10-Q: Old Market Capital Corporation Reports Q3 2025 Results, Reflecting Amplex Acquisition and Strategic Shift

Old Market Capital Corporation's Q3 2025 results showcase the impact of the Amplex acquisition and the strategic shift away from consumer finance.

Summary

• Old Market Capital Corporation (OMCC) reported its financial results for the quarter ended December 31, 2024.
• The company completed its domestication from British Columbia to Delaware on April 18, 2024.
• On June 15, 2024, OMCC acquired 51% of Amplex Electric Inc., a broadband internet, VOIP, and video services provider, and increased its ownership to 61% during the quarter.
• As of December 31, 2024, Amplex had approximately 12,850 broadband customers, including 4,100 fiber subscribers, and over 11,000 fiber passings completed.
• OMCC sold substantially all of its finance receivables and repossessed assets to Westlake Financial on April 26, 2024, and ceased new loan originations.
• Revenue for the three months ended December 31, 2024, was $2.968 million, primarily from wireless internet, fiber internet, and other services provided by Amplex.
• Net loss attributable to common shareholders for the quarter was $(124) thousand, or $(0.04) per share.
• For the nine months ended December 31, 2024, revenue was $6.415 million.
• Net loss attributable to common shareholders for the nine months was $(4.115) million, or $(0.64) per share.
• The company recognized a loss on dissenting shareholders' liability of $1.1 million for the nine months ended December 31, 2024, related to the sale of assets to Westlake.
• OMCC has two reportable segments: consumer finance (discontinued) and telecommunications (Amplex).

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the company is reporting a loss, it is also undergoing a strategic shift with the acquisition of Amplex and the sale of its finance receivables. The future outlook is uncertain but has potential.

Positives

• The acquisition of Amplex provides a new revenue stream for OMCC in the telecommunications sector.
• The sale of finance receivables to Westlake Financial allows OMCC to focus on its new strategic direction.
• Amplex secured a RUS Loan for up to $21.34 million to finance broadband infrastructure.
• The company settled the dissenting shareholders' liability.

Negatives

• The company reported a net loss attributable to common shareholders of $(124) thousand for the quarter and $(4.115) million for the nine months ended December 31, 2024.
• The company identified a material weakness in its internal control over financial reporting related to non-routine transactions.
• The company incurred $1.1 million of transaction costs related to the acquisition of Amplex during the nine months ended December 31, 2024.

Risks

• Weak economic conditions may negatively impact Amplex's revenue.
• Amplex is subject to various federal, state, and local laws and regulations, which could increase costs and limit its ability to offer services.
• The company's success depends on developing and executing a new business plan.
• The company's ability to use excess capital to increase shareholder returns is uncertain.

Future Outlook

The company is focused on developing and executing a new business plan following the sale of its finance receivables and the acquisition of Amplex. The company anticipates funding future acquisitions through cash on hand, the issuance of debt, Common Stock, restricted stock units, and warrants for its Common Stock or a combination thereof.

Industry Context

The company's strategic shift reflects a move towards the growing broadband internet and telecommunications sector, capitalizing on the increasing demand for high-speed internet services, particularly in rural areas. This aligns with broader industry trends of consolidation and diversification in the telecommunications market.

Comparison to Industry Standards

• It is difficult to compare OMCC's results directly to industry standards due to its recent strategic shift and the acquisition of Amplex.
• However, the company's focus on expanding fiber internet services aligns with the industry trend of increasing bandwidth demand and the need for reliable, high-speed internet access.
• Comparisons to other rural broadband providers like Windstream, Frontier Communications, and Consolidated Communications could provide a benchmark for future performance, particularly in terms of customer acquisition costs, ARPU (average revenue per user), and network buildout efficiency.

Legal Proceedings

• The company is involved in certain claims and legal proceedings in the normal course of business.
• Specifically, the company has been sued together with several other defendants, in a lawsuit styled: Nicholas Financial, Inc. v. Jeremiah Gross, No. 21CY-CV02148-01, 7th Judicial Circuit, Clay County, Missouri.

Related Party Transactions

• Amplex leases certain property (including an office building) and warehouse building from the Red Bug Entities, which are related parties under ASC 850, Related Parties.
• The Red Bug Entities were created by, and are majority-owned by Amplex's Chief Executive Officer.

Stakeholder Impact

• Shareholders: The strategic shift and acquisition of Amplex could impact shareholder value.
• Employees: The company's restructuring and new business plan could affect employees.
• Customers: Amplex's customers will be impacted by the company's broadband internet services.
• Suppliers: The company's suppliers will be impacted by the new business plan and acquisition of Amplex.

Next Steps

• The company will continue to integrate Amplex and execute its new business plan.
• The company will focus on expanding its broadband internet services and acquiring new customers.
• The company will work to remediate the material weakness in its internal control over financial reporting.

Key Dates