First Quarter 2007 Consolidated Revenues of Approximately $11.7 Million, up 141% From First Quarter 2006; Operating Income of $580,000, up From a Loss of $(527,000) From the Previous Year; Net Income of $285,000 in Q1 2007, Compared With a Loss of $(430,000) for Q1 2006
EASLEY, SC--(MARKET WIRE)--May 16, 2007 -- Computer Software Innovations, Inc. (OTC BB:CSWI.OB - News), CSI Technology Outfitters(TM) ("CSI"), today announced its financial results for the first quarter ended March 31, 2007.
CSI posted revenue of approximately $11.7 million for the first quarter ended March 31, 2007, up approximately $6.8 million or 141% compared to the first quarter of 2006. CSI ended the prior year with orders on hand for an additional $3.5 million of product due to backordered components from its suppliers, and postponed software installations. CSI added an additional $2.1 million in business generated from its ongoing operations and an additional $1.2 million from its acquisition of McAleer Computer Associates, Inc.
Gross profit for the first quarter 2007 was approximately $2.5 million, an increase of approximately $1.0 million or 68% compared to the first quarter 2006. The increase in gross profit can be attributed primarily to the increase in software sales and the higher volume in sales of interactive whiteboard solutions and related services. As a percentage, gross margin was lower due to higher sales of higher margin internet telephony and engineering services in the prior year's quarter. Operating income for the quarter was approximately $580,000, versus a loss of approximately $(527,000) in the prior year's comparable quarter.
CSI posted net income for the quarter ended March 31, 2007 of approximately $285,000 or $0.08 earnings per basic share and $0.02 earnings per diluted share, an increase of approximately $715,000 compared to a net loss of approximately $(430,000) or $(0.15) loss per basic and diluted share for the same period last year.
Nancy Hedrick, CEO of CSI, stated, "We are pleased with the success we experienced in the first quarter, which traditionally is a lower earnings quarter for us. Our results were positively affected, in part, because of $3.5 million in technology and software revenue, which we did not finalize in the fourth quarter of 2006. Additionally, the recent acquisition of McAleer Computer Associates, Inc. helped us achieve higher software margins, driving down our operating expenses as a percent of sales and increasing net income, despite continued pressure on hardware margins. We are excited about the impact of the McAleer acquisition, and the continued increases in revenues from both our ongoing hardware and software operations. Both segments experienced double digit growth in the first quarter of 2007 over the prior year's quarter."
Ms. Hedrick continued, "During 2006 we saw a decrease in E-Rate related revenues, which impacted both our top and bottom lines and our margins in the prior year. We were recently notified that we received funding approvals of approximately $5 million or 29% of the $17 million awarded E-Rate contracts for the 2005/2006 E-Rate filing season for which funding was requested. While we cannot estimate which projects will be completed in 2007, we are optimistic that the increase in funding awards, nearly double the E-Rate related billings for 2006, will result in an increase in 2007 related revenues. We are pleased with the first quarter results and look forward to providing investors with an update on our conference call as we continue making good progress in our second quarter."
Conference Call Reminder:
The conference call will take place at 4:15 p.m. Eastern, on Wednesday, May 16, 2007. Anyone interested in participating should call (888) 562-3356 if calling within the United States or (973) 582-2700 if calling internationally, approximately 5 to 10 minutes prior to the 4:15 p.m. call. There will be a playback available until May 23, 2007. To listen to the playback, please call (877) 519-4471 if calling within the United States or (973) 341-3080 if calling internationally. Please use replay pass code 8799720.
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 September 30, 2007 on the Company website.
About Computer Software Innovations, Inc.
Computer Software Innovations, Inc. (OTC BB:CSWI.OB - News), CSI Technology Outfitters(TM), 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 400 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
Certain information contained in this news release includes forward-looking statements that involve substantial risk and uncertainties. Any statement in this news release that is not a statement of an historical fact constitutes a "forward-looking statement." Among other things, these statements often address our expected future business and financial performance, financial condition and results of operations. These forward-looking statements often contain words or phrases such as "may," "could," "should," "expect," "anticipate," "plan," "believe," "seek," "estimate," "predict," "project" or words of similar import. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from the economic health of the software and technology industry, demand for CSI's products and engineering services, competitive pricing pressures and the availability of necessary financing. In addition, other risks are more fully described in CSI's 2006 Form 10-KSB and other filings with the Securities and Exchange Commission. These uncertainties may cause our actual results to be materially different from those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
For the Three Months
Computer Software Innovations, Inc. Ended
Statements of Operations March 31,
------------------------
2007 2006
----------- -----------
REVENUES
Software applications segment $ 2,739,436 $ 1,104,072
Technology solutions segment 8,912,296 3,738,332
=========== ===========
Net sales and service revenue 11,651,732 4,842,404
COST OF SALES
Cost of Sales excluding depreciation,
amortization, and capitalization 1,418,727 474,255
Depreciation 14,310 18,400
Amortization of capitalized software costs 239,197 151,009
Capitalized software costs (226,973) (181,775)
----------- -----------
Software applications segment cost of sales 1,445,261 461,889
=========== ===========
Cost of Sales excluding depreciation 7,651,606 2,855,308
Depreciation 21,464 21,600
----------- -----------
Technology solutions segment cost of sales 7,673,070 2,876,908
=========== ===========
Total cost of sales 9,118,331 3,338,797
=========== ===========
Gross profit 2,533,401 1,503,607
OPERATING EXPENSES
Salaries, wages and benefits excluding
stock-based compensation 1,072,307 771,215
Stock-based compensation 85,786 613,954
Acquisition expenses 69,655 -
Professional and legal compliance costs 219,871 342,680
Marketing expenses 43,649 89,904
Travel and mobile costs 153,421 82,445
Depreciation 90,247 35,111
Other selling, general and administrative
expenses 218,660 95,710
----------- -----------
Total operating expenses 1,953,596 2,031,019
=========== ===========
Operating income (loss) 579,805 (527,412)
OTHER INCOME (EXPENSE)
Interest income 2,705 2,181
Interest expense (134,019) (92,385)
Amortization of loan fees - (17,458)
Loss on disposal of property and equipment (1,218) -
----------- -----------
Net other income (expense) (132,532) (107,662)
=========== ===========
Income (loss) before income taxes 447,273 (635,074)
INCOME TAX EXPENSE (BENEFIT) 162,490 (205,544)
----------- -----------
Net income (loss) $ 284,783 $ (429,530)
=========== ===========
BASIC EARNINGS (LOSS) PER SHARE $ 0.08 $ (0.15)
=========== ===========
DILUTED EARNINGS (LOSS) PER SHARE $ 0.02 $ (0.15)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING
- Basic 3,489,015 2,891,556
=========== ===========
- Diluted 13,675,910 2,891,556
=========== ===========
Computer Software Innovations, Inc.
Balance Sheet Data March 31,
2007 December 31,
(Unaudited) 2006
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ - $ -
Accounts receivable 5,493,438 3,828,190
Inventories 52,160 2,569,382
Prepaid expenses 107,965 56,174
Income tax receivable 43,651 43,651
------------ ------------
Total current assets 5,697,214 6,497,397
============ ============
PROPERTY AND EQUIPMENT, net 1,372,345 771,472
COMPUTER SOFTWARE COSTS, net 2,124,835 1,505,458
DEFERRED TAX ASSET 205,125 366,476
GOODWILL 1,480,587 -
OTHER ASSETS 1,662,308 318,884
============ ============
$ 12,542,414 $ 9,459,687
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 3,176,868 $ 3,995,021
Deferred revenue 3,847,621 2,079,492
Deferred tax liability 407,500 373,960
Bank line of credit 1,341,000 551,000
Current portion of notes payable 238,007 109,274
Subordinated notes payable to shareholders 2,250,400 2,250,400
------------ ------------
Total current liabilities 11,261,396 9,359,147
============ ============
NOTES PAYABLE, less current portion 1,007,960 204,680
Total Liabilities $ 12,269,356 $ 9,563,827
============ ============
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock - $0.001 par value;
15,000,000 shares authorized; 6,944,736
and 7,012,736 shares issued and outstanding,
respectively 6,945 7,013
Common stock - $0.001 par value; 40,000,000
shares authorized; 3,544,385 and 3,429,030
shares issued and outstanding, respectively 3,544 3,429
Additional paid-in capital 6,634,624 6,473,342
Retained earnings (Accumulated deficit) (6,240,990) (6,525,773)
Unearned stock compensation (131,065) (62,151)
------------ ------------
Total shareholders' equity (deficit) 273,058 (104,140)
============ ============
$ 12,542,414 $ 9,459,687
============ ============
Computer Software Innovations, Inc.
Statement of Cash Flows For the Three Months Ended
March 31,
--------------------------
2007 2006
------------ ------------
OPERATING ACTIVITIES
Net income (loss) $ 284,783 $ (429,530)
Adjustments to reconcile net income (loss)
to net cash provided by (used for)
operating activities
Depreciation and amortization 365,218 243,578
Stock-based compensation expense, net 85,786 613,954
Deferred income taxes 161,141 13,705
Loss on disposal of fixed assets 1,218 -
Changes in deferred and accrued amounts
Accounts receivable (1,665,248) 2,422,825
Inventories 2,517,222 (14,506)
Prepaid expenses and other assets 51,994 (24,621)
Accounts payable (818,153) 173,876
Deferred revenue 1,768,129 (273,730)
Taxes payable (receivable) - (225,568)
============ ============
Net cash provided by operating
activities 2,752,090 2,499,983
------------ ------------
INVESTING ACTIVITIES
Purchase of property and equipment (82,639) (351,484)
Capitalization of computer software (226,973) (181,775)
Purchase of computer software (21,601) (10,000)
Trademarks - (4,354)
Purchase of McAleer Computer Associates, Inc. (4,149,519) -
============ ============
Net cash used for investing activities (4,480,732) (547,613)
------------ ------------
FINANCING ACTIVITIES
Net borrowings (repayments) under line
of credit 790,000 (1,701,000)
Borrowings under long-term notes payable 972,046 400,000
Repayments of long-term notes payable (40,033) (8,245)
Exercise of stock options 6,629 -
============ ============
Net cash provided by (used for)
financing activities 1,728,642 (1,309,245)
============ ============
Net increase in cash and cash
equivalents - 643,125
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - -
============ ============
CASH AND CASH EQUIVALENTS, END OF PERIOD $ - $ 643,125
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 47,636 $ 222,882
Income Taxes $ 1,350 $ 6,318
Contact:
Contact:
Computer Software Innovations, Inc.
Company Contact:
David Dechant
864-855-3900
Ddechant@csioutfitters.com
Or
Investor Contact:
Alliance Advisors, LLC
Mark McPartland
910-221-1827
MarkMcp@allianceadvisors.net