Exhibit 99.1
IASG Announces Third Quarter Results
ALBANY, New York, (November 13, 2003) -- Integrated Alarm Services Group, Inc.
(Nasdaq: IASG), today reported financial results and accomplishments for the
third quarter ended September 30, 2003.
In announcing the results, Timothy M. McGinn Chairman and CEO said, "We are
pleased with both the financial and operational accomplishments in the quarter.
The IPO was a major milestone for our Company. New alarm contract acquisitions
are proceeding well. Since the end of the second quarter we have acquired
approximately 12,000 alarm contracts for our portfolio and we have the
equivalent of another 75,000 contracts under letters of intent. We continue to
believe that we will be able to achieve the 2003 plan outlined in the Company's
prospectus."
Total revenue for the third quarter ended September 30, 2003 was $9.7 million
compared to $5.8 million for the third quarter of 2002. For the nine-month
period total revenue was $28.2 million compared to $16.8 million in 2002.
Net loss for the quarter was $4.4 million or $0.25 per share, compared to a loss
of $0.7 million or $1.18 per share for the same period in 2002. The nine month
net loss was $20.5 million or $3.02 per share, compared to $3.1 million or $5.68
per share for the same period last year. Included in the third quarter results
were a charge of $1.6 million of debt issuance costs associated with the
prepayment of $95 million of debt; as well as a $1.3 million reversal of
customer contract amortization expenses resulting from the final purchase price
allocation associated with the IASI acquisition; and $0.3 million of accounting
costs for the initial public offering. Financial period to period per share
comparisons vary significantly primarily as a result of the recent IPO and the
weighted average shares outstanding methodology.
General and administrative expenses were $2.7 million for the third quarter
ended September 30, 2003, compared to $0.8 million for the same period during
2002. General and administrative expenses were $10.8 million for the nine-month
period ended September 30, 2003 and $1.5 million for the same period ended
September 30, 2002.
Primarily as a result of the IPO, the weighted average shares outstanding for
the quarter ended September 30, 2003, increased to 17.3 million shares compared
to 0.6 million shares for the same period in 2002. Nine month weighted average
shares outstanding increased to 6.8 million shares compared to 0.6 million
shares in 2002. As of September 30, 2003 there were 24,573,640 shares issued and
outstanding.
Net cash used in operating activities for the quarter ended September 30, 2003
was $3.2 million, including $4.2 million for interest expense. This compares to
$1.1 million of cash provided during the third quarter of 2002 with interest
expense of $1.1 million. For the nine month period, net cash used in operating
activities was $7.4 million, including interest expense of $12.1 million,
compared to $1.9 million of cash provided during the same period of 2002 with
interest expense of $3.6 million.
Third quarter accomplishments and subsequent events:
o On July 29, 2003, IASG successfully completed its initial public
offering. Net proceeds of $196 million were received upon the sale of
23 million shares at a price per share of $9.25.
o Since going public, IASG has retired approximately $95 million in debt,
which had a weighted average interest rate of 11.1%.
o From the date of the IPO through October 31, 2003, the Company has
purchased approximately 12,000 contracts with total recurring monthly
revenue ("RMR") of approximately $396,000. The Company has entered into
letters of intent to acquire contracts and business with total RMR of
approximately $2,245,000. These purchases are subject to the completion
of due diligence and the negotiation of the specific terms of the
acquisitions. For the same period, the Company has made new loans to
dealers totaling approximately $2.9 million collateralized by
approximately 5,800 contracts with a total RMR of approximately
$147,000.
See the attached financial highlights for the third quarter 2003 and nine months
ended September 30, 2003. For more information about IASG please visit our Web
site at http://www.iasg.us.
About IASG
Integrated Alarm Services Group provides total integrated solutions to
independent security alarm dealers located throughout the United States to
assist them in serving the residential and commercial security alarm market.
IASG's services include alarm contract financing including the purchase of
dealer alarm contracts for its own portfolio and providing loans to dealers
collateralized by alarm contracts. IASG, with 5,000 independent dealer
relationships, is also the largest wholesale provider of alarm contract
monitoring.
This press release may contain statements, which are not historical facts and
are considered forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements contain
projections of IASG's future results of operations, financial position or state
other forward-looking information. In some cases you can identify these
statements by forward looking words such as "anticipate", "believe", "could",
"estimate", "expect", "intend", "may", "should", "will" and "would" or similar
words. You should not rely on forward-looking statements because IASG's actual
results may differ materially from those indicated by these forward looking
statements as a result of a number of important factors. These factors include,
but are not limited to: general economic and business conditions; our business
strategy for expanding our presence in our industry; anticipated trends in our
financial condition and results of operations; the impact of competition and
technological change; existing and future regulations effecting our business,
and other risks and uncertainties discussed under the heading "Risks Related to
our Business" in IASG's final prospectus dated July 23, 2003 as filed with the
Securities and Exchange Commission on July 25, 2003, and the reports IASG files
from time to time with the Securities and Exchange Commission. IASG does not
intend to and undertakes no duty to update the information contained in this
press release.
Contact:
Joseph L. Reinhart
Investor Relations
Integrated Alarm Services Group, Inc.
518-426-1515
Integrated Alarm Services Group. Inc. And Subsidiaries
(Successor to KC Acquisition Corporation and Subsidiaries)
STATEMENTS OF OPERATIONS
Combined For the Three and Nine Months Ended September 30, 2002 and
Consolidated For the Three and Nine Months Ended September 30, 2003
(Unaudited)
Three months ended Nine months ended
---------------------------- ----------------------------
September September September September
2002 2003 2002 2003
------------ ------------ ------------ ------------
Revenue:
Monitoring fees $ 4,468,953 $ 5,930,091 $ 14,334,341 $ 17,872,642
Customer accounts -- 3,679,942 -- 9,747,077
Billing fees 169,796 45,264 471,862 87,761
Related party monitoring fees 500,704 -- 1,060,378 282,250
Related party placement fees 649,595 -- 911,688 90,437
Service and subcontractor fees -- 77,046 -- 168,501
------------ ------------ ------------ ------------
Total revenue 5,789,048 9,732,343 16,778,269 28,248,668
Cost of revenue (excluding depreciation
and amortization) 3,445,250 4,247,531 11,174,017 12,001,091
------------ ------------ ------------ ------------
2,343,798 5,484,812 5,604,252 16,247,577
------------ ------------ ------------ ------------
Operating expenses:
Selling and marketing 165,300 229,037 503,277 684,531
Depreciation and amortization 1,283,965 2,189,001 3,952,163 8,609,426
General and administrative 830,614 2,673,240 1,526,001 10,795,519
------------ ------------ ------------ ------------
Total operating expenses 2,279,879 5,091,278 5,981,441 20,089,476
------------ ------------ ------------ ------------
Income (loss) from operations 63,919 393,534 (377,189) (3,841,899)
Other income (loss) 113,195 468,245 1,035,470 205,495
Amortization of debt issuance costs 330,696 1,985,380 760,856 2,892,793
Related party interest expense 329,859 462,381 891,276 914,229
Interest expense 753,039 3,424,199 2,704,576 10,820,616
Interest income -- 608,664 -- 1,113,585
------------ ------------ ------------ ------------
Loss before provision for income taxes (1,236,480) (4,401,517) (3,698,427) (17,150,457)
Benefit (provision) for income taxes 583,481 35,828 550,706 (3,331,345)
------------ ------------ ------------ ------------
Net loss $ (652,999) $ (4,365,689) $ (3,147,721) $(20,481,802)
============ ============ ============ ============
Net loss per share $ (1.18) $ (0.25) $ (5.68) $ (3.02)
============ ============ ============ ============
Weighted average number of common
shares outstanding 553,808 17,269,123 553,808 6,774,349
============ ============ ============ ============
Pro forma income tax to give effect to the
conversion from S to C Corporation status:
Loss before provision for income taxes $ (1,236,480) $ (4,401,517) $ (3,698,427) $(17,150,457)
Benefit (provision) for income taxes 840,684 $ 35,828 1,820,484 285,143
------------ ------------ ------------ ------------
Net loss $ (395,796) $ (4,365,689) $ (1,877,943) $(16,865,314)
============ ============ ============ ============
Net loss per share $ (0.71) $ (0.25) $ (3.39) $ (2.49)
============ ============ ============ ============
Integrated Alarm Services Group. Inc. And Subsidiaries
(Successor to KC Acquisition Corporation and Subsidiaries)
Balance Sheets
Combined as of December 31, 2002 and Consolidated as of (Unaudited)
September 30, 2003
December 31, September 30,
2002 2003
------------- -------------
Assets (Unaudited)
Current assets
Cash and cash equivalents $ 442,082 $ 36,159,725
Short-term investments 3,000,000 66,906,572
Current portion of notes receivable -- 602,137
Accounts receivable, net 1,499,762 2,614,032
Prepaid expenses 72,648 1,179,803
Due from related party 346,608 171,167
------------- -------------
Total current assets 5,361,100 107,633,436
Property and equipment, net 2,708,161 2,454,052
Notes receivable net of current portion -- 2,126,124
Dealer relationships, net 27,560,912 24,225,441
Customer contracts, net -- 34,084,836
Goodwill, net 7,218,743 59,425,759
Debt issuance costs, net 1,047,221 1,940,657
Restricted cash and cash equivalents 1,163,229 1,129,914
Other assets 568,431 575,391
------------- -------------
Total assets $ 45,627,797 $ 233,595,610
============= =============
Liabilities and Stockholders' (Deficit) Equity
Current liabilities:
Current portion of long-term debt, related $ 1,738,724 $ --
Current portion of long-term debt 3,059,879 9,681,000
Current portion of capital lease obligations 146,316 153,541
Accounts payable and accrued expenses 4,680,313 3,812,522
Current portion of deferred revenue 3,812,626 5,642,876
Other liabilities -- 407,211
------------- -------------
Total current liabilities 13,437,858 19,697,150
Long-term debt, net of current portion, related 10,696,537 --
Long-term debt, net of current portion 29,566,223 57,634,841
Capital lease obligations, net of current portion 361,542 243,937
Deferred revenue, net of current portion -- 344,149
Deferred income taxes 2,458,738 723,200
Other liabilities 384,480 384,571
Due to related party 285,300 169,155
------------- -------------
Total liabilities 57,190,678 79,197,002
------------- -------------
Commitments and Contingencies
Stockholders' (deficit) equity:
Common stock 709 24,574
Common stock subscribed -- 315,342
Paid-in capital 5,554,289 204,559,813
Accumulated deficit (17,117,879) (50,501,121)
------------- -------------
Total stockholders' (deficit) equity (11,562,881) 154,398,608
------------- -------------
Total liabilities and stockholders' (deficit) equity $ 45,627,797 $ 233,595,610
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