[LOGO OF SANZ] [LOGO OF EARTHWHERE]
Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Relations Contact:
Liolios Group, Inc.
Ronald Both, 949-574-3860
ron@liolios.com
SANZ Announces Operating Results for First Quarter 2006
Improves Cash Flow and Raises
Additional $1.5 Million in Equity with Institutional Investor
Englewood, Colorado, May 15, 2006 - SAN Holdings, Inc. (OTCBB: SANZ) reported
revenue of $14.3 million and gross profit of $3.5 million for its quarter ending
March 31, 2006. Net loss for the March 2006 quarter was $1.6 million versus $1.5
million for the March 2005 quarter. Net loss available to common shareholders
was $7.3 million (net loss per share of $0.06), and included a deemed dividend
related to the beneficial conversion feature of convertible Series A preferred
stock issued by SANZ in March 2006. Excluding this item, net loss per share
would have been $0.01 as compared to a net loss per share of $0.01 in the March
2005 quarter.
Bob Ogden, SANZ' CFO, stated, "For the quarter, revenue was down and gross
margin was up slightly when compared to the prior year. Our professional
services revenue continued to show year on year growth both in total and as a
percent of revenue, in spite of the delays in Federal budget approvals that had
a negative effect on total services revenue and technical resource utilization
in our Federal Storage Solutions business, and slowed project approvals for
EarthWhere(TM) releases. Our operating expenses, which included for the first
time a non-cash charge for stock-based compensation, increased significantly
year on year, reflecting the impact of the increase in staff undertaken in late
2005 in our EarthWhere business where software and business development expenses
were up by more than $500,000 over our March 31, 2005 quarter. Our cash flow
from operations was a positive $944,000."
SANZ' CEO, John Jenkins, noted, "While our commercial storage solutions business
performed better than expected in the March 2006 quarter, as noted above, the
contribution of our Federal business in both Storage Solutions and EarthWhere
was hurt by the delays in the Federal budget approval process. With the release
of new engagements, our Federal professional services business is now showing
improved utilization and we have a good pipeline of EarthWhere software and
service engagements that we expect to land in the June quarter. These include
some significant new clients, and reflect financial return on the significant
investment in resources we have made." He added, "Our commercial Storage
Solutions business looks to continue to build on its good momentum of the first
quarter."
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SANZ also announced that it had recently completed the final round of its
private equity financing that included an institutional investor in the amount
of $1.5 million. SANZ has closed approximately $5.0 million in new cash equity
financing since late February of this year.
Monarch Capital Group, LLC has served as the placement agent for SANZ' recent
equity transactions.
CFO, Bob Ogden, added, "Completing our equity raise has made a dramatic
difference in the Company's balance sheet and, we believe, in the way SANZ is
now perceived by investors, customers and suppliers. We improved our working
capital by approximately $17.4 million through new cash infusion and debt
conversion, and have provided a solid capital foundation for our business."
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
manages, processes and delivers customized spatial imagery. SANZ is a subsidiary
of SAN Holdings, Inc. http://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, one-time events and other important factors
disclosed previously and from time to time in our filings at the SEC.
SAN Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
March 31, December 31,
2006 2005
----------- -----------
Assets
Cash and cash equivalents $ 1,083 $ 6
Accounts receivable, net 10,457 11,832
Other current assets 3,152 2,912
----------- -----------
Total Current assets $ 14,692 $ 14,750
Property & equipment, net 645 673
Capitalized software, net 1,121 872
Goodwill 22,808 22,808
Intangible assets, net 1,664 1,736
Other assets 368 378
----------- -----------
Total assets $ 41,298 $ 41,217
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Liabilities and Stockholders' Equity
Bank debt $ 5,054 $ 20,401
Other current liabilities 15,016 13,975
----------- -----------
Total current liabilities 20,070 34,376
Long-term debt 5,335 --
Total Stockholders' Equity 15,893 6,841
----------- -----------
Total Liabilities & Stockholders' Equity $ 41,298 $ 41,217
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SAN Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except for share and per share data)
For the three months ended
March 31, 2006 March 31, 2005
-------------- --------------
Revenue $ 14,272 $ 15,516
Cost of sales 10,765 11,759
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Gross profit 3,507 3,757
Gross margin percentage 24.6% 24.2%
Selling, engineering and general and administrative expenses 4,358 3,561
Depreciation and amortization 260 308
-------------- --------------
Loss from operations (1,111) (112)
Interest expense (474) (347)
Charge for warrants issued to related party for debt guaranty -- (1,049)
Other income (expense) (14) (5)
-------------- --------------
Net loss $ (1,599) $ (1,513)
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Deemed dividend related to beneficial conversion feature of
convertible Series A Preferred Stock (5,715) --
Net loss available to common stockholders $ (7,314) $ (1,513)
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Basic and diluted net loss per share $ (0.06) $ (0.01)
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Weighted average common shares used in the calculation
of basic and diluted net loss per share 115,878,022 103,835,445
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SAN Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
For the three months ended
March 31, 2006 March 31, 2005
-------------- --------------
Net cash provided by (used in) operating activities $ 944 $ (3,334)
Net cash used in investing activities (434) (278)
Net cash provided by financing activities 567 4,877
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Net increase in cash and cash equivalents $ 1,077 $ 1,265
Cash and cash equivalents at beginning of period 6 486
Cash and cash equivalents at end of period $ 1,083 $ 1,751
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