Nextera Announces Year End Results and Additional Funding

  
    
  
  
    
      Nextera Enterprises, Inc. (OTCBB:NXRA) today reported financial results 
      for fiscal year ended December 31, 2006 included in its Annual Report 
      filed with the SEC on April 17, 2007.
    
    
      Net sales for the fiscal year ended December 31, 2006 were $7.5 million. 
      Net sales for 2006 reflect the operating results of the Woodridge Labs 
      business from the March 9, 2006 acquisition date forward. Net sales for 
      the 2006 period include a $2.3 million charge for expected returns 
      related to the March 2007 voluntary recall of certain DermaFreeze365™ 
      products sold in 2006. There were no sales reported for the 2005 period 
      as the Company had no business operations in 2005.
    
    
      For the fiscal year ended December 31, 2006, Nextera recorded a net loss 
      of $7.3 million or $0.19, per share as compared to a net loss of $1.9 
      million or $0.07 per share, for the 2005 fiscal year. The 2006 year 
      included an aggregate charge of $2.5 million, or $0.06 per share, for 
      expected returns and a write-down of inventories related to the 
      March 2007 voluntary product recall and a $1.4 million, or $0.03 per 
      share, charge associated with the amortization of the step-up to fair 
      value in the inventory acquired from Woodridge Labs, as required by SFAS 
      141. Additionally, the 2006 year included a $0.3 million, or $0.01 per 
      share, restructuring charge associated with the relocation of the 
      corporate headquarters from Boston, Massachusetts to Panorama City, 
      California.
    
    
      As of December 31, 2006, Nextera had cash on-hand of $0.6 million. 
      Outstanding debt under the Company’s credit 
      facility was $11.7 million at December 31, 2006, $1.3 million lower than 
      the initial debt balance at March 9, 2006. Contributing to the ability 
      of the Company to repay its debt was the receipt of $0.3 million with 
      respect to an indemnity claim under the purchase agreement for the 
      acquisition of the Woodridge Labs business. Nextera also had Federal and 
      State tax net operating loss carryforwards of approximately $55.6 
      million and $25.6 million, respectively, that expire between 2007 and 
      2026. A full valuation allowance is maintained on the Company’s 
      deferred tax assets, which includes the loss carry-forwards, due to the 
      uncertainty of utilization of the future tax benefits.
    
    
      For the fiscal year ended December 31, 2006, non-cash charges were $2.8 
      million, or $0.07 per share. Non-cash charges included $1.4 million 
      related to the one-time inventory step-up charge, $0.8 million of 
      amortization of intangible assets and depreciation, $0.2 million each 
      for deferred tax expense relating to the goodwill generated in the 
      Woodridge Labs acquisition, stock-based compensation and inventory 
      write-downs.
    
    
      The inventory step-up charge was associated with purchase accounting 
      resulting from the write-off of the step-up in the value of inventory 
      acquired from Woodridge Labs. Inventory was stepped-up to its current 
      fair market value in the acquisition and subsequently sold, results in a 
      higher cost of goods sold during the periods in which the stepped-up 
      inventory is sold. The resulting cost of goods sold and gross margins 
      were negatively impacted as compared to historical and future periods in 
      which the inventory sold represents the actual cost of products 
      produced. The inventory step-up charge was $0.3 million in first quarter 
      of 2006, $1.0 million in the second quarter of 2006 and $0.1 million in 
      the third quarter of 2006. No further inventory step-up charges will be 
      recorded in connection with the inventory acquired as part of the 
      acquisition of the Woodridge Labs business.
    
    
      As a result of the 2006 financial impact of the March 2007 product 
      recall and lower than expected operating results during the fourth 
      quarter of 2006, the Company failed to comply with certain of its 
      original financial covenants under its credit facility. However, the 
      Company was successful in amending its financial covenants associated 
      with its credit facility to provide for the deferral of certain 
      covenants until 2008, as well as reducing the thresholds of other 
      covenants that remain in effect throughout 2007. Additionally, the 
      Company entered into various agreements with certain of its shareholders 
      to obtain $4.5 million in additional subordinated financing which was 
      funded during March and April 2007.
    
    
      Joe Millin, President of Nextera Enterprises, said, “The 
      first year of Woodridge Labs operations under Nextera has been 
      demanding. We are managing through the DermaFreeze365™ 
      product recall and there have been challenges in the mass retail space 
      in 2006, including consolidation of retailers and a move towards 
      retailer-specific proprietary brands. However, we feel Woodridge is 
      positioned well in our niche to manage these opportunities. In 2006 we 
      launched the Ellin LaVar Textures™ hair care 
      brand through exclusive distribution at a major retail pharmacy. Our 
      first product shipments from the Ellin Lavar line in late December 
      resulted in approximately $900,000 of revenue recognized in the first 
      quarter of 2007. In the first quarter of 2007 we also announced the 
      acquisition of the Heavy Duty™ personal care 
      brand with initial distribution in home-improvement retail, a sector 
      that Woodridge had not previously had a presence.” 
      “On the corporate front, in the first quarter 
      of 2007 we reset our bank loan covenants to better match our 2007 
      operating projections. This restructuring included $4.5 million of 
      financial support from existing shareholders to fund Nextera’s 
      2007 operations,” added Mr. Millin.
    
    
      About Nextera Enterprises, Inc.
    
    
      Nextera Enterprises Inc. operates through its wholly-owned subsidiary, 
      Woodridge Labs, Inc. Woodridge is an independent developer and 
      marketer of branded consumer products that offer simple, effective 
      solutions to niche personal care needs. More information can be found at www.nextera.com 
      and www.woodridgelabs.com.
    
    
      Forward-Looking Statements
    
    
      This release contains forward-looking statements that involve risks and 
      uncertainties, including, but not limited to, estimates of future 
      performance. Actual results may differ materially from the results 
      predicted, and reported results should not be considered an indication 
      of future performance. Important factors that could cause actual results 
      to differ materially from those expressed or implied in the 
      forward-looking statements are detailed under “Item 
      1A.Risk Factors” and elsewhere in filings 
      with the Securities and Exchange Commission made from time to time by 
      Nextera, including, but not limited to: its Annual Report on Form 10-K 
      for the year ended December 31, 2006 filed with the Securities and 
      Exchange Commission on April 17, 2007; recent quarterly reports on Form 
      10-Q; and other current reports on Form 8-K. All forward-looking 
      statements included in this news release should be considered in the 
      context of these risk factors. Nextera undertakes no obligation to 
      release publicly any revisions to any forward-looking statements to 
      reflect events or circumstances after the date hereof or to reflect the 
      occurrence of unanticipated events. Investors and prospective investors 
      are cautioned not to place undue reliance on such forward-looking 
      statements.
    
    
    
    
      
        
          
            NEXTERA ENTERPRISES, INC.
          
          
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          
          
            (amounts in thousands, except per share amounts)
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
          Year Ended
        
      
      
        
        
        
        
        
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
        
        
        
        
           
        
        
          2006 
        
        
        
        
        
        
        
        
           
        
        
          2005 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net revenue
        
        
        
        
        
        
        
        
          $
        
        
          7,481 
        
        
        
        
        
        
        
        
          $
        
        
          -- 
        
      
      
        
          Cost of sales
        
        
        
        
        
        
        
        
           
        
        
          5,307 
        
        
        
        
        
        
        
        
           
        
        
          -- 
        
      
      
        
          Gross profit
        
        
        
        
        
        
        
        
        
        
          2,174 
        
        
        
        
        
        
        
        
        
        
          -- 
        
      
      
        
          Selling, general and administrative expenses
        
        
        
        
        
        
        
        
        
        
          7,775 
        
        
        
        
        
        
        
        
        
        
          2,054 
        
      
      
        
          Amortization of intangible assets
        
        
        
        
        
        
        
        
           
        
        
          726 
        
        
        
        
        
        
        
        
           
        
        
          -- 
        
      
      
        
          Operating loss
        
        
        
        
        
        
        
        
        
        
          (6,327)
        
        
        
        
        
        
        
        
        
        
          (2,054)
        
      
      
        
          Interest income
        
        
        
        
        
        
        
        
        
        
          193 
        
        
        
        
        
        
        
        
        
        
          287 
        
      
      
        
          Interest expense
        
        
        
        
        
        
        
        
        
        
          (1,016)
        
        
        
        
        
        
        
        
        
        
          -- 
        
      
      
        
          Other expense
        
        
        
        
        
        
        
        
           
        
        
          -- 
        
        
        
        
        
        
        
        
           
        
        
          (188)
        
      
      
        
          Loss from continuing operations before income taxes
        
        
        
        
        
        
        
        
        
        
          (7,150)
        
        
        
        
        
        
        
        
        
        
          (1,955)
        
      
      
        
          Provision for income taxes
        
        
        
        
        
        
        
        
           
        
        
          236 
        
        
        
        
        
        
        
        
           
        
        
          24 
        
      
      
        
          Loss from continuing operations
        
        
        
        
        
        
        
        
        
        
          (7,386)
        
        
        
        
        
        
        
        
        
        
          (1,979)
        
      
      
        
          Income from discontinued operations
        
        
        
        
        
        
        
        
           
        
        
          69 
        
        
        
        
        
        
        
        
           
        
        
          78 
        
      
      
        
          Net loss
        
        
        
        
        
        
        
        
          $
        
        
          (7,317)
        
        
        
        
        
        
        
        
          $
        
        
          (1,901)
        
      
      
        
          Preferred stock dividends
        
        
        
        
        
        
        
        
           
        
        
          (353)
        
        
        
        
        
        
        
        
           
        
        
          (328)
        
      
      
        
          Net loss applicable to common stockholders
        
        
        
        
        
        
        
        
          $
        
        
          (7,670)
        
        
        
        
        
        
        
        
          $
        
        
          (2,229)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss per common share, basic and diluted, from continuing 
          operations
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
          $
        
        
          (0.19)
        
        
        
        
        
        
        
        
          $
        
        
          (0.07)
        
      
      
        
          Discontinued operations
        
        
        
        
        
        
        
        
           
        
        
          0.00 
        
        
        
        
        
        
        
        
           
        
        
          0.00 
        
      
      
        
          Net loss per common share, basic and diluted
        
        
        
        
        
        
        
        
          $
        
        
          (0.19)
        
        
        
        
        
        
        
        
          $
        
        
          (0.07)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average common shares outstanding, basic and diluted
        
        
        
        
        
        
        
        
           
        
        
          40,738 
        
        
        
        
        
        
        
        
           
        
        
          33,870 
        
      
    
    
    
    
      
        
          
            NEXTERA ENTERPRISES, INC.
          
          
             CONDENSED CONSOLIDATED BALANCE SHEETS
          
          
              (amounts in thousands)
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
             
          
        
        
        
        
        
        
        
        
        
        
          December 31,
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
        
           
        
        
          2006 
        
        
        
        
        
        
        
        
        
        
           
        
        
          2005 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          CURRENT ASSETS:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
        
        
        
        
        
        
        
        
          $
        
        
          597 
        
        
        
        
        
        
        
        
        
        
          $
        
        
          15,043 
        
      
      
        
          Inventories
        
        
        
        
        
        
        
        
        
        
        
        
          2,595 
        
        
        
        
        
        
        
        
        
        
        
        
          -- 
        
      
      
        
          Other current assets
        
        
        
        
        
        
        
        
        
        
           
        
        
          387 
        
        
        
        
        
        
        
        
        
        
           
        
        
          128 
        
      
      
        
          Total current assets
        
        
        
        
        
        
        
        
        
        
        
        
          3,579 
        
        
        
        
        
        
        
        
        
        
        
        
          15,171 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Goodwill
        
        
        
        
        
        
        
        
        
        
        
        
          10,969 
        
        
        
        
        
        
        
        
        
        
        
        
          -- 
        
      
      
        
          Intangible assets
        
        
        
        
        
        
        
        
        
        
        
        
          12,827 
        
        
        
        
        
        
        
        
        
        
        
        
          -- 
        
      
      
        
          Other assets
        
        
        
        
        
        
        
        
        
        
           
        
        
          768 
        
        
        
        
        
        
        
        
        
        
           
        
        
          64 
        
      
      
        
          Total assets
        
        
        
        
        
        
        
        
        
        
          $
        
        
          28,143 
        
        
        
        
        
        
        
        
        
        
          $
        
        
          15,235 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND STOCKHOLDERS' EQUITY
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Accounts payable and accrued expenses
        
        
        
        
        
        
        
        
        
        
          $
        
        
          4,364 
        
        
        
        
        
        
        
        
        
        
          $
        
        
          542 
        
      
      
        
          Total current liabilities
        
        
        
        
        
        
        
        
        
        
        
        
          4,364 
        
        
        
        
        
        
        
        
        
        
        
        
          542 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Long-term debt
        
        
        
        
        
        
        
        
        
        
        
        
          11,718 
        
        
        
        
        
        
        
        
        
        
        
        
          -- 
        
      
      
        
          Deferred tax liability
        
        
        
        
        
        
        
        
        
        
        
        
          236 
        
        
        
        
        
        
        
        
        
        
        
        
          -- 
        
      
      
        
          Other long-term liabilities
        
        
        
        
        
        
        
        
        
        
        
        
          1,334 
        
        
        
        
        
        
        
        
        
        
        
        
          1,334 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total stockholders' equity
        
        
        
        
        
        
        
        
        
        
           
        
        
          10,491 
        
        
        
        
        
        
        
        
        
        
           
        
        
          13,359 
        
      
      
        
          Total liabilities and stockholders' equity
        
        
        
        
        
        
        
        
        
        
          $
        
        
          28,143 
        
        
        
        
        
        
        
        
        
        
          $
        
        
          15,235