NORFOLK, Va., Aug. 29 /PRNewswire-FirstCall/ -- Waterside Capital Corp. , a Small Business Investment Company (SBIC), today reported financial results for the twelve months ended June 30, 2008.
The Company's net decrease in stockholders' equity resulting from operations (which includes net operating income plus realized and unrealized gains or losses on investments) was $2,142,000 or $1.12 loss per share for the twelve months ended June 30, 2008, compared to a decrease of $5,359,000 or $2.80 loss per share for the twelve months ended June 30, 2007. The per share performance was calculated using weighted average shares outstanding of 1,915,548. The decrease in 2008 was primarily due to the following:
1. Net operating losses of ($309,232) or ($0.16) per share for the year ended June 30, 2008 compared to a net operating loss of ($1,352,575) or ($0.71) per share for the year ended June 30, 2007.
2. Realized loss on investments recognized during the year of ($1,894,289). The majority of this is attributable to the partial write off of International Wood, LLC in the amount of $1,940,000.
At June 30, 2008, Waterside's loans and investments had a fair value of $20.9 million compared with $21.2 million reported at June 30, 2007. For the twelve months ended June 30, 2008, the Company originated new investments of $5.9 million and received proceeds from sale of investments, proceeds from collection of notes receivable, return of capital on equity securities and principal collected on debt securities of $5.2 million. This compared to the company's funding of $5.3 million in new investments for the twelve months ended June 30, 2007, and receiving proceeds from the sale of investments, principal collected on debt securities, and proceeds from collection of notes receivable of $10.5 million. The net asset value of the common shares decreased to $3.84 per share at June 30, 2008 from the $4.95 reported at June 30, 2007. The decrease in net asset value was due to the above mentioned $2,142,000 decrease in shareholders equity resulting from operations.
The Future is Bright
The Company prepaid $5.3 million of SBA debenture debt with an average interest rate of 8.4% in September 2007. In April 2008, SBA approved the Company's refinancing of $16.1 million of outstanding debentures. The refinanced $16.1 million will take place in September 2008 and will mature September 1, 2018. The interest rate will be several basis points lower than the Company's present obligations and will reduce interest expense and improve operating performance.
Waterside Capital continues to focus on three key areas to improve operations: profitability, refinancing of maturing SBA debentures, and additional new capital. Its early efforts have resulted in substantial improvement in operations, and many of those efforts are still working their way through Waterside's system and will take time to absorb.
Profitability- Waterside Capital has implemented expense controls including salary reductions and began building a robust business development effort to obtain additional risk appropriate investments in this very competitive business.
Refinance of maturing SBA debentures- During the year the Company curtailed its debt with the SBA by $5.3 million leaving a balance of $16.1 million maturing in 2009 through 2011. Waterside's success is dependent of the refinancing of this debt.
Additional new capital- The key to acceptable future earnings is additional capital which will allow for new risk appropriate investments. Waterside Capital has explored a variety of options all of which would be dilutive to existing shareholders, since any new equity dilutes the existing equity holders if the Company's stock continues trading at a substantial discount to book value. The Company cannot grow and reach acceptable operating levels without new capital. It is anticipated that an Investment Banker will be engaged to advise the Company on alternatives available to enhance and/or preserve shareholder value and assist in raising capital.
About Waterside Capital Corporation
Waterside Capital Corporation is a Small Business Investment Company (SBIC) headquartered in Norfolk, Virginia with a portfolio of approximately $21 million of loans and investments in 16 companies located primarily in the Mid-Atlantic region. Waterside Capital's individual investments range from $500,000 to over $3 million. Visit Waterside's web site at http://www.watersidecapital.com/.
Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are "forward-looking statements" including Waterside's optimism regarding the growth of its portfolio companies (within the meaning of the Private Securities Litigation Reform Act of 1995) that involve a number of risks and uncertainties. It is possible that the assumptions made by management-including, but not limited to, investment opportunities, results, performance or expectations-may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements. In addition to the above factors, other important factors including the risks associated with the performance of the Company's portfolio companies, dependencies on key employees, delays, interest rates, the level of economic activity, 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.
WATERSIDE CAPITAL CORPORATION Financial Summary (In thousands except per share data) Six Months Ended Year Ended June 30, June 30, 2008 2007 2008 2007 Statement of Operations data: Total operating income $834 $1,058 $2,097 $2,133 Interest expense 625 842 1,328 1,697 Other operating expenses 473 1,025 1,078 2,144 Recovery Related to Investee Litigation (net) - 355 - 355 Net operating income (loss) (264) (454) (309) (1,353) Realized gain (loss) on investments (2,041) (254) (1,894) (1,333) Change in unrealized appreciation (depreciation) on investments 1 (2,943) 61 (2,673) Net increase (decrease) in stockholders' equity resulting from operations $(2,304) $(3,651) $(2,142) $(5,359) Per share data (basic): Net operating income (loss) $(0.14) $(0.24) $(0.16) $(0.71) Net increase (decrease) in stockholders' equity resulting from operations (1.20) (1.91) (1.12) (2.80) At June 30, At June 30, Balance Sheet data: 2008 2007 Cash $2,626 $9,569 Loans and investments, at fair value Debt securities 6,496 9,332 Equity securities 11,041 5,966 Options and warrants 2,053 2,343 Notes receivable and other 1,279 3,571 Total loans and investments 20,869 21,212 Debentures payable 16,100 21,400 Stockholders' equity 7,346 9,489 Net asset value per common share $3.84 $4.95
