Revenue increases to a record $380 million, representing a 15%
increase from the Prior Year TORONTO and ENGLEWOOD, CO, March 31
/PRNewswire-FirstCall/ -- 180 Connect Inc. ("180 Connect" or the
"Company") (OTCBB: CNCT.OB, CNCTU.OB, CNCTW.OB), one of North
America's largest providers of installation, integration and
fulfillment services to the home entertainment, communication, and
home integration service industries, today released its financial
results for the year ended December 31, 2007. Certain information
contained in this news release constitutes forward-looking
information, including anticipated growth and financial
performance. See "Forward-Looking Information". Selected Financial
Highlights - Year Ended December 31, 2007 For the year ended
December 31, 2007 as compared to the year ended December 31, 2006:
Year to Date Highlights - Revenue grew to $379.8 million, an
increase of $48.6 million, or 14.7%, compared to revenue of $331.2
million in 2006. - EBITDA from continuing operations (2) was $19.3
million, an increase of $5.8 million or 42.8% compared to $13.5
million in 2006. - Total cash provided by operating activities was
$1.5 million, a decrease of $4.8 million from the cash provided by
operating activities of $6.3 million in 2006. - Loss from
continuing operations was $22.9 million, an increase of $14.1
million compared to a loss from continuing operations of $8.8
million in 2006. - Net loss was $24.9 million, an increase of $10.3
million compared to a net loss of $14.6 million in 2006. - Net loss
per share for the twelve months ended December 31, 2007 and
December 31, 2006, respectively, is as follows: - Loss from
continuing operations was $1.20 per share basic and diluted
compared to a loss from continuing operations of $0.60 per share
basic and diluted in 2006. - Net loss was $1.30 per share basic and
diluted compared to net loss of $1.00 per share basic and diluted
in 2006. Peter Giacalone, President and Chief Executive Officer of
the Company stated; "2007 was a significant and successful year for
180 Connect. The management team was highly focused on improving
margins and rebuilding shareholder confidence in the organization.
Major initiatives included the significant capital raise through
completing the merger with Ad Venture Partners, expanding and
strengthening our relationship with our major customers, and
streamlining of the systems and processes of control and
management. Our employees continue to deliver some of the best
quality and consumer satisfaction metrics in the industry despite
the challenges of weather and geography. 180 Connect's team
delivered a 43% increase in EBITDA on 15% revenue growth, year over
year, with a strong focus on cash management and delivery. We are
also very pleased to note that DIRECTV was ranked "Highest in
Customer Satisfaction among Satellite/Cable TV Subscribers" in the
southern, western and eastern regions of the United States,
according to the J.D. Power and Associates 2007 Residential
Cable/Satellite TV Customer Satisfaction Study. As 180 Connect is
the primary service provider for DIRECTV's western region, I
believe that the award reflects our commitment and ability to
deliver exceptional customer service." 2007 Highlights 2007
financial results were strong as the Company achieved significant
revenue growth and record EBITDA from continuing operations(2).
Revenue for 2007 increased to $380 million, from $331 million in
2006. This 15% increase reflects across-the-board volume increases
in satellite and cable and also includes contribution from 180
Network Services and Digital Interiors - Home businesses. DIRECTV
volume increased 15% year over year, as they not only continue to
channel more work through the Home Service Provider Network, but
also continue to sell more advanced product. Cable revenues
increased 10% year over year as the Company continued to benefit
from its investments in its cable workforce and significant growth
in the Company's Canadian operations with Rogers Communications
which increased by 60%. 180 Connect's Network Services business
reported modest top line growth in 2007 as certain municipal fiber
projects originally forecast to contribute in 2007 have been
deferred to 2008 as a result of delays in financing associated with
the current credit markets. The Company remains cautiously
optimistic that this business will provide meaningful contributions
in 2008, with the focus on its several fiber-to-the-home private
developments. The Company remains confident in the long term growth
prospects for this business and is pleased to announce an award for
a $2 million airport project with the City of San Jose, CA. The
pace of growth in 180 Connect's Home business was moderate as a
result of the slowdown in the production home housing market. The
Company will continue to monitor this business closely and has
already begun the process of focussing its efforts on the higher
end custom home and multi-dwelling unit market which has remained
fairly steady despite the deterioration in the broader housing
market. Long term, in-home technology remains an increasingly
important factor in home buying decisions, and we believe this will
continue to support the growth of the business, particularly in the
higher end segment of the housing market. Earnings performance for
2007 was the strongest in the history of the Company. EBITDA from
continuing operations was $20.1 million for 2007 excluding stock
based compensation expense of $0.9 million, an increase of $6.6
million or 48% year over year. On an adjusted basis excluding US
listing costs, restructuring charges and stock based compensation
expense, EBITDA from continuing operations was $21.3 million for
2007, an increase of 47% year over year. These results were
primarily attributable to underlying operational improvements
implemented in streamlining the Company's management team, reduced
insurance costs, improved inventory process and controls coupled
with volume increases. General and Administrative costs declined
despite the 15% increase in revenue. General and Administrative
costs excluding stock-based compensation as a percentage of revenue
declined to 4.8% in 2007 from 5.9% in 2006 as a result of more
stringent approval processes and reductions in legal and
professional fees. Both reported and adjusted EBITDA were
negatively impacted by approximately $0.4 million of earnings
related to the closure of a Networks Services operation during the
fourth quarter, now reported within discontinued operations.
Looking Forward The Company set out last fall to refinance its
existing debt in an effort to supplement its liquidity and lower
its borrowing costs. While the Company continues to monitor the
deteriorating debt markets, it has been able to manage its seasonal
working capital needs by lowering its costs, working with its
vendors, reducing customer chargebacks, focusing on collecting
receivables and most recently, negotiating a reduction in its
required letter of credit for its insurance obligations, freeing up
its restricted cash. As such, the Company has not pursued any of
the term loan proposals received to date largely due to the impact
of increasing the cost of capital and the requirement to issue
significant additional equity. The Company believes that its
effective cash management performance will remain on track and is
not currently in the market for additional financing. Over the past
12 months 180 Connect has experienced significant growth. While the
Company believes it has been successful in achieving many of its
goals and positioning itself to become a dominant sector player,
these efforts are not, in the opinion of the Board of Directors,
being appropriately valued by the public markets. As such, the
Board of Directors of 180 Connect has appointed a Special Committee
comprised of independent directors of the Board, with a mandate to
consider and review strategic alternatives for the Company,
including transaction proposals that have or may be received from
time to time. The Special Committee has retained investment bankers
to assist in this process and is considering a number of
alternatives to improve shareholder value. The Board of Directors
has not set any deadline for completing the review of its strategic
options and may ultimately determine that its current business plan
is the best means to build and deliver shareholder value. Summary
Results The following is a summary of the Company's selected
consolidated data and operating information for the twelve months
ended December 31, 2007 and 2006 and should be read in conjunction
with the annual audited financial statements. The amounts presented
below have been reclassified to reflect the adjustments associated
with the discontinued operations of the Company and the
reclassification of certain amounts of long term debt to the
current portion of long term debt. Selected Consolidated Financial
and Operating Data: Twelve Months Twelve Months Ended Ended
December 31, December 31, 2007 2006 % Change
--------------------------------------------
Revenue......................$ 379,767,879 $ 331,175,241 14.7%
Direct expenses.............. 341,108,774 297,073,863 14.8%
-------------------------------------------- Direct contribution
margin (1).................. 38,659,105 34,101,378 13.4% General
and administrative (a).......... 19,223,846 19,675,497 (2.3)%
Foreign exchange (gain) loss (124,329) 30,361 (509.5)%
Restructuring costs.......... 275,000 892,688 (69.2)%
-------------------------------------------- EBITDA (2)
EBITDA............ 19,284,588 13,502,832 42.8%
Depreciation................. 12,061,858 13,398,987 (10.0)%
Amortization of customer contracts................... 3,681,499
3,712,673 (0.8)% Other (income) expense Interest and loan fees.....
16,272,393 10,043,504 62.0% Gain on extinguishment of
debt...................... - (1,233,001) - (Gain) loss on sale of
investments and assets.... 715,151 (726,086) (198.5)% (Gain) loss
on change in fair value of derivative liabilities...............
5,020,945 (1,363,936) (468.1)% Other expense..............
3,579,459 - - -------------------------------------------- Loss
from continuing operations before income tax expense
(benefit)........... (22,046,717) (10,329,309) 113.4% Income tax
expense (benefit). 856,576 (1,503,271) (157.0)%
-------------------------------------------- Loss from continuing
operations.................. (22,903,293) (8,826,038) 159.5% Loss
from discontinued operations.................. (2,039,073)
(5,762,800) (64.6)% --------------------------------------------
Net loss for the period......$ (24,942,366) $ (14,588,838) 71.0%
--------------------------------------------
-------------------------------------------- (a) General and
administrative expense includes stock-based compensation of
$860,035 and $91,214, for the years ended December 31, 2007, and
December 31, 2006, respectively. Per Share Data Twelve Months
Twelve Months Ended Ended December 31, December 31, 2007 2006
----------------------------- Loss per share from continuing
operations Basic.....................................$ (1.20) $
(0.60) Diluted...................................$ (1.20) $ (0.60)
Net loss per share: Basic.....................................$
(1.30) $ (1.00) Diluted...................................$ (1.30)
$ (1.00) Weighted average number of shares outstanding -
basic........................ 19,155,718 14,641,010
----------------------------- -----------------------------
Weighted average number of shares outstanding -
diluted...................... 19,155,718 14,641,010
----------------------------- -----------------------------
Selected Consolidated Balance Sheet Data As of December 31,
December 31, 2007 2006 ----------------------------- (Restated)
Cash and cash equivalents...................$ 366,449 $ 2,904,098
Working capital deficit..................... 30,162,680 32,218,721
Total assets................................ 158,284,151
165,443,572 Total debt and capital lease obligations.... 56,765,878
77,355,246 Total shareholders' equity..................$ 22,211,042
$ 9,402,081 A copy of the annual audited consolidated financial
statements of the Company for the twelve months ended December 31,
2007 is attached to this news release. The Company will be
releasing its year end report on March 31, 2008 which will be
available on EDGAR and the Company's website. Additional
information relating to the Company is available on EDGAR at
http://www.sec.gov/edgar.shtml, on SEDAR at http://www.sedar.com/
and on the Company's website at http://www.180connect.net/.
Non-GAAP Measures: (1) The term "Direct Contribution Margin"
consists of revenue less direct expenses and excludes general and
administrative expense, foreign exchange loss (gain), (gain) loss
on sale of investments and assets, depreciation, amortization of
customer contracts, interest and loan costs, (gain) loss on change
on fair value of derivative liabilities, gain on extinguishment of
debt, other expense, and income tax expense (benefit). DCM, as
referred to in this news release, is a non-GAAP measure which does
not have any standardized meaning prescribed by GAAP and is
therefore unlikely to be comparable to similar measures presented
by other issuers. Management believes that this term provides a
better assessment of the contribution of the field operations
dealing directly with its customers' subscribers by eliminating:
(1) the general and administrative costs that are not part of the
direct costs of generating revenue; (2) the charge for customer
contracts and depreciation which are non-cash expense items; and
(3) (gain) loss on sale of investments and assets, (gain) loss on
change in fair value of derivative liabilities, gain on
extinguishment of debt, and other expense, which are not considered
to be in the normal course of operating activity. Investors should
be cautioned, however, that DCM should not be construed as an
alternative to income (loss) from continuing operations determined
in accordance with GAAP as an indicator of the Company's
performance. Following is a reconciliation of DCM to the comparable
GAAP measure being net loss from continuing operations: Year Ended
Year Ended December 31, December 31, 2007 2006 --------------
-------------- Direct contribution margin (1)..............$
38,659,105 $ 34,101,378 General and
administrative.................. 19,223,846 19,675,497 Foreign
exchange loss (gain)................ (124,329) 30,361 Restructuring
costs......................... 275,000 892,688
Depreciation................................ 12,061,858 13,398,987
Amortization of customer contracts.......... 3,681,499 3,712,673
Interest and loan costs..................... 16,272,393 10,043,504
Gain on extinguishment of debt.............. - (1,233,001) (Gain)
loss on sale of investments and
assets..................................... 715,151 (726,086)
(Gain) loss on change in fair value of derivative
liabilities..................... 5,020,945 (1,363,936) Other
expense............................... 3,579,459 - Income tax
expense (benefit)................ 856,576 (1,503,271)
-------------- -------------- Net loss from continuing
operations.........$ (22,903,293) $ (8,826,038) --------------
-------------- -------------- -------------- (2) The term "EBITDA
from continuing operations" refers to loss from continuing
operations before deducting depreciation, amortization of customer
contracts, (gain) loss in sale of investments and assets, interest
and loan fees, (gain) loss on change in fair value of derivative
liabilities, gain on extinguishment of debt, other expense, and
income tax expense (benefit). EBITDA from continuing operations, as
referred to in this news release, is a non-GAAP measure which does
not have any standardized meaning prescribed by GAAP and is
therefore unlikely to be comparable to similar measures presented
by other issuers. Management believes that EBITDA from continuing
operations provides a better assessment of cash flow from the
operations of the Company by eliminating: (1) the charge for
depreciation, and amortization of customer contracts which are non-
cash expense items and (2) (gain) loss on sale of assets, (gain)
loss on change in fair market value of derivative liabilities, gain
on extinguishment of debt, and other expense, which are not
considered to be in the normal course of operating activity. In
addition, financial analysts and investors use a multiple of EBITDA
from continuing operations for valuing companies within the same
sector, in order to eliminate the differences in accounting
treatment from one company to the next. Given that the Company is
in a growth stage, management believes the focus on EBITDA from
continuing operations gives the investor or reader of the
consolidated financial statements and MD&A more insight into
the operating capabilities of management and its utilization of its
operating assets. Management further believes that EBITDA from
continuing operations is also the best metric for measuring
valuation. Investors should be cautioned, however, that EBITDA from
continuing operations should not be construed as an alternative to
income (loss) from continuing operations determined in accordance
with GAAP as an indicator of the Company's performance. Following
is a reconciliation of EBITDA from continuing operations to the
comparable GAAP measure being net loss from continuing operations:
Year Ended Year Ended December 31, December 31, 2007 2006
-------------- -------------- EBITDA from continuing operations
(2)....... 19,284,588 13,502,832
Depreciation................................ 12,061,858 13,398,987
Amortization of customer contracts.......... 3,681,499 3,712,673
Interest and loan costs..................... 16,272,393 10,043,504
Gain on extinguishment of debt.............. - (1,233,001) (Gain)
loss on sale of investments and
assets..................................... 715,151 (726,086)
(Gain) loss on change in fair value of derivative
liabilities..................... 5,020,945 (1,363,936) Other
expense............................... 3,579,459 - Income tax
expense (benefit)................ 856,576 (1,503,271)
-------------- -------------- Net loss from continuing
operations.........$ (22,903,293) $ (8,826,038) --------------
-------------- -------------- -------------- Conference Call
Information A live webcast of 180 Connect Inc.'s 2007 year end
results earnings call will be available at
http://www.180connect.net/. The call will begin at 5:00 p.m. EST,
March 31, 2008. The dial-in numbers for the call are international
dial 617.213.8853 and toll free at 866.831.6224, participant pass
code is 15653962. The webcast will be archived on the Company's
website and a replay of the call will be available beginning at
7:00 p.m. EST on Monday, March 31, 2008 through to 11:59 p.m. EST
Monday, April 7, 2008. The dial-in numbers for the replay are
617.801.6888 International Dial and toll free at 888.286.8010 pass
code 92229639. 180 Connect Inc. 180 Connect Inc. is one of North
America's largest providers of installation, integration and
fulfillment services to the home entertainment, communications and
home integration service industries. With more than 4,000 skilled
technicians and 750 support personnel based in over 85 operating
locations, 180 Connect is well positioned as the only pure play
national residential service provider in the market. 180 Connect
shares are traded under the name of 180 Connect Inc. on the OTCBB
under the symbols CNCT.OB, CNCTU.OB and CNCTW.OB. Forward-Looking
Information This news release contains forward-looking statements
which reflect management's expectations regarding the Company's
future growth, results of operations, performance and business
prospects and opportunities. Statements about the Company's future
plans and intentions, results, levels of activity, performance,
goals or achievements or other future events constitute
forward-looking statements. Wherever possible, words such as "will
be", "may", "should", "could", "expect", "plan", "intend",
"anticipate", "believe", "estimate", "predict" or "potential" or
the negative or other variations of these words, or other similar
words or phrases, have been used to identify these forward-looking
statements. These statements reflect management's current beliefs
and are based on information currently available to management.
Forward-looking statements involve significant risk, uncertainties
and assumptions. Many factors, including those discussed under
section 1A "Risk Factors" of the Report Form 10-K could cause
actual results, performance or achievements to differ materially
from the results discussed or implied in the forward-looking
statements. These factors should be considered carefully and
prospective investors should not place undue reliance on the
forward-looking statements. Although the forward-looking statements
contained in this news release are based upon what management
believes to be reasonable assumptions, the Company cannot assure
investors that actual results will be consistent with these
forward-looking statements. These forward-looking statements are
made as of the date of this news release and the Company assumes no
obligation to update or revise them to reflect new events or
circumstances, except as required by law. Consolidated Financial
Statements 180 Connect Inc. Consolidated Balance Sheets (Unaudited)
December 31, December 31, 2007 2006 -----------------------------
(Restated) (Note 1) Assets Current Assets Cash and cash equivalents
$ 366,449 $ 2,904,098 Accounts receivable (less allowance for
doubtful accounts of $3,750,200 and $2,506,637, respectively)
48,378,339 48,934,952 Inventory 20,180,167 15,816,148 Restricted
cash 10,169,108 14,503,000 Prepaid expenses and other assets
9,378,519 7,910,255 ----------------------------- TOTAL CURRENT
ASSETS 88,472,582 90,068,453 Property, plant and equipment
34,906,750 34,882,890 Goodwill 11,034,723 11,034,723 Customer
contracts, net 21,391,257 25,072,756 Other assets 2,478,839
4,384,750 ----------------------------- TOTAL ASSETS $ 158,284,151
$ 165,443,572 -----------------------------
----------------------------- Liabilities and Shareholders' Equity
Current liabilities Accounts payable and accrued liabilities $
79,115,651 $ 78,686,245 Current portion of long-term debt
27,769,301 26,502,096 Fair value of derivative financial
instruments 122,168 4,065,729 Current portion of capital lease
obligations 11,628,142 13,033,104 -----------------------------
TOTAL CURRENT LIABILITIES 118,635,262 122,287,174 Income tax
liability 191,580 - Long-term debt - 12,264,621 Convertible debt -
6,276,584 Capital lease obligations 17,246,267 15,213,112
----------------------------- TOTAL LIABILITIES 136,073,109
156,041,491 Shareholders' Equity Common stock $.0001 par value;
authorized 100,000,000, at December 31, 2007 and December 31, 2006
issued and outstanding shares 25,520,152 and 14,685,976,
respectively 2,552 1,469 Paid-in capital 130,096,083 91,871,813
Treasury stock, 500,000 shares and zero at December 31, 2007 and
December 31, 2006 respectively (224,019) - Accumulated deficit
(107,898,597) (82,956,231) Accumulated other comprehensive income
235,023 485,030 ----------------------------- TOTAL SHAREHOLDERS'
EQUITY 22,211,042 9,402,081 ----------------------------- TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY $ 158,284,151 $ 165,443,572
----------------------------- ----------------------------- Note 1:
The 2006 consolidated balance sheet has been restated to reclassify
$20,534,422 of debt previously reported as long-term to current in
accordance with the requirements of Emerging Issues Task Force
Issue # 95-22, "Balance Sheet Classification of Borrowing
Outstanding under Revolving Credit Agreements that Include Both a
Subjective Accelerator Clause and a Lock-Box Agreement." This
restatement had no impact on the previously reported consolidated
statements of results of operations, shareholder's equity and cash
flows. Consolidated Financial Statements 180 Connect Inc.
Consolidated Statements of Operations (Unaudited) Year Ended Year
Ended Year Ended December 31, December 31, December 31, 2007 2006
2005 -------------------------------------------- Revenue $
379,767,879 $ 331,175,241 $ 278,640,517 Expenses Direct expenses
341,108,774 297,073,863 255,120,324 General and administrative (1)
19,223,846 19,675,497 21,702,824 Foreign exchange loss (gain)
(124,329) 30,361 (18,692) Restructuring costs 275,000 892,688
1,672,485 Depreciation 12,061,858 13,398,987 6,147,874 Amortization
of customer contracts 3,681,499 3,712,673 4,093,985 Other (income)
expense Interest and loan fees 16,272,393 10,043,504 3,440,690 Gain
on extinguishment of debt - (1,233,001) - (Gain) loss on sale of
investments and assets 715,151 (726,086) (6,897,291) Impairment of
goodwill and customer contracts - - 608,096 (Gain) loss on change
in fair value of derivative liabilities 5,020,945 (1,363,936) -
Other expense 3,579,459 - -
-------------------------------------------- Loss from continuing
operations before income tax expense (benefit) (22,046,717)
(10,329,309) (7,229,778) Income tax expense (benefit) 856,576
(1,503,271) (2,001,727)
-------------------------------------------- Loss from continuing
operations (22,903,293) (8,826,038) (5,228,051) Loss from
discontinued operations, net of income taxes of zero (2,039,073)
(5,762,800) (3,288,604)
-------------------------------------------- Net loss for the
period $ (24,942,366) $ (14,588,838) $ (8,516,655)
--------------------------------------------
-------------------------------------------- Net loss per share
from continuing operations: Basic $ (1.20) $ (0.60) $ (0.36)
Diluted $ (1.20) $ (0.60) $ (0.36) Net loss per share: Basic $
(1.30) $ (1.00) $ (0.59) Diluted $ (1.30) $ (1.00) $ (0.59)
Weighted average number of shares outstanding - basic 19,155,718
14,641,010 14,368,864 Weighted average number of shares outstanding
- diluted 19,155,718 14,641,010 14,368,864 (1) General and
administrative includes stock-based compensation of $860,035,
$91,214 and $1,387,133 for the years ended December 31, 2007,
December 31, 2006, and December 31, 2005, respectively. 180 Connect
Inc. Consolidated Statements of Shareholders' Equity (Unaudited)
Common Stock Outstanding Common Paid in Treasury Shares Stock
Capital Stock
------------------------------------------------------- Balances at
December 25, 2004 14,296,622 $ 1,430 $ 86,878,322 $ - Issuance on
exercise of stock options for cash 408,847 41 728,291 - Share
repurchase (175,320) (18) (759,810) - Stock-based compensation - -
1,387,133 - Sale of investment - - - - Net loss - - - -
------------------------------------------------------- Balances at
December 31, 2005 14,530,149 1,453 88,233,936 - Issuance on
exercise of stock options for cash 155,827 16 259,696 - Issuance of
warrants on long-term debt - - 3,286,967 - Stock-based compensation
- - 91,214 - Net loss - - - -
------------------------------------------------------- Balances at
December 31, 2006 14,685,976 1,469 91,871,813 - Issuance on
exercise of stock options for cash 46,467 4 77,507 - Issuance on
exercise of warrants for cash 1,200,000 120 17,140 - Issuance on
exercise of convertible debt 510,000 51 2,293,179 - Net proceeds
from reverse merger 9,577,709 958 37,932,207 - Issuance costs
attributed to reverse merger - - (6,976,440) - Stock-based
compensation - - 860,035 - Issuance of warrants on long-term debt -
- 2,803,296 - Issuance of warrants in support of Arrangement - -
800,000 - Acquisition of net assets of AVP - - (7,099,514) -
Reclassification of the Public Warrants - - 7,516,810 - Purchase of
500,000 shares of treasury stock (500,000) (50) 50 (224,019)
Foreign currency translation adjustment - - - - Net loss - - - -
------------------------------------------------------- Balances at
December 31, 2007 25,520,152 $ 2,552 $130,096,083 $ (224,019)
-------------------------------------------------------
------------------------------------------------------- Accumulated
Other Comprehensive Accumulated Income Deficit (loss) Total
----------------------------------------- Balances at December 25,
2004 $(59,452,519) $ 6,988,770 $ 34,416,003 Issuance on exercise of
stock options for cash - - 728,332 Share repurchase (398,219) -
(1,158,047) Stock-based compensation - - 1,387,133 Sale of
investment - (6,503,740) (6,503,740) Net loss (8,516,655) -
(8,516,655) ----------------------------------------- Balances at
December 31, 2005 (68,367,393) 485,030 20,353,026 Issuance on
exercise of stock options for cash - - 259,712 Issuance of warrants
on long-term debt - - 3,286,967 Stock-based compensation - - 91,214
Net loss (14,588,838) - (14,588,838)
----------------------------------------- Balances at December 31,
2006 (82,956,231) 485,030 9,402,081 Issuance on exercise of stock
options for cash - - 77,511 Issuance on exercise of warrants for
cash - - 17,260 Issuance on exercise of convertible debt - -
2,293,230 Net proceeds from reverse merger - - 37,933,165 Issuance
costs attributed to reverse merger - - (6,976,440) Stock-based
compensation - - 860,035 Issuance of warrants on long-term debt - -
2,803,296 Issuance of warrants in support of Arrangement - -
800,000 Acquisition of net assets of AVP - - (7,099,514)
Reclassification of the Public Warrants - - 7,516,810 Purchase of
500,000 shares of treasury stock - - (224,019) Foreign currency
translation adjustment - (250,007) (250,007) Net loss (24,942,366)
- (24,942,366) ----------------------------------------- Balances
at December 31, 2007 $(107,898,597) $ 235,023 $ 22,211,042
-----------------------------------------
----------------------------------------- 180 Connect Inc.
Consolidated Statements of Cash Flows (Unaudited) Year Ended Year
Ended Year Ended December 31, December 31, December 31, 2007 2006
2005 -------------------------------------------- Cash provided by
(used in) the following activities: Operating Loss from continuing
operations..................$ (22,903,293) $ (8,826,038) $
(5,228,051) Add (deduct) items not affecting cash: Depreciation,
amortization and impairment............ 15,743,357 17,111,660
10,849,955 Non-cash interest expense.. 8,117,147 3,210,141 459,852
Stock-based compensation... 860,035 91,214 1,387,133 Deferred
income taxes...... - (1,561,031) (1,491,941) Settlement of
derivative liability................. (2,766,573) - - Gain on
extinguishment of debt...................... - (1,233,001) - (Gain)
loss on change in fair value of derivative
liabilities............... 5,020,945 (1,363,936) - (Gain) loss on
sale of investments and assets.... 715,151 (726,086) (6,897,291)
Other...................... (177,050) (291) 3,816 Changes in
non-cash working capital balances related to operations: Accounts
receivable......... 556,613 227,513 (6,464,271)
Inventory.................. (4,364,019) 4,486,519 (2,412,713) Other
current assets....... (1,222,516) 338,030 (688,922) Insurance
premium deposits. (16,195) (6,209,037) 1,126,896 Other
assets............... (377,949) (37,035) (18,928) Settlement of
class action lawsuit................... - - (7,973,623) Settlement
of certain wage practices................. - - (1,217,639)
Restricted cash............ 4,333,892 247,366 (8,696,719) Accounts
payable and accrued liabilities....... (9,660) 2,375,179 14,320,065
Operating cash flows from discontinued operations... (1,966,397)
(1,842,778) (2,597,616) -------------- --------------
-------------- Total cash provided by (used in) operating
activities................ 1,543,488 6,288,389 (15,539,997)
-------------- -------------- -------------- Investing Purchase of
property, plant and equipment............... (3,373,257)
(2,742,727) (5,656,286) Net proceeds from disposition of
investments.............. - 1,327,693 10,968,388 Proceeds from sale
of property, plant and equipment................... - - 665,000
Short-term investments....... - - 16,178,848 Business
acquisition......... - - (429,603) -------------- --------------
-------------- Total cash used in investing
activities.................. (3,373,257) (1,415,034) 21,726,347
-------------- -------------- -------------- Financing Repayment of
capital lease obligations................. (12,105,040)
(15,010,698) (4,960,341) Repayment of debt............ (12,333,337)
(7,350,000) (6,908,003) Proceeds from share issuance. 94,771
259,712 723,608 Net proceeds from reverse
merger...................... 37,933,165 - - Issuance costs on
reverse merger...................... (6,976,440) - - Redemption of
convertible debt........................ (10,393,577) - - Increase
(decrease) in borrowings under the Revolver credit facility....
(101,160) (377,494) - Issuance costs on long-term
debt........................ - (3,546,150) - Net proceeds from
refinancing of vehicles................. 3,470,714 2,127,542 -
Proceeds from issuance of convertible debt............ - 10,686,101
- Proceeds from refinancing of long-term debt.............. -
42,140,497 - Extinguishment of long-term
debt........................ - (32,863,525) - Repurchase of common
stock... (224,019) - - Repurchase of shares through normal course
issuer bid.... - - (1,158,047) Settlement with selling shareholders
of Mountain Center Inc......... - - (2,950,000) Issuance costs paid
on convertible debt............ - (1,388,985) - --------------
-------------- -------------- Total cash provided by (used in)
financing activities.................. (634,923) (5,323,000)
(15,252,783) -------------- -------------- -------------- Effect of
exchange rates on cash and cash equivalents... (72,957) 291 39,753
-------------- -------------- -------------- Net increase
(decrease) in cash and cash equivalents during the
period........... (2,537,649) (449,354) (9,026,680) Cash and cash
equivalents, beginning of period......... 2,904,098 3,353,452
12,380,132 -------------- -------------- -------------- Cash and
cash equivalents, end of period...............$ 366,449 $ 2,904,098
$ 3,353,452 -------------- -------------- --------------
-------------- -------------- -------------- Supplemental cash flow
information: Interest paid................$ 8,779,371 $ 6,091,487 $
2,485,035 -------------- -------------- --------------
-------------- -------------- -------------- Income taxes
paid............$ 257,120 $ 429,279 $ 1,265,756 --------------
-------------- -------------- -------------- --------------
-------------- Supplemental disclosure of non-cash investing and
financing transactions: For the years ended December 31, 2007,
December 31, 2006 and December 31, 2005, the Company had additional
capital lease obligations for vehicles of $9,080,617, $6,401,900
and $39,403,406 respectively. DATASOURCE: 180 Connect Inc. CONTACT:
please contact the following or visit our website at
http://www.180connect.net/. Claudia A. Di Maio, Director Investor
Relations, TEL: (866) 995-8888, DIRECT LINE: (416) 930-7710, EMAIL:
; Devlin Lander, Integrated Corporate Relations, TEL.: (415)
292-6855
Copyright