TAMPA, Fla.--(BUSINESS WIRE)--Innovaro, Inc. (NYSE Amex:INV) today announced that total revenue was $3.4 million for the quarter ended September 30, 2011 as compared to $4.2 million for the quarter ended September 30, 2010 and net loss for the quarter ended September 30, 2011 was ($624,000) as compared to ($13.2 million) for the quarter ended September 30, 2010.
Three Months Ended September 30, 2011 and 2010 Financial Results Summary
- Total revenue decreased to $3.4 million for the three months ended September 30, 2011 from $4.2 million for the three months ended September 30, 2010.
- Total operating expenses decreased to $4.5 million for the three months ended September 30, 2011 from $17.2 million for the three months ended September 30, 2010.
- Net loss for the three months ended September 30, 2011 was ($624,000) and included the following non-cash (income) and expense items: ($513,000) gain on derivative liabilities; $330,000 in non-cash depreciation and amortization; and $140,000 in non-cash stock-based compensation expense related to vesting options. Net loss for the three months ended September 30, 2010 was ($13.2 million), and included the following non-cash (income) expense items: ($776,000) gain on derivative liabilities; $544,000 in non-cash depreciation and amortization; $92,000 in non-cash stock-based compensation expense related to vesting options; and non-cash impairment charges of $11.6 million.
Nine Months ended September 30, 2011 and 2010 Financial Results Summary
- Total revenue increased to $12.2 million for the nine months ended September 30, 2011 from $9.3 million for the nine months ended September 30, 2010.
- Strategic Services revenue for the nine months ended September 30, 2011 increased by 57% over the nine months of 2010.
- Technology Services revenue for the nine months ended September 30, 2011 decreased by 32% over the nine months of 2010.
- Total operating expenses decreased to $14.9 million for the nine months ended September 30, 2011 from $25.0 million for the nine months ended September 30, 2010.
- Net loss for the nine months ended September 30, 2011 was ($3.5 million) and included the following non-cash (income) and expense items: $911,000 loss on derivative liabilities; $1,075,000 in non-cash depreciation and amortization; and $408,000 in non-cash stock-based compensation expense related to vesting options. Net loss for the nine months ended September 30, 2010 was ($25.0 million), and included the following non-cash (income) expense items: ($817,000) gain on derivative liabilities; $1.4 million in non-cash depreciation and amortization; and $213,000 in non-cash stock-based compensation expense related to vesting options; and non-cash impairment charges of $11.6 million.
Financial Condition
Our total assets were $24.1 million as of September 30, 2011 and $24.7 million as of December 31, 2010. As of September 30, 2011 we had $1.5 million in cash and cash equivalents, $1.2 million in accounts receivable and contracts in progress, $3.7 million in accounts payable, accrued bonus and accrued expenses and $5.4 million in debt. As of December 31, 2010, we had $263,000 in cash and cash equivalents, $2.0 million in accounts receivable and contracts in progress, $1.5 million in accounts payable and accrued expenses and $5.8 million in debt.
Asa Lanum Innovaro’s CEO stated, "I am pleased with our continuing improvement in financial performance. We grew revenue for the First Nine Months of 2011 by 32% over the First Nine Months of 2010. We reduced our controllable expenses, which include salaries and wages, professional fees, sales and marketing, and general and administrative costs for 3rd Quarter 2011 by 17% over 3rd Quarter 2010. These controllable expenses for the Nine Months of 2011 were reduced by 32% over the first Nine Months of 2010. We have seen a reduction in revenue from Strategos as they have completed some major assignments, but do see continuing opportunities in the pipeline for them. Although our sales have decreased in Technology Services, our individual sales productivity and our average sales price in Technology Services has increased. Within our PharmaLicensing Group we have seen an increase in the number of searches in process as well as those being monitored for completion. Our focus for Q4 will be to continue to execute within our Strategos and Technical Services3 businesses while simultaneously pursuing building our sales capability and customer base for LaunchPad."
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Innovaro, Inc. |
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Consolidated Balance Sheets |
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September 30, 2011 (Unaudited) |
December 31, 2010 |
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| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,545,942 | $ | 262,619 | ||||
| Accounts receivable, net | 1,103,502 | 1,796,454 | ||||||
| Contracts in process | 131,276 | 214,734 | ||||||
| Available-for-sale securities | 110,744 | 171,139 | ||||||
| Prepaid expenses and other assets | 520,424 | 791,432 | ||||||
| Total current assets | 3,411,888 | 3,236,378 | ||||||
| Cost method investments | 95,589 | 95,589 | ||||||
| Equity method investments | 303,454 | 303,454 | ||||||
| Note receivable and accrued interest | 1,778,000 | 1,700,000 | ||||||
| Fixed assets, net | 6,582,665 | 6,736,567 | ||||||
| Goodwill | 6,412,538 | 6,407,640 | ||||||
| Intangible assets, net | 5,563,532 | 6,174,792 | ||||||
| Total assets | $ | 24,147,666 | $ | 24,654,420 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 934,868 | $ | 1,078,088 | ||||
| Accrued expenses | 551,513 | 420,707 | ||||||
| Accrued bonus | 2,198,530 | - | ||||||
| Deferred revenue | 987,285 | 987,624 | ||||||
| Current maturities of long-term debt | 109,344 | 433,964 | ||||||
| Total current liabilities | 4,781,540 | 2,920,383 | ||||||
| Long-term debt, less current maturities | 5,282,093 | 5,358,173 | ||||||
| Derivative liabilities | 760,368 | 1,140,005 | ||||||
| Deferred tax liability | 1,198,177 | 1,220,687 | ||||||
| Total liabilities | 12,022,178 | 10,639,248 | ||||||
| EQUITY | ||||||||
| Innovaro stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value, 1,000,000 shares authorized; none | ||||||||
| issued and outstanding | - | - | ||||||
| Common stock, $.01 par value, 29,000,000 shares authorized; | ||||||||
| 15,161,274 and 14,631,950 shares issued; 15,041,274 and 14,585,261 | ||||||||
| shares outstanding at September 30, 2011 and December 31, 2010, | ||||||||
| respectively | 150,413 | 145,853 | ||||||
| Additional paid-in capital | 86,718,619 | 85,024,704 | ||||||
| Accumulated deficit | (75,362,144 | ) | (71,829,344 | ) | ||||
| Accumulated other comprehensive income | 93,215 | 147,922 | ||||||
| Total Innovaro stockholders’ equity | 11,600,103 | 13,489,135 | ||||||
| Noncontrolling interest | 525,385 | 526,037 | ||||||
| Total equity | 12,125,488 | 14,015,172 | ||||||
| Total liabilities and equity | $ | 24,147,666 | $ | 24,654,420 | ||||
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Innovaro, Inc. |
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Consolidated Statements of Operations |
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(Unaudited) |
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| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | ||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
| Revenue: | |||||||||||||||||
| Strategic services | $ | 2,899,131 | $ | 3,337,416 | $ | 10,482,237 | $ | 6,684,046 | |||||||||
| Technology services | 521,120 | 868,998 | 1,766,225 | 2,593,574 | |||||||||||||
| 3,420,251 | 4,206,414 | 12,248,462 | 9,277,620 | ||||||||||||||
| Expenses: | |||||||||||||||||
| Direct costs of revenue – Strategic services | 2,756,720 | 3,125,688 | 8,913,962 | 5,301,333 | |||||||||||||
| Direct costs of revenue – Technology services | 301,729 | 363,305 | 1,000,184 | 1,237,063 | |||||||||||||
| Salaries and wages | 437,195 | 648,118 | 1,247,130 | 2,117,273 | |||||||||||||
| Professional fees | 102,025 | 142,494 | 287,174 | 509,591 | |||||||||||||
| Research and development | 27,936 | 297,587 | 661,600 | 848,241 | |||||||||||||
| Sales and marketing | 114,070 | 18,867 | 228,188 | 456,744 | |||||||||||||
| General and administrative | 507,499 | 593,136 | 1,535,809 | 1,770,808 | |||||||||||||
| Depreciation and amortization | 296,686 | 388,095 | 976,871 | 1,184,503 | |||||||||||||
| Impairment loss | - | 11,620,708 | - | 11,620,708 | |||||||||||||
| 4,543,860 | 17,197,998 | 14,850,918 | 25,046,264 | ||||||||||||||
| Other (income) and expense: | |||||||||||||||||
| Other (income) expense | (598,060 | ) | 283,239 | 631,698 | 126,850 | ||||||||||||
| Interest expense, net | 106,348 | 235,136 | 329,558 | 512,374 | |||||||||||||
| (491,712 | ) | 518,375 | 961,256 | 639,224 | |||||||||||||
| Loss before income taxes | (631,897 | ) | (13,509,959 | ) | (3,563,712 | ) | (16,407,868 | ) | |||||||||
| Provision for income tax benefit | (7,547 | ) | (300,529 | ) | (23,674 | ) | (390,338 | ) | |||||||||
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Net loss |
(624,350 |
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(13,209,430 |
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(3,540,038 |
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(16,017,530 |
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| Net loss attributable to the noncontrolling interest | (2,835 | ) | (2,084 | ) | (7,238 | ) | (4,445 | ) | |||||||||
| Net loss attributable to Innovaro stockholders | $ | (621,515 | ) | $ | (13,207,346 | ) | $ | (3,532,800 | ) | $ | (16,013,085 | ) | |||||
| Net loss attributable to Innovaro | |||||||||||||||||
| stockholders per share: Basic and diluted | $ | (0.04 | ) | $ | (0.91 | ) | $ | (0.24 | ) | $ | (1.26 | ) | |||||
| Weighted average shares outstanding: Basic | |||||||||||||||||
| and diluted | 15,024,970 | 14,536,396 | 15,003,871 | 12,745,278 | |||||||||||||
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Innovaro, Inc. |
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Consolidated Statements of Cash Flows |
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(Unaudited) |
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| Nine Months Ended September 30, | ||||||||
| 2011 | 2010 | |||||||
| Operating Activities: | ||||||||
| Net loss attributable to Innovaro stockholders | $ | (3,532,800 | ) | $ | (16,013,085 | ) | ||
| Adjustments to reconcile net loss attributable to Innovaro | ||||||||
| stockholders to net cash flows from operating activities: | ||||||||
| Goodwill and intangible asset impairment | - | 10,332,628 | ||||||
| Fixed asset impairment | - | 1,288,080 | ||||||
| Net loss attributable to noncontrolling interest | (7,238 | ) | (4,445 | ) | ||||
| Depreciation and amortization | 976,871 | 1,184,503 | ||||||
| Amortization of debt discount from investor warrants | 98,832 | 247,252 | ||||||
| Loss on sale and impairment of available-for-sale securities | 201 | 1,136,865 | ||||||
| Loss (gain) on derivative liabilities | 911,193 | (817,609 | ) | |||||
| Stock-based compensation | 407,645 | 213,360 | ||||||
| Deferred income taxes | (23,674 | ) | (390,338 | ) | ||||
| Other | 13,740 | (24,974 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and contracts in process | 775,343 | (1,318,457 | ) | |||||
| Prepaid expenses and other assets | 218,942 | 103,604 | ||||||
| Deferred revenue | (339 | ) | (599,461 | ) | ||||
| Accounts payable, accrued expenses and accrued bonus | 2,192,701 | 1,802,353 | ||||||
| Net cash flows from operating activities | 2,031,417 | (2,859,724 | ) | |||||
| Investing Activities: | ||||||||
| Capital expenditures | (34,693 | ) | (39,546 | ) | ||||
| Capitalization of software development costs | (185,272 | ) | - | |||||
| Proceeds from sale of available-for-sale securities | - | 311,997 | ||||||
| Proceeds from redemption of certificates of deposit | - | 492,246 | ||||||
| Net cash flows from investing activities | (219,965 | ) | 764,697 | |||||
| Financing Activities: | ||||||||
| Net repayments on bank line of credit | - | (250,000 | ) | |||||
| Payments on long-term debt | (525,466 | ) | (791,758 | ) | ||||
| Gross proceeds from private equity securities offering | - | 3,799,999 | ||||||
| Offering costs paid from private equity securities offering | - | (593,440 | ) | |||||
| Net cash flows from financing activities | (525,466 | ) | 2,164,801 | |||||
| Effect of foreign exchange rates | (2,663 | ) | 19,600 | |||||
| Increase in cash and cash equivalents | 1,283,323 | 89,374 | ||||||
| Cash and cash equivalents at beginning of period | 262,619 | 2,118,970 | ||||||
| Cash and cash equivalents at end of period | $ | 1,545,942 | $ | 2,208,344 | ||||
Conference Call Information
We will host a live conference call at 4:30 p.m. ET today to discuss the results. Investors and analysts are invited to attend the conference call.
Investors and analysts can participate in the call by dialing:
US & Canada: 866-240-5139
UK: 0-800-368-0590
Other International Callers: 713-481-0091
About Innovaro, Inc.
Innovaro is The Innovation Solutions Company. The focus of our business is to help clients innovate and grow. Innovaro offers a comprehensive set of services and software to assure the success of any innovation project, regardless of the size or intent. The Company’s unique combination of consulting services provide innovation expertise, its new LaunchPad software product provides an integrated innovation environment, and technology services provide any business with the innovation support they need to drive success. For more information about Innovaro, please visit our website at www.innovaro.com.
Forward-Looking Statements
Certain matters discussed in this press release are “forward-looking statements.” These forward-looking statements can generally be identified as such because the context of the statement will include words such as “expects,” “should,” “believes,” “anticipates” or words of similar import. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements and these factors are identified from time to time in our filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This press release is available at www.innovaro.com.