Advanced Communications Announces Results for Quarter Ended December 31, 2007
NEW YORK, Feb 19, 2008 (BUSINESS WIRE) -- Advanced Communications Technologies, Inc. (OTC Bulletin Board: ADVC), an integrated reverse logistics holding company serving the consumer products industry, today announced financial results for the second fiscal quarter and the six months ended December 31, 2007.
For the three and six month periods ended December 31, 2007, the Company reported record revenue of $16.5 million and $25.6 million, respectively, compared to $2 million and $4.2 million, respectively, for the comparable periods. The increase in revenue is principally attributable to the acquisition of Vance Baldwin Electronics, which was completed on August 17, 2007. On a pro forma basis, assuming Vance Baldwin had been included in consolidated results in full for all periods, revenue for the second quarter increased 13.4% from $14.6 million for the three months ended December 31, 2006, while revenue for the six months ended December 31, 2007 increased 12.8% to $32.1 million from $28.4 million compared to the six months ended December 31, 2006.
For the quarters ended December 31, 2007 and 2006, adjusted EBITDA amounted to $1,044,000 and $(164,000), respectively, while for the six month periods ended December 31, 2007 and 2006, adjusted EBITDA amounted to $1,749,000 and $(213,000), respectively.
For the quarters ended December 31, 2007 and 2006, net losses amounted to $(339,000) and $(212,000), respectively, on a GAAP (generally accepted accounting principles) basis. Non-GAAP adjusted net income (loss) amounted to $174,000 and $(212,000), respectively, for the periods.
For the six month periods ended December 31, 2007 and 2006, net losses amounted to $(799,000) and $(296,000), respectively, on a GAAP basis. For such periods, adjusted net income (loss) amounted to $432,000 and $(296,000), respectively,
"While Vance Baldwin will essentially continue to be managed and operated as a separate stand-alone business, we continue to be pleased with the pace of the integration of its management team and operations with those of Advanced Communications and Cyber-Test, specifically with the cross-selling of services and the offering of new integrated service capabilities to all of our customers and the overall market" said Wayne Danson, President and Chief Executive Officer of Advanced Communications. "With improving results turned in for the second quarter and year to date, and the particularly strong start to the third quarter, I am pleased with the performance of both Vance Baldwin and Cyber-Test in terms of generating revenue and managing expenses."
Danson stated that management believes that, with its integrated services, the Company is strongly positioned to take advantage of market opportunities that otherwise would not be available to either a distribution or service/repair business on a stand-alone basis.. "We are excited about a number of extraordinary sales opportunities we anticipate closing before the end of the fiscal year, which will clearly demonstrate the uniqueness of our service capabilities", Danson added.
"At Vance Baldwin, we are seeing a pickup in sales in a number of areas compared to last year, especially sales volume from new programs such as those with third-party administrators ("TPAs")," said Steve Miller, Chief Operating Officer of ACT. "Meanwhile, Cyber-Test is benefiting from the addition of another major customer this year, as well as volume increases from its two major customers and increased scalability of its business"
Non-GAAP Measures
To supplement our consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures of certain components of financial performance. These non-GAAP measures include earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA and adjusted net income (loss). Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization of acquisition-related intangible assets, non-cash stock-based and other compensation expense and purchase accounting for inventory and its effect on cost of sales in the period. Adjusted net income (loss) represents our net income (loss) before non-cash stock-based and other compensation expense, amortization of acquisition-related intangible assets, and purchase accounting for inventory and its effect on cost of sales in the period. These non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance and prospects for the future.
We believe these non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of our core operating measures. We use EBITDA, adjusted EBITDA and adjusted net income (loss) as measures of operating performance because they assist us in comparing our operating performance on a consistent basis as such measures do not reflect the impact of certain items not directly resulting from our core operations. These non-GAAP financial measures should not be considered a substitute for, or superior to, GAAP results.
About Advanced Communications Technologies Inc.
Advanced Communications is a New York-based company that specializes in the consumer electronic aftermarket service and supply chain, known as reverse logistics. Through its principal operating unit, Encompass Group Affiliates, and in conjunction with its principal stockholder, Advanced Communications acquires businesses that provide computer and electronic repair services, parts distribution and asset management services. Advanced Communications addresses the full scope of this $4 billion market - including the end-user driven product support and repair industry, as well as the manufacturer-driven recovery and e-Waste industry. It provides single-source lifecycle management services for technology products, currently in the North American market, with accelerating growth towards a global presence. The Company's market position is based on its distinctive ability to provide single-point, comprehensive lifecycle service on a competitive basis.
About Vance Baldwin Electronics
Vance Baldwin Electronics is an industry leading Original Equipment Manufacturer Parts Distributor. In continuous operation for more than fifty years and operating from south Florida and Atlanta, Vance Baldwin distributes parts for consumer electronics, computers, printers, appliances and office equipment. Vance Baldwin also provides service aids and industrial products such as cable, tools, test equipment, cleaners and other installation equipment. Its distribution facility located near Atlanta, Georgia, allows for 2 day delivery to the vast majority of the United States with UPS Ground Service. It maintains a call center with highly trained parts consultants to receive customer calls and provide assistance with parts selection and ordering. For more information about Vance Baldwin Electronics, visit www.vancebaldwin.com
About Cyber-Test
Located in central Florida, Cyber-Test is an established electronic equipment repair facility located in Orlando, Florida, specializing in the repair and exchange of consumer and office electronic equipment, providing board-level and whole-unit repair to third-party warranty companies, OEMs, national retailers and national office equipment dealers. Cyber-Test, in continuous operation since 1986, offers Level II and Level III call center technical support, service contract administration and support and asset recovery programs. The company's expertise is rooted in depot repairs, advance exchange services, reverse engineering logistics, and help desk technical support. For more information, visit Cyber-Test's website at equipfix.com.
Advanced Communications Technologies, Inc.
For The Three Months Ended
December 31,
-------------------------------
2007 2006
--------------- ---------------
NET SALES $ 16,561,344 $ 2,018,533
COST OF SALES 12,992,231 1,344,974
--------------- ---------------
GROSS PROFIT 3,569,113 673,559
--------------- ---------------
OPERATING EXPENSES
Depreciation and amortization 480,847 17,247
Selling, general and administrative
expenses 2,607,839 859,981
--------------- ---------------
TOTAL OPERATING EXPENSES 3,088,686 877,228
--------------- ---------------
Profit (Loss) From Operations 480,427 (203,669)
--------------- ---------------
OTHER INCOME (EXPENSE)
Other income (expense) (2,285) 1,464
Interest expense, net (817,131) (9,696)
--------------- ---------------
TOTAL OTHER (EXPENSE) (819,416) (8,232)
--------------- ---------------
NET LOSS (338,989) (211,901)
--------------- ---------------
Deemed dividend on preferred stock -- --
NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS $ (338,989) $ (211,901)
Net loss per share - basic and
diluted $ - $ -
Weighted average number of shares
outstanding during the period -
basic and diluted 4,997,711,570 4,849,418,808
--------------- ---------------
For The Six Months Ended
December 31,
-------------------------------
2007 2006
--------------- ---------------
NET SALES $ 25,633,145 $ 4,159,370
COST OF SALES 20,004,389 2,719,830
--------------- ---------------
GROSS PROFIT 5,628,756 1,439,540
--------------- ---------------
OPERATING EXPENSES
Depreciation and amortization 588,715 36,783
Selling, general and administrative
expenses 4,704,237 1,679,449
--------------- ---------------
TOTAL OPERATING EXPENSES 5,292,952 1,716,232
--------------- ---------------
Profit (Loss) From Operations 335,804 (276,692)
--------------- ---------------
OTHER INCOME (EXPENSE)
Other income (expense) 73,847 1,464
Interest expense, net (1,209,109) (21,113)
--------------- ---------------
TOTAL OTHER (EXPENSE) (1,135,262) (19,649)
--------------- ---------------
NET LOSS (799,458) (296,341)
--------------- ---------------
Deemed dividend on preferred stock (819,905)
NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS $ (1,619,363) $ (296,341)
Net loss per share - basic and diluted $ - $ -
Weighted average number of shares
outstanding during the period - basic
and diluted 4,997,711,570 4,659,440,570
--------------- ---------------
A reconciliation between the Company's net loss on a GAAP basis to
non-GAAP adjusted EBITDA is as follows:
Three Months Ended Six Months Ended
December 31, December 31,
----------------------------------------------------------------------
2007 2006 2007 2006
----------------------------------------------------------------------
GAAP net loss $ (339,000)$(212,000)$ (799,000)$(296,000)
----------------------------------------------------------------------
Special items:
----------------------------------------------------------------------
Interest expense 817,000 10,000 1,209,000 21,000
----------------------------------------------------------------------
Amortization of
acquisition-related
intangible assets 429,000 -- 488,000 --
----------------------------------------------------------------------
Depreciation expense 53,000 17,000 101,000 37,000
----------------------------------------------------------------------
Income taxes -- 3,000 5,000 7,000
----------------------------------------------------------------------
Stock-based and other
non-cash compensation
expense 84,000 18,000 507,000 18,000
----------------------------------------------------------------------
Effect on cost of sales
of inventory purchase
accounting write up -- -- 238,000 --
----------------------------------------------------------------------
Non-GAAP adjusted EBITDA $1,044,000 $(164,000)$1,749,000 $(213,000)
----------------------------------------------------------------------
A reconciliation between the Company's net loss on a GAAP basis to
non-GAAP adjusted net income (loss) is as follows:
Three Months Ended Six Months Ended
December 31, December 31,
----------------------------------------------------------------------
2007 2006 2007 2006
----------------------------------------------------------------------
GAAP net loss $(339,000)$(212,000) $(799,000)$(296,000)
----------------------------------------------------------------------
Special items:
----------------------------------------------------------------------
Amortization of
acquisition-related
intangible assets 429,000 -- 488,000 --
----------------------------------------------------------------------
Stock-based and other non-
cash compensation expense 84,000 -- 507,000 --
----------------------------------------------------------------------
Effect on cost of sales of
inventory purchase
accounting write up -- -- 238,000 --
----------------------------------------------------------------------
Non-GAAP adjusted net income
(loss) $ 174,000 $(212,000) $ 432,000 $(296,000)
----------------------------------------------------------------------
Advanced Communications Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, June 30,
2007 2007
------------ ------------
ASSETS (Unaudited)
Current Assets
Cash and cash equivalents $3,468,043 $843,721
Restricted cash 761,397 --
Accounts receivable, net of allowances
of $302,585 and $6,919, respectively 5,656,808 429,105
Inventory 3,014,337
Replacement parts and equipment 520,858 371,353
Due from vendors 687,448 --
Prepaid expenses and other current assets 761,039 84,083
------------ ------------
Total Current Assets 14,869,930 1,728,262
------------ ------------
Property and equipment, net 538,922 261,849
Other Assets
Deferred financing costs, net 874,032 --
Deferred acquisition costs 363,558 885,364
Intangibles assets, net 10,139,166 --
Goodwill 14,074,521 2,624,388
Other assets 78,143 7,960
------------ ------------
Total Other Assets 25,529,450 3,517,712
------------ ------------
TOTAL ASSETS $40,938,302 $5,507,823
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
LIABILITIES
Current Liabilities
Accounts payable $5,020,647 $2,197,344
Accrued expenses 2,188,111 1,375,363
Escrow liability 761,397 --
Notes payable, current portion 507,614 617,068
Capitalized lease obligation, current
portion 36,015 15,341
------------ ------------
Total Current Liabilities 8,513,784 4,205,116
------------ ------------
Long Term Liabilities
Senior Notes, net of unamortized original
issue discount and current portion 11,881,250 --
Senior Subordinated Notes, net of
unamortized original issue discount 11,553,800 --
Convertible notes payable 1,206,146 --
Note payable, officer 310,000 --
Capitalized lease obligation, less current
portion 56,111
Convertible preferred stock
Series A convertible preferred stock,
$.01 par value -- 3,006,200
Series B convertible preferred stock,
$.01 par value -- 40,000
Series A-1 convertible preferred stock,
$.01 par value 340,000
Series A-2 convertible preferred stock,
$.01 par value 4,206,105 --
Series C convertible preferred stock,
$.01 par value 6,300,000 --
Series D convertible preferred stock,
$.01 par value 633,962 --
------------ ------------
Total Long Term Liabilities 36,127,374 3,386,200
------------ ------------
TOTAL LIABILITIES 44,641,158 7,591,316
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Common stock, no par value, 5,000,000,000
shares authorized,
4,997,711,570 issued and outstanding 31,092,290 31,092,290
Additional paid-in capital 1,280,374 1,280,374
Accumulated deficit (36,075,520) (34,456,157)
------------ ------------
Total Stockholders' Deficiency (3,702,856) (2,083,493)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $40, 938,302 $5,507,823
============ ============
SOURCE: Advanced Communications Technologies, Inc.
CONTACT: Advanced Communications Technologies, Inc.
Wayne I. Danson, 646-227-1600
Chief Executive Officer
or
John E. Donahue, 646-227-1600
Chief Financial Officer
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