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U.S. Debt Settlement US4.DE Stock Holders Should Be Inquisitive About This

A debt settlement company located in the U.S. which is publicly traded on the Frankfurt, Germany stock exchange, U.S. Debt Settlement (US4.DE), and also a TASC member, issued a statement yesterday, below, regarding their company performance that will be read by investors.

What I found odd was that in the outlook for the future it appears to not inform investors about pending regulations in the United States which could significantly impact debt settlement companies. It seems that when the FTC passes the new advance fee ban or if the Debt Settlement Consumer Protection Act passes that is pending in Congress that it would potentially and significantly impact the debt settlement services and profitability of debt relief companies in this space, including U.S. Debt Settlement.

I’m just saying, from an investor point of view, pending regulation and the predication by debt settlement trade associations that 85% of their members may go out of business as a result seems like a really important fact for a publicly traded debt settlement company to mention to investors.

Additionally perplexing is the belief that U.S. Debt Settlement is going to have an easy going in heavily regulator watched and problem industries like loan modification, tax modification or debt settlement just because they may be marketed under a network of attorneys. See Consumer Groups Make the Case to Not Exempt Debt Settlement Attorney Model From Regulation as an example of how consumer groups are speaking out to close this loophole.

My opinion is that attorneys or not, this is going to be a real mess since regulators are already targeting attorneys that provide those services. And not only targeting them but suing them and disbarring them for their actions.

Investors in U.S. Debt Settlement may want to ask the company direct questions about these issues if they have concerns and would like a specific response on how they may impact the future outlook. I know I tried to.

In reporting this story I contacted Michael Mann, CEO for U.S. Debt Settlement and asked “why the release makes no mention of pending debt settlement regulation and legislation in the U.S. that might impact performance moving forward. Don’t you think that’s an important fact to share with investors?”

The response from Mann, no response.

U.S. Debt Settlement US4.DE Stock Holders Should Be Inquisitive About This

LOS ANGELES, CA. — July 15th, 2010 — U.S. Debt Settlement, Inc. (“USDS”, or “the Company”) today announces its financial results for the fiscal year that ended December 31st, 2009 (not audited). The Company achieved a revenue growth of 125% to USD 1.320 million, while net results have been impacted by costs for capital raising and public listing of the company’s shares.

U.S. Debt Settlement US4.DE Stock Holders Should Be Inquisitive About This

Michael Mann, CEO of USDS, commented: “2009 was a transitional year for U.S. Debt, a year in which we made key strategic decisions affecting the future of the Company. In terms of capital, by completing a second round of financing and an initial listing on the Open Market segment of the Frankfurt Exchange, we have secured the means for financing our future growth. Strategically, we focused on acquisitions. Taken together, these activities explain the drop in earnings despite a considerable increase in revenue. One-time expenses amounting to approximately USD 350,000 were accrued in connection with fund raising activities, investment banking, and the Public Listing. At the same time, we cut back our marketing expenses considerably, focusing our management capacities on the search for acquisition targets. As a result, organic growth remained below potential.

Michael Mann, CEO of USDS, commented: “2009 was a transitional year for U.S. Debt, a year in which we made key strategic decisions affecting the future of the Company. In terms of capital, by completing a second round of financing and an initial listing on the Open Market segment of the Frankfurt Exchange, we have secured the means for financing our future growth. Strategically, we focused on acquisitions. Taken together, these activities explain the drop in earnings despite a considerable increase in revenue. One-time expenses amounting to approximately USD 350,000 were accrued in connection with fund raising activities, investment banking, and the Public Listing. At the same time, we cut back our marketing expenses considerably, focusing our management capacities on the search for acquisition targets. As a result, organic growth remained below potential.

We accepted these limitations with a view to future market developments. Our top priority is and has been the expansion of our service spectrum. As such we have identified and are actively pursuing expansion into two related industries: First, the negotiation and settlement of consumer pay day loans. Tens of millions of delinquent pay day loans exist in the U.S. alone. However, only a handful of companies across the country negotiate and manage these loans for consumers. We are currently seeking to expand into pay day loan management through acquisition and organic growth. We see excellent potential for growth in this market not only in the United States, but are also planning to expand to Canada and the UK. The second industry that we are well-positioned to enter and moving into is that of marketing and servicing of consumer debt programs for attorneys. Credit card settlement and negotiation is rapidly transitioning to a business model in which attorneys play an active role. We can provide many of the services that the attorneys need (including marketing, servicing and debt negotiation) to properly service their clients. We have put together a nationwide network of attorneys and will be rolling out our advertising campaign to consumers in the third quarter of 2010. Because of the inclusion of attorneys we will be able to market across the entire debt spectrum comprising credit card settlement, consumer credit counseling, bankruptcy services, home-loan modification and tax debt negotiations.

Our existing skill set positions us to take advantage of expansion opportunities in both industries. The markets for these combined services are enormous and USDS is set to capture significant portions of each. We believe that expanding into pay day loan settlement and debt program servicing for attorneys will greatly increase our depth of services, making us less dependent on any one specific industry, increase our revenue and add value for shareholders.”

Michael Mann continued: “The fact that revenue development in 2009 remained within expectations but did not achieve its full potential is also due to the fact that we did not finalize the planned acquisitions by the end of the year, as we had planned. We have now achieved this goal, by finalizing the acquisitions of American Debt Control and Fast Debt Solutions in February and March of 2010. For the current year, we do not only expect another significant revenue increase, but we are also looking forward to be able to present the turnaround to our shareholders when we report our second quarter results.

We will continue to expand our current services and pursue acquisition targets.”Source

U.S. Debt Settlement US4.DE Stock Holders Should Be Inquisitive About This
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Anonymous

    I heard that USDS went out of business, you were tracking that company and doing a good job of warning investors. In retrospect should have listened.

  • MrsFernandez

    Numerous complaints have been filed with the BBB against US Debt Settlement (AKA Compass Credit Services, AKA Global Client Services) and they often provide no response to those either. And they’re not a member of The Association of Settlement Companies. They just take it upon themselves to use their logo fraudulently.
    They’re the worst kind of thieves. They kick people when they’re down and trying to handle their debt responsibly.

  • MrsFernandez

    Numerous complaints have been filed with the BBB against US Debt Settlement (AKA Compass Credit Services, AKA Global Client Services) and they often provide no response to those either. And they’re not a member of The Association of Settlement Companies. They just take it upon themselves to use their logo fraudulently.
    They’re the worst kind of thieves. They kick people when they’re down and trying to handle their debt responsibly.

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