
|
$
|
(6,147
|
)
|
|
$
|
64,277
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
ownership and control of stockholders;
|
•
|
acquisition of other companies and businesses;
|
•
|
permissible investments and activities;
|
•
|
maintenance of adequate capital levels;
|
•
|
sales practices;
|
•
|
anti-money laundering requirements;
|
•
|
an insolvency regime for insured depository institutions and the powers of the FDIC as receiver of insolvent insured depository institutions;
|
•
|
restrictions on repurchases of stock, dividends or other distributions by banking organizations;
|
•
|
restrictions on engaging in proprietary trading and investing in or sponsoring certain investment funds;
|
•
|
deposit insurance provided by the FDIC;
|
•
|
supervision and examination;
|
•
|
limitations on transactions between banks and their affiliates;
|
•
|
requirements of depository institutions to meet the credit needs of their local communities; and
|
•
|
enforcement actions and civil and criminal penalties for violations of banking statutes and regulations.
|
•
|
convert potential clients in its pipeline into actual clients (and even if they become actual clients, it could be more time consuming and expensive to do so);
|
•
|
retain an existing client;
|
•
|
attract potential clients willing to consider ODX’s solutions;
|
•
|
attract and/or to retain qualified employees necessary to support ODX’s business and growth plans and/ or remain competitive.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
|
On Deck Capital, Inc.
|
|
|
|
/s/ Kenneth A. Brause
|
|
Kenneth A. Brause
Chief Financial Officer
(Principal Financial Officer)
|
Date: August 7, 2019
|
|
|
|
|
/s/ Nicholas Sinigaglia
|
|
Nicholas Sinigaglia
Chief Accounting Officer ( Principal Accounting Officer ) |
Date: August 7, 2019
|
|
Exhibit
Number
|
|
Description
|
|
Filed /
Incorporated by
Reference from
Form *
|
|
Incorporated
by Reference
from Exhibit
Number
|
|
Date Filed
|
|
|
8-K
|
|
3.1
|
|
12/22/2014
|
||
|
|
10-Q
|
|
3.2
|
|
11/6/2018
|
||
|
|
S-1
|
|
4.1
|
|
11/10/2014
|
||
10.1
+
|
|
|
Filed Herewith.**
|
|
|
|
|
|
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
101.INS
|
|
XBRL Instance Document
|
|
Filed herewith.
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed herewith.
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
*
|
All exhibits incorporated by reference to the Registrant's Form S-1 or S-1/A registration statements relate to Registration No. 333-200043
|
**
|
Supersedes Exhibit 10.4 filed with the Form 10-K for the year ended December 31, 2018 filed on March 1, 2019
|
|
|
18.
|
Adjustments, Dissolution, Liquidation, Merger or Change in Control
.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of On Deck Capital, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Noah Breslow
|
|
Noah Breslow
Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of On Deck Capital, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Kenneth A. Brause
|
|
Kenneth A. Brause
Chief Financial Officer
|
|
/s/ Noah Breslow
|
|
Noah Breslow
Chief Executive Officer
|
|
/s/ Kenneth A. Brause
|
|
Kenneth A. Brause
Chief Financial Officer
|