-------------------------------------------------------------------------
Revenue increases to a record $102 million, representing a 14%
increase from the prior year TORONTO and ENGLEWOOD, CO, Nov. 13
/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 third quarter ended September 30, 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 - Third Quarter Ended September 30, 2007 For
the three months ended September 30, 2007 as compared to the three
months ended September 30, 2006: Third Quarter Highlights - Revenue
grew to $102.5 million, an increase of $12.6 million, or 14.0%,
compared to revenue of $89.9 million in 2006. - EBITDA from
continuing operations(2) was $8.4 million, an increase of $1.9
million or 30% compared to $6.5 million in 2006. - Total cash
provided by operating activities was $0.8 million, an increase of
$7.1 million from the cash used by operating activities of $6.3
million in 2006. - Loss from continuing operations was $8.8
million, a decrease of $13.8 million compared to income from
continuing operations of $5.0 million in 2006. - Net loss was $8.8
million, a decrease of $13.3 million compared to net income of $4.5
million in 2006. - Net income (loss) per share is as follows: - Net
income (loss) from continuing operations was a loss of $(0.43) per
share basic and diluted, respectively, compared to net income from
continuing operations of $0.34 and $0.32 per share basic and
diluted, respectively in 2006. - Net income (loss) was a loss of
$(0.43) per share basic and diluted, respectively, compared to net
income of $0.30 and $0.29 per share basic and diluted,
respectively, in 2006. Peter Giacalone, President and Chief
Executive Officer of the Company stated: "These results reflect
another quarter of solid internal growth in our satellite and cable
businesses, as well as contributions from 180 Network Services and
180 Home. We are particularly excited about the long term growth
opportunities that can be realized from the recent projects
announced in our Network Services business, representing a backlog
of approximately $100 million - a market that is experiencing
significant near term growth given current market conditions. The
standout result from the completion of the merger with Ad.Venture
Partners Inc. is the improved financial strength of the Company.
The Company's stronger balance sheet provides the foundation for
refinancing the balance of its debt and positions the Company to
capitalize on attractive strategic acquisitions." Third Quarter
2007 Highlights Revenue in the third quarter increased to $102.5
million, up from $89.9 million for the same period in 2006. This
14% growth reflects volume increases across-the-board in both the
satellite and cable businesses, as well as contributions from 180
Network Services and 180 Home, all of which benefited from a
combination of strong internal growth and a disciplined operational
management team. DIRECTV volume increased 14% from the prior year,
largely attributable to increased high-definition sales and upgrade
initiatives as DIRECTV continues to sell more advanced product. The
Company is 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, the Company believes that the award reflects its commitment
and ability to deliver exceptional customer service. 180 Connect
believes that its satellite business is on track to complete over
2.3 million work orders for DIRECTV alone this year. Cable revenues
increased 6% from the prior year, as 180 Connect continues to
benefit from solid market growth, increased market share and the
Company's ability to leverage its competitive advantages in
supporting its customer's triple play initiatives. 180 Network
Services revenue increased 37% from the prior year and 180 Connect
believes it is well positioned to continue its rapid growth. The
Company's significant municipal fiber projects in Boise, Idaho and
Ontario, Santa Clara and Shafter, California, currently underway,
continue to deliver exceptional margins as well as showcase its
capabilities to potential future customers. The Company expects
that these projects in addition to recently announced contracts,
including the City of Palo Alto, CA and Truckee Donner, CA, will
more than double its annual revenues in its 180 Network Services
business. 180 Home, 180 Connect's structured wiring business,
continues to grow rapidly, with third quarter revenue increasing
approximately 58% over the prior year. The Company continues to see
significant opportunity to expand this business, as in-home
technology has become an increasingly important factor in home
buying decisions. EBITDA from continuing operations(2) excluding a
non-cash stock based compensation charge of $0.2 million was $8.6
million for the third quarter of 2007, an increase of 33% over
results reported for the same period in 2006. For the first nine
months of 2007, EBITDA from continuing operations was $14.6
million, an increase of approximately 67% over the first nine
months of 2006, on approximately 19% higher revenue. EBITDA from
continuing operations(2) excluding US listing costs, restructuring
charges and non-cash stock based compensation, for the nine months
ended September 30, 2007 was $15.6 million. This increase was
primarily due to the growth in work order volume in the Company's
satellite and cable businesses, cost savings achieved by
implementing better operational controls, as well as increased
growth from its Network Services business, partially offset by the
impact of higher fuel prices. Seasonally, the third and fourth
quarters are the Company's strongest quarters from an EBITDA
standpoint, as its customers marketing focus, primarily DIRECTV's
NFL Ticket and high definition sales and upgrade initiatives, drive
a favorable volume and mix shift in work performed. Looking Forward
The Company's continued success in the third quarter was due to a
relentless focus on business fundamentals under the leadership of a
strong management team. Given the strength in demand across the
satellite and cable businesses and the increase in non-operating
costs the Company is revising its 2007 revenue guidance to between
$380 million to $385 million and EBITDA of between $22.5 million to
$23 million representing earnings growth between 63% and 67%. There
are four primary factors contributing to the change in EBITDA
guidance. First, costs associated with the investment in the
quality of the Company's workforce were not offset with its
customer's bonus programs. Despite the impact of higher costs, 180
Connect believes that these programs are vital and have been
critical in protecting its franchise and maintaining its market
share. Second, fuel costs represent a significant cost in the
Company's business, with the spike in fuel prices resulting in
approximately $750,000 of additional costs for the full year,
exceeding its original estimates. The Company is in a constant
dialog with its customers regarding these increased costs and will
continue to negotiate a surcharge in order to share this burden.
Third, the Company's roll out of an enhanced work force management
system had a short term effect on efficiency and costs, affecting
the Company's margins, however, the Company expects to recover the
cost and productivity benefits of this enhanced system over the
longer term. Fourth, 180 Network Services division continues to
post impressive earning and margins, certain projects previously
forecast to contribute in 2007 have been deferred to 2008 due to
delays in municipal permitting, developer entitlements, public
financing or vendor specifications. Nevertheless, the Company views
these as deferrals of the earnings cycle and remains confident they
will be delivered in 2008. Summary Results The following is a
summary of the Company's selected consolidated financial and
operating information for the three and nine months ended September
30, 2007 and 2006 and should be read in conjunction with the
accompanying unaudited consolidated financial statements for the
three and nine months ended September 30, 2007. The amounts
presented below have been reclassified to reflect the adjustments
associated with the discontinued operations of the Company.
Selected Unaudited Consolidated Financial and Operating Data: Three
Months Three Months Ended Ended % Sept 30, 2007 Sept 30, 2006
Change Revenue $102,521,340 $ 89,908,346 14.0% Expenses Direct
89,914,862 78,711,246 14.2% General and administrative 4,054,289
4,712,862 -14.0% Stock-based compensation 227,019 - 100.0% Foreign
exchange loss (gain) (72,760) (469) - Restructuring costs - - -
Depreciation 3,058,116 3,433,006 -10.9% Amortization of customer
contracts 920,376 929,727 -1.0% Interest expense 7,801,006
2,898,538 169.1% (Gain) loss on fair market value of derivatives
887,062 (4,599,330) -119.3% Gain on extinguishment of debt -
(1,233,001) -100.0% Other expense 4,379,459 - 100.0% (Gain) loss on
sale of assets (7,336) 135,696 -105.4%
------------------------------------------- Income (loss) from
continuing operations before income taxes (8,640,753) 4,920,071
-275.6% Income tax expense (recovery) 130,583 (96,965) -234.7%
------------------------------------------- Gain (loss) from
continuing operations (8,771,336) 5,017,036 -274.8% Loss from
discontinued operations, net of income taxes of nil - (538,899)
-100.0% ------------------------------------------- Net income
(loss) and total comprehensive income (loss) for the period
(8,771,336) 4,478,137 -295.9%
-------------------------------------------
------------------------------------------- Nine Months Nine Months
Ended Ended % Sept 30, 2007 Sept 30, 2006 Change Revenue
$283,615,672 $239,245,733 18.6% Expenses Direct 254,853,816
216,089,499 17.9% General and administrative 13,802,266 13,933,478
-0.9% Stock-based compensation 227,019 91,214 100.0% Foreign
exchange loss (gain) (113,442) 3,033 - Restructuring costs 275,000
392,879 -30.0% Depreciation 8,574,819 10,013,336 -14.4%
Amortization of customer contracts 2,761,122 2,789,180 -1.0%
Interest expense 14,012,024 6,925,495 102.3% (Gain) loss on fair
market value of derivatives 5,576,723 (3,433,755) -262.4% Gain on
extinguishment of debt - (1,233,001) -100.0% Other expense
4,379,459 - 100.0% (Gain) loss on sale of assets 491,884
(1,114,467) -144.1% -------------------------------------------
Income (loss) from continuing operations before income taxes
(21,225,018) (5,211,158) 307.3% Income tax expense (recovery)
383,027 (58,165) -758.5%
------------------------------------------- Gain (loss) from
continuing operations (21,608,045) (5,152,993) 319.3% Loss from
discontinued operations, net of income taxes of nil (79,527)
(1,876,694) -95.8% ------------------------------------------- Net
income (loss) and total comprehensive income (loss) for the period
(21,687,572) (7,029,687) 208.5%
-------------------------------------------
------------------------------------------- Per Share data Three
Three Nine Nine Months Months Months Months Ended Ended Ended Ended
Sept 30, Sept 30, Sept 30, Sept 30, 2007 2006 2007 2006
------------ ------------ ------------ ------------ Income (loss)
from continuing operations: Basic............. $ (0.43) $ 0.34 $
(1.27) $ (0.35) Diluted........... $ (0.43) $ 0.32 $ (1.27) $
(0.35) Net income (loss) for the period: Basic............. $
(0.43) $ 0.30 $ (1.27) $ (0.48) Diluted........... $ (0.43) $ 0.29
$ (1.27) $ (0.48) Weighted average number of shares:
Basic............. 20,243,082 14,685,976 17,011,000 14,625,856
Weighted average number of shares: Diluted........... 20,243,082
15,510,667 17,011,000 14,625,856 Selected Consolidated Balance
Sheet Data For the period ended: Sept 30, December 31, 2007 2006
---------------------------- Cash and cash
equivalents.................. $ 969,285 $ 2,904,098 Working capital
deficit.................... 15,625,580 11,684,299 Total
assets............................... 158,370,876 165,443,572 Total
debt and capital lease obligations... 51,074,549 73,289,517 Total
shareholders' equity................. $ 17,318,538 $ 9,402,081 A
copy of the interim unaudited consolidated financial statements of
the Company for the three and nine months ended September 30, 2007
are attached to this news release. The Company will be releasing
its third quarter report on November 14, 2007 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"
("DCM") consists of revenue less direct expense and excludes
general and administrative expense, foreign exchange loss (gain),
stock-based compensation, (gain) loss in sale of investments and
assets, depreciation, amortization of customer contracts, interest
and expense, (gain) loss on fair market value of derivatives, gain
on extinguishment of debt, interest expense, and income tax expense
(recovery). DCM, as referred to in this news release, is a non-GAAP
measure which does not have any standardized meaning prescribed by
US GAAP and is therefore unlikely to be comparable to similar
measures presented by other issuers. We believe that this term
provides a better assessment of the contribution of the field
operations dealing directly with our 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
the amortization of customer contracts and depreciation and stock
based compensation which are non-cash expense items; and (3) (gain)
or loss on sale of assets, (gain) loss on fair market value of
derivatives, 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 US GAAP as an indicator of
our performance. For a reconciliation of DCM to the comparable US
GAAP measure, loss from continuing operations, see "Direct
Contribution Margin" Following is a reconciliation of DCM to loss
from continuing operations: Three Three Nine Nine Months Months
Months Months Ended Ended Ended Ended Sept 30, Sept 30, Sept 30,
Sept 30, 2007 2006 2007 2006 ------------ ------------ ------------
------------ Direct contribution margin(1) $12,606,478 $11,197,100
$28,761,856 $23,156,234 General and administrative 4,054,289
4,712,862 13,802,266 13,933,478 Non-cash stock-based compensation
227,019 - 227,019 91,214 Foreign exchange loss (gain) (72,760)
(469) (113,442) 3,033 Restructuring costs - - 275,000 392,879
Depreciation 3,058,116 3,433,006 8,574,819 10,013,336 Amortization
of customer contracts 920,376 929,727 2,761,122 2,789,180 Interest
expense 7,801,006 2,898,538 14,012,024 6,925,495 Gain on
extinguishment of debt - (1,233,001) - (1,233,001) (Gain) loss on
sale of assets (7,336) 135,696 491,884 (1,114,467) (Gain) loss on
change in fair value of derivative liabilities 887,062 (4,599,330)
5,576,723 (3,433,755) Other expense 4,379,459 - 4,379,459 - Income
tax expense (recovery) 130,583 (96,965) 383,027 (58,165)
------------ ------------ ------------ ------------ Income (loss)
from continuing operations ($8,771,336) $5,017,036 ($21,608,045)
($5,152,993) ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ (2) The term
"EBITDA from continuing operations" refers to income from
continuing operations before deducting depreciation, amortization
of customer contracts, (gain) loss in sale assets, interest
expense, (gain) loss on fair market value of derivatives, gain on
extinguishment of debt, other expense, and income tax expense
(recovery). 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 US 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 Company's
operations by eliminating: (1) the charge for depreciation,
amortization of customer contracts and stock-based compensation,
which are non-cash expense items and (2) (gain) or loss on sale of
assets, (gain) loss on fair market value of derivatives, 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, we believe the focus on EBITDA from continuing operations
gives the investor or reader of the Company's consolidated
financial statements and MD&A more insight into the operating
capabilities of management and its utilization of the Company's
operating assets. Management further believes that EBITDA from
continuing operations is also the best metric for measuring the
Company's 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 US GAAP as an indicator of the Company's
performance. For a reconciliation of EBITDA from continuing
operations to the comparable GAAP measure, being income (loss) from
continuing operations, see "EBITDA from Continuing Operations."
Following is a reconciliation of EBITDA from continuing operations
to net loss from continuing operations: Three Three Nine Nine
Months Months Months Months Ended Ended Ended Ended Sept 30, Sept
30, Sept 30, Sept 30, 2007 2006 2007 2006 ------------ ------------
------------ ------------ EBITDA from continuing operations(2)
8,397,930 6,484,707 14,571,013 8,735,630 Depreciation 3,058,116
3,433,006 8,574,819 10,013,336 Amortization of customer contracts
920,376 929,727 2,761,122 2,789,180 Interest expense 7,801,006
2,898,538 14,012,024 6,925,495 Gain on extinguishment of debt -
(1,233,001) - (1,233,001) (Gain) loss on sale of assets (7,336)
135,696 491,884 (1,114,467) (Gain) loss on change in fair value of
derivative liabilities 887,062 (4,599,330) 5,576,723 (3,433,755)
Other expense 4,379,459 - 4,379,459 - Income tax expense (recovery)
130,583 (96,965) 383,027 (58,165) ------------ ------------
------------ ------------ Income (loss) from continuing operations
($8,771,336) $5,017,036 ($21,608,045) ($5,152,993) ------------
------------ ------------ ------------ ------------ ------------
------------ ------------ Conference Call Information A live
webcast of 180 Connect Inc.'s third quarter 2007 earnings call will
be available at http://www.180connect.net/. The call will begin at
4:30 p.m. EST, November 13, 2007. The dial-in numbers for the call
are international dial 617.213.8857 and toll free at 866.831.6267,
participant pass code is 81992339. The webcast will be archived on
the Company's website and a replay of the call will be available
beginning at 6:30 p.m. EST on Tuesday, November 13, 2007 through to
11:59 p.m. EST Tuesday, November 20, 2007. The dial-in numbers for
the replay are 617.801.6888 International Dial and toll free at
888.286.8010 pass code 27422392. 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-Q
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. 180 Connect
Inc. Consolidated Balance Sheets (in United States Dollars)
(Unaudited) As at ---------------------------- September 30,
December 31, 2007 2006 ---------------------------- Assets Current
Assets Cash and cash equivalents $ 969,285 $ 2,904,098 Accounts
receivable (less allowance for doubtful accounts of $1,652,894 and
$2,506,637, respectively) 52,009,680 48,934,952 Inventory
18,388,807 15,816,148 Restricted cash 11,859,300 14,503,000 Prepaid
expenses and other assets 7,523,344 7,910,255
---------------------------- TOTAL CURRENT ASSETS 90,750,416
90,068,453 Property, plant and equipment 31,375,700 34,882,890
Goodwill 11,034,723 11,034,723 Customer contracts, net 22,311,634
25,072,756 Deferred tax asset 276,608 - Other assets 2,621,795
4,384,750 ---------------------------- TOTAL ASSETS $158,370,876
$165,443,572 ----------------------------
---------------------------- Liabilities and Shareholders' Equity
Current liabilities Accounts payable and accrued liabilities $
81,395,821 $ 78,686,245 Current portion of long-term debt 6,817,352
5,967,674 Fair value of derivative financial instruments 8,194,756
4,065,729 Current portion of capital lease obligations 9,968,067
13,033,104 ---------------------------- TOTAL CURRENT LIABILITIES
106,375,996 101,752,752 Income tax liability 387,212 - Long-term
debt 18,667,844 32,799,043 Convertible debt - 6,276,584 Capital
lease obligations 15,621,286 15,213,112
---------------------------- TOTAL LIABILITIES 141,052,338
156,041,491 Shareholders' Equity Common stock $.0001 par value;
authorized 100,000,000, at September 30, 2007 and December 31, 2006
issued and outstanding shares 25,500,152 and 14,685,976,
respectively 2,550 1,469 Paid- in capital 121,698,780 91,871,813
Treasury stock, 500,000 shares and nil at September 30, 2007 and
December 31, 2006 respectively (224,019) - Deficit (104,643,803)
(82,956,231) Accumulated other comprehensive income 485,030 485,030
---------------------------- TOTAL SHAREHOLDERS' EQUITY 17,318,538
9,402,081 ---------------------------- TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $158,370,876 $165,443,572
---------------------------- ---------------------------- 180
Connect Inc. Consolidated Statements of Operations and
Comprehensive Income (Loss) (in United States Dollars) (Unaudited)
Three Months Three Months Nine Months Nine Months Ended Ended Ended
Ended September 30, September 30, September 30, September 30, 2007
2006 2007 2006
---------------------------------------------------------- Revenue
$102,521,340 $ 89,908,346 $283,615,672 $239,245,733 Expenses Direct
expenses 89,914,862 78,711,246 254,853,816 216,089,499 General and
administra- tive 4,054,289 4,712,862 13,802,266 13,933,478 Non-cash
stock- based compen- sation 227,019 - 227,019 91,214 Foreign
exchange loss (gain) (72,760) (469) (113,442) 3,033 Restructur- ing
costs - - 275,000 392,879 Depreciation 3,058,116 3,433,006
8,574,819 10,013,336 Amortization of customer contracts 920,376
929,727 2,761,122 2,789,180 Other (income) expense Interest and
loan fees 7,801,006 2,898,538 14,012,024 6,925,495 Gain on
extinguish- ment of debt - (1,233,001) - (1,233,001) (Gain) loss on
sale of investments and assets (7,336) 135,696 491,884 (1,114,467)
(Gain) loss on change in fair value of derivative liabilities
887,062 (4,599,330) 5,576,723 (3,433,755) Other expense 4,379,459 -
4,379,459 -
---------------------------------------------------------- Income
(loss) from continu- ing opera- tions before income tax expense
(8,640,753) 4,920,071 (21,225,018) (5,211,158) Income tax expense
(recovery) 130,583 (96,965) 383,027 (58,165)
---------------------------------------------------------- Income
(loss) from continu- ing opera- tions (8,771,336) 5,017,036
(21,608,045) (5,152,993) Loss from discontinued operations, net of
income taxes of nil - (538,899) (79,527) (1,876,694)
---------------------------------------------------------- Net
income (loss) and comprehensive income (loss) for the period $
(8,771,336) $ 4,478,137 $(21,687,572) $ (7,029,687)
----------------------------------------------------------
---------------------------------------------------------- Net
income (loss) per share from continuing operations: Basic $ (0.43)
$ 0.34 $ (1.27) $ (0.35) Diluted $ (0.43) $ 0.32 $ (1.27) $ (0.35)
Net income (loss) per share: Basic $ (0.43) $ 0.30 $ (1.27) $
(0.48) Diluted $ (0.43) $ 0.29 $ (1.27) $ (0.48) Weighted average
number of shares outstand- ing - basic 20,243,082 14,685,976
17,011,000 14,625,856 Weighted average number of shares outstand-
ing - diluted 20,243,082 15,510,667 17,011,000 14,625,856 180
Connect Inc. Consolidated Statements of Cash Flows (in United
States Dollars) (Unaudited) Three Months Ended Nine Months Ended
---------------------------- ---------------------------- September
30, September 30, September 30, September 30, -------------
------------- ------------- ------------- 2007 2006 2007 2006
------------- ------------- ------------- ------------- Cash
provided by (used in) the follow- ing activi- ties: Operating
Income (loss) from contin- uing opera- tions $ (8,771,336) $
5,017,036 $(21,608,045) $ (5,152,993) Add (deduct) items not
affecting cash: Deprecia- tion and amortiza- tion 3,978,492
4,362,733 11,335,941 12,802,516 Non-cash interest expense 4,680,713
1,008,180 6,865,837 2,124,570 Stock- based compensa- tion 227,019 -
227,019 91,214 Future income taxes - (180,000) - (180,000)
Settlement of deriv- ative liability (2,766,573) - (2,766,573) -
Gain on extinguish- ment of debt - (1,233,001) - (1,233,001) (Gain)
loss on change in fair value of derivative liabili- ties 887,062
(4,599,330) 5,576,723 (3,433,755) (Gain) loss on sale of invest-
ments and assets (7,336) 135,696 491,884 (1,114,467) Other 34,067
961 73,993 3,106 Changes in non-cash working capital balances
related to operations: Accounts receivable (11,009,290)
(13,939,349) (3,074,728) 4,339,502 Inventory (3,624,307)
(5,004,743) (2,572,659) 2,522,490 Other current assets (320,110)
(419,655) (700,259) (305,961) Insurance premium deposits
(3,289,009) (525,317) 1,316,723 (2,827,125) Other assets 918,776
(58,765) (453,287) (38,063) Restricted cash - - 2,643,700 247,366
Accounts payable and accrued liabilities 19,886,709 9,613,919
2,593,371 (6,123,210) Operating cash flows from dis- continued
operations - (472,882) (60,507) (1,529,897) -------------
------------- ------------- ------------- Total cash provided by
(used in) operating activities 824,877 (6,294,517) (110,867)
192,292 ------------- ------------- ------------- -------------
Investing Purchase of property, plant and equipment (360,421)
(630,210) (2,052,529) (2,091,671) Net proceeds from disposi- tion
of investments - - - 1,327,693 ------------- -------------
------------- ------------- Total cash used in investing activities
(360,421) (630,210) (2,052,529) (763,978) -------------
------------- ------------- ------------- Financing Repayment of
capital lease obli- gations (1,755,783) (3,533,928) (9,241,450)
(11,378,009) Repayment of long-term debt (7,000,001) - (10,333,336)
(7,350,000) Proceeds from share issuance 14,704 - 61,372 259,712
Net proceeds from reverse merger 37,933,165 - 37,933,165 - Issuance
costs on reverse merger (6,976,440) - (6,976,440) - Redemption of
convert- ible debt (10,393,577) - (10,393,577) - Increase
(decrease) in borrow- ings under long-term debt (11,418,105)
1,098,488 (3,993,853) 1,098,488 Issuance costs on long-term debt -
(3,414,390) - (3,515,471) Net proceeds from refinancing of vehicles
- - 3,470,714 - Proceeds from issuance of convertible debt - - -
10,686,101 Proceeds from refinancing of long-term debt - 42,140,497
- 42,140,497 Extinguishment of long-term debt - (32,863,525) -
(32,863,525) Repurchase of common stock (224,019) - (224,019) -
Issuance costs paid on convertible debt - - - (1,388,985)
------------- ------------- ------------- ------------- Total cash
provided by (used in) financing activities 179,944 3,427,142
302,578 (2,311,192) ------------- ------------- -------------
------------- Effect of exchange rates on cash and cash equivalents
(34,067) (19,892) (73,993) (22,037) ------------- -------------
------------- ------------- Net increase (decrease) in cash and
cash equivalents during the period 610,333 (3,517,477) (1,934,813)
(2,904,915) Cash and cash equivalents, beginning of period 358,952
3,966,014 2,904,098 3,353,452 ------------- -------------
------------- ------------- Cash and cash equivalents, end of
period $ 969,285 $ 448,537 $ 969,285 $ 448,537 -------------
------------- ------------- ------------- -------------
------------- ------------- ------------- Supplemental cash flow
information: Interest paid $ 1,691,880 $ 1,425,122 $ 6,102,000 $
4,504,060 ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- Income
taxes paid $ 76,715 $ 228,935 $ 219,298 $ 323,292 -------------
------------- ------------- -------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental disclosure of non-cash investing and financing
transactions: For the nine months ended September 30, 2007 and
September 30, 2006, the Company had additional capital lease
obligations for vehicles of $3,182,956 and $6,797,554,
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