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

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,

2012

2011

Current assets:

Cash

$

75,910

$

268,170

Accounts receivable, net

250,426

101,785

Available-for-sale securities

4,765

55,038

Prepaid expenses and other current assets

188,567

225,657

Current portion of notes receivable and accrued interest

1,199,611

1,804,000

Current assets held for sale

-

1,279,458

Total current assets

1,719,279

3,734,108

Cost method investments

86,784

86,784

Equity method investments

92,148

92,148

Notes receivable and accrued interest, less current portion

829,670

-

Fixed assets, net

5,420,138

5,597,622

Intangible assets, net

321,323

3,158,505

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 expenses

450,271

364,891

Deferred revenue

250,936

123,836

Current maturities of long-term debt

3,294,896

1,644,664

Current liabilities held for sale

-

2,324,389

Total current liabilities

4,719,314

4,970,620

Long-term debt, less current maturities

1,938,520

3,997,775

Derivative liability

29,000

-

Deferred tax liability

38,002

190,039

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, respectively

161,510

150,396

Additional paid-in capital

87,796,900

86,820,437

Accumulated deficit

(86,445,142

)

(76,453,214

)

Accumulated other comprehensive income

3,139

53,939

Total Innovaro stockholders' equity

1,516,407

10,571,558

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 revenue

668,813

610,450

Salaries and wages

759,696

1,013,179

Professional fees

410,851

321,934

Research and development

413,638

751,775

Sales and marketing

71,084

133,917

General and administrative

1,129,946

1,150,962

Depreciation and amortization

1,015,562

1,144,746

Impairment loss

2,052,153

1,169,012

6,521,743

6,295,975

Other (income) and expense:

Loss related to write-down of note receivable

1,128,000

-

Other (income) expense

(851,798

)

(56,856

)

Interest expense, net

390,279

433,201

666,481

376,345

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 diluted

15,464,506

15,013,299

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 amortization

1,015,562

1,144,746

Amortization of debt discount from investor warrants

122,146

132,138

Stock issued for services

182,250

-

Long-lived asset impairment

2,052,153

1,169,012

Loss on write-down of note receivable

1,128,000

-

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 compensation

191,919

293,237

Deferred income taxes

(151,231

)

(134,046

)

Other

7,088

9,683

Changes in operating assets and liabilities:

Accounts receivable

(148,641

)

(40,453

)

Prepaid expenses and other assets

35,790

161,764

Deferred revenue

127,100

(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 business

600,000

-

Payments received on notes receivable

100,000

-

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 offering

389,923

-

Proceeds from debt borrowings

250,000

200,000

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