- Company reports third consecutive quarter of positive EBITDA -
KeyOn Communications Holdings, Inc.(OTCBB: KEYO), one of the largest providers of wireless broadband, satellite video and voice over Internet protocol (VoIP) services in the United States, reported its financial results for the quarter ended June 30, 2009.
“Our second quarter reflects our current strategy to control expenses and improve operating efficiencies in order to generate positive EBITDA rather than to expand through acquisitions and organic growth. In this quarter, our team focused its resources on the completion of our broadband stimulus applications. Earlier today we announced that we filed applications for approximately $150 million in federal funding through the American Recovery and Reinvestment Act of 2009 (ARRA), an important accomplishment with the potential for a significant impact on KeyOn’s future growth,” commented Jonathan Snyder, President and CEO of KeyOn Communications. “We do expect to pick-up our acquisition efforts and make use of the additional capital we have raised to grow our customer base once again. I hope to see the effects of this renewed focus in the third and fourth quarters.”
2009 Second Quarter Consolidated Results
For the second quarter ended June 30, 2009, the Company reported revenue of $1,784,332, a decrease of approximately 10.2%, as compared to $1,986,288 for the second quarter ended June 30, 2008. This decrease is consistent with the Company’s cost restructuring plan focused on reducing overall marketing and advertising costs. While customer disconnects have remained stable, not marketing to acquire new subscribers has resulted in an overall decline in the customer base.
The operating loss, which included non-cash stock-based compensation expense of $0.04 million for the quarter ended June 30, 2009, was $0.8 million for the quarter ended June 30, 2009, as compared to an operating loss of $2.5 million for the quarter ended June 30, 2008, which included non-cash based stock compensation of $1.4 million.
The Company reported a net loss of $1.1 million, or $0.11 loss per common share, for the quarter ended June 30, 2009, compared to a net loss of $2.7 million, or $0.33 loss per common share, for the quarter ended June 30, 2008, an improvement of 59%.
Adjusted EBITDA for the quarter ended June 30, 2009 was negative $9,317 compared to negative $418,086 in the second quarter in the prior year, an improvement of $408,769. By removing expenses related to the Company’s federal broadband stimulus applications under ARRA, adjusted EBITDA for the quarter ended June 30, 2009, was $56,741.
Annette Eggert, KeyOn’s CFO, stated, “We have achieved our financial target of generating positive adjusted EBITDA on our base operations for three consecutive quarters. Our focused cost reduction initiatives have provided a solid operating foundation for us to move forward with our current business strategy designed for greater growth and scale.”
Outlook
Jonathan Snyder continued, “Over the past 7 years, our mission has been to extend the reach of broadband using next generation wireless technologies in rural un-served and underserved markets. In addition to our deep experience in the industry, our achievement of positive adjusted EBITDA for three consecutive quarters indicates that we are in a great position to be awarded federal funds through ARRA. Upon receipt, we plan to quickly execute to meet the intent and spirit of the President’s stimulus package by providing vital access to broadband services, creating jobs and reigniting our economy.”
KEYON COMMUNICATIONS HOLDINGS INC. AND RELATED ENTITIES | ||||||||
SUMMARY OF CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Unaudited) | ||||||||
For the Three Months Ended June 30, | ||||||||
2009 | 2008 | |||||||
TOTAL REVENUES: | $ | 1,784,332 | $ | 1,986,288 | ||||
OPERATING COSTS AND EXPENSES: | ||||||||
Payroll, bonuses and taxes | 703,606 | 2,476,354 | ||||||
Depreciation and amortization | 617,500 | 688,934 | ||||||
Network operating costs | 754,541 | 726,876 | ||||||
Other general and administrative expense | 258,333 | 310,697 | ||||||
Installation expense | 32,613 | 121,535 | ||||||
Professional fees | 188,180 | 56,304 | ||||||
Marketing and advertising | 5,825 | 136,746 | ||||||
Cost of DISH inventory | - | 14,308 | ||||||
Total operating costs and expenses | 2,560,598 | 4,531,754 | ||||||
LOSS FROM OPERATIONS | (776,266 | ) | (2,545,466 | ) | ||||
OTHER INCOME (EXPENSE): | (350,567 | ) | (186,688 | ) | ||||
NET LOSS | $ | (1,126,833 | ) | $ | (2,732,154 | ) | ||
Net loss per common share--basic and diluted | $ | (0.11 | ) | $ | (0.33 | ) | ||
For the Three Months Ended June 30, | ||||||||
2009 | 2008 | |||||||
Reconciliation of Non-GAAP to GAAP: | ||||||||
EBITDA before stock-based compensation | $ | (9,317 | ) | $ | (418,086 | ) | ||
Interest expense | (350,568 | ) | (186,784 | ) | ||||
Interest income | 1 | 96 | ||||||
Non-cash stock compensation-professional fees | (106,800 | ) | - | |||||
Depreciation | (617,500 | ) | (688,934 | ) | ||||
Stock-based compensation | (42,649 | ) | (1,438,446 | ) | ||||
Net Loss | $ | (1,126,833 | ) | $ | (2,732,154 | ) |
About KeyOn Communications Holdings, Inc.
KeyOn Communications Holdings Inc. (OTCBB: KEYO) is one of the largest providers of wireless broadband, satellite and voice over Internet protocol (VoIP) services in the United States, primarily targeting underserved markets with populations generally less than 50,000. KeyOn offers broadband services with VoIP and satellite video services to both residential and business subscribers across 11 Western and Midwestern states. Through a combination of organic growth and acquisitions, KeyOn has expanded its network footprint to reach approximately 50,000 square miles and cover nearly 2,500,000 people as well as small-to-medium businesses. With its successful track record of acquiring companies and growing its core subscriber base, KeyOn is one of the leading wireless broadband companies in the United States. Management intends to drive subscriber growth through additional acquisitions as well as organic growth across the company’s expanding footprint by offering bundled services including broadband, video, VoIP and related valuable services such as the Bullseye Club. The company also intends to opportunistically build mobile and/or nomadic WiMAX networks in and around its market footprint. More information on KeyOn can be found at http://www.keyon.com.
Non-GAAP Measures
This press release includes disclosure regarding “Adjusted EBITDA” which is a measurement used by KeyOn Communications to monitor business performance and is not recognized under GAAP (generally accepted accounting principles). Accordingly, investors are cautioned in using or relying upon these measures as alternatives to recognized GAAP measures.
“Adjusted EBITDA” is defined as earnings or loss from operations adjusted for depreciation, amortization, goodwill impairment, non-cash stock-based compensation, and broadband stimulus application expenses. Adjusted EBITDA should not be construed as an alternative to operating loss as defined by GAAP.
Safe Harbor Statement
Certain statements contained in this press release are "forward-looking statements" within the meaning of applicable federal securities laws, including, without limitation, anything relating or referring to future financial results and plans for future business development activities, and are thus prospective. Forward-looking statements may include, without limitation, the company’s expectations regarding: future financial and operating performance and financial condition; plans, objectives and strategies; product development; industry conditions; the strength of its balance sheet; and liquidity and financing needs. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside of the company’s control, which could cause actual results to differ materially from such statements. For a more detailed description of the factors that could cause such a difference, please refer to the company’s filings with the Securities and Exchange Commission, including the information under the headings “Risk Factors” and “Forward-Looking Statements” in our Form 10-KSB filed on April 15, 2009. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements contained herein. The company undertakes no obligation to update or supplement such forward-looking statements.
Contacts:
Company Contact:
KeyOn
Communications Holdings, Inc.
Rory Erchul, 402-998-4044
VP of
Marketing
rerchul@keyon.com
www.keyon.com
or
Investor
Relations Contact:
Liviakis Financial Communications,
Inc.
John Liviakis, 415-389-4670
John@Liviakis.com
www.liviakis.com