A Novo Broadband, Inc. Announces Third Quarter Results.Business Editors/Hi-Tech Writers NEW CASTLE, Del.--(BUSINESS WIRE)--Aug. 20, 2002 A Novo Broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). , Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :ANVB) today announced results for its third fiscal quarter ended June June: see month. 30, 2002. Sales for the third quarter of fiscal 2002 increased 62% to $4.9 million, as compared to $3.0 million for the third quarter of fiscal 2001. Repair revenue increased to $4.5 million for the third quarter of fiscal 2002, as compared to $305,000 for the third quarter of fiscal 2001. With an increased effort to provide logistics services to customers, revenue from this source increased to $348,000 for the period ended June 30, 2002, as compared to $185,000 in the corresponding quarter of fiscal 2001. Bill Kelly Kel·ly , Ellsworth Born 1923. American abstract painter and sculptor whose works are characterized by flat color areas with sharply defined edges. Kelly, Emmett 1898-1979. , President and Chief Executive Officer of A Novo Broadband, noted that the Company's business plan is now sharply focused on increasing repair and logistics revenues. He expects these will continue to be generated by the Company's relationships with manufacturers of equipment for the broadband market and the system operators that use them. He added that the Company will continue to target service and repair opportunities for digital set top boxes for the cable industry, cable modems cable modem Modem used to convert analog data signals to digital form and vise versa, for transmission or receipt over cable television lines, especially for connecting to the Internet. , and digital subscriber line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and modems. The acquisition in August 2001 of the assets constituting the repair business of Broadband Services See broadband and broadband service provider. , which provided in-warranty repair authorization The right or permission to use a system resource; the process of granting access. See access control. for Motorola products This is a list of Motorola products. Motorola is a multinational company which manufactures telecommunications and electronics products. Computers Laptops
Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. arrangements and enable the Company to make productive use of our substantial vertical storage capacities. Kelly added that the Company's performance is still somewhat constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. by a shortage of working capital but that a combination of increases in production, the introduction of a number of cost-cutting measures, the receipt of advances totaling $3.5 million from A Novo SA, the Company's French parent during the first and second quarter, and an expanded bank credit facility was expected to relieve much of the pressure on the Company's cash flow. He also said, as a result of the measures taken to improve cash flow and liquidity during the first nine months of the current fiscal year and the subsequent suspension of our Ohio and California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). operations, together with anticipated increases in net revenues from our core repair service functions and the anticipated availability of funds under our bank credit facility, we will have sufficient liquidity to meet our working capital and capital expenditure needs for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. Our cash resources are limited, however, and a failure to maintain sufficient levels of eligible receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed under our bank credit facility could lead to a default under that facility. Any such default could have a severe adverse impact on our business and might require us to cease operations. In February February: see month. 2002, the Company curtailed its operations in Canada and sought a sale of the related assets, which was completed on May 8, 2002. As a result of the sale, the Company recognized a loss of $2.6 million, including the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of approximately $2.5 million of goodwill stemming from our acquisition of the facility in September 2000. For the third quarter of fiscal 2002, the Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. facility contributed an estimated operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $289,000 to the overall loss from operations of $491,000. On July 30, 2002, in order to further reduce operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , the Company suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. operations at their Ohio and California facilities and reduced their employee head count. A Novo Broadband, Inc. is one of a group of companies controlled by Paris-based A Novo SA. Members of the group distribute and service cable and other electronic and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment on an industrial scale in Europe and North and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. . The Company has its corporate office in New Castle, Delaware New Castle is a city in New Castle County, Delaware, six miles (10 km) south of Wilmington, situated on the Delaware River, at the head of Delaware Bay. In 1900, 3,380 people lived here; in 1910, 3,351. According to 2006 Census Bureau estimates, the population of the city is 4,836. and service centers located in California, Ohio California, Ohio is a small neighborhood in the city of Cincinnati. It is located on the banks of the Ohio River. Because of this, many of its historical homes have water damage. It is not uncommon to see a home with two or three stories only being inhabited on the uppermost story. , Florida and Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). . This press release includes statements, which constitute 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. made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provision 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. These statements are identifiable by use of such words as "belief", "expect", "anticipate" or other similar words or phrases that indicate their forward-looking character. Such statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors, which could cause or contribute to such differences, are detailed in the Company's Securities and Exchange Commission filings, including its most recent Report on Form 10-KSB. Financial statements follow.
A NOVO BROADBAND, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2002 Sept. 30, 2001
(unaudited) (audited)
----------- -----------
CURRENT ASSETS
Cash $ 328,218 $ 320,696
Accounts receivable, net 5,128,606 4,267,857
Inventories, net 2,004,385 1,871,350
Notes receivable-related
party 52,819 200,000
Prepaid and other assets 362,115 163,306
Deferred income taxes 541,000 541,000
----------- -----------
Total current assets 8,417,143 7,364,209
----------- -----------
PROPERTY AND EQUIPMENT, at
cost
Furniture and fixtures 1,183,393 1,217,341
Equipment 3,093,941 2,885,684
Leasehold improvements 1,024,145 523,371
Software 136,528 57,000
----------- -----------
5,438,007 4,683,396
Less accumulated
depreciation (1,817,544) (1,216,323)
----------- -----------
Net property and
equipment 3,620,463 3,467,073
----------- -----------
OTHER ASSETS
Goodwill, net 5,973,498 8,528,807
Deferred income taxes 1,962,279 1,552,000
Note receivable-related
party 12,161 -
Other assets 147,172 139,519
----------- -----------
Total other assets 8,095,110 10,220,326
----------- -----------
TOTAL ASSETS $20,132,716 $21,051,608
=========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Current portion of long-
term obligations $ 202,379 $ 190,008
Notes payable - bank 2,772,186 500,000
Note payable - related
party 3,606,503 4,971,940
Accounts payable 2,606,732 3,039,259
Accrued expenses
Payroll and related
taxes 392,981 990,935
Other 120,661 250,429
----------- -----------
Total current
liabilities 9,701,442 9,942,571
----------- -----------
LONG-TERM LIABILITIES 53,809 83,334
----------- -----------
Total liabilities 9,755,251 10,025,905
----------- -----------
STOCKHOLDERS' EQUITY
Common stock 8,760 4,915
Additional paid-in-capital 19,196,535 13,861,873
Stock subscription
receivable (138,387) -
Accumulated other
comprehensive loss (38,464) (47,304)
Retained deficit (8,650,979) (2,793,781)
----------- -----------
Total stockholders'
equity 10,377,465 11,025,703
----------- -----------
TOTAL LIABILITIES AN
STOCKHOLDERS' EQUITY $20,132,716 $21,051,608
=========== ===========
A NOVO BROADBAND, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Three Months Ended Nine Months Ended
June 30, June 30,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenues $ 4,886,286 $ 3,007,407 $15,254,400 $11,729,890
Cost of sales 3,383,326 1,961,884 12,153,730 8,259,031
----------- ----------- ----------- -----------
Gross profit 1,502,960 1,045,523 3,100,670 3,470,859
Selling,
general
and
administrative
expenses 1,993,503 2,050,261 6,464,027 4,792,929
----------- ----------- ----------- -----------
Loss from
operations (490,543) (1,004,738) (3,363,357) (1,322,070)
----------- ----------- ----------- -----------
Other (expense)
income
Interest
expense (113,430) (3,452) (395,816) (24,814)
Interest
income 1,038 77,277 30,232 273,591
Loss on
disposal of
assets (2,561,775) - (2,561,775) -
----------- ----------- ----------- -----------
Total other
(expense)
income (2,674,167) 73,825 (2,927,359) 248,777
----------- ----------- ----------- -----------
Loss before
income taxes (3,164,710) (930,913) (6,290,716) (1,073,293)
Benefit from
taxes - 317,371 386,093 364,529
----------- ----------- ----------- -----------
Loss from
continuing
operations (3,164,710) (613,542) (5,904,623) (708,764)
Discontinued
operations:
Gain on
disposal of
division,
net of tax
provision of
$0, $0, $0
and
($93,000) 47,425 - 47,425 180,230
----------- ----------- ----------- -----------
Net loss (3,117,285) (613,542) (5,857,198) (528,534)
Other
comprehensive
loss 21,157 - 8,840 -
----------- ----------- ----------- -----------
Total
comprehensive
loss $(3,096,128) $ (613,542) $(5,848,358) $ (528,534)
=========== =========== =========== ===========
Basic and
diluted
earnings per
share
Loss from
continuing
operations $ (0.50) $ (0.13) $ (1.08) $ (0.15)
Gain on
discontinued
operations $ 0.01 - $ 0.01 $ 0.04
----------- ----------- ----------- -----------
Net loss per
share $ (0.49) $ (0.13) $ (1.07) $ (0.11)
=========== =========== =========== ===========
Weighted
average
shares
outstanding 6,392,398 4,849,923 5,449,335 4,817,731
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