EXHIBIT 99.1
NEWS RELEASE FOR NOVEMBER 22, 2004
Contacts for Incentra Solutions:
Allen & Caron Inc. Incentra Solutions
Jill Bertotti (investors) Paul McKnight
jill@allencaron.com Chief Financial Officer
Len Hall (financial media) pmcknight@incentrasolutions.com
len@allencaron.com (303) 449-8279
(949) 474-4300
INCENTRA SOLUTIONS ANNOUNCES RECORD
THIRD QUARTER, NINE-MONTH RESULTS
YEAR-OVER-YEAR THIRD QUARTER REVENUE INCREASED TO $4.3 MILLION;
PROFORMA REVENUE FOR THE QUARTER TO $5.3 MILLION
BOULDER, CO, NOVEMBER 22, 2004 - Incentra Solutions Inc. (OTCBB: ICEN), formerly
Front Porch Digital, Inc. (Front Porch), today reported year-over-year
significant improvements in top- and bottom-line performance for its third
quarter and nine months ended September 30, 2004. Chairman and CEO Thomas P.
Sweeney said that results for this year's third quarter were driven by continued
strong sales momentum for the Company's digital archive software and recurring
storage services and were further enhanced by the first deliveries of complete
integrated solutions for two customers.
PRO FORMA RESULTS OF OPERATIONS
Pro forma revenue for this year's third quarter increased approximately 64
percent to $5.3 million from $3.3 million for the third quarter of 2003 and
increased approximately 36 percent sequentially from $3.9 million in the 2004
second quarter. Pro forma revenue for the first nine months of 2004 increased
approximately 36 percent to $13.1 million, up from $9.7 million for the
comparable prior year period.
Pro forma net loss before amounts attributable to common shareholders1 for the
third quarter and nine months ended September 30, 2004 was $3.8 million and $9.9
million, respectively, which compares to a pro forma net loss of $4.0 million
and $13.8 million for the comparable year-earlier periods, respectively. Pro
forma net loss allocable to common shareholders for the third quarter and nine
months ended September 30, 2004 was $4.4 million and $11.9 million,
respectively, which compares to a pro forma net loss of $4.7 million and $15.8
million for the comparable year-earlier periods, respectively. Included in net
loss for the 2004 three- and nine-month periods was $1.4 million in
non-recurring costs related to the acquisition of ManagedStorage International
(MSI), which costs were included in SG&A expenses. Of that amount, approximately
$800,000 were non-cash charges.
Pro forma results of operations included 100 percent of the operating results of
Front Porch and MSI for all periods presented. On the other hand, results of
operations determined in accordance with generally accepted accounting
principles (GAAP) excluded the results of operations of Front Porch prior to the
completion of the acquisition on August 18, 2004.
"We are very pleased with the results for this year's third quarter,
particularly with our team's ability to immediately deliver on the stated
synergies of the combined company ahead of expectations," Sweeney said. "By
accepting two orders for complete storage solutions with immediate delivery
requirements, we accelerated our company's integration plans and incurred the
related spending during the third quarter."
The Broadcast & Media division delivered its first fully-integrated digital
archive solution to a major cable provider during the quarter, including the
entire storage infrastructure. The MSI division also delivered a complete
storage solution for a leading digital cinema broadcaster.
"We are working to finish our integration efforts as quickly as possible, and
are on track to introduce our complete solutions in the first quarter of 2005,"
Sweeney added.
Pro forma EBITDA2 for this year's third quarter, as adjusted to exclude the
non-recurring acquisition charges, was a slight loss of approximately $57,000,
as compared to a loss of $1.7 million for the comparable prior year period.
During the 2004 third quarter, the Company continued to invest in the further
development of its proprietary software packages. The total combined investment
in research and development for the third quarter and first nine months of this
year, capitalized for the Company's proprietary software products DIVArchive and
GridWorks, was $467,000 and $1.1 million, respectively.
"Our software is the key to the future. GridWorks and DIVArchive are industry
leading software packages today, and will require continued investment to ensure
they are relevant to the broadest possible set of customers in our target
markets," said Walt Hinton, Chief Technology Officer.
The Company announced last week that it had filed a Form 12b-25 Notification of
Late Filing with the Securities and Exchange Commission (SEC) extending the
deadline for filing its Quarterly Report on Form 10-QSB for the quarter ended
September 30, 2004 for up to five calendar days. Chief Financial Officer Paul
McKnight noted the Company has not yet filed with the SEC its 2004 third quarter
and nine-month results on Form 10-QSB and now plans to file the Form 10-QSB by
early December. "We continue to work with our new independent auditors to
complete our disclosures for the 10-QSB and make the necessary filings,"
McKnight said.
RESULTS OF OPERATIONS IN ACCORDANCE WITH GAAP
For the third quarter and nine months ended September 30, 2004, total revenues
were $4.3 million and $8.6 million, respectively, compared to $2.5 million and
$7.7 million for the comparable prior year periods, respectively. Net loss
before amounts attributable to common shareholders1 for the third quarter and
nine months ended September 30, 2004 was $2.9 million and $7.4 million,
respectively, which compares to a net loss of $2.3 million and $8.5 million,
respectively, for the comparable year-earlier periods. Net loss allocable to
common shareholders for the third quarter and nine months ended September 30,
2004 was $3.3 million and $8.1 million, respectively, which compares to a net
loss of $2.5 million and $10.1 million, respectively, for the comparable
year-earlier periods. Included in the net losses for the 2004 three- and
nine-month periods was $1.4 million in costs related to the acquisition of MSI,
which costs were included in SG&A expenses.
EBITDA(2) for the three months ended September 30, 2004, as adjusted to exclude
the non-recurring acquisition charges, was positive, totaling approximately
$113,000 as compared to a loss of approximately $857,000 for the comparable
year-earlier period.
ANNUAL MEETING OF SHAREHOLDERS
Incentra held its 2004 Annual Shareholders Meeting on November 17, 2004. A
quorum of shareholders was present in person or by proxy. All proposals
submitted to the shareholders were approved, including the election of four
directors to the Board.
CONFERENCE CALL INFORMATION
As previously announced, management will host a conference call to be broadcast
live on the Internet on Tuesday, November 23, 2004 at 11:00 a.m. (Eastern time)
at the Company's website, www.incentrasolutions.com. After you register your
name and company, you will be given access to the live webcast. Additionally, an
archive of the conference call will be available at this site.
ABOUT INCENTRA SOLUTIONS, INC.
Incentra Solutions, Inc. (www.incentrasolutions.com, otcbb:icen) is a provider
of storage management solutions to broadcasters, enterprises and managed service
providers worldwide. The Company operates a Broadcast & Media Division, Front
Porch Digital (www.fpdigital.com), that provides digital archive management and
transcoding solutions and a wholly-owned subsidiary, ManagedStorage
International (MSI, www.MSIservice.com), that provides storage management
software, hardware and outsourcing services facilitated by its GridWorks online
storage resource management product.
- ----------
(1) Net loss before amounts attributable to common shareholders excludes
dividends and accretion related to the company's preferred stock.
(2) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and cumulative effect of changes in accounting principle.
Although EBITDA is not a measure of performance or liquidity calculated in
accordance with generally accepted accounting principles (GAAP), the
Company believes the use of the non-GAAP financial measure EBITDA enhances
an overall understanding of the Company 's past financial performance and
is a widely-used measure of operating performance in practice. In addition,
the Company believes the use of EBITDA provides useful information to the
investor because EBITDA excludes significant non-cash interest and
amortization charges related to past financings by the Company that, when
excluded, the Company believes produces more meaningful operating
information. EBITDA
also excludes depreciation and amortization expenses incurred primarily in
the MSI subsidiary, which are significant when compared to such levels
prior to the acquisition of MSI. However, investors should not consider
this measure in isolation or as a substitute for net income, operating
income, cash flows from operating activities or any other measure for
determining the Company's operating performance or liquidity that are
calculated in accordance with GAAP, and this measure may not necessarily be
comparable to similarly titled measures employed by other companies. A
reconciliation of EBITDA to the most comparable GAAP financial measure, net
loss before income taxes, is included below.
EBITDA Reconciliation Three Months Ended September 30, 2004 and 2003:
Three months ended Three months ended
September 30, 2004 September 30, 2003
All Amounts in (000'S) as Reported Proforma as Reported Proforma
- --------------------- ----------- -------- ----------- --------
Pretax loss before amounts
attributable to common shareholders $ 2,934 $ 3,792 $ 2,338 $ 4,028
Depreciation & amortization 1,082 1,339 854 1,520
Interest (cash portion) 54 114 7 32
Interest (non-cash portion) 486 857 620 800
------- ------- ------- -------
EBITDA ($1,312) ($1,482) ($ 857) ($1,676)
Non-recurring charges 1,425 1,425 --
------- ------- ------- -------
EBITDA, as adjusted $ 113 ($ 57) ($ 857) ($1,676)
INCENTRA SOLUTIONS FORWARD LOOKING STATEMENTS
CERTAIN INFORMATION DISCUSSED IN THIS PRESS RELEASE MAY CONSTITUTE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 AND THE FEDERAL SECURITIES LAWS. ALTHOUGH THE
COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE BASED UPON REASONABLE ASSUMPTIONS AT THE TIME MADE, IT CAN GIVE
NO ASSURANCE THAT ITS EXPECTATIONS WILL BE ACHIEVED. READERS ARE CAUTIONED NOT
TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING
STATEMENTS ARE INHERENTLY SUBJECT TO UNPREDICTABLE AND UNANTICIPATED RISKS,
TRENDS AND UNCERTAINTIES SUCH AS THE COMPANY'S INABILITY TO ACCURATELY FORECAST
ITS OPERATING RESULTS; THE COMPANY'S POTENTIAL INABILITY TO ACHIEVE
PROFITABILITY OR GENERATE POSITIVE CASH FLOW; THE AVAILABILITY OF FINANCING; AND
OTHER RISKS ASSOCIATED WITH THE COMPANY'S BUSINESS. FOR FURTHER INFORMATION ON
FACTORS WHICH COULD IMPACT THE COMPANY AND THE STATEMENTS CONTAINED HEREIN,
REFERENCE SHOULD BE MADE TO THE COMPANY'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING ANNUAL REPORTS ON FORM 10-KSB, QUARTERLY REPORTS
ON FORM 10-QSB AND CURRENT REPORTS ON FORM 8-K. THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE OR SUPPLEMENT FORWARD-LOOKING STATEMENTS THAT BECOME UNTRUE
BECAUSE OF SUBSEQUENT EVENTS.
# # # #