Excerpts from MD&A on sedar As a loan brokerage platform, which Peak completely revamped in 2020, Jinxiaoer was still being used for free during the quarter by thousands of loan brokers in several cities and through loan brokerage companies converted into Jinxiaoer Service Centers to generate loan candidate leads for the Lending Hub to the benefit of all of the Company’s subsidiaries. The Company expects Jinxiaoer to start making a direct contribution to its overall revenue in the second half of 2021.
Unlike the supply-chain financing services provided to factories to help them buy goods from material suppliers, which require related logistics, transportation and warehousing services outsourced to third-parties and recorded as “cost of service” expenses by the Company, these purchase order financing transactions by retailers and distributors carry no cost of service expenses, making them much more profitable to the Company. Higher profit margin transactions such as these, including transactions where the Lending Hub is used to help social media influencers finance product showcase events on popular social media platforms such as TikTok and WeChat, are expected to account for an increasingly greater percentage of transactions on Lending Hub, thereby gradually improving the Company’s overall profit margin. It should also be noted that more and more supply- chain financing related services previously outsourced to third-parties were shifted to the Company’s Gold River platform during the quarter. As a result, profit margins on the Company’s supply-chain financing service bundle (including logistics, transportation and warehousing) increased by a factor of almost eight in Q4. This trend is also expected to contribute to better profit margins for Peak in the future.
......has strategic partnerships in place to potentially add more than 10-times the number of clients the Company serviced throughout 2020.
Peak’s capital market success in the fourth quarter came at a considerable cost, as “consulting fees” were second only to “cost of service” expenses related to supply-chain transactions during the quarter. The consulting fees incurred by the Company in Q3 and Q4 however were related to specific capital market strategies designed and implemented during those periods. Those fees are therefore not expected to account for such a large percentage of the Company’s expenses in the future, which should allow Peak to get back on track to profitability by as early as Q2 2021.
As at April 30, 2021 the Company had no debentures obligations outstanding.
As of the date of this MD&A, the Company had already been approached by one such Chinese Fintech whose offering would be complementary to the Company’s Lending Hub ecosystem.