Exhibit 99.1
HALO Investor Relations Contact:
Chris Witty / Jody Burfening
Lippert/Heilshorn & Associates
cwitty@lhai.com
212) 838-3777
HALO Media Contact:
Leah Ritchie
Halo Technology Holdings
leah@haloholdings.com
(203) 422-2950
HALO Technology Holdings Announces First Quarter Results
GREENWICH, Conn. – November 20, 2006 –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 atwww.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 onForm 10-KSB , and the Company’s Quarterly Reports onForm 10-QSB .
(tables follow)
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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 | 7,750,000 | 7,750,000 | ||||||
(Liquidation value — $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 | ||||
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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 |
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