[0] The Netplex Group Reports First Quarter Financial Results.Business Editors/Hi-Tech Writers RESTON Reston, uninc. city (1990 pop. 48,556), Fairfax co., N Va., a planned community established in 1961. A suburb of Washington, D.C., Reston is organized in a series of residential villages and commercial areas. , Va.--(BUSINESS WIRE)--May 15, 2000 The Netplex Group (Nasdaq:NTPL NTPL National Trust Photo Library NTPL Native POSIX Thread Library ) Business Editors/Hi-Tech Writers -- Company Obtains Over 30 e-Solutions Contracts -- MyBizOffice Demonstrates Significant Progress The Netplex Group, Inc. (Nasdaq: NTPL) today announced financial results for its first quarter ended March 31, 2000. The Company reported revenue of $20.4 million compared to $22.7 million for the first quarter of 1999. Included in the previous year was a $3.5 million, low-margin, equipment sale that was a necessary component of a service project. In addition, the Company began a policy this year of using third-party distributors Third-Party Distributor The name given to institutions that sell or distribute mutual funds to investors for fund management companies without direct relation to the fund itself. to provide clients this type of low-margin equipment, if necessary. Under the new policy, only the net revenue (referral fee) is reported in the financial results, whereas in prior periods the gross revenue was booked. As a result, the current year's first quarter revenue is lower by $1.2 million than it would have been under the previous policy. The adjustments primarily impacted Netplex's e-Business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. Solutions, which reported revenue for the quarter of $10.5 million. After adjusting for these changes, as well as inter-company revenue related to the development of Netplex's MyBizOffice(TM) service, pro-forma e-Business revenue for the current year first quarter was $12.3 million compared to $10.5 million for the same period of the previous year and $12.0 million for the previous quarter. Contractors Resources, Inc., the Netplex subsidiary that operates the MyBizOffice service, reported revenue of $10.1 million (including revenue for services provided to e-solutions of $129,000), a 12 percent increase over the previous year's first quarter revenue of $9.0 million. The Company reported a loss for the first quarter of $3.8 million, which reflects a $4.5 million investment in the following: $1.6 million for continued investment in the MyBizOffice.com online service, which recently announced a premier-level partnership with Monster.com; $1.5 million for consulting personnel in support of our shifting revenue mix; $400,000 towards sales and marketing infrastructure; and $1.0 million in corporate infrastructure. The Company's pro-forma financial information, after adjusting for the unbilled un·billed adj. 1. Not having been billed or charged for: unbilled medical charges. 2. Appearing, as in a movie, without being credited: an unbilled walk-on. revenues and associated revenue costs related to the development of the MyBizOffice Web initiative and the product sale accounting change mentioned above, is as follows:
------------------- -------- -------- -------- -------- -------
1Q00 1Q99 %B/(W) 4Q99 %B/(W)
------------------- -------- -------- -------- -------- -------
Pro-forma
revenue
e-Business 12,324 10,485 18% 12,044 2 %
CR 10,064 8,990 12% 10,670 (6)%
-------- -------- -------- -------- -------
Total 22,388 18,784 19% 22,714 (1)%
-------- -------- -------- -------- -------
Gross margin(1)
e-Business 29.7% 29.1% 2% 31.7% (6)%
CR 3.7% 3.4% 9% 3.7% --
-------- -------- -------- -------- -------
Total 17.0 % 18.9% (10)% 18.2% (7)%
-------- -------- -------- -------- -------
Operating
income(1)
e-Business (64) 1,595 (104)% 322 (120)%
CR (1,217) 46 -- (1,392) 13%
-------- -------- -------- -------- -------
Total (1,281) 1,641 -- (1,070) (20)%
-------- -------- -------- -------- -------
Corporate
expenses(1) 2,033 947 115% 2,281 (11)%
-------- -------- -------- -------- -------
EBITDA(1) (3,314) 694 (578)% (3,351) --
-------- -------- -------- -------- -------
Interest, taxes,
depreciation,
amortization, &
minority
interest(1) 476 571 (17)% 2,856 --
-------- -------- -------- -------- -------
Net operating
income(1) $ (3,790) 123 -- $ (6,207) 39 %
-------- -------- -------- -------- -------
((1) as reported)
Netplex recently announced a partnership between MyBizOffice and Monster.com, the leading global online careers site. To prepare for the potential business the partnership could generate for MyBizOffice, it was necessary for Netplex to transform its service, which was originally developed for independent IT professionals, to address the needs of all categories of independent consultants. This necessity required an extensive system expansion to accommodate different industries. In addition, Netplex was required to increase its level of capacity to manage an anticipated large influx of new members as a result of the marketing exposure that the Monster.com affiliation affiliation (  fil´ēā´sh is expected to provide MyBizOffice.Monster.com, which experiences monthly traffic in excess of 14.5 million visitors, has registered over 175,000 users through its contractor-focused Monster Talent Market(SM). As a result of this agreement, MyBizOffice will be the prominently displayed contractor contractor n. 1) a person or entity that enters into a contract. 2) commonly, a person or entity that agrees to construct a building or to provide or install specialized portions of the construction. e-Office E-Office is an abbreviation for “electronic office”, referring to the ongoing process of eliminating paper and making all office transactions electronic. The term is something of a marketing buzzword, without any specific technical meaning. service within the Monster.com site. As pointed out in a conference call conducted by Netplex to discuss the two-year arrangement with Monster.com, the deal included a $1 million annual slot fee and a guaranteed level of revenue sharing revenue sharing Funding arrangement in which one government unit grants a portion of its tax income to another government unit. For example, provinces or states may share revenue with local governments, or national governments may share revenue with provinces or states. of $1 million and $2 million in the first and second years, respectively. The revenue sharing arrangement includes a payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. of 25 percent of the first year's and 30 percent of the second year's gross profits generated as a result of the partnership. Netplex's management indicated that, based on its historical experience, sufficient revenue to cover the slot fee and guaranteed revenue share should be generated with the addition of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 850 new members. "The partnership between MyBizOffice and Monster.com materialized as a result of our individual leadership roles in serving the independent contractor A person who contracts to do work for another person according to his or her own processes and methods; the contractor is not subject to another's control except for what is specified in a mutually binding agreement for a specific job. market," commented Gene Zaino The creator of this article, or someone who has substantially contributed to it, may have a conflict of interest regarding its subject matter. It may require cleanup to comply with Wikipedia's content policies, particularly neutral point of view. , Netplex Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Contractors Resources has developed over the last fourteen years to become a complete virtual corporate office, or `e-office,' that alleviates administrative burdens and provides corporate-priced benefits for independent contractors. Monster.com selected MyBizOffice because of its leadership role in developing the most comprehensive business support and advocacy The act of Pleading or arguing a case or a position; forceful persuasion. for independents. The partnership provides the credentials CREDENTIALS, international law. The instruments which authorize and establish a public minister in his character with the state or prince to whom they are addressed. If the state or prince receive the minister, he can be received only in the quality attributed to him in his credentials. and the motivation to gain a strong market presence in an already large but quickly growing market." Over the last six months, Netplex's e-Business Solutions has focused on developing a much-needed infrastructure to support the growing demand for its specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. service offerings. Directed by Pamela Pamela sweet maidservant who chastely repels disgraceful advances, marries her aristocratic pursuer, and attempts to reform him. [Br. Lit.: Richardson Pamela] See : Virtuousness Fredette, Netplex's President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , e-Business Solutions has established a strong reputation in the retail industry and in Internet security ''This article or section is being rewritten at Internet security is the process of protecting data and privacy of devices connected to internet from information robbery, hacking, malware infection and unwanted software. . Its strategy is to develop expertise in chosen vertical sectors to become recognized as a market-leader in the industry's e-business development. The level of revenue generated by Netplex's e-Business Solutions presently reflects management's focus in developing the foundation for future growth, while also investing in the diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of Netplex's vertical specialization A career option pursued by some attorneys that entails the acquisition of detailed knowledge of, and proficiency in, a particular area of law. As the law in the United States becomes increasingly complex and covers a greater number of subjects, more and more attorneys are . Indications of the strategy's success is the continued growth of its pipeline, which has grown to $32 million currently from $15 million at the beginning of the year, in addition to more than 30 e-Business Solutions contract wins. "The growth in the e-solutions market has attracted many participants, but customers are seeking out solutions companies that provide specific industry thought-leadership," stated Fredette. "We expect to establish a strong presence in more vertical markets over the remainder of the year and expect signs of our penetration The successful unauthorized breach of a security perimeter. See penetration test. to surface in the second quarter." Financing On March 28, Netplex entered into a private placement of $10 million consisting of convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". and additional warrants arranged through J.C. Bradford Bradford, city, England Bradford, city (1991 pop. 293,336) and metropolitan district, N central England, on a small tributary of the Aire River. It is a center of the worsted industry, which dates from the Middle Ages. & Co. The preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , which earns dividends at the rate of 7 percent per year, can be converted at a 20% premium to the daily weighted average price determined over a thirty-trade day period. To further inhibit inhibit /in·hib·it/ (in-hib´it) to retard, arrest, or restrain. in·hib·it v. 1. To hold back; restrain. 2. potential price pressure associated with hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. , the institutional investors' are limited to selling no more than 10 percent of the daily volume in any one trade day during the conversion period. The pricing period of the convertible preferred stock ends on Tuesday Tuesday: see week. , May 16 at the close of the trade session. Conference Call Netplex management has scheduled a conference call to provide further insights regarding the financial results and to respond to investor questions, today, May 15 at 4:45 p.m. (EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ). The dial-in number is: 1-888-673-1254 Reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. No.: 15243355 The conference call will also be available on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the through VCall at www.vcall.com. A replay of the conference call will be available for 24 hours Adv. 1. for 24 hours - without stopping; "she worked around the clock" around the clock, round the clock beginning one hour after the completion of the call. The dial-in and reservation numbers for the replay are: 1-800-633-8284 Reservation No.: 15243355 About The Netplex Group, Inc. Netplex (Nasdaq: NTPL) (www.netplexgroup.com) creates e-business solutions that combine industry-specific business strategies; interactive digital marketing; user-centric applications and data systems; and secure, high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" Internet systems infrastructure. Netplex's complete spectrum of "industrial strength" e-solutions positions customers with vision, confidence, and continuing competitive advantage. About MyBizOffice MyBizOffice(TM), the online service of Netplex's subsidiary, Contractors Resources, Inc., is a Business Services Provider (BSP BSP Bromsulphalein, a dye used in the study of liver function. See also sulfobromophthalein clearance test. ) designed to provide the financial infrastructure, resources, and business services that help professionals build careers as independent contractors. MyBizOffice serves as a "virtual corporate office" (e-office) for its member contractors by providing the services of a corporate administration staff--such as contract review, time sheet administration, billing and collections, health benefits, retirement plans, wealth-building financial strategies, and tax administration--while helping them keep abreast Verb 1. keep abreast - keep informed; "He kept up on his country's foreign policies" keep up, follow trace, follow - follow, discover, or ascertain the course of development of something; "We must follow closely the economic development is Cuba" ; "trace the of developments that affect their independent life and work style. Netplex, the Netplex logo, and MyBizOffice are trademarks of The Netplex Group, Inc. Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " (within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995) that involve a number of risks and uncertainties. It is possible that the assumptions made by management--including, but not limited to, those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc contract awards, service offerings, market opportunities, results, performance or expectations--may not materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. . Actual results may differ materially from those projected or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in any forward-looking statements. In addition to the above factors, other important factors including the risks associated with unforeseen technical difficulties, the ability to meet customer requirements, market acceptance of service offerings, changes in technology and standards, dependencies on key employees, customer satisfaction, availability of technical talent, dependencies on certain technologies, delays, market acceptance and competition, as well as other risks described from time to time in the Company's filings with the Securities Exchange Commission, press releases, and other communications.
Consolidated Operating Results by Segment
(Amounts in 000's)
First Quarter ended March 31
----------------------------
2000 1999
-------- --------
Operating revenues
e-Information Services $ 2,254 $ 2,209
-------- --------
e-Infrastructure Services 4,617 5,333
e-Infrastructure Product Resales 3,641 6,163
-------- --------
e-Infrastructure 8,258 11,496
-------- --------
e-Business Solutions 10,512 13,705
Contractor's Resources 9,935 8,990
-------- --------
Operating revenues 20,447 22,695
-------- --------
Gross profit
e-Information Services 717 1,172
-------- --------
e-Infrastructure Services 937 1,726
e-Infrastructure Product Resales 1,466 1,091
-------- --------
e-infrastructure 2,403 2,817
-------- --------
e-Business Solutions 3,120 3,989
Contractor's Resources 350 305
-------- --------
Gross profit 3,470 4,294
-------- --------
Gross profit percentage
e-Information Services 31.8% 53.1%
-------- --------
e-Infrastructure Services 20.3% 32.4%
e-Infrastructure Product Resales 40.3% 17.7%
-------- --------
e-infrastructure 29.1% 24.5%
-------- --------
e-Business Solutions 29.7% 29.1%
Contractor's Resources 3.7% 3.5%
-------- --------
Gross profit percentage 17.0% 18.9%
-------- --------
Operating Expenses
e-Information Services 1,093 583
e-Infrastructure Services and
Product Resales 2,091 1,811
-------- --------
e-Business Solutions 3,184 2,394
Contractor's Resources 1,567 259
-------- --------
Operating expenses 4,751 2,653
-------- --------
Operating income
e-Information Services (376) 589
e-Infrastructure Services and
Product Resales 312 1,006
-------- --------
e-Business Solutions (64) 1,595
Contractor's Resources (1,217) 46
-------- --------
Operating income (1,281) 1,641
Corporate Expenses 2,033 947
-------- --------
EBITDA (3,314) 694
Interest, taxes, depreciation,
amortization and minority interest 476 571
-------- --------
Net operating income( loss) $ (3,790) $ 123
======== ========
THE NETPLEX GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
Assets 2000 1999
------------ ------------
Current assets:
Cash and cash equivalents $ 13,289,467 $ 4,220,148
Accounts receivable, net of
allowance for doubtful
accounts of $462,000 and
$342,000, respectively 11,870,802 12,513,823
Prepaid expenses and other current
assets 223,727 923,762
------------ ------------
Total current assets 25,383,996 17,657,733
Property and equipment, net 2,108,350 1,891,084
Other assets 595,384 775,290
Goodwill and other intangible
assets, net 5,745,839 6,092,610
------------ ------------
Total assets $ 33,833,569 $ 26,416,717
============ ============
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $ 2,230,217 $ 3,294,403
Line of credit 3,437,000 5,126,245
Accrued expenses and other current
liabilities 10,522,129 9,305,229
Capital lease obligation, current
portion 75,812 107,890
Deferred revenues 558,218 193,262
------------ ------------
Total current liabilities 16,823,376 18,027,031
Insurance premium due 425,000 850,000
Capital lease obligations, net of
current portion 195,504 195,504
------------ ------------
Total liabilities 17,443,880 19,072,535
Commitments and contingencies
Minority interest in subsidiary 357,299 481,877
------------ ------------
Stockholders' equity:
Preferred Stock:
Class A Cumulative, $.01 par
value, liquidation preference of
$4.00 per share; 2,000,000 shares
authorized; 80,597 and 109,961
shares issued and outstanding at
March 31, 2000 and December 31,
1999, respectively 805 1,099
Class C Cumulative, $.01 par
value; liquidation preference of
$3.50 per share; 2,500,000 shares
authorized; 1,500,000 shares
issued and outstanding at March
31, 2000 and December 31, 1999,
respectively 15,000 15,000
Class D Cumulative, $.01 par
value; 15,000 shares authorized;
10,000 shares issued and
outstanding at March 31, 2000 100 --
Common Stock: $.001 par value,
40,000,000 shares authorized;
17,812,066 and 16,137,250 shares
issued and outstanding at March
31, 2000 and December 31, 1999,
respectively 17,812 16,137
Additional paid in capital 34,721,180 21,762,418
Accumulated deficit (18,722,507) (14,932,347)
------------ ------------
Total stockholders' equity 16,032,390 6,862,307
------------ ------------
Total liabilities and
stockholders' equity $ 33,833,569 $ 26,416,717
============ ============
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