Super Vision (NASDAQ:SUPVA)
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Super Vision International, Inc. (NASDAQ:SUPVA) (Class A Common), a
world leader in solid-state LED and fiber optic lighting systems and
controls used in commercial, architectural, signage, swimming pool and
retail lighting applications today announced financial results for the
year ended December 31, 2006. The year ended December 31, 2006 was a
transformational year for the Company. During 2006, new management began
a process of change that ultimately brought about the restructuring and
right-sizing of the Company, the termination of the Company’s
long-term capital lease obligation, the resolution of all outstanding
legal proceedings and, finally, in December 2006, the closing of a $9
million private placement of equity to strengthen the Company’s
balance sheet and enable management to execute the Company’s
new Nexxus Lighting strategy. Management believes that these long-term
strategic actions have positioned the Company well for the future.
However, although positive, the number and timing of these one-time
events had a significant adverse financial impact on the Company in the 4th
quarter of 2006, and had a material negative impact on the year over
year variances between 2006 and 2005.
Revenue from our commercial lighting division led the Company in 2006,
with sales of light emitting diode (LED) products increasing 24% and
overall sales in this division increasing 2% over 2005. The LED sales
increase was partially offset by a 9% decline in the sale of fiber optic
products in our commercial lighting division.
Despite the positive trend in commercial lighting and exciting new
product introductions, the impact of ongoing litigation prior to
settlement, the decrease in international sales resulting from changes
in distribution, and the impact of reduced purchases by pool
distributors and builders as a result of the slow-down in the
residential housing market resulted in an 8% decrease in sales from $12
million in 2005 to $11.0 million in 2006.
Revenue from LED lighting systems and control products accounted for
approximately 50% of our sales in 2006 as compared to approximately 49%
in 2005. Sales of fiber optic lighting systems accounted for
approximately 45% of the Company’s revenue in
2006 as compared to approximately 47% in 2005. The balance of our sales
came from our Oasis™ waterfall and water
feature line of products. We believe that our LED product lines are
still in their growth mode and offer significant revenue potential for
both the commercial/architectural and pool and spa lighting markets.
“We recently announced the upcoming change of
our name to Nexxus Lighting, Inc. Our strategic vision is now focused on
connecting advanced technology, including white light LED technology,
with general lighting products and systems. With all that we
accomplished in 2006 to restructure the Company, we feel that we have
positioned the Company well to drive growth in the future,”
stated Mike Bauer, President / CEO of Super Vision International.
Fiber optic lighting sales decreased 11% in 2006, driven by an 18%
decline in fiber optic sales in our international market. However, we
are planning on introducing new LED light sources that drive light into
fiber in 2007. These new products are expected to serve as a platform
for several new applications involving fiber in advanced lighting
systems.
“During 2006, we also invested in new product
tooling on a number of new Savi® products and
we introduced six major new products. We believe these new product
investments are essential to repositioning the Company to capitalize on
the growth potential of the high brightness `white light' LED lighting
systems market, and enabling the Company to emerge as one of the leaders
in this market going forward,” continued Mr.
Bauer.
Gross margins in 2006 decreased to 36% from 41% in 2005. The $936,000
reduction in gross margin was mainly attributable to lower revenue in
2006 combined with increased variable cost of sales of approximately
$42,000. Although revenue decreased 8%, cost of sales remained almost
flat at approximately $7,064,000 in 2006 as compared to approximately
$7,111,000 in 2005. The loss of revenue was attributable in part to
pricing pressures in the international markets combined with pricing
discounts in the commercial market in order to maintain a competitive
advantage, which were not accompanied by reduced costs from suppliers.
Increased fuel costs also contributed to the higher cost of sales,
resulting in increased freight in costs and increased product costs for
petroleum based products. “We anticipate an
increase in gross margins from LED products as we gain traction in the
higher gross margin commercial market with our Savi®
line,” concluded Mr. Bauer.
The Company posted an operating loss of approximately $2,135,000 for the
year ended December 31, 2006 as compared to an operating loss of
approximately $365,000 for the same period in 2005. The increased
operating loss was due primarily to increased general and administrative
expenses and a slight increase in selling expense. General and
administrative (G&A) expenses increased $1,273,000 or 55% and selling
expense increased $76,000 or 3% over selling, general and administrative
expenses in the prior year. Increases in legal expenses of $715,000,
consulting and professional fees of $331,000 and stock-based
compensation expense of $222,300 contributed to the increase in G&A
expenses. The increase in legal expenses was primarily due to the
negotiated settlement or final resolution of pending litigation. As of
today, the Company is no longer involved in any pending litigation.
Sales and marketing expenses increased $75,600 to approximately
$2,466,000 in 2006 as compared to $2,390,000 for the same period in
2005, primarily due to new marketing and sales materials created to
support the introduction of the new Savi Pool and Spa Light, the new
DLS-2 System and the new Pool Catalog in 2006.
The net loss for the year ended December 31, 2006 was approximately
$2,235,000, or $0.80 per basic and diluted common share, as
compared to a net loss of approximately $488,500, or $0.19 per basic and
diluted common share, for the year ended December 31, 2005. The increase
in net loss was primarily due to lower revenues and gross margins and
higher legal expenses related to the settlement or resolution of all
outstanding litigation and stock-based compensation expenses as a result
of the adoption of FAS 123(R) offset in part by the gain on termination
of capital lease, net of impairment.
For the year ended December 31, 2006, EBITDA was approximately
($1,307,000) compared to approximately $467,500 in 2005. The decrease
was primarily due to an increase in net operating loss in 2006. The
increase in net operating loss was primarily attributable to the
$936,000 decrease in gross margin as a result of lower revenues and the
increase in selling, general and administrative expenses of
approximately $1,349,000 over prior year expenses primarily as a result
of increased legal expenses, professional fees and stock-based
compensation expense relating to the adoption of FAS 123(R). Despite the
lower EBITDA in 2006 compared to 2005, management anticipates that
positive trends in gross margins and continued focus on revenue growth
and cost management will yield positive contributions to our EBITDA in
2007.
On November 29, 2006, the Company entered into a lease termination
agreement with Max King Realty, Inc. (“Max
King Realty”), a company controlled by Brett
M. Kingstone, the Company’s chairman of the
board, to terminate the capital lease with Max King Realty for the
Company’s existing facility. The lease had a
fifteen-year term extending through June 15, 2012. Max King Realty was
willing to accommodate the Company’s desire
to terminate its obligations under the lease by terminating the lease,
repaying the third party indebtedness secured by the premises and
selling the premises to an unrelated third party. Upon executing the
lease termination agreement, the balance of the capital lease obligation
of $2,312,900, less the promissory note payable to Max King Realty of
approximately $332,800 and the net book value of the related
office/warehouse building of approximately $1,232,400 resulted in a gain
on termination of capital lease of approximately $747,700. This gain was
offset in part by an impairment loss of $241,300 for leasehold
improvements made to the facility resulting in a net gain of $506,400
which is reflected in the accompanying statement of operations as gain
on termination of capital lease, net of impairment. The Company has
since relocated its Orlando operations to a new facility at 9400-200
Southridge Park Court, Orlando Florida.
In addition, effective March 26, 2007, the Company redeemed all of the
outstanding shares of Class B Common Stock in exchange for 604,080
shares of Class A Common Stock, or 1.25 shares of Class A Common Stock
for each share of Class B Common Stock exchanged. The transaction was
effected pursuant to an Exchange Agreement between the Company and the
Kingstone Family Limited Partnership II (“KFLP”),
an entity controlled by Brett M. Kingstone, the Company’s
chairman of the board, dated March 26, 2007. Pursuant to the Exchange
Agreement, KFLP exchanged 483,264 shares of the Company’s
Class B Common Stock, constituting all of the issued and outstanding
shares of the Company’s Class B Common Stock,
for 604,080 shares of the Company’s Class A
Common Stock (the “Exchange”).
The Exchange eliminated the disparity in voting rights between the Class
B Common Stock, which is entitled to five votes per share and the Class
A Common Stock, which is entitled to one vote per share.
As of December 31, 2006, the Company had cash and investments of
approximately $7.5 million and a current ratio of 5.1 to 1.
For more information, please visit the existing Super Vision
International web site at www.svision.com.
Our new web site, www.nexxuslighting.com,
will be operational soon.
Certain of the above statements contained in this press release are
forward-looking statements that involve a number of risks and
uncertainties. Such forward-looking statements are within the meaning of
that term in Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Reference is made to Super
Vision's filings under the Securities Exchange Act for factors that
could cause actual results to differ materially. Super Vision undertakes
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, or
otherwise. Readers are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks
and uncertainties, and that actual results may differ materially from
those indicated in the forward-looking statements as a result of various
factors. Readers are cautioned not to place undue reliance on these
forward-looking statements.
Financial Summary
SUPER VISION INTERNATIONAL, INC.
BALANCE SHEETS
December 31,
2006
2005
ASSETS
Current Assets:
Cash and cash equivalents
$
531,181
$
248,080
Restricted cash
--
82,943
Restricted investments
500,000
--
Investments
6,471,400
943,127
Trade accounts receivable, less allowance for doubtful accounts of
$121,535 and $98,688
1,231,277
1,516,979
Inventories, less reserve of $274,128 and $221,286
3,463,367
3,279,182
Prepaid expenses
261,852
235,692
Other assets
21,751
5,187
Total current assets
12,480,828
6,311,190
Property and Equipment:
Machinery and equipment
2,297,239
2,079,491
Furniture and fixtures
420,374
403,674
Computers and software
797,077
739,812
Leasehold improvements
213,595
1,141,047
Property held under capital lease
--
3,081,000
3,728,285
7,445,024
Accumulated depreciation and amortization
(2,699,239)
(4,737,067)
Net property and equipment
1,029,046
2,707,957
Deposits on equipment
--
4,200
Patents and trademarks, less accumulated amortization of $122,747
and $100,075
213,131
177,892
Other intangible assets, less accumulated amortization of $84,627
and $56,915
60,359
62,151
Other assets
67,020
60,418
$
13,850,384
$
9,323,808
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
$
1,155,162
$
1,484,921
Related party payable
20,700
--
Accrued compensation and benefits
111,932
261,652
Notes payable
1,157,846
--
Deposits
22,697
23,143
Current portion of obligation under capital lease with related party
--
225,814
Total current liabilities
2,468,337
1,995,530
Obligation under capital lease with related party, less current
portion
--
2,292,856
Total liabilities
2,468,337
4,288,386
Stockholders’ Equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized, none
issued
--
--
Class A common stock, $.001 par value, 16,610,866 shares
authorized, 6,097,476 and 2,061,299 issued and outstanding
6,098
2,061
Class B common stock, $.001 par value, 3,389,134 shares
authorized, 483,264 issued and outstanding. Each share of Class B
common stock is entitled to five votes per share.
483
483
Additional paid-in capital
19,142,231
10,572,958
Accumulated deficit
(7,766,765)
(5,531,762)
Accumulated other comprehensive loss, net of deferred income taxes
--
(8,318)
Total stockholders’ equity
11,382,047
5,035,422
$
13,850,384
$
9,323,808
SUPER VISION INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
Year Ended
December 31
2006
2005
Revenues
$ 11,001,011
$ 11,983,223
Cost of sales
7,064,461
7,110,595
Gross margin
3,936,550
4,872,628
Operating expenses:
Selling, general and administrative
6,040,523
4,691,905
Research and development
538,298
552,209
Gain on disposal of property and equipment
(593)
(6,000)
Gain on termination of capital lease, net of impairment
(506,367)
--
Total operating expenses
6,071,861
5,238,114
Operating loss
(2,135,311)
(365,486)
Non-operating income (expense):
Interest income
38,488
55,540
Other income
221,622
189,480
Loss on investments
(3,482)
--
Interest expense
(356,320)
(367,992)
Total non-operating expense, net
(99,692)
(122,972)
Net loss
$ (2,235,003)
$ (488,458)
Basic and diluted loss per common share
$ (0.80)
$ (0.19)
Basic and diluted weighted average shares outstanding
2,810,187
2,542,579