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Computer Software Innovations, Inc. Announces Record Financial Results for the Quarter and Full Year Ended December 31, 2007 EASLEY, SC--(MARKET WIRE)--Mar 10, 2008 -- Computer Software Innovations, Inc. (OTC BB:CSWI.OB - News)
-- Record Revenues of $55.2 Million for the 2007 fiscal year, up 93%
versus 2006;
-- Net Income $1.7 Million or $.14 per diluted share in 2007, versus net
loss of $0.9 Million in 2006;
-- Operating Income Increases to $3.1 Million, versus operating loss of
$0.2 Million in 2006;
-- Fourth Quarter Revenues Increase Over 88% to $11.1 Million versus Q4
2006;
Computer Software Innovations, Inc. (OTC BB:CSWI.OB - News), CSI Technology Outfitters(TM) ("CSI") today announced its financial results for the quarter and full year ended December 31, 2007. Financial Results - Fiscal Year 2007: For the year ended December 31, 2007, revenues were approximately $55.2 million, up 93%, or $26.6 million, from $28.6 million in the comparable period a year ago. The technology solutions segment increased revenue $21.2 million, or 90%, primarily driven by increased adoption of interactive classroom technologies and engineered infrastructure solutions. The software applications segment also improved revenues by $5.5 million, or 109%, with the acquisition of McAleer Computer Associates, Inc. ("McAleer") contributing $4.5 million of the improvement and the remaining $1.0 million coming from organic growth in new software sales and support services. Gross profit for the year was approximately $11.3 million, an increase of $4.9 million, or 78%, compared to $6.4 million in 2006. Operating income for the year was approximately $3.1 million compared to an operating loss of approximately $243,000 for the same period in 2006. Net income for 2007 was $1.7 million, or earnings of $0.46 per basic share and $0.14 per diluted share, as compared to a net loss of approximately $0.9 million, or $0.27 loss per basic and diluted share for the comparable period ended December 31, 2006. EBITDA improved to $4.8 million for the year ended December 31, 2007, an increase of $4.3 million from $0.5 million in the prior year (EBITDA is a non-GAAP financial measure. See reconciliation to GAAP measure Net Income (Loss) which follows). For the year ended December 31, 2007, shareholders equity improved to $2.5 million from a deficit of approximately $104,000 for the same period in 2006. "The record performance we achieved in 2007 is the result of increased demand for the interactive classrooms in our markets, coupled with organic software revenue growth and the addition of McAleer. We anticipate continued demand for our technology products and service solutions as we proceed into 2008. Additionally, the McAleer acquisition continues to contribute significantly to the software applications segment of our business, where we expect continued growth as well as cross-selling opportunities within the expanded territory." "We enter 2008 with a positive outlook. Our efforts remain focused on increasing revenues, improving gross margins and earnings, and providing value to our shareholders. We look to capitalize on the strong demand for our technology and software solutions through deeper penetration into our existing client base, take advantage of cross selling opportunities in the newly acquired footprint, and expand into new geographic regions," continues Ms. Hedrick. Financial Results - Fourth Quarter 2007: CSI posted record revenues of approximately $11.1 million for the fourth quarter ended December 31, 2007, up approximately $5.2 million, or 89%, compared to $5.9 million in the fourth quarter of 2006. CSI experienced significant organic growth in its technology solutions segment during the fourth quarter of $3.9 million, or 81%, primarily from increased sales of interactive classroom products and related services and infrastructure product. CSI's software applications segment increased revenues $1.3 million, or 126%, with $1.1 million added from its McAleer acquisition, and $0.1 million from organic growth. Gross profit for the fourth quarter was approximately $1.7 million, an increase of $0.7 million or 72% compared to the fourth quarter 2006. The increase in gross profit can be attributed primarily to both higher volume sales of interactive whiteboard solutions product and related services, and the increase in software applications segment revenues. Operating loss for the fourth quarter of 2007 was approximately $307,000, compared to an operating loss of approximately $576,000 for the same period in 2006. While operating costs increased, primarily from the McAleer acquisition and increased selling efforts, those costs declined as a percent of sales, resulting in improved economies of scale. CSI posted a net loss for the quarter ended December 31, 2007 of approximately $138,000 or $0.03 loss per basic and diluted share, compared to a net loss of approximately $812,000 or $0.24 loss per basic and diluted share for the same period in 2006. Due to the seasonality of CSI's business, the fourth quarter is traditionally the lowest performing quarter in its fiscal year. CSI's EBITDA, or earnings before interest, income taxes, depreciation and amortization, improved in the fourth quarter to $0.2 million, an increase of $0.8 million over the prior year's negative EBITDA of $0.6 million (EBITDA is a non-GAAP financial measure. See reconciliation to GAAP measure Net Income (Loss) which follows). Nancy Hedrick, CEO of CSI, stated, "We are very pleased with our financial performance during the fourth quarter. We continued our growth trend, which was fueled by the technology solutions segment and the increased number of interactive classroom installs conducted during the quarter. Our significant growth in both the technology and software solutions segments of our business resulted in record setting top line performance. Overall, we are excited to see that our financial performance not only met, but exceeded, our previously announced guidance for both revenues and EBITDA for the year end." Conference Call Reminder for Today The Company will host a conference call today, Monday, March 10, 2008 at 4:15 p.m. Eastern Time to discuss the company's financial and operational results for fourth quarter and full year 2007, which ended December 31, 2007. Conference Call Details Date: Monday, March 10, 2008 Time: 4:15 p.m. (EST) Dial-in Number: 1-800-762-8795 International Dial-in Number: 1-480-248-5085 It is recommended that participants phone-in approximately 5 to 10 minutes prior to the start of the 4:15 p.m. call. A replay of the conference call will be available approximately 2 hour after the completion of the call for 7 days, until March 17, 2008. To listen to the replay, dial (800) 406-7325 if calling within the U.S. or (303) 590-3030 if calling internationally and enter the pass code 3850420. The call is also being webcast and may be accessed at CSI's website at www.csioutfitters.com. The webcast will be archived and accessible until April 10, 2008 on the Company website. About Computer Software Innovations, Inc. Computer Software Innovations, Inc. is a full service company providing software and technology solutions primarily to public sector organizations. The software solutions include financial management, billing and revenue management, school activity accounting, lesson planning and automated workflow. The technology solutions include IP telephony, IP video surveillance, visual communications, interactive classrooms, network security and traffic monitoring, infrastructure design, wireless solutions, network management, engineering services and hardware solutions. CSI's client base includes school districts, higher education, municipalities, county governments, and other non-profit organizations. Currently, more than 600 public sector organizations utilize CSI's software systems and network integration services. Additional information on CSI can be obtained through its website at www.csioutfitters.com. Forward-Looking and Cautionary Statements This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Among other things, these statements relate to our financial condition, results of operations and future business plans, operations, opportunities and prospects. In addition, we and our representatives may from time to time make written or oral forward-looking statements, including statements contained in filings with the Securities and Exchange Commission and in our reports to stockholders. These forward-looking statements are generally identified by the words or phrases "may," "could," "should," "expect," "anticipate," "plan," "believe," "seek," "estimate," "predict," "project" or words of similar import. These forward-looking statements are based upon our current knowledge and assumptions about future events and involve risks and uncertainties that could cause our actual results, performance or achievements to be materially different from any anticipated results, prospects, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are not guarantees of future performance. Many factors are beyond our ability to control or predict. You are accordingly cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date that we make them. We do not undertake to update any forward-looking statement that may be made from time to time by or on our behalf. In our most recent Form 10-K, we have included risk factors and uncertainties that might cause differences between anticipated and actual future results. We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area. The operations and results of our software and systems integration businesses also may be subject to the effects of other risks and uncertainties, including, but not limited to:
-- a reduction in anticipated sales;
-- an inability to perform customer contracts at anticipated cost levels;
-- our ability to otherwise meet the operating goals established by our
business plan;
-- market acceptance of our new software, technology and services
offerings;
-- an economic downturn; and
-- changes in the competitive marketplace and/or customer requirements.
COMPUTER SOFTWARE INNOVATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Year Ended
------------------------ -------------------------
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
----------- ----------- ------------ -----------
REVENUES
Software
applications
segment $ 2,310,210 $ 1,021,603 $ 10,477,885 $ 5,019,860
Technology
solutions segment 8,781,396 4,860,289 44,718,735 23,533,670
----------- ----------- ------------ -----------
Net sales and
service revenue 11,091,606 5,881,892 55,196,620 28,553,530
COST OF SALES
Software
applications segment
Cost of sales excluding
depreciation,
amortization and
capitalization 1,516,733 862,942 5,988,497 2,738,281
Depreciation 30,688 14,729 76,728 65,011
Amortization of
capitalized
software costs 323,251 180,052 1,108,811 709,175
Capitalization of
software costs (344,079) (229,004) (1,058,070) (1,156,307)
----------- ----------- ------------ -----------
Total Software
applications
segment cost of
sales 1,526,593 828,719 6,115,966 2,356,160
Technology solutions
segment
Cost of sales
excluding
depreciation 7,823,650 4,029,161 37,670,256 19,732,931
Depreciation 23,396 22,093 89,812 91,516
----------- ----------- ------------ -----------
Total technology
solutions segment
cost of sales 7,847,046 4,051,254 37,760,068 19,824,447
Total cost of
sales 9,373,639 4,879,973 43,876,034 22,180,607
----------- ----------- ------------ -----------
Gross profit 1,717,967 1,001,919 11,320,586 6,372,923
----------- ----------- ------------ -----------
OPERATING EXPENSES
Salaries, wages and
benefits (excluding
stock-based
compensation) 1,206,215 928,637 5,031,730 3,442,095
Stock-based
compensation 10,053 95,746 102,361 970,894
Reverse merger
costs -- 21,105 -- 85,234
Acquisition costs 2,187 (56) 10,823 38,217
Professional and
legal compliance
and litigation
costs 194,899 175,094 694,175 609,117
Sales consulting
fees 58,295 -- 222,349 --
Marketing costs 38,470 (7,978) 140,024 116,661
Travel and mobile
costs 166,877 132,446 617,263 462,417
Depreciation and
amortization 83,495 56,153 358,438 180,975
Other selling,
general and
administrative
expenses 264,847 176,515 997,321 710,323
----------- ----------- ------------ -----------
Total operating
expenses 2,025,338 1,577,662 8,174,484 6,615,933
Operating income (307,371) (575,743) 3,146,102 (243,010)
----------- ----------- ------------ -----------
OTHER INCOME (EXPENSE)
Interest income 143 421 12,756 3,522
Interest expense (142,091) (97,032) (561,444) (409,334)
Net unrealized gain
(loss) on warrants
to purchase of
common stock -- (329,153) -- (329,153)
Amortization of
loan fees -- -- -- --
Loss on disposal of
asset -- -- (1,218) --
----------- ----------- ------------ -----------
Net other income
(expense) (141,948) (425,764) (549,906) (734,965)
Income before
income taxes (449,319) (1,001,507) 2,596,196 (977,975)
----------- ----------- ------------ -----------
INCOME TAX EXPENSE (311,627) (189,798) 855,142 (98,361)
----------- ----------- ------------ -----------
NET INCOME (LOSS) $ (137,692) $ (811,709) $ 1,741,054 $ (879,614)
=========== =========== ============ ===========
BASIC EARNINGS (LOSS)
PER SHARE $ (0.03) $ (0.24) $ 0.46 $ (0.27)
=========== =========== ============ ===========
DILUTED EARNINGS
(LOSS) PER SHARE $ (0.03) $ (0.24) $ 0.14 $ (0.27)
=========== =========== ============ ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING:
- Basic 4,620,366 3,429,030 3,809,026 3,236,327
=========== =========== ============ ===========
- Diluted 4,620,366 3,429,030 12,198,431 3,236,327
=========== =========== ============ ===========
COMPUTER SOFTWARE INNOVATIONS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
--------------------------
2007 2006
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ -- $ --
Accounts receivable, net 8,697,036 3,828,190
Inventories 470,485 2,569,382
Prepaid expenses 42,832 56,174
Income tax receivable 177,147 43,651
------------ ------------
Total current assets 9,387,500 6,497,397
------------ ------------
PROPERTY AND EQUIPMENT, net 1,316,713 771,472
COMPUTER SOFTWARE COSTS, net 2,162,717 1,505,458
DEFERRED TAX ASSET 263,324 366,476
GOODWILL 1,480,587 --
OTHER INTANGIBLE ASSETS, net 1,574,809 318,884
------------ ------------
Total assets $ 16,185,650 $ 9,459,687
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 4,023,936 $ 3,995,021
Deferred revenue 5,323,889 2,079,492
Deferred tax liability 469,046 373,960
Bank line of credit -- 551,000
Current portion of notes payable 283,187 109,274
Subordinated notes payable to shareholders 2,250,400 2,250,400
------------ ------------
Total current liabilities 12,350,458 9,359,147
------------ ------------
NOTES PAYABLE, less current portion 763,717 204,680
BANK LINE OF CREDIT, less current portion 575,000 --
------------ ------------
Total liabilities 13,689,175 9,563,827
------------ ------------
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock - $0.001 par value; 15,000,000
shares authorized; 6,859,736 and 7,012,736
shares issued and outstanding, respectively 6,860 7,013
Common stock - $0.001 par value; 40,000,000
shares authorized; 4,698,970 and 3,429,030
shares issued and outstanding, respectively 4,699 3,429
Additional paid-in capital 7,400,939 6,473,342
Accumulated deficit (4,784,719) (6,525,773)
Unearned stock compensation (131,304) (62,151)
------------ ------------
Total shareholders' equity (deficit) 2,496,475 (104,140)
------------ ------------
Total liabilities and shareholders' equity
(deficit) $ 16,185,650 $ 9,459,687
============ ============Non-GAAP Financial Measure: Explanation and Reconciliation of EBITDA EBITDA is a non-GAAP financial measure used by management, lenders and certain investors as a supplemental measure in the evaluation of some aspects of a corporation's financial position and core operating performance. Investors sometimes use EBITDA as it allows for some level of comparability of profitability trends between those businesses differing as to capital structure and capital intensity by removing the impacts of depreciation and amortization. EBITDA does not include changes in major working capital items such as receivables, inventory and payables, which can also indicate a significant need for, or source of, cash. Since decisions regarding capital investment and financing and changes in working capital components can have a significant impact on cash flow, EBITDA is not a good indicator of a business's cash flows. We use EBITDA for evaluating the relative underlying performance of the Company's core operations and for planning purposes, including a review of this indicator and discussion of potential targets in the preparation of annual operating budgets. We calculate EBITDA by adjusting net income or loss to exclude net interest expense, income tax expense or benefit and depreciation and amortization, thus the term "Earnings Before Interest, Taxes, Depreciation and Amortization" and the acronym "EBITDA." EBITDA is presented as additional information because management believes it to be a useful supplemental analytic measure of financial performance of our core business, and as it is frequently requested by sophisticated investors. However, management recognizes it is no substitute for GAAP measures and should not be relied upon as an indicator of financial performance separate from GAAP measures (as discussed further below). When evaluating EBITDA, investors should consider, among other things, increasing and decreasing trends in the measure and how it compares to levels of debt and interest expense, ongoing investing activities, other financing activities and changes in working capital needs. Moreover, this measure should not be construed as an alternative to net income (as an indicator of operating performance) or cash flows (as a measure of liquidity) as determined in accordance with GAAP. While some investors use EBITDA to compare between companies with different investment and capital structures, all companies do not calculate EBITDA in the same manner. Accordingly, the EBITDA presented below may not be comparable to similarly titled measures of other companies. A reconciliation of net income reported under GAAP to EBITDA is provided below:
Three Months Ended Year Ended
December 31, December 31,
-------------- ---------------
Amounts in thousands 2007 2006 2007 2006
------ ------ ------- ------
Reconciliation of Net income (loss) per
GAAP to EBITDA:
Net income (loss) per GAAP $ (138) $ (812) $ 1,741 $ (880)
Adjustments:
Income tax expense (benefit) (312) (190) 855 (98)
Interest expense, net 142 97 549 406
Depreciation and amortization of fixed
assets and trademarks 138 93 525 338
Amortization of software development
costs 323 180 1,109 709
------ ------ ------- ------
EBITDA $ 153 $ (632) $ 4,779 $ 475
------ ------ ------- ------Contact: Contacts:
Company Contact:
David Dechant
Computer Software Innovations, Inc.
864-855-3900
Ddechant@csioutfitters.com
Investor Contact:
Mark McPartland
Alliance Advisors, LLC
910-221-1827
MarkMcp@allianceadvisors.net
Source: Computer Software Innovations, Inc.
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