| [November 16, 2007] |
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Brookside Provides Business Update and Third Quarter Financial Results
TAMPA, Fla. --(Business Wire)-- Brookside Technology Holdings Corp. (OTCBB: BKSD), a provider of converged VoIP, data, video and wireless business communications systems, today announced financial results for the three months ended September 30, 2007, and provided a business update on the company.
Michael Nole, Chairman and CEO of Brookside, commented, "We are quite pleased with the company's progress since going public through a reverse merger in February of 2007. We have achieved important milestones, many of which have already positively impacted our business and others that are expected to provide growth in revenue, margins, and EBITDA in the coming quarters. As the demand for converged telecommunications products and services in the commercial and government sectors continues, we feel the company is well positioned to capitalize on this highly specialized growth market. While we incurred additional expenses since becoming a public company earlier this year, these expenses were offset to some degree by other operating expense reductions and we have identified additional opportunities to improve efficiencies over the next 12 months. Our fixed cost infrastructure will provide us with meaningful operating leverage as we move forward with our growth strategy."
"We achieved very strong sequential revenue growth from the third quarter of 2007 compared to the second quarter of 2007. On a year over year basis, the sharp increase in revenue from service and installation sales in the third quarter of 2007 was offset by a decline in equipment sales. This was the result of our deliberate actions in the South Central territory to shift our single focus from a one-time system sale to a sales process that positions our "bundled" product and services offering that includes both long-term recurring warranty and maintenance contracts combined with converged equipment sales for both existing and new customers. More importantly, early in the third quarter we hired several highly experienced sales people whose contribution can be measured by the strength of our new business pipeline, which has resulted in recent sales of those specific portfolio based sales."
"We are very excited and pleased with our recent acquisition of U.S. Voice & Data. This is Brookside's first major acquisition and marks an important milestone in our goal to becoming a leading national provider of turnkey converged voice and data services. With operations in Lexington and Louisville, Kentucky and Indianapolis, Indiana, U.S. Voice & Data provides us a strong regional presence and foundation to advance our strategy in the North Central region. Since the acquisition was completed at the end of the third quarter, it did not have a meaningful impact on our third quarter results; however, U.S. Voice & Data had unaudited revenue of $15.4 million and EBITDA of $3.0 million for the trailing twelve months ended September 30, 2007. Combined, Brookside and U.S. Voice & Data generated approximately $13.4 million of revenue and positive EBITDA for the nine months ended September 30, 2007. The high recurring revenue and strong cash flow of our combined companies, as well as the synergies between Brookside and U.S. Voice & Data make this acquisition a perfect fit for us. We expect the benefits of this acquisition to become evident in our fourth quarter results and beyond."
Mr. Nole continued, "Going forward, we will continue to leverage the products and services of our respective subsidiary companies, as well as introduce new products and services across the organization. A clear example is our new strategic partnership with SinglePoint Solutions to offer network services consulting and products to assist in managing our customer's total cost of utilization. We also partnered with Datacom Warranty Corporation to offer complete parts warranty to further protect our customer, reduce certain risk, and lower their total cost of utilization. We enhanced our product offering by entering into a new product distribution agreement with Inter-Tel, a Mitel Company, to expand distribution of the Inter-Tel 5000 and Mitel 3300 products throughout Austin and San Antonio. These new products and our bundled services offering, including extended warranties and maintenance programs, we feel, allows us to offer a portfolio of combined products and services second to none."
Mr. Nole concluded, "With the acquisition of U.S. Voice & Data now behind us, we look forward to completing the integration and continuing our aggressive acquisition strategy as we target complementary businesses at attractive valuations that allow us to fully leverage our infrastructure and capabilities. As we look ahead, the combination of our expanding customer base, increased revenues from recurring maintenance and support services, network services, and additional plans for ancillary products and services revenue contribution and our strong pipeline of new business should result in organic revenue growth on a combined pro-forma basis in 2008. We also expect EBITDA improvement on a combined pro-forma basis next year as we continue to expand our product offerings, capitalize on incremental warranty and services, aggregate purchasing discounts, improve efficiencies and benefit from the strong operating leverage."
Revenue for the three months ended September 30, 2007 was $$927,036 versus $1,123,494 million for the comparable period in 2006. Net loss attributable to common stockholders in the third quarter of 2007 was $1,439,776 or $(0.018) per share versus income of $223,532 or $0.004 per share in the third quarter of 2006. Net loss for the third quarter of 2007 included a non-cash charge to amortization expense of value attributable to warrants and beneficial conversion feature issued in connection with the acquisition financing totaling $928,701.
About Brookside Technology Holdings Corp
Brookside Technology Holdings Corp., through its subsidiary companies, is a leading provider and global managed services company specializing in analyzing, designing, selling, and implementing converged Voice over IP (VoIP), data, video, and wireless (Wi-Fi) business communications systems. Brookside offers a unique portfolio of products and services that solve today's telecommunications challenges by combining technology, business, and financial solutions. Brookside's customers include both commercial and state/government organizations of all types and sizes throughout the United States. The Company seeks to acquire complementary businesses looking to capitalize on the highly specialized growth market of providing turnkey converged voice and data solutions. With a proven track record of acquiring profitable businesses at attractive valuations, Brookside plans to leverage its expanding capabilities and combined customer bases of its portfolio companies. Additional information on the company can be found at www.brooksideus.com.
Forward-Looking Statement: Except for factual statements made herein, the information contained in this press release consists of forward-looking statements that involve risks and uncertainties, including the effect of changing economic conditions, customer acceptance of products and other risks and uncertainties. As previously disclosed in its SEC filings, such forward-looking statements are not guarantees of performance, and the Company's results could differ materially from those contained in such statements. These forward-looking statements speak only as of the date of this release, and the Company undertakes no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances after the date of this release.
BROOKSIDE TECHNOLOGY HOLDINGS CORP
CONSOLIDATED BALANCE SHEETS
As of September 30, 2007 and December 31, 2006
September 30, December 31,
---------------------------
ASSETS 2007 2006
Current assets (Unaudited)
------------- ------------
Cash and cash equivalents $ 133,685 $ 35,666
Accounts receivable, net 2,559,479 333,429
Inventory 790,699 39,160
Deferred contract costs - 10,883
Prepaid expenses 38,594 -
Deferred Finance Charges 333,258 -
------------- ------------
Total current assets 3,855,714 419,138
------------- ------------
Property and equipment
Office equipment 261,817 178,424
Vehicles 53,780 -
Furniture, fixtures and leasehold
improvements 131,861 12,960
------------- ------------
447,458 191,384
Less: accumulated depreciation (161,485) (127,976)
------------- ------------
Property and equipment, net 285,973 63,408
------------- ------------
Goodwill 14,075,885 -
Non-compete agreement 100,000 -
Deposits and other assets 15,568 -
------------- ------------
TOTAL ASSETS $ 18,333,139 $ 482,546
============= ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities
Current liabilities
Accounts payable and accrued expenses $ 959,156 $ 368,419
Billings in excess of revenues 1,708,644 227,195
Accrued payroll liabilities 331,093 37,436
Current portion of long term debt 3,166,051 623,863
Other current liabilities 77,777 71,633
------------- ------------
Total current liabilities 6,242,722 1,328,546
Long term debt net of debt issuance
costs, less current portion 2,549,027 -
------------- ------------
Total liabilities 8,791,748 1,328,546
------------- ------------
Stockholders' deficit
Series A Convertible Preferred Stock,
2,175,322 issued and outstanding at
June 30, 2007 at 8% dividend yield.
Liquidation preference of $2,271,672
at September 30, 2007. 1,655,493 -
Common stock, $.001 par value,
250,000,000 shares authorized,
87,900,000 shares issued and
outstanding at September 30, 2007, and
63,000,000 shares issued at and
outstanding at December 31, 2006,
respectively 87,900 63,000
Additional paid in capital 12,467,517 337,927
Retained deficit (4,669,519) (1,246,927)
------------- ------------
Total stockholders' equity (deficit) 9,541,391 (846,000)
------------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 18,333,139 $ 482,546
============= ============
BROOKSIDE TECHNOLOGY HOLDINGS CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarter and Nine Months Ended September 30, 2007 and 2006
Quarter Ended Nine Months Ended
September September September September
30, 30, 30, 30,
------------------------ ------------------------
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
REVENUES
Installation and
other services $ 314,469 $ 111,168 $ 624,495 $ 657,713
Equipment sales 612,567 1,012,326 1,303,980 2,114,727
----------- ----------- ----------- -----------
Total
revenues 927,036 1,123,494 1,928,475 2,772,440
COST OF SALES
(excluding
depreciation) 555,217 576,446 1,146,865 1,869,410
----------- ----------- ----------- -----------
GROSS PROFIT 371,819 547,048 781,610 903,030
----------- ----------- ----------- -----------
OPERATING EXPENSES
General and
administrative 841,130 303,432 1,634,398 812,852
Stock based
compensation
expense - - 915,000 -
Provision for
doubtful
accounts - - - 2,984
Depreciation
expense 15,741 18,209 37,317 41,325
----------- ----------- ----------- -----------
Total
operating
expenses 856,871 321,641 2,586,715 857,161
----------- ----------- ----------- -----------
OTHER INCOME
(EXPENSE)
Interest expense (34,838) (19,988) (61,395) (42,895)
Amortization
expense (928,701) - (928,701) -
Other income
(expenses), net 8,815 18,113 10,341 20,886
----------- ----------- ----------- -----------
Total other
income
(expense) (954,724) (1,875) (979,755) (22,009)
----------- ----------- ----------- -----------
INCOME (LOSS)
BEFORE
INCOME TAXES (1,439,776) 223,532 (2,784,859) 23,860
Income tax benefit - - - -
----------- ----------- ----------- -----------
NET INCOME (LOSS) $(1,439,776) $ 223,532 $(2,784,859) $ 23,860
=========== =========== =========== ===========
Preferred Stock
Dividends (43,506) - (96,350) -
----------- ----------- ----------- -----------
Net loss
attributable to
common
shareholders $(1,483,282) $ 223,532 $(2,881,209) $ 23,860
=========== =========== =========== ===========
Loss per share-
basic and fully
diluted $ (0.018) $ 0.004 $ (0.037) $ 0.000
=========== =========== =========== ===========
Weighted average
shares
outstandings 81,327,632 63,000,000 77,691,575 63,000,000
=========== =========== =========== ===========
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