Innovaro, Inc. Reports Financial Results for the Year Ended December 31, 2012

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Innovaro, Inc. Reports Financial Results for the Year Ended December 31, 2012

TAMPA, Fla.--(BUSINESS WIRE)-- Innovaro, Inc. (QTCQB:INNI), The Innovation Solutions Company, announced today that the Company will release its year-end 2012 financial results.

Year Ended 2012 Financial Results


Revenue from continuing operations was $531,000 for the year ended December 31, 2012 as compared to $435,000 for the year ended December 31, 2011. Net loss from continuing operations was $6.5 million for the year ended December 31, 2012 and $6.1 million for the year ended December 31, 2011.

Some of the highlights from 2012 include:

  • Total revenue from continuing operations for the year ended December 31, 2012 increased by 22% over year ended December 31, 2011;
  • Total expenses from continuing operations for the year ended December 31, 2012 increased by 4% over year ended December 31, 2011;
  • Loss from continuing operations for the year ended December 31, 2012 was ($6.5) million, which included the following non-cash expenses: $2.1 million impairment loss, $1.0 million in non-cash depreciation and amortization, $1.1 million loss related to the write down of one of our notes receivable and $193,000 in non-cash stock-based compensation expense related to vesting options, partially offset by a non-cash benefit of $151,000 from the provision for income tax. Loss from continuing operations for the year ended December 31, 2011 was ($6.1) million, which included the following non-cash expenses: $1.2 million impairment loss, $1.1 million in non-cash depreciation and amortization, and $293,000 in non-cash stock-based compensation expense related to vesting options, partially offset by a non-cash benefit of $134,000 from the provision for income tax.

Financial Condition

Our total assets were $8.5 million at December 31, 2012 compared to $20.8 million at December 31, 2011. At December 31, 2012, we had $76,000 in cash, $250,000 in accounts receivable, $1.2 million in accounts payable and accrued expenses and $5.2 million in debt outstanding. At December 31, 2011, we had $268,000 in cash, $102,000 in accounts receivable, $878,000 in accounts payable and accrued expenses and $5.6 million in debt outstanding.

Recent Developments

On March 11, 2013, we were delisted from the New York Stock Exchange ("NYSE") MKT and we began trading on the OTCQB Marketplace under the ticker symbol "INNI." Prior to March 11, 2013, our stock was traded on the NYSE MKT (formerly known as the NYSE Amex) under the ticker symbol "INV."

The continued decline in the Company's market capitalization resulted in a triggering event in which management determined that the implied fair value of its intangible assets is less than their carrying values. We recorded an impairment loss related to continuing operations of approximately $2.1 million for the year ended December 31, 2012.

Our promissory note with Greenwood Hudson Portfolio which was due on December 31, 2012 was not collected and we subsequently learned that, despite our related security interest, the property located in Pasco County, Florida had been sold by the State of Florida for property taxes due. The reduction of our collateral required a write-down of the note receivable to net realizable value. We recorded a loss of $1.1 million related to the write-down of this note for the year ended December 31, 2012.

Innovaro, Inc.
Consolidated Balance Sheet
 
ASSETS  
December 31,
20122011
Current assets:
Cash$75,910$268,170
Accounts receivable, net250,426101,785
Available-for-sale securities4,76555,038
Prepaid expenses and other current assets188,567225,657
Current portion of notes receivable and accrued interest1,199,6111,804,000
Current assets held for sale -  1,279,458 
Total current assets1,719,2793,734,108
Cost method investments86,78486,784
Equity method investments92,14892,148
Notes receivable and accrued interest, less current portion829,670-
Fixed assets, net5,420,1385,597,622
Intangible assets, net321,3233,158,505
Non-current assets held for sale -  8,097,098 
Total assets$8,469,342 $20,766,265 
LIABILITIES
Current liabilities:
Accounts payable$723,211$512,840
Accrued expenses450,271364,891
Deferred revenue250,936123,836
Current maturities of long-term debt3,294,8961,644,664
Current liabilities held for sale -  2,324,389 
Total current liabilities4,719,3144,970,620
Long-term debt, less current maturities1,938,5203,997,775
Derivative liability29,000-
Deferred tax liability38,002190,039
Non-current liabilities held for sale -  800,503 
Total liabilities 6,724,836  9,958,937 
Commitments and contingencies--
 
EQUITY
Innovaro stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued and outstanding--
Common stock, $.01 par value, 29,000,000 shares authorized; 16,165,952 and 15,159,544 shares issued; 16,150,952 and 15,039,544 shares outstanding at December 31, 2012 and 2011, respectively161,510150,396
Additional paid-in capital87,796,90086,820,437
Accumulated deficit(86,445,142)(76,453,214)
Accumulated other comprehensive income 3,139  53,939 
Total Innovaro stockholders' equity1,516,40710,571,558
Noncontrolling interest 228,099  235,770 
Total equity 1,744,506  10,807,328 
Total liabilities and equity$8,469,342 $20,766,265 
 
Innovaro, Inc.
Consolidated Statements of Comprehensive Loss
 
 Years Ended December 31,
2012 2011
 
Revenue$530,834$435,425
 
Expenses:
Direct costs of revenue668,813610,450
Salaries and wages759,6961,013,179
Professional fees410,851321,934
Research and development413,638751,775
Sales and marketing71,084133,917
General and administrative1,129,9461,150,962
Depreciation and amortization1,015,5621,144,746
Impairment loss 2,052,153  1,169,012 
6,521,7436,295,975
 
Other (income) and expense:
Loss related to write-down of note receivable1,128,000-
Other (income) expense(851,798)(56,856)
Interest expense, net 390,279  433,201 
666,481376,345
 
Loss from continuing operations before income taxes(6,657,390)(6,236,895)
Provision for income tax expense (benefit) (151,231) (134,046)
Loss from continuing operations(6,506,159)(6,102,849)
Income (loss) from discontinued operations, net of tax (including loss on disposal) (3,493,440) 1,182,126 
Net loss$(9,999,599)$(4,920,723)
 
Net loss attributable to noncontrolling interest (7,671) (296,853)
Net loss attributable to Innovaro stockholders$(9,991,928)$(4,623,870)
 
Net loss$(9,999,599)$(4,920,723)
Other comprehensive loss:
Unrealized loss from available-for-sale securities (34,000) (93,983)
Comprehensive loss$(10,033,599)$(5,014,706)
 
Basic and diluted income (loss) per share:
Loss from continuing operations$(0.42)$(0.41)
Income (loss) from discontinued operations (0.23) 0.08 
Net loss$(0.65)$(0.33)
 
Weighted average shares outstanding: Basic and diluted15,464,50615,013,299
 
Innovaro, Inc.
Consolidated Statements of Cash Flows
 
Years Ended December 31,
2012 2011
Operating Activities:
Net loss$(9,999,599)$(4,920,723)
Less: Income from discontinued operations, net of tax (3,493,440) 1,182,126 
 
Loss from continuing operations(6,506,159)(6,102,849)
Adjustments to reconcile net loss from continuing operations to net cash flows from operating activities:
Depreciation and amortization1,015,5621,144,746
Amortization of debt discount from investor warrants122,146132,138
Stock issued for services182,250-
Long-lived asset impairment2,052,1531,169,012
Loss on write-down of note receivable1,128,000-
Loss (gain) on sale and impairment of available-for-sale securities(47,630)201,441
Loss (gain) on derivative liabilities(51,000)150,825
Stock-based compensation191,919293,237
Deferred income taxes(151,231)(134,046)
Other7,0889,683
Changes in operating assets and liabilities:
Accounts receivable(148,641)(40,453)
Prepaid expenses and other assets35,790161,764
Deferred revenue127,100(19,324)
Accounts payable and other liabilities 366,082  202,417 
Net cash flows from operating activities of continuing operations (1,676,571) (2,831,409)
 
Investing Activities:
Capital expenditures(1,279)(39,218)
Capitalization of software development costs(45,525)(225,172)
Proceeds from disposal of business600,000-
Payments received on notes receivable100,000-
Proceeds from sale of available-for-sale securities 63,903  42,870 
Net cash flows from investing activities of continuing operations 717,099  (221,520)
 
Financing Activities:
Net proceeds from stock offering389,923-
Proceeds from debt borrowings250,000200,000
Payments on long-term debt (731,480) (621,467)
Net cash flows from financing activities of continuing operations (91,557) (421,467)
 
Net cash flows from continuing operations(1,051,029)(3,474,396)
 
Net cash flows from discontinued operations 858,769  3,479,947 
 
(Decrease) increase in cash(192,260)5,551
Cash at beginning of period 268,170  262,619 
Cash at end of period$75,910 $268,170 
 

Conference Call Information

We will host a live conference call at 4:30 p.m. ET today to discuss the results. Investors and analysts are invited to attend the conference call.

Investors and analysts can participate in the call by dialing:

US & Canada: 866-240-5139

International Callers: 713-481-0091

About Innovaro, Inc.

Innovaro is The Innovation Solutions Company. The focus of our business is to help organizations innovate a

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