Press Release
GREENWICH, Conn.-- November 20, 2007, HALO Technology Holdings (OTCBB: HALO) (the "Company" or "HALO") today announced results for the three months ended September 30, 2006.
For the first quarter of fiscal 2007, the Company reported revenue of $6.5 million, an increase of $6.2 million over the $0.3 million reported in the first quarter of fiscal 2006. Results for the current quarter reflect the acquisitions of the following: Tesseract, DAVID Corporation, Process Software, and ProfitKey International, all of which were acquired October 26, 2005; Empagio, Inc, which was acquired January 13, 2006; Executive Consultants, Inc., acquired March 1, 2006; Tenebril, purchased on August 24, 2006; and RevCast, acquired September 15, 2006. The company reported a net loss attributable to common stockholders of $3.4 million, or $(0.11) per diluted share, versus income of $20.2 million, or $0.89 per diluted share, for the same period last year. The first quarter of fiscal 2007 included $2.7 million in gains on warrants, due to the application of the fair value accounting treatment, compared to $23.8 million in the first quarter of fiscal year 2006. Results for the first quarter of fiscal 2007 and 2006 exclude HALO's subsidiary Gupta Technologies, which has been accounted for as discontinued operations and is in the process of being sold.
"This quarter, HALO continued to see its portfolio companies strengthen their market positions and take steps to improve operating performance," said CEO Ron Bienvenu. "We have, in tandem, reduced expenses and lowered our cash burn rate, while working diligently to complete the sale of Gupta to Unify (OTCBB: UNFY) and the acquisition of Unify's IRM and ViaMode divisions. We believe that IRM will provide excellent complementary product offerings for our DAVID platform, and several of the Halo operating units offer valuable products and services that will benefit ViaMode customers.
"We remain committed to our goal of reducing the debt load on our balance sheet. While the Gupta transaction is the first major step in this process, we continue to pursue additional measures that we believe will significantly and positively affect our financial position," he added.
Conference Call
HALO will host a conference call today at 11:00 a.m. Eastern. During the call, Ron Bienvenu, chairman and chief executive officer, and Mark Finkel, chief financial officer, will discuss the Company's performance and financial results. The telephone number for the conference call is 800-399-7503.
A live webcast of the call will also be available on the company's website www.haloholdings.com. To listen to the live call online, please visit the site at least 10 minutes early to register, download and install any necessary audio software. The webcast will be archived on the site, and a telephone replay of the call will be available for seven days beginning at 2:00 PM Eastern time, November 20, at 706-645-9291, using conference ID #1780036.
About HALO Technology Holdings
HALO Technology Holdings, Inc. is a global provider of a diversified range of standards-based enterprise software applications and on-demand solutions. HALO's strategy is to acquire and operate enterprise software companies with a commitment to sustainable growth. HALO portfolio companies focus on customer service, product quality and profitability to build long term customer relationships and ensure customer satisfaction today and into the future. Everyday, thousands of corporations and institutions from across the globe rely on our portfolio companies to deliver high quality, enterprise class software and services. For more information, please see our website at www.haloholdings.com.
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. (the "Reform Act"). These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. The safe harbors for forward-looking statements provided by the Reform Act are unavailable to issuers of "penny stock". Our shares may be considered a penny stock and, as a result, the safe harbors may not be available to us. Such forward-looking statements include those relating to future opportunities, the outlook of customers, the reception of new products and technologies, and the success of new initiatives. In particular, statements contained in this press release that concern future operating results or other statements using words such as "anticipate," "believe," "could," "estimate," "intend," "may," "plan," "project," "should" "will," or "set our sights on" constitute forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.In addition, such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such factors include: (i) demand for the Company's products; (ii) the actions of current and potential new competitors; (iii) changes in technology; (iv) the nature and amount of the Company's revenues and expenses; and (v) overall economic conditions and other risks detailed from time to time in the Company's periodic earnings releases and reports filed with the Securities and Exchange Commission, as well as the risks and uncertainties discussed in the Company's Annual Report on Form 10-KSB , and the Company's Quarterly Reports on Form 10-QSB .
HALO Holdings
Consolidated Balance Sheets
September 30, 2006 June 30, 2006
(unaudited) (audited)
------------------ ----------------
Assets
Current Assets:
Cash and cash equivalents $509,645 $853,901
Marketable securities -- 9,750
Accounts receivable, net of
allowance for doubtful
accounts of $112,843 and
$105,812, respectively 2,347,702 2,053,676
Due from Platinum Equity, LLC 330,000 302,500
Prepaid expenses and other
current assets 703,210 315,444
Assets held for sale 17,438,677 18,313,168
------------------ ----------------
Total current assets 21,329,234 21,848,439
Property and equipment, net 665,627 320,027
Deferred financing costs, net 1,330,491 1,492,096
Intangible assets, net of
accumulated amortization of
$1,337,342 and $849,282,
respectively 9,563,040 9,679,925
Goodwill 29,983,047 26,283,132
Other assets 74,815 79,919
------------------ ----------------
Total assets $62,946,254 $59,703,538
================== ================
Liabilities and stockholders'
equity
Current liabilities:
Current portion of senior notes
payable 1,896,189 1,333,126
Notes payable to Tenebril
sellers 3,529,412 --
Notes payable to Platinum
Equity, LLC 1,750,000 1,750,000
Deposit for sale of Gupta 500,000 --
Notes payable 160,000 3,275,000
Accounts payable 2,119,204 1,609,575
Accrued expenses 6,190,812 5,062,252
Deferred revenue 8,817,806 9,477,722
Due to ISIS 1,243,885 1,243,864
Liabilities of discontinued
operations 5,333,455 5,945,227
------------------ ----------------
Total current
liabilities 31,540,763 29,696,766
Subordinate notes payable 2,083,334 1,770,833
Senior notes payable 20,137,680 20,752,493
Other long term liabilities 434,594 453,974
Series C warrants liabilities 2,188,244 3,720,893
Senior and Sub warrants
liabilities 804,289 1,333,942
Other warrants liabilities 3,160,878 2,566,319
------------------ ----------------
Total liabilities 60,349,782 60,295,220
Commitments and contingencies -- --
Mandatory redeemable Series D
Preferred Stock: $.00001 par
value; 8,863,636 shares
authorized, 7,045,454 issued
and outstanding
(Liquidation value - $7,750,000) 7,750,000 7,750,000
Stockholders' equity (deficit):
Preferred stock (Canadian
subsidiary) 2 2
Shares of Common Stock to be
issued for accrued interest on
subordinated debt and for
RevCast acquisition 544,840 41,667
Common stock: $.00001 par
value; 150,000,000 shares
authorized; 30,406,625 and
26,723,247 shares issued and
outstanding, respectively 305 267
Additional paid-in-capital 92,292,362 86,265,258
Accumulated other comprehensive
loss (24,728) (43,528)
Accumulated deficit (97,966,309) (94,605,348)
------------------ ----------------
Total stockholders'
equity (deficit) ($5,153,528) ($8,341,682)
------------------ ----------------
Total liabilities and
stockholders' equity (deficit) $62,946,254 $59,703,538
================== ================
HALO Technology Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
September 30,
2006 2005
------------ ------------
Revenue
Licenses $ 637,485 $ 85,000
Services 5,849,661 202,778
------------ ------------
Total revenues 6,487,146 287,778
Cost of revenue
Cost of licenses 211,961 6,858
Cost of services 1,504,008 57,526
------------ ------------
Total cost of revenues 1,715,969 64,384
------------ ------------
Gross Profit 4,771,177 223,394
Product development 1,215,284 86,073
Sales, marketing and business development 1,020,871 130,593
General and administrative (including non-
cash compensation of $557,932 and $119,328,
respectively) 3,654,431 633,994
------------ ------------
Loss before interest and fair value gain on
warrants (1,119,409) (627,266)
Fair value gain on warrants 2,668,341 23,806,784
Interest expense, net (4,772,791) (2,106,111)
(Loss) income from continuing operations
before income taxes (3,223,859) 21,073,407
Income taxes 9,058 1,218
------------ ------------
(Loss) income from continuing operations (3,232,917) 21,072,189
Income (loss) from discontinued operations,
net of taxes 126,603 (682,548)
------------ ------------
Net (loss) income $(3,106,314) $20,389,641
------------ ------------
Computation of (loss) income attributable to
common shareholders
Net (loss) income before preferred dividends $(3,106,314) $20,389,641
Preferred dividends (254,674) (220,179)
------------ ------------
(Loss) income attributable to common
stockholders $(3,360,988) $20,169,462
Basic income (loss) per share attributable to
common stock:
(Loss) income from continuing operations $ (0.12) $ 6.50
Income (loss) from discontinued
operations $ 0.01 $ (0.22)
Net (loss) income $ (0.11) $ 6.28
Diluted income (loss) per share attributable
to common stock:
(Loss) income from continuing operations $ (0.12) $ 0.92
Income (loss) from discontinued
operations $ 0.01 $ (0.03)
Net (loss) income $ (0.11) $ 0.89
Weighted-average number common shares - basic 29,403,325 3,209,597
Weighted-average number common shares -
diluted 29,403,325 22,949,143
HALO Technology Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
September 30,
2006 2005
------------ -------------
Operating Activities
Net (loss) income $(3,106,314) $ 20,389,641
Income (loss) from discontinued operations 126,603 (682,548)
------------ -------------
(Loss) income from continuing operations (3,232,917) 21,072,189
Adjustments to reconcile (loss) income from
continuing operations to net cash used in
operating activities of continuing
operations:
Depreciation and amortization 403,917 43,279
Recovery of doubtful accounts (53,840) --
Fair value gain on warrants revaluation (2,668,341) (23,806,784)
Non cash compensation 557,932 119,328
Non cash interest expense 3,517,215 1,925,523
Loss on disposal of property and equipment (381) --
Loss on sale of marketable securities 28,429 --
Changes in operating assets and
liabilities of continuing operations
Accounts receivable 85,103 219,786
Prepaid expenses and other current assets 145,265 (47,285)
Accounts payable and accrued expenses 946,036 (227,445)
Deferred revenue (1,141,862) (14,315)
------------ -------------
Net cash used in operating activities of
continuing operations (1,413,444) (715,724)
Investing activities
Purchase of property and equipment (174,595) (23,540)
Acquisition deposits to Platinum Equity, LLC -- (1,003,835)
Cash acquired in acquisition of Tenebril,
Inc. 622,683 --
Cash acquired in acquisition of RevCast,
Inc. 500 --
Kenosia acquisition, net of cash acquired of
$6,125 -- (464,049)
Deposit from Unify for sale of Gupta
Technologies, LLC 500,000 --
Proceeds from sales of marketable securities 12,149 --
Proceeds from sales of property and
equipment 960 --
------------ -------------
Net cash provided by (used in) investing
activities of continuing operations 961,697 (1,491,424)
Financing activities
Repayment of Fortress debt (270,000) --
Repayment of subordinated notes -- (1,500,000)
Repayment of Senior notes -- (6,825,000)
Proceeds from new Senior notes, net of
issuance cost of $1,083,872 -- 8,916,128
Proceeds from promissory note -- 500,000
------------ -------------
Net cash (used in) provided by financing
activities of continuing operations (270,000) 1,091,128
Effects of exchange rates on cash (12,094) 45,738
Cash flows of discontinued operations
Net cash provided by operating activities 389,585 291,773
Net cash used in investing activities -- (18,471)
------------ -------------
389,585 273,302
Net decrease in cash and cash equivalents (344,256) (796,980)
Cash and cash equivalents -beginning of
period 853,901 1,548,013
------------ -------------
Cash and cash equivalents -end of period $ 509,645 $ 751,033
Supplemental disclosure of cash flow
Information:
Income tax paid $ 19,517 $ 31,616
Interest paid $ 475,436 $ 315,068