Exhibit 99.1
FOR IMMEDIATE RELEASE
SANZ Announces Operating Results For Year 2006
Englewood, Colorado, April 24, 2007 - SAN Holdings, Inc. (SANZ) (OTCBB: SANZ) today announced results for its fiscal year ended December 31, 2006.
Newly appointed Chairman and CEO Todd Oseth stated, “My goal is to transform SANZ into the leading provider of data access solutions. Since joining the company one month ago, I continue to focus on strengthening the fundamentals of our business. My three priorities for SANZ are: improve our financial performance, lower our costs and improve our operational execution.”
2006 Overall Results
Consolidated revenue for the year ended December 31, 2006 (“2006”) was $58.8 million as compared to $59.1 million for the year ended December 31, 2005 (“2005”). Gross profit for 2006 was $14.0 million versus $14.8 million for 2005. Selling, engineering, general and administrative expenses were $17.5 million in 2006 (and included $375,000 of share-based compensation expense) as compared to $15.8 million in 2005. The net loss for 2006 was $33.0 million and included non-cash charges of $22.3 million related to goodwill and intangible asset impairments and non-cash charges of $4.7 million related to the accounting for derivative financial instruments issued in the Company’s 2006 private placement transaction. For 2005, the net loss was $15.8 million and included a non-cash charge of $9.2 million for goodwill impairment. The net loss available to common shareholders for 2006 was $37.8 million, or $(0.33) per share, and included $340,000 of common stock dividends accrued for holders of the Company’s convertible series A preferred stock and a deemed dividend of $4.5 million related to the beneficial conversion feature of the Company’s convertible series A preferred stock. For 2005, the net loss available to common shareholders was $15.8 million or $(0.15) per share.
Storage Solutions Segment
Revenue for 2006 was $55.7 million versus $57.0 million for 2005. Loss from operations for 2006 was $22.9 million and included non-cash charges of $22.3 million related to goodwill and intangible asset impairments. For 2005, the loss from operations was $8.9 million and included a non-cash charge of $9.2 million for goodwill impairment.
EarthWhere Segment
Revenue for 2006 was $3.1 million versus $2.1 million or a 47% increase. Loss from operations for 2006 was $2.9 million as compared to $1.7 million in 2005.
About SANZ
SANZ is a nationwide data storage consulting and system integration firm focused exclusively on the design, deployment and support of intelligent data management. As part of its business model, SANZ has developed specialized expertise in the data management challenges of geotechnology users. SANZ’ software product, EarthWhere, is a spatial data provisioning application that catalogs, manages, and provisions customized geospatial imagery. SANZ is a subsidiary of SAN Holdings, Inc. For more information please visit www.sanz.com.
FORWARD LOOKING STATEMENTS:
This press release contains statements that are “forward looking statements” under the Federal securities laws. These forward-looking statements include statements regarding our expectations, beliefs, or intentions about the future, and are based on information available to us at this time. We assume no obligation to update any of these statements and specifically decline any obligation to update or correct any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Actual results could vary materially from our expectations. Factors that could cause actual results to vary materially include, but are not limited to: component quality and availability, transition to new products, changes in business conditions, changes in the company’s sales strategy, competition in the storage management engineering services marketplace, competitive pricing pressures, continued market acceptance of the company’s products, delays in the development of new technology, changes in customer buying patterns, changes in the company’s business strategy to improve long term financial and operational results, including but not limited to costs reductions, one-time events and other important factors disclosed previously and from time to time in our filings at the SEC.
Contact:
Investor Advantage, LLC for SANZ
Mark McPartland
910-221-1827
markm@investor-advantage.com
SAN Holdings, Inc. | | | | | |
Condensed Consolidated Balance Sheets | | | |
(In thousands) | | | | | |
| | | | | | |
| | | December 31, | | December 31, | |
| | | 2006 | | 2005 | |
| Assets | | | | | |
| | | | | | |
| Cash | | $ | - | | $ | 6 | |
| Accounts receivable, net | | | 15,384 | | | 11,832 | |
| Other current assets | | | 2,743 | | | 2,912 | |
| Total current assets | | | 18,127 | | | 14,750 | |
| | | | | | | | |
| Property & equipment, net | | | 472 | | | 673 | |
| Capitalized software, net | | | 1,394 | | | 872 | |
| Goodwill | | | 1,289 | | | 22,808 | |
| Intangible assets, net | | | 666 | | | 1,736 | |
| Other assets | | | 207 | | | 378 | |
| Total assets | | $ | 22,155 | | $ | 41,217 | |
| | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | |
| | | | | | | | |
| Bank debt | | $ | 7,703 | | $ | 20,401 | |
| Other current liabilities | | | 17,496 | | | 13,975 | |
| Total current liabilities | | | 25,199 | | | 34,376 | |
| | | | | | | | |
| Long-term debt | | | 6,814 | | | - | |
| | | | | | | | |
| Total Stockholders' Equity | | | (9,858 | ) | | 6,841 | |
| Total Liabilities & Stockholders' Equity | | $ | 22,155 | | $ | 41,217 | |
SAN Holdings, Inc. | | | |
Condensed Consolidated Statements of Operations | | |
(In thousands, except for share and per share data) | | |
| | | | |
| | | Years ended December 31, | |
| | | 2006 | | 2005 | |
| | | | | | |
| Revenue | | $ | 58,745 | | $ | 59,115 | |
| Cost of sales | | | 44,710 | | | 44,277 | |
| Gross profit | | | 14,035 | | | 14,838 | |
| | | | | | | | |
| | | | | | | | |
| Selling, engineering and general and administrative expenses | | | 17,532 | | | 15,822 | |
| Charge for goodwill impairment | | | 21,519 | | | 9,200 | |
| Charge for impairment of intangible asset | | | 800 | | | - | |
| Depreciation and amortization | | | 783 | | | 1,099 | |
| | | | | | | | |
| Loss from operations | | | (26,599 | ) | | (11,283 | ) |
| | | | | | | | |
| Interest expense | | | (1,474 | ) | | (1,610 | ) |
| Charge for warrants issued to related party for debt guaranty | | | - | | | (2,877 | ) |
Charges related to the accounting for derivative financial instruments issued in the 2006 private placement transaction | | | (4,729 | ) | | - | |
| Other income (expense) | | | (155 | ) | | (33 | ) |
| | | | | | | | |
| Net loss | | $ | (32,957 | ) | $ | (15,803 | ) |
| | | | | | | | |
| Deemed dividend related to beneficial conversion feature of convertible Series A Preferred Stock | | | (4,539 | ) | | - | |
| Common stock dividends accrued for holders of convertible Series A Preferred Stock | | | (340 | ) | | - | |
| | | | | | | | |
| Net loss available to common stockholders | | $ | (37,836 | ) | $ | (15,803 | ) |
| | | | | | | | |
| Basic and diluted net loss per share | | $ | (0.33 | ) | $ | (0.15 | ) |
| | | | | | | | |
| Weighted average common shares used in the calculation of basic and diluted net loss per share | | | 116,175,389 | | | 108,446,023 | |
SAN Holdings, Inc. Segment Information | | | |
(In thousands) | | | |
| | | | |
| | | Years ended December 31, | |
| | | 2006 | | 2005 | |
| | | | | | |
Storage Solutions | | | | | |
| Total net revenue | | $ | 55,639 | | $ | 57,001 | |
| Loss from operations (1) | | | (22,903 | ) | | (8,851 | ) |
| | | | | | | | |
EarthWhere | | | | | | | |
| Total net revenue | | | 3,106 | | | 2,114 | |
| Loss from operations | | | (2,929 | ) | | (1,732 | ) |
| | | | | | | | |
Total | | | | | | | |
| Total net revenue | | | 58,745 | | | 59,115 | |
| Loss from operations (1) | | $ | (25,832 | ) | $ | (10,583 | ) |
| | | | | | | | |
(1) The Storage Solutions segment loss from operations for 2006 and 2005 included charges for goodwill impairment of $21.5 million and $9.2 million, respectively. The Storage Solutions segment loss from operations for 2006 also included a charge for the impairment of the SANZ commercial trade name in the amount of $800,000.
SAN Holdings, Inc. | | |
Condensed Consolidated Statements of Cash Flows | |
(In thousands) | |
| | | |
| | | Years ended December 31, | |
| | | 2006 | | 2005 | |
| | | | | | |
| Net cash provided by (used in) operating activities | | $ | (3,457 | ) | $ | (5,193 | ) |
| Net cash used in investing activities | | | (1,231 | ) | | (1,229 | ) |
| Net cash provided by financing activities | | | 4,682 | | | 5,942 | |
| | | | | | | | |
| Net increase in cash and cash equivalents | | $ | (6 | ) | $ | (480 | ) |
| | | | | | | | |
| Cash and cash equivalents at beginning of period | | | 6 | | | 486 | |
| | | | | | | | |
| Cash and cash equivalents at end of period | | $ | - | | $ | 6 | |
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