Message #8 From:
Stock News Bot Date: February 27, 2007 04:30:00 AM
QSGI News QSGI Reports 126% Revenue Growth within Data Center Maintenance Division, Along with Record Revenue on 37% Growth within Data Security & Compliance Division for the Fourth Quarter
HIGHTSTOWN, N.J.--(BUSINESS WIRE)--QSGI, Inc. (OTCBB: QSGI) the only data security and regulatory compliance provider offering a full suite of life-cycle services for a corporation’s entire IT platform, today reported financial results for the fourth quarter ended December 31, 2006.
-- Data Security & Compliance revenue increased 37% to $6.7 million -- Data Center Maintenance revenue rose 126% to $1.3 million -- Data Center Hardware revenue decreased 27% to $4.6 million
Gross profit increased 12% to $2.4 million, versus $2.1 million in the fourth quarter of 2005
-- Data Security & Compliance gross profit increased 168% to $816,000 -- Data Center Maintenance gross profit rose 123% to $873,000 -- Data Center Hardware gross profit decreased 52% to $680,000
“We generated very strong growth within both our Data Security & Compliance Division, as well as our Data Center Maintenance Division,” stated Marc Sherman, chairman and chief executive of QSGI. “Within the Data Security & Compliance division we focused heavily on strengthening our asset remarketing relationships with the major OEMs, which helped drive the 37 percent growth during the quarter. Although our remarketing business has lower gross margins than our full-suite of data security services, our goal was to rapidly expand this business in order to layer on the higher margin end-user services through these OEM clients over time. At the same time, we added a number of new clients for our full suite of Data Security & Compliance services, including one of the world’s largest retailers; a leading international private bank; a well renowned provider of tobacco products; and a worldwide marketer of specialty skincare merchandise and beauty accessories.”
Mr. Sherman continued, “We are especially pleased with the recent success of our mobile audit and erasure vehicle, as well as our portable server ‘suitcase’ solution, both of which eliminate the inherent data security risks associated with transporting technology assets. These new offerings have had a measurable impact attracting new end-user clients, especially in light of the recent high profile data security breaches during transportation at several major institutions.”
“Our Data Center Maintenance division continues to grow at an impressive rate, as evidenced by a 126% increase in revenue over the same period last year. We recently announced new mainframe and mid-range server maintenance contracts, which are estimated to generate an additional $1.2 million in recurring annual revenue. As a result, our Data Center Maintenance division is now pacing at approximately $6.6 million in annualized revenues, which we expect will help us to achieve sustained company-wide profitability as we continue to grow the division. Although the concentrated sales within our Data Center Hardware division often results in wide swings from quarter-to-quarter, as we saw this quarter, the division was up for the full year and we anticipate solid contributions from this business going forward.”
New client and channel partners signed during the quarter:
3 new Data Security & Compliance clients
Additional contracts from new or existing Data Center Maintenance clients amounting to incremental annual revenue of more than $1.2 million
Total revenue for the fourth quarter of 2006 rose 10% to $12.6 million, as compared with $11.4 million for the same period in 2005, reflecting a 37% increase in revenue from the company’s Data Security & Compliance division, a 126% rise in the Data Center Maintenance division, and a 27% decrease in the Data Center Hardware division. Gross profit increased 12% to $2.4 million, versus $2.1 million in the fourth quarter of 2005. Selling, general and administrative expenses were $2.5 million, versus $2.2 million for the same period last year, which included approximately $50,000 of expenses related to an acquisition that was not completed. Net loss available to common stockholders for the fourth quarter of 2006 was $(270,939), or $(0.01) per share, compared to net loss of $(45,823), or $(0.00) per share, for the same period in 2005.
Conference Call
QSGI will host a conference call at 10:00 a.m. Eastern today, February 27, 2007. During the call, Marc Sherman, chairman and chief executive officer, Seth Grossman, president and chief operating officer, and Ed Cummings, chief financial officer, will discuss the Company’s quarterly performance and financial results. The telephone number for the conference call is 866-585-6398. A live webcast of the call will also be available on the company's website, www.QSGI.com. To listen to the live call online, please visit the site at least 10 minutes early to register, download and install any necessary audio software.
The webcast will be archived on the site, and investors will be able to access an encore recording of the conference call for one week by calling 866-245-6755, conference ID #511239. The encore recording will be available two hours after the conference call has concluded.
QSGI is the only data security and regulatory compliance provider offering a full suite of end-of-life and other life-cycle services for a Fortune 1000 corporation’s and government client’s entire information technology (IT) platform. QSGI offsets its clients’ expenses through its value-added remarketing program. Prior to resale, the company utilizes its proprietary Department of Defense (DOD) level certified data sweep to eliminate otherwise recoverable data. QSGI reduces its clients' potential liability by ensuring regulatory and environmental compliance for IT products. QSGI also maintains and provides services on enterprise-class hardware, including mainframes, midrange servers, tape storage products and disk storage products. Given the sensitive nature of the company’s client relationships, it does not provide the names of its clients. Additional information about the company is available at www.qsgi.com.
Statements about QSGI’s future expectations, including future revenues and earnings, and all other statements in this press release other than historical facts are ‘forward-looking statements’ within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Litigation Reform Act of 1995.QSGI intends that such forward-looking statements involve risks and uncertainties and are subject to change at any time, and QSGI’s actual results could differ materially from expected results.QSGI undertakes no obligation to update forward-looking statements to reflect subsequently occurring events or circumstances.
CONDENSED CONSOLIDATED BALANCE SHEETS
Assets
December 31,
2006
2005
Current Assets
Cash and cash equivalents
$
632,948
$
153,794
Accounts receivable, net of reserve of $780,116 and $80,000 in 2006 and 2005, respectively
8,012,421
7,014,129
Inventories
4,982,710
4,136,304
Prepaid expenses and other assets
183,069
227,352
Deferred income taxes
457,692
155,668
Total Current Assets
14,268,840
11,687,247
Property And Equipment, Net
410,241
605,887
Goodwill
6,644,403
3,212,314
Intangibles, Net
2,555,584
2,872,240
Other Assets
158,784
116,225
$
24,037,852
$
18,493,913
Liabilities And Stockholders' Equity
Current Liabilities
Revolving lines of credit
$
3,915,825
$
3,631,500
Accounts payable
1,382,336
2,254,136
Accrued expenses
601,850
279,090
Accrued payroll
329,658
264,134
Deferred revenue
517,439
286,595
Other current liabilities
122,784
29,366
Total Current Liabilities
6,869,892
6,744,821
Long-term Deferred Revenue
416,239
117,945
Deferred Income Taxes
310,656
280,318
Total Liabilities
7,596,787
7,143,084
Redeemable Convertible Preferred Stock
4,220,577
1,967,220
Commitments And Contingencies (Note 13)
Stockholders' Equity
Preferred shares: authorized 5,000,000 in 2006 and 2005, $0.01 par value, none issued
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Common shares: authorized 95,000,000 in 2006 and 55,000,000 in 2005, $0.01 par value; 31,172,716 shares issued and outstanding in 2006 and 28,670,631 issued and outstanding in 2005.
