EXHIBIT 99.3
TRANSCRIPT OF CONFERENCE CALL
INCENTRA SOLUTIONS, INC.
THIRD QUARTER AND NINE MONTHS RESULTS
NOVEMBER 23, 2004
OPERATOR: Good morning, and welcome to the Incentra Solutions
Incorporated Third Quarter and Nine Months Results conference call. At this
time, all participants have been placed on a listen-only mode, and the floor
will be open for questions following the presentation. It is now my pleasure to
introduce your host for today's call, Jill Bertotti of Allen & Caron. Ma'am, you
may begin.
JILL BERTOTTI: Good morning and thank you for joining us for the Incentra
Solutions First Investor conference call. This morning we will be discussing the
company's results for third quarter and nine months ended September 30th, 2004.
Before we start today's call, there are a few items I would like
to cover with you. First, in addition to the disseminating through PR newswire
this morning today's new release announcing the company's financial results, an
email copy of the release was also sent to a large number of conference call
participants. If any of you did not receive a copy of the news release, please
call our California office at 949-474-4300 after the call and we will email you
a copy. Additionally, a replay of the conference call will also be available on
the Internet via a link provided at www.incentrasolutions.com.
Finally, I have been asked to make the following statements.
Certain information discussed on this conference call 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 explications reflected in such forward-looking
statements are based upon reasonable assumptions at the time made, it can give
no assurances expectations will be achieved. Listeners are cautioned not to
place undue reliance on these forward looking statements. Forward-looking
statements are inherently subject to unpredictable and unanticipated risk.
Trends in 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 on factors that
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-KSC, 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.
On the call today from Incentra Solutions, we have Tom Sweeney,
Chairman and CEO, Paul McKnight, Chief Financial Officer, Walt Hinton, Chief
Technical Officer and Mike Knaisch, President of the company's Front Porch
Digital Broadcast and Media Services Division. Management will provide a review
of the results, after which they'll be a question and answer period. I'd now
like to turn the call over to Tom. Good morning, Tom.
TOM SWEENEY: Thank you Jill, good morning to everyone, thank you for
joining the call. Hopefully we can provide some information to you all that's
relevant to the third quarter results for the business. As you've already seen,
we are, of course, extremely happy with the growth of the business overall.
Revenues in the third quarter on a combined basis reached $5.3 million, which is
a new high for the company in relation to $3.3 million last year so the growth
has started to occur. We are especially pleased with the integration of the
companies that is going along as we had planned. In some respects, it has had to
have been accelerated because of the need to deliver some complete solutions,
which were ahead of what our expectations were in terms of market release. So
we'll talk a little bit about that. And at this point Paul, I'd like to turn the
call over to you. If you would go ahead and give an overview of the financial
results.
PAUL MCKNIGHT: Sure. Good morning. I'm happy today to present the third
quarter results for Incentra Solutions. What I'm going to do first is I'm going
to provide the pro forma results; I'll give you some highlights of what happened
in the quarter. And we believe that the pro forma results are more appropriate
for us to look at and review because it represents the combined result of both
companies for all the period that we report.
But first all, as Tom said, I'd like to report that the revenues
for the quarter on a combined basis, pro forma basis, was 5.3 million, which is
a 64% increase over the same period last year of 3.3 million. On a year-to-date
9 month basis, we recognized 13.1 million in 2004, which is a 36% increase over
the same period last year of 9.7 million. The primary drivers of this revenue
were the continued success among our recurring storage service revenue, the
continued delivery of our software and professional services to the broadcast
industry and 2 key deliveries of complete solutions that we incurred in the
quarter for hardware, software and services.
So now, let me discuss a little bit about our cost structure. I
can't quite provide a detailed breakdown at the moment because we're still in
process of categorizing properly all of the items with our auditors. However, I
would like to share with you the total cost of revenues and SG&A for Incentra.
For the quarter, we incurred $8.3 million of total costs as compared to 6.3
million for the same quarter last year. However, I'd like to point out that in
the 8.3 million of costs; we incurred 1.4 million of merger related costs. And
I'll explain a little bit about what was included in those merge-related costs.
They're all one-time costs of legal, audit fees and special charges, and some of
which, about 800,000 of that number, were associated with non-cash expenses that
we had to recognize. So if we back out the one-time merger costs in the quarter,
cost without that impact would have been 6.9 million for the quarter this year
compared to 6.3 million for the previous year's quarter. So as you can see, we
had a fairly accelerated growth in revenues, with a relatively stable cost
structure.
For the net loss before amounts attributable to common
shareholders for the quarter was $3.8 million loss compared to a $4 million loss
in the previous quarter on a pro forma basis. Again, if we back up the merger
related costs, I would like to explain to you where our EBITDA calculation came
out for the quarter. On a pro forma basis, the EBITDA adjusted for depreciation
factors, amortization, and removing the merger-related costs were a negative
57,000 compared to 1.7 million dollar EBITDA loss for the same time the previous
year; so significant improvement.
So now I will share with you the results on a GAAP basis for the
quarter. And what this will include, the GAAP basis financials will include all
of MSI results for all of the periods, but it will only include Front Porch
Digital for the post acquisition period after August 18th, 2004. So on a GAAP
basis, revenues for the quarter were 4.3 million compared to 2.5 million of the
previous year and 8.6 million for the 9 months year-to-date compared to 7.7
million for the 9 months for the previous year. Again, the net loss attributable
to common shareholders on a GAAP basis for the quarter was $2.9 million loss
compared to a $2.3 million loss the previous year. However, again, if we backed
up the merger-related cost of 1.4 million, we will calculate an EBITDA as
adjusted on a GAAP basis for the quarter of a positive $113,000 as compared to
$857,000 loss for the same quarter last year.
Now I'd like to point out another important item to talk about
with regards to Incentra. I wanted to explain that and make sure everyone
understands the amounts of investment that Incentra has for 2 key areas. One is
in our software development for both our GridWorks and our Diva software
platforms. And I wanted to state that for the quarter, Incentra invested
$467,000 for Q3 of 2004, and 1.1 million on a year-to-date basis from 2004 for
software development. In addition, another key area of investment is we need to
continue to invest in hardware and software in the data storage infrastructure
area to ensure that we can deliver the storage service revenues to our
customers. The investment for the quarter was 127,000 for data storage
infrastructure and 1.7 million on a year-to-date basis for 2004.
TOM SWEENEY: Okay, thank you Paul. Now I'd like to turn the call over to
Mike Knaisch who's the President of the Front Porch Digital Division. Mike, if
you would please give an update on the third quarter results.
MIKE KNAISCH: Be happy to. Well as the company has announced on previous
occasions, compared to 2003, Front Porch has seen about a 2 to 300% increase in
the number and value of deals we've been competing for worldwide in 2004. So we
see a strong evidence that the global migration of the broadcast industry to
digital workflow continues to gain momentum. Front Porch has established and is
leveraging its leadership position in this growing market. Since the beginning
of 2004, we've won more than 80% of the bids tendered throughout Europe and
Asia, our strongest regions, and we've won a number of major reference accounts
throughout North America as well.
In the third quarter, which represented our 7th consecutive
quarter for record levels of revenue and new orders, there were a number of key
deals that helped us achieve these results. In Asia, we established new
relationships with Discovery, MTV and Nickelodeon, and
we now have more than 20 customers throughout the region where we are the clear
market share leader. In Europe, we added new installations with Disney Spain,
Nickelodeon UK and the expansion of our relationship with the European RTL
network among others. Front Porch now has more than 50 customers throughout this
region, where we are the market share leader as well.
Over the past 4 months, we've augmented our sales and sales
engineering resources in North America, and this team's quickly gaining traction
with new business wins with Peninsula, Thought Equity, and most significantly
ComCast, the largest cable provider in the country. The ComCast win was
especially notable for several reasons. First, as the largest cable provider in
the country, this was a highly competitive bid and our selection validates the
progress we're making in North America, establishing the same kind of leadership
position we enjoy internationally. ComCast has chosen Front Porch to replace its
Legacy archive system from Avalon, the division of EMC, which is one of our key
competitors. And we are migrating the entire ComCast content library to our Diva
Archive platform. But more importantly, this transaction represents our first
customer that has purchased not only Diva Archive and the professional services
around it, but a complete integrated storage solution, including servers, disk,
and tape libraries. Now this ComCast transaction is a model for new business in
the future and it is one example of the synergies we've achieved through our
merger with MSI. We're currently gearing up our sales and marketing efforts to
make an aggressive push behind this strategy beginning in January of next year,
and we're very excited about the prospects as we look forward.
One last point worth noting, we announced a global exclusive
alliance with Telestream, which is the market share leader in transcoding. Now
this deal augments the capabilities we continue to enjoy where our own product,
BitScream, and more importantly blocks our competition from being able to offer
Telestream's flip factory transcoder in competitive archive management
solutions. And we see this as a key competitive advantage that will help us win
more deals worldwide as transcoding increasingly becomes part of the overall
archive management solution.
TOM SWEENEY: Okay, thank you Mike. This is Tom Sweeney again. I'd now like
to talk a little bit about the results on the enterprise and service provider
segments of our business.
The third quarter had one significant transaction in it, which
was the provision of a large storage solution for a digital cinema broadcaster
here in the United States. That is something that we are very enthusiastic
about. Glad to see that that's happening as quickly as it did. In addition, we
had a very large renewal for our software for GridWorks for a large managed
storage service provider here in the United States where they will continue to
use our software to manage approximately 300 terabytes of infrastructure across
11 different data centers.
In addition, we saw strong gains in both our enterprise and
service provider space for recurring revenues, with additional servers being
added across the board and increasing storage volumes from all the customers. So
that was very positive.
And lastly, we have seen an increase in the volume of both
proposals and funnel work that is going on in proposing both complete solutions,
especially around the outsourcing of managed storage infrastructures for data
protection. So that has been a positive attribute as well for the quarter.
At this time, I'd like Walt Hinton to give a brief update. Walt
is our Chief Technology Officer. Walt, go ahead.
WALT HINTON: Thank you very much Tom. The business is very focused on
delivering complete solutions, and the technology initiatives going forward tie
directly to that. Mike had referenced the significant win at ComCast. When we
described complete solutions, we mean all of the hardware, all of the software,
and professional services to deliver turnkey solutions for archives, for the
broadcasters, as well as turnkey solutions for data protection for traditional
enterprise as well as service providers.
There are 4 key elements that we believe make up a complete
solution. The ability to provide remote monitoring as well as remote management,
the ability to perform professional services around assessments, designs,
implementations, as well as all of the procurement, and then ultimately
outsourcing of storage operations on behalf of our customers. This includes also
all of the hardware and software that are provided and developed by Incentra
Solutions or through our partners. And then lastly, the ability to provide
financing and capital solutions on behalf of our customers.
We see the market having some key primary drivers that are
helping to create this demand that fuels a very healthy business. The first is
that we see storage growth on an annual basis continuing at 50% or greater
compound annual growth rate. There are also new technologies, such as serial ATA
disk or nearline storage that are also coming in to the market and creating
changes to the way people manage their protection solutions as well as digital
archives. The result of that creates a more heterogeneous storage environment,
which creates more complexity, and therefore a need for a trusted advisor.
Additionally, we see both internal and external compliance requirements driving
traditional enterprise to up the ante in terms of their storage management
capabilities.
At the same time, we don't see staffing growth continuing at a
compound growth rate of 50% or more like the storage growth rate, but rather
staffing is expected to grow more about the lines of 10%. So the need for
augmentation or efficiency improvements is further heightened. And at the same
time, the requirement for operational cost improvements is also increasing.
So the result for the Incentra Solutions business is to continue
to focus our investment in our software solutions, both the Diva Archive
solution as well as the GridWorks storage operating system.
And lastly, we will continue to expand our partnerships, both on
a hardware and a software basis to be able to deliver those complete solutions
in a heterogeneous environment, and provide the right tools and the right time
on behalf of our customers.
TOM SWEENEY: Okay Walt, thank you. I'd like to summarize a few items for
you so you have a better feel for where the business is focused and the types of
things we need to accomplish as we go forward.
Number one, complete solutions are the key. We have to continue
to put ourselves in a position where we can take a greater percentage of the
total spend by our target markets as we go forward. So it's not enough to be the
leader in the archive management software space, we want to become a leader from
a solutions perspective. And that means that we need to be able to provide all
of the hardware, all the software, the professional services, and in some cases,
the financing necessary for customers to implement these solutions.
That is true also in the enterprise space. Those are
requirements that are not unique just to broadcasters. So the company will
continue to do that. We think we have a very favorable position in terms of how
the company's position versus our competitors. Our intellectual property gives
us that advantage. It's one that we can exploit today and as we go forward.
As we move along here now, we will continue to introduce
services, both early next year and later next year in terms of expanding the
monitoring and management that we can offer, as well as generating additional
product solutions on a broadcast space.
As Mike Knaisch had mentioned, we have increased the sales
engineering, sales resource on the broadcast side of the business. We are going
to continue to do that as we see our growth accelerate. For the enterprise and
service provider segment, we are just beginning the process now of introducing
some additional sales and sales management personnel. Those are resources we
would expect to add some time in the first quarter, and start to see results
from those additional resources as we exit the second quarter and move farther
in to the year.
Finally, the company has determined that there are opportunities
for us on a broader scale basis. In the last 9 months, we have found that in
order to sell complete solutions or introduce monitoring and management services
to customers, we need to be present when the customers are making technology
decisions and purchases. That experience has been brought about through our work
with both the VARK (sp?) community as well as with professional service
companies, and we believe at this time it makes sense for the company to
consider the possibility of acquiring a company that already has a presence in
the storage business that is selling hardware, software, and services to
customers, and that we can add our monitoring and management capabilities to.
To that extent, we have gone ahead and retained Inverary
Partners as an advisor from an acquisition perspective and Wells Fargo has been
retained to provide guidance and support around financing solutions, if those
were required. There is no guarantee that the
company will find an appropriate candidate to acquire, or that the company will
be able to reach agreement with any candidate that they think would be a good
acquisition for the business, but it's certainly one that we think is worth
spending some of our time and money on because we think we can accelerate the
company's position and growth characteristics overall.
In addition, we have retained Allen & Caron as our Investor
Relations firm. Obviously their focus is straight-forward. We want to increase
the amount of institutional awareness and buying of the company stock.
Hopefully, that will result in a strengthening currency as well as in a greater
share price, which we think would be appropriate for the value of the company
overall.
And then finally, for all of our shareholders, one of the things
that is important is that the company formulate a plan to move up to a major
exchange and off the bulletin board. Now this is something that requires the
company to meet a number of pre-determined qualifications, both in terms of its
size, its institutional shareholdings, its stock buying, as well as its
capitalization, those are all items that we're working to understand, but it is
certainly our intent as we move forward in to 2005 to position the company to be
able to move to a major exchange, which we think in the long run is a good
investment in terms of dollars on our part, and will create the type of return
that our shareholders expect.
At this point, I think we've ended the formal presentation, and
we are in a position to go ahead and take questions.
OPERATOR: Thank you. The floor is now open for questions. If you do
have a question, please press star one on your touchtone telephone at this time.
If at any point your question is answered, you may remove yourself from the
queue by pressing the pound key. Questions will be taken in the order that they
are received. And we do ask that while posing your question, you please pick up
your handset to ensure proper sound quality. Once again, to ask a question at
this time, please press star one on your touchtone telephone. Please hold the
line while we poll for questions. Thank you, our first question today is coming
from Wylie Johnson of Highline Advisors. Please go ahead with your question.
WYLIE JOHNSON: Good morning, gentlemen. Could you go into a little more detail
about your pipeline? I think Mike had mentioned the Front Porch pipeline was up
200 to 300%. Did I hear that correctly? And maybe going in more detail about
where that business is actually coming from relative to your direct focus and
your indirect focus.
TOM SWEENEY: Right. Mike, would you please go ahead and answer Wylie's
question.
MIKE KNAISCH: Certainly. Well, for starters, we have weekly sales funnel
calls during which we review the 30-60-90 day opportunities, and we also track
outward on a 6 month basis. And, you are correct, as we look in the aggregate
comparing our sales funnel experience this year compared to 2003, there has been
a two to 300% increase in the market. In terms of where those deals are coming
from, direct versus indirect, the vast majority of our business, probably close
to 85%, is coming through indirect channels. And the partner network that we
have is very broad,
representing the key players in the value chain of delivery of digital broadcast
solutions. So they would include large storage hardware providers, storage tech
being the most notable among them. We have more than 40 installations worldwide
operating on a storage tech platform. We also work with large systems
integrators, like AF Associates and Thompson. Those 2 channels represent the
majority of the indirect business that we have. But we also have a variety of
regional distributors who could be simply borrowers, as Tom has described, or
business coming through asset management or automation vendors and other related
businesses in the digital supply chain.
WYLIE JOHNSON: Well it's Wylie here, just assuming your closure rates remain
the same, I guess the business is likely to pick up, is there any bottleneck in
delivering on this pipeline?
MIKE KNAISCH: Well, certainly scaling the business to meet the increasing
demand is a key consideration for us, and we have continued to invest in those
delivery resources. But we have also found that partners are an effective
delivery channel for us, and we have several integrators that have been fully
trained on the delivery of Diva Archive, and that's an activity that we expect
to continue.
TOM SWEENEY: Yeah, and I think I'm going to add one item here, this is Tom
Sweeney. One of the key aspects of delivering greater volumes of archive
solutions, whether it's for the archive software itself or whether it's for a
broader more complete solution, is that we need to make sure that we're making
progress in minimizing the amount of customization that's required for these
individual broadcasters. The company has made great progress in that respect
from the standpoint that now less than 50% of the archives that are being
purchased require any form of significant customization. So the company's
ability to be integrated across the very broad spectrum of workflow engines as
well as the ability to control a very wide set of storage infrastructures is
very well developed now. So I don't think we're going to encounter any near-term
issues from a scaling perspective.
WYLIE JOHNSON: Okay, I have a follow up here, if that's okay, relating to
the ComCast business. And I guess I was, didn't quite hear that. Was that a
total solution that you had sold to ComCast? And is that in the U.S.? And is
there, I guess that's my question relating to ComCast.
MIKE KNAISCH: Yes, ComCast is a complete integrated solution including
hardware, professional services, as well as all of the server infrastructure
required to operating Diva Archive, the disk and tape libraries. And it is
located in the U.S.; it's actually based in their operations center, which is
south of Denver. And that installation is nearly complete, over the next 3
months we'll be migrating their library from the Avalon system over to Diva
Archive. In fact, ComCast has just this month delivered an additional order for
increased capacity.
TOM SWEENEY: Thank you, Mike.
OPERATOR: Thank you. The next question today is coming from Michael
Shonstrom of Shonstrom Research. Please go ahead with your question.
MICHAEL SHONSTROM: Yeah, my question had to do with the industry. I mean if, I
looked at a couple of different resellers out there. Up until the last quarter,
they've had difficulty growing their top line, profitability is hard to come by,
many operate at small losses, the pressure on pricing on equipment continues to
be problematic. More and more equipment offerings are coming out that reduce the
cost of storing data. I mean the cost per bit of storage just continues to go
down, down, down, and I think IBM just announced a new array of disk products
that, you know, lowers that bar yet once again fairly significantly according to
them. And so could you talk a little bit about what's your business model in
terms of your, you know, gross profit margins, what your operating costs are
going to be, SG&A and so on, where do you think that's going to be, and what
advantage you may have in being able to price? Does your stock, a proprietary
software offer this?
TOM SWEENEY: Okay. So, Michael, thank you for being on the call, this is
Tom Sweeney. Let me give you a couple of comments and then I'll provide some
color around it.
I can't, today, give you the breakdown on the gross margins or
PNL, those items, simply because the auditors need to finish their work. That'll
be filed shortly and then we can of course go in some more detail. But let me
give you some answers from a historical perspective and where we would expect to
take advantage going forward.
From a historical standpoint, software when we sell it, like
Diva Archive or if we sell software like GridWorks, those generally come with
very high gross margins associated with them, both for the upfront license fees
as well as for the maintenance or recurring fees associated with supporting
them. That particularly capability is one that provides an advantage when trying
to create a complete solution.
The pricing pressures that you mentioned in the marketplace
aren't real. I don't think there are many VARs or storage solutions providers
out there that are not feeling very pressured in terms of being able to deliver
product, and frankly with very thin margins. But when we talk about providing a
complete solution, and not just hardware or software, but also being able to
deliver remote monitoring and management, those are the types of services that
also have very high gross margins associated with them because all of the remote
monitoring and management that we do is highly automated. Today we manage some
6,000 hardware elements around the world from our (inaudible) here in Colorado
which has 12 people in it.
So, as we go forward, where we see the synergy and the value of
the businesses being able to participate across a broad spectrum of services,
that includes, in some cases, the need to supply hardware to customers, and we
may not be able to extract any greater premium than any other company in terms
of selling that product. But we do know that we will have greater returns by
introducing our professional and managed services than providing a complete
solution as we go forward.
So there are VARs out there in the world today, many of them
lack the ability to do complete solutions. And very significantly, most of them
lack recurring services, which is a key part for profitability as you go
forward.
MICHAEL SHONSTROM: The recurring service feature, the, you know, the managed
storage doesn't seem as though it's overly unique in that other companies can
get in to that. What sort of advantage do you have at this point to sort or
protect that space?
TOM SWEENEY: Right. So the managed services business is one that's defined
by the software platform that you operator from. So GridWorks, our internal
software, is a large scale storage resource management platform. If you were
going to be in the storage management business, you would not only require a
software platform like that, but you would also then need to have all of the
people, the processes, and the maturity to be able to manage the environments
for your customers. So as a competitive barrier, there are no other companies
that have GridWorks number one, there are certainly other companies that can
provide storage management services. But generally, those companies look like
the very largest systems integrators around the world. So companies like IBM or
CSC or CA or Corel; those are all companies that when they offer to manage
infrastructures, they generally are making offers to manage all of the data
center and all of the operations, as well as potentially taking over all of the
development and applications availability. And so our offering, which is focused
much more around the data protection area, an area that is most susceptible to
outsourcing, is one where we have a specialization, and we do not find ourselves
competing with the large systems integrators.
MICHAEL SHONSTROM: Interesting, yeah. Yeah, that's where I thought your
competition would come from, but apparently it's not specifically in that area.
And one final question, I just, if, you've got, I guess, a revenue recognition
issue with your business in installation type operations. Could you just, do you
have any feel for what that will be, whether you're recognizing all the revenue
up front, or over some sort of period of time, and what does that do to your
reported results versus your cash business?
TOM SWEENEY: Right. So let me give you a general answer, this is Tom
again. So the revenue recognition policies that the company follows are made up
of a number of different characteristics. Software, if it is sold as a single
license, you generally recognize that software license upfront and maintenance,
of course, you would recognize over the life of the contract.
For our recurring service customers, we recognize revenues as
they are in further build, on to the customers on a monthly basis. And in the
case where we are doing larger projects or complete solutions, like we did with
ComCast, there are a series of recognitions that take place, both at the time
that hardware is delivered and accepted, the time that software is delivered and
accepted, and in some cases, over a progress period for professional services if
development was required or integration. So we have to maintain, unfortunately,
more than one solution from a revenue recognition standpoint. What it means for
us, though, from a cash flow perspective, it's a little bit harder to answer
that because the contracts have different formulas in them. We certainly have
contracts where customers are required to pay a significant sum of the contract
upfront, and then we incur expenses as we move along. There are other cases
where there's progress payments or payments that are made at the completion of
the project. So generally, we have to match them up, but we have more than one
method we have to follow.
MICHAEL SHONSTROM: Great, okay. I guess that was a silly question any way. But
thanks.
TOM SWEENEY: You're welcome.
OPERATOR: Once again, if you do have a question, please press the star
key followed by the number one on your touchtone telephone. We have a follow up
question coming from Wylie Johnson of Highline Advisors. Please go ahead with
your question.
WYLIE JOHNSON: Tom, can you talk about the business going forward? I mean
you've showed some nice sequential increase. Do you expect the business to grow
in to the December quarter? And then subsequently into March and maybe even
further out? And if so, what does that do to your bottom line; I mean you're
basically break-even? Can you give any; I guess forward-looking guidance
relating to profitability? And also, what's the cash on the balance sheet?
TOM SWEENEY: Right. So Wylie, let me try and answer the question as best I
can. So number one, we can't give forward-looking guidance today for a couple of
reasons. One, we need to finish the work that we're doing with our outside
auditors and accountants. But more importantly, the fourth quarter, the December
quarter, is one which, you know, is susceptible to the impact of holidays on our
deliveries for projects or for implementation. So, it's a little bit difficult
to give guidance right now. We are working aggressively to develop and analyst
following which can then be used to provide some external views about the
company's expectations as we go forward. We certainly think there's opportunity
to continue to grow the business at a rapid pace. Certainly when we look at our
views towards next year, towards 2005, you know, we would be significantly
disappointed if we didn't continue growth. So, that is certainly the plan.
As we prepare to release the integrated results for the company,
we will go ahead and make it possible for people to understand where the company
needs to be operating at from a revenue perspective for it to be either income
positive or to be positive on an EBITDA basis. But I can tell you that the
EBITDA performance for the company ought to be positive from that respect is
probably down in about the 4.5 million range. So it's actually quite a bit lower
than where we were for the third quarter. And that has a lot to do with the
one-time results of the third quarter in delivering some larger infrastructures
that frankly don't generally necessarily significant profits on their own.
WYLIE JOHNSON: Okay.
TOM SWEENEY: Are there any other questions?
OPERATOR: No sir, there are no further questions at this time. Do you
have any closing comments?
TOM SWEENEY: Yes. I'd just like to conclude by saying number one, thank
you for joining the call, taking the time out of your holiday week. We're
certainly appreciative of your time. I'm sorry that we couldn't arrange to do it
last week but trying to get through all the financial results and the completion
from an accounting perspective has been quite a bit of work, as you could
imagine. We will be back again in the first quarter to review the fourth quarter
results and I'll provide updates or make ourselves available as people would
like. Thank you.
OPERATOR: Thank you for your participation. That does conclude this
morning's teleconference. You may disconnect your lines at this time and have a
great day. Thank you.