New Strategy Focused on Directly Reaching SMB Market
ENGLEWOOD, CO -- (Marketwire - May 11, 2011) - Verecloud, Inc. (OTCBB: VCLD), innovators in the emerging cloud computing services business, today announced financial results for its fiscal 2011 third quarter ended March 31, 2011 highlighted by revenue of $1,002,326 as the company transitions its business model to delivering cloud services as a complete, customized suite directly to the small and medium business market (SMBs).
While professional services remained Verecloud's sole source of revenue for the three months ended March 31, 2011, this transition has resulted in lower professional services revenue versus previous quarters as the company invests in the new strategy. The trend is expected to continue in the near term as the company focuses on investing in and launching the cloud services platform in the fiscal 2012 first quarter ended September 30, 2011.
"We are very excited about the launch of our cloud services platform directly to SMBs," said John McCawley, chief executive officer of Verecloud. "We have spent a lot of time talking to SMBs about their needs in the cloud marketplace and we believe our platform will revolutionize how they take advantage of the explosive market for cloud services and will drive a significant opportunity for Verecloud."
Financial Highlights
-- Revenue of $1,002,326, down 37 percent from the quarter ended
December 31, 2010 and up 285 percent compared to the year ago quarter.
-- Net loss of $385,936, down from net income of $17,724 in the quarter
ended December 31, 2010. Net loss for the three months ended March 31,
2010 was $636,096.
-- Ended the quarter with a cash balance of $32,961 compared to $197,151
as of the fiscal year ended June 30, 2010 and down from $326,971 at
March 31, 2010.
Additional financial information, including historical SEC filings and the current Quarterly Report on Form 10-Q can be found on Verecloud's website at www.verecloud.com.
About Verecloud
Based in Denver, Colorado, Verecloud®, Inc. is an innovative technology company that developed and operates Nimbus CSB, a cloud service brokerage platform that integrates cloud service suppliers and connects to SMBs through multiple distribution channels. Nimbus CSB is targeted at organizations that need innovative, high-margin cloud services to drive growth including SMBs, communications service providers (CSPs), managed service providers (MSPs), and innovative cloud computing solution suppliers who want access to the evolving distribution channels. For more information on Verecloud visit: http://www.verecloud.com
Forward-Looking Statement
This release may contain projections and other forward-looking statements that involve risks and uncertainties. Forward-looking statements are projections reflecting management's judgment and assumptions based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Future performance cannot be assured. Readers are referred to the documents filed by Verecloud with the Securities and Exchange Commission (SEC), specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. Recent documents filed with the SEC can be found in the Investor Relations section of our website (www.verecloud.com). Verecloud believes the forward-looking statements in this release are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date of this release. Verecloud is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this release.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, June 30,
2011 2010
----------- -----------
ASSETS
Current assets
Cash $ 32,961 $ 197,151
Accounts receivable 534,943 632,962
Other current assets 55,555 34,243
----------- -----------
Total current assets 623,459 864,356
Property and equipment
Computer related 89,307 87,655
Equipment and machinery 39,485 36,255
Other property and equipment 36,330 36,330
----------- -----------
Subtotal 165,122 160,240
Accumulated depreciation (127,740) (98,839)
----------- -----------
Net property and equipment 37,381 61,401
Other assets
Capitalized software, net 862,990 -
----------- -----------
Total assets $ 1,523,831 $ 925,757
=========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities
Accounts payable $ 360,511 $ 174,899
Accrued liabilities 395,079 319,899
----------- -----------
Total current liabilities 755,590 494,798
Long term debt, net of unamortized discount 1,426,648 864,000
----------- -----------
Total liabilities 2,182,238 1,358,798
Commitments and contingencies
Stockholders' (deficit)
Preferred stock - $0.001 par value,
5,000,000 shares authorized: - -
No shares issued or outstanding
Common stock - $0.001 par value,
200,000,000 shares authorized: 71,577 70,098
71,577,165 and 70,098,000 shares
issued and outstanding, respectively
Additional paid-in capital 1,086,888 797,670
Accumulated (deficit) (1,816,872) (1,300,809)
----------- -----------
Total stockholders' (deficit) (658,407) (433,041)
----------- -----------
Total liabilities and stockholders' (deficit) $ 1,523,831 $ 925,757
=========== ===========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
Revenue $ 1,002,326 $ 260,433 $ 4,106,553 $ 5,126,586
Cost of goods sold 540,420 129,999 1,908,945 2,299,535
----------- ----------- ----------- -----------
Gross profit 461,907 130,434 2,197,608 2,827,051
Operating expenses
Employee related (1) 412,792 656,353 1,173,429 1,507,613
Marketing expense 124,060 139,687 616,923 527,981
Legal and accounting 80,569 105,594 238,510 357,904
Consulting expense 41,286 99,513 212,961 191,050
Rent 22,500 34,416 67,435 104,858
Travel and
entertainment 45,792 52,421 97,456 96,938
Information
technology 12,889 9,174 31,126 72,808
Depreciation 8,924 12,555 28,901 24,476
Other 48,097 24,996 134,555 73,277
----------- ----------- ----------- -----------
Total operating
expenses 796,909 1,134,709 2,601,295 2,956,905
----------- ----------- ----------- -----------
Operating income (loss) (335,003) (1,004,275) (403,687) (129,854)
Other income (expense)
Interest income 16 965 242 3,608
Interest (expense) (38,204) (38,319) (99,873) (134,693)
----------- ----------- ----------- -----------
Total other income
(expense) (38,188) (37,354) (99,630) (131,085)
----------- ----------- ----------- -----------
Pretax income (loss) (373,191) (1,041,629) (503,318) (260,939)
Income tax expense
(benefit) 12,745 (405,533) 12,745 (341,223)
----------- ----------- ----------- -----------
Net income (loss) $ (385,936) $ (636,096) $ (516,063) $ 80,284
=========== =========== =========== ===========
Basic net income (loss)
per common share $ (0.01) $ (0.01) $ (0.01) $ 0.00
Basic weighted average
common shares 71,366,758 47,729,222 70,610,311 44,096,752
(1) Includes
stock-based
compensation as
follows:
Salary and wages $ 19,812 $ 28,916 $ 86,744 $ 204,743
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
Nine Months Ended
March 31,
----------------------
Operating Activities 2011 2010
---------- ----------
Net income (loss) $ (516,063) $ 80,284
Adjustments to reconcile net income to
net cash from operations
Depreciation and amortization 28,901 24,476
Stock for services 8,185 141,915
Stock-based compensation 86,744 204,743
Income tax expense (benefit) - (341,223)
Change in assets and liabilities
Accounts receivable 98,019 1,125,323
Other current assets (21,312) 8,365
Accounts payable 185,612 (77,203)
Other current liabilities 75,180 (15,373)
---------- ----------
Net cash provided by (used in) operating activities (54,735) 1,151,308
Investing Activities
Purchase of computer related (1,652) (12,727)
Purchase of equipment and machinery (3,230) (2,519)
Purchase of other property and equipment - (2,946)
Capitalized software (862,990) -
---------- ----------
Net cash (used in) investing activities (867,872) (18,193)
Financing Activities
Issuance of common stock 58,417 -
Reduction in note payable (100,000) (840,000)
Increase in long term debt 800,000 -
Members distributions - (506,623)
---------- ----------
Net cash provided by (used in) financing activities 758,417 (1,346,623)
Decrease in cash for period $ (164,190) $ (213,508)
Cash at beginning of period 197,151 540,479
---------- ----------
Cash at end of period $ 32,961 $ 326,971
---------- ----------
Schedule of Noncash Investing and Financing
Activities
Loan Discount $ 137,352 $ -
Supplemental disclosure:
Cash paid for interest during the year $ - $ 134,693
Cash paid for income taxes during the year $ 12,745 $ -
Investor Relations Jim Buckley Chief Financial Officer Verecloud, Inc. 877-711-6492 jim.buckley@verecloud.com Media Relations Dirk Van Slyke Corporate Marketing Verecloud, Inc. 303-999-7398 dirk.vanslyke@verecloud.com