Innovaro, Inc. (NYSE Amex: INV), today announced that total revenue was $1.3 million for the quarter ended March 31, 2012 as compared to $3.6 million for the quarter ended March 31, 2011 and net loss for the quarter ended March 31, 2012 was ($1.3) million as compared to ($176,000) for the quarter ended March 31, 2011. First Quarter 2012 Financial Results Summary
- Total revenue decreased to $1.3 million for the three months ended March 31, 2012 from $3.6 million for the three months ended March 31, 2011.
- Strategic Services revenue decreased by 75% over first quarter 2011.
- Technology Services revenue decreased by 11% over first quarter 2011.
- Total expenses decreased to $2.5 million for the three months ended March 31, 2012 from $3.6 million for the three months ended March 31, 2011.
- Net loss for the three months ended March 31, 2012 was ($1.3) million and included the following non-cash expenses: $324,000 in non-cash depreciation and amortization, and $98,000 in non-cash stock-based compensation expense related to vesting options. Net loss from operations for the three months ended March 31, 2011 was ($176,000), which included the following non-cash expenses: $374,000 in non-cash depreciation and amortization; and $83,000 in non-cash stock-based compensation expense related to vesting options.
Recent Developments
In April 2012, our Board of Directors approved the issuance of 61,876 shares of restricted stock under our equity compensation plan to our non-employee directors in lieu of $49,500 in cash director fees owed to them. The shares of restricted stock vested on May 7, 2012. The number of shares of restricted stock issued to the non-employee directors was based on the closing price of our common stock on the NYSE Amex on April 4, 2012. Asa Lanum, Innovaro’s CEO stated, “While we understand the reasons for the slowing of revenue we are not satisfied with the results and are working diligently to improve them. As mentioned in our discussion of the 2011 results, the challenging economic situation in Europe and the completion of several existing client assignments made the first quarter of 2012 a difficult one for Innovaro. However, based on results already in hand and on our prospective business pipeline we expect second quarter 2012 results to be substantially improved as we extend existing client relationships further and launch initial assignments with a number of newly-acquired clients. Some of this has been evidenced by the announcements of the new clients and engagements during the second quarter.”| Innovaro, Inc. Consolidated Balance Sheet | ||||||
| March 31, 2012 (Unaudited) | December 31, 2011 | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash | $162,249 | $268,170 | ||||
| Accounts receivable, net | 879,358 | 799,235 | ||||
| Contracts in process | 139,242 | 513,040 | ||||
| Available-for-sale securities | 57,193 | 55,038 | ||||
| Prepaid expenses and other assets | 244,151 | 294,625 | ||||
| Note receivable and accrued interest | 1,830,000 | 1,804,000 | ||||
| Total current assets | 3,312,193 | 3,734,108 | ||||
| Cost method investments | 86,784 | 86,784 | ||||
| Equity method investments | 92,148 | 92,148 | ||||
| Fixed assets, net | 5,582,598 | 5,632,757 | ||||
| Goodwill | 6,175,353 | 6,130,152 | ||||
| Intangible assets, net | 4,904,943 | 5,090,316 | ||||
| Total assets | $20,154,019 | $20,766,265 | ||||
| LIABILITIES | ||||||
| Current liabilities: | ||||||
| Accounts payable | $674,469 | $549,431 | ||||
| Accrued expenses | 899,245 | 475,348 | ||||
| Accrued bonus pool | 1,366,580 | 1,444,955 | ||||
| Deferred revenue | 994,200 | 856,222 | ||||
| Current maturities of long-term debt | 1,598,772 | 1,644,664 | ||||
| Total current liabilities | 5,533,266 | 4,970,620 | ||||
| Long-term debt, less current maturities | 3,976,241 | 3,997,775 | ||||
| Deferred tax liability | 989,385 | 990,542 | ||||
| Total liabilities | 10,498,892 | 9,958,937 | ||||
| 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; 15,159,544 shares issued; 15,064,544 and 15,039,544 shares outstanding at March 31, 2012 and December 31, 2011, respectively | 150,646 | 150,396 | ||||
| Additional paid-in capital | 86,918,658 | 86,820,437 | ||||
| Accumulated deficit | (77,758,902 | ) | (76,453,214 | ) | ||
| Accumulated other comprehensive income | 110,841 | 53,939 | ||||
| Total Innovaro stockholders’ equity | 9,421,243 | 10,571,558 | ||||
| Noncontrolling interest | 233,884 | 235,770 | ||||
| Total equity | 9,655,127 | 10,807,328 | ||||
| Total liabilities and equity | $20,154,019 | $20,766,265 | ||||
| Innovaro, Inc. Consolidated Statements of Operations and Comprehensive Income (Unaudited) | ||||||
| Three Months Ended March 31, | ||||||
| 2012 | 2011 | |||||
| Revenue: | ||||||
| Strategic services | $743,671 | $3,027,861 | ||||
| Intelligence and Insights services | 512,643 | 574,868 | ||||
| 1,256,314 | 3,602,729 | |||||
| Expenses: | ||||||
| Direct costs of revenue – Strategic services | 823,818 | 1,681,562 | ||||
| Direct costs of revenue – Intelligence and Insights services | 332,163 | 333,242 | ||||
| Salaries and wages | 378,794 | 324,508 | ||||
| Professional fees | 78,963 | 88,279 | ||||
| Research and development | 100,263 | 303,577 | ||||
| Sales and marketing | 66,206 | 61,235 | ||||
| General and administrative | 477,625 | 504,686 | ||||
| Depreciation and amortization | 291,041 | 341,088 | ||||
| 2,548,873 | 3,638,177 | |||||
| Other (income) and expense: | ||||||
| Other (income) expense | (120,920 | ) | 6,703 | |||
| Interest expense, net | 134,776 | 141,587 | ||||
| 13,856 | 148,290 | |||||
| Loss before income taxes | (1,306,415 | ) | (183,738 | ) | ||
| Provision for income tax expense (benefit) | 1,159 | (7,998 | ) | |||
| Net loss | (1,307,574 | ) | (175,740 | ) | ||
| Net loss attributable to the noncontrolling interest | (1,886 | ) | (2,427 | ) | ||
| Net loss attributable to Innovaro stockholders | (1,305,688 | ) | (173,313 | ) | ||
| Other comprehensive income | 56,902 | 7,087 | ||||
| Comprehensive loss | $(1,248,786 | ) | $(166,226 | ) | ||
| Net loss attributable to Innovaro stockholders per share: Basic and diluted | $(0.09 | ) | $(0.01 | ) | ||
| Weighted average shares outstanding: Basic and diluted | 15,064,544 | 15,022,761 | ||||
| Innovaro, Inc. Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2012 | 2011 | |||||||
| Operating Activities: | ||||||||
| Net loss attributable to Innovaro stockholders | $ | (1,305,688 | ) | $ | (173,313 | ) | ||
| Adjustments to reconcile net loss attributable to Innovaro stockholders to net cash flows from operating activities: | ||||||||
| Net loss attributable to noncontrolling interest | (1,886 | ) | (2,427 | ) | ||||
| Depreciation and amortization | 291,041 | 341,088 | ||||||
| Amortization of debt discount from investor warrants | 32,944 | 32,582 | ||||||
| Gain (loss) on sale and impairment of available-for-sale securities | (12,803 | ) | 201 | |||||
| Loss (gain) on derivative liabilities | - | 72,066 | ||||||
| Stock-based compensation | 98,471 | 82,578 | ||||||
| Deferred income taxes | 1,159 | (7,998 | ) | |||||
| Other | 40,660 | 7,512 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and contracts in process | 298,611 | (45,140 | ) | |||||
| Prepaid expenses and other assets | (20,460 | ) | 97,584 | |||||
| Deferred revenue | 137,978 | 113,157 | ||||||
| Accounts payable, accrued expenses and accrued bonus | 470,560 | 174,551 | ||||||
| Net cash flows from operating activities | 30,587 | 692,441 | ||||||
| Investing Activities: | ||||||||
| Capital expenditures | (1,189 | ) | (22,758 | ) | ||||
| Capitalization of software development costs | (45,525 | ) | - | |||||
| Proceeds from sale of available-for-sale securities | 16,236 | - | ||||||
| Net cash flows from investing activities | (30,478 | ) | (22,758 | ) | ||||
| Financing Activities: | ||||||||
| Payments on long-term debt | (101,032 | ) | (291,637 | ) | ||||
| Net cash flows from financing activities | (101,032 | ) | (291,637 | ) | ||||
| Effect of foreign exchange rates on cash | (4,998 | ) | (5,411 | ) | ||||
| Increase (decrease) in cash | (105,921 | ) | 372,635 | |||||
| Cash at beginning of period | 268,170 | 262,619 | ||||||
| Cash at end of period | $ | 162,249 | $ | 635,254 | ||||
| Supplemental Disclosures of Cash Flow Information | ||||||||
| Cash paid for taxes | $ | - | $ | - | ||||
| Cash paid for interest | $ | 115,731 | $ | 125,053 | ||||
| Supplemental Disclosures of Non-Cash Investing and Financing Activities | ||||||||
| Unrealized gain (loss) from available-for-sale securities | $ | 5,588 | $ | (49,496 | ) | |||
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 provides innovation expertise, its new LaunchPad software product provides an integrated innovation environment, and Intelligence and Insights services provide businesses the innovation support to drive success. For more information about Innovaro, please visit its 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.