6D Global Technologies, Inc. Announces Quarterly Financial Results
18 November 2015 - 1:00PM
6D Global Technologies, Inc. (NASDAQ:SIXD), a premier digital
business solutions company listed on NASDAQ under stock symbol
"SIXD," today announced its financial results for the quarter ended
September 30, 2015.
Third Quarter Financial Highlights
During the quarter, the Company posted record revenue of $3.11
million reflecting year over year growth of 15%, approximately
one-third of which was attributable to client additions from two
companies acquired during the first half of 2015. The remaining
increase was attributable to new professional service projects and
extensions with both existing and new clients within the digital
solutions, Content Management Solutions (CMS) segment, two of which
accounted for more than 10% of total revenue compared to four
clients during the same period last year. A strategic decision,
initiated at the beginning of the year, to focus increasingly on
the high growth/higher margin digital solutions business versus IT
staffing, continued to yield improvements in gross margin, which
came in at a healthy 40.4% versus 36.8% during the same period a
year ago. As anticipated —owing primarily to regional expansion,
professional services inclusive of one time legal fees related to
on-going matters, and merger integration costs, as well as key
management and employee additions —Non-GAAP business segment
operating loss grew to $1.86 million or a loss per share of $0.02
versus operating income of $121,268 generated a year ago while the
Company was still a private concern. GAAP operating loss during the
quarter was $6.41 million, which included a non-cash derivative
liability charge of $4.42 million.
During the period, the Company shored up its balance sheet
significantly, consummating a $10 million private placement
financing sufficient to execute on its near and intermediate term
initiatives. The company ended the quarter with cash of $8.80
million, current assets of $11.63 million and total assets of
$21.41 million versus $6.88 million in the year ago.
Nine Month Ended September 30, 2015 Financial
Highlights
During this period, the Company posted a year over year revenue
increase of 16% to $9.61 million while yielding a gross margin of
39.6%, which was in line with the year ago period. Revenue growth
was attributable to a higher number of professional service
projects and new contracts predominantly within the digital
solutions (CMS) segment and associated with acquisitions, which was
offset by a decline in IT staffing engagements as previously noted.
Non-GAAP business segment operating loss totaled $3.91 million for
the period. GAAP operating loss for the year was $8.55 million,
which included a non-cash derivative liability charge of $4.42
million.
Business Outlook
Tejune Kang, Chairman and CEO commented, "While we are generally
pleased with the results, 6D will continue to prove its ability to
contribute to the disruption of the enterprise digital marketing
sector with its unique value proposition and multi-faceted growth
strategy. Having recently built out our sales and marketing
leadership and our overall employee-base to over 100, we will
continue to focus on expanding our services across multiple growth
areas of the digital marketing segment both organically and through
R&D efforts. We will also expand through our previously stated
acquisition strategy, which entails pursuing both products and
services plays key to contributing to the future roll out of our
branded service offering geared primarily towards Chief Marketing
Officers. The integration of our two most recently closed
acquisitions earlier this year is now near complete, and we have
already begun to experience synergies from both cross marketing and
cost standpoints, both of which should continue to improve. To that
end, it remains our goal and commitment to shareholders to continue
to improve revenue mix and gross margins over the next twelve
months, as well as scale our top line efforts to expand operating
margins and improve our overall bottom line. We look forward to
sharing meaningful business development updates in the near to
intermediate future."
Safe Harbor Statement
This press release contains "forward-looking statements" within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995, including, but not
limited to, statements with respect to the Company's future growth
opportunities and strategic plan. Forward-looking statements are
neither historical facts nor assurances of future performance.
Instead, they are based only on our current beliefs, expectations
and assumptions regarding the future of our business, future plans
and strategies, projections, anticipated events and trends, the
economy, and other future conditions. Because forward-looking
statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict and many of which are outside of our control.
Our actual results and financial condition may differ materially
from those indicated in the forward-looking statements. Therefore,
you should not rely on any of these forward-looking statements.
Important factors that could cause our actual results and financial
condition to differ materially from those indicated in the
forward-looking statements include, among others, those items
listed under the "Risk Factors" caption in the Company's public
reports filed with the SEC, including the Company's Form 10-K for
the fiscal year ended December 31, 2014. Any forward-looking
statement made by us in this press release is based only on
information currently available to us and speaks only as of the
date on which it is made. We undertake no obligation to publicly
update any forward-looking statement, whether written or oral, that
may be made from time to time, whether as a result of new
information, future developments or otherwise.
About 6D Global Technologies, Inc.
6D Global Technologies, Inc. is a NASDAQ listed (stock symbol:
SIXD) premier digital business solutions company serving the
digital marketing and technology needs of enterprise-class
organizations worldwide. 6D Global's common stock is included in
four Russell Indexes including the Russell 2000®, Russell 3000®,
Russell Global and Russell Microcap® Index. 6D Global Technologies'
companies offer a full suite of services and solutions to help
large organizations optimize digital business channels and create
better experiences for their customers, resulting in increased
revenue growth and market share. Services include web content
management, web and marketing analytics, digital creative,
marketing automation, mobile applications, digital publishing, and
marketing management solutions. For more information, visit
www.6DGlobal.com.
|
|
6D GLOBAL TECHNOLOGIES,
INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED) |
|
|
|
|
September 30,
2015 |
December 31,
2014 |
Assets |
|
|
Current Assets |
|
|
Cash |
$ 8,802,316 |
$ 4,888,797 |
Accounts receivable |
1,745,605 |
1,316,448 |
Unbilled revenues |
709,444 |
62,049 |
Deferred tax assets |
-- |
161,255 |
Prepaid expenses and other current
assets |
369,216 |
165,907 |
Total Current Assets |
11,626,581 |
6,594,456 |
|
|
|
Property and Equipment, net |
428,583 |
154,917 |
|
|
|
Other Assets |
|
|
Restricted cash |
655,562 |
110,699 |
Security deposits |
35,816 |
24,075 |
Internal development software |
138,535 |
-- |
Goodwill |
5,889,437 |
-- |
Intangible assets, net |
2,637,200 |
-- |
Total Other Assets |
9,356,550 |
134,774 |
|
|
|
Total Assets |
$ 21,411,714 |
$ 6,884,147 |
|
|
|
Liabilities and Stockholders'
Equity (Deficit) |
|
|
|
|
|
Current Liabilities |
|
|
Accounts payable and accrued
liabilities |
$ 1,670,274 |
$ 1,039,301 |
Due to factor |
-- |
833,938 |
Current maturities of capital lease
liability |
53,610 |
53,610 |
Current maturities of notes payable |
6,600 |
6,600 |
Deferred revenue |
130,368 |
68,420 |
Short-term debt |
1,091,008 |
-- |
Contingent consideration, current
portion |
337,664 |
-- |
Total Current Liabilities |
3,289,524 |
2,001,869 |
|
|
|
Long-Term Liabilities |
|
|
Capital lease liability, net of current
maturities |
182,244 |
111,130 |
Notes payable, net of current
maturities |
48,470 |
53,420 |
Security deposit payable |
50,000 |
30,000 |
Deferred rent |
129,793 |
55,429 |
Derivative liability |
12,346,147 |
-- |
Contingent consideration, net of current
portion |
269,383 |
-- |
Total Long-Term Liabilities |
13,026,037 |
249,979 |
|
|
|
Total Liabilities |
$ 16,315,561 |
$ 2,251,848 |
|
|
|
Commitment and Contingencies |
|
|
|
|
|
Redeemable convertible preferred stock
net of issuance costs, par value $0.00001; 10,000,000 shares
authorized; 1,088 and 0 shares issued and outstanding as of
September 30, 2015 and December 31, 2014, respectively |
$ 10,277,862 |
$ -- |
|
|
|
Stockholders' Equity (Deficit) |
|
|
Common stock, par value $0.00001;
150,000,000 shares authorized; 78,247,864 and 77,575,617
shares issued and outstanding as of September 30, 2015 and
December 31, 2014, respectively |
782 |
776 |
Additional paid-in capital |
3,940,065 |
5,203,279 |
Accumulated deficit |
(9,122,556) |
(571,756) |
|
|
|
Total Stockholders' Equity (Deficit) |
(5,181,709) |
4,632,299 |
Total Liabilities, Redeemable convertible
preferred stock and Stockholders' Equity (Deficit) |
$ 21,411,714 |
$ 6,884,147 |
|
|
6D GLOBAL TECHNOLOGIES,
INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) |
|
|
|
|
|
|
For the Three
Months Ended |
For the Nine
Months Ended |
|
September 30,
2015 |
September 30,
2014 |
September 30,
2015 |
September 30,
2014 |
|
|
|
|
|
Revenues |
$ 3,115,726 |
$ 2,709,066 |
$ 9,611,654 |
$ 8,299,053 |
|
|
|
|
|
Cost of revenues |
1,857,173 |
1,713,409 |
5,802,680 |
4,952,021 |
|
|
|
|
|
Gross margin |
1,258,553 |
995,657 |
3,808,974 |
3,347,032 |
|
|
|
|
|
Operating expenses |
|
|
|
|
Selling, general and administrative |
3,194,060 |
874,389 |
8,159,162 |
2,504,776 |
Operating expenses |
3,194,060 |
874,389 |
8,159,162 |
2,504,776 |
|
|
|
|
|
(Loss) income from operations |
(1,935,507) |
121,268 |
(4,350,188) |
842,256 |
|
|
|
|
|
Other (expense) income |
|
|
|
|
Interest expense, net |
(60,752) |
(81,934) |
(248,967) |
(105,869) |
Loss on debt extinguishment |
-- |
-- |
-- |
(57,502) |
Loss on derivative liability |
(4,418,867) |
-- |
(4,418,867) |
-- |
Other (expense) income |
(57) |
-- |
7,130 |
-- |
Other expenses, net |
(4,479,676) |
(81,934) |
(4,660,704) |
(163,371) |
|
|
|
|
|
(Loss) income before income tax benefit
(expense) |
(6,415,183) |
39,334 |
(9,010,892) |
678,885 |
|
|
|
|
|
Income tax benefit (expense) |
6,465 |
(7,745) |
460,092 |
52,122 |
|
|
|
|
|
Net (loss) income |
$ (6,408,718) |
$ 31,589 |
$ (8,550,800) |
$ 731,007 |
|
|
|
|
|
Accretion of equity issuance costs |
(12,264) |
-- |
(12,264) |
-- |
|
|
|
|
|
Deemed dividend for preferred stock |
(10,880,000) |
-- |
(10,880,000) |
-- |
|
|
|
|
|
Net (loss) income attributable to common
stockholders |
$ (17,300,982) |
$ 31,589 |
$ (19,443,064) |
$ 731,007 |
|
|
|
|
|
Net (loss) income per common share
attributable to common stockholders – basic |
$ (0.22) |
$ 0.00 |
$ (0.25) |
$ 0.02 |
|
|
|
|
|
Weighted average common shares – basic |
78,247,864 |
39,499,702 |
78,220,139 |
38,696,586 |
|
|
|
|
|
Net (loss) income per common share
attributable to common stockholders – diluted |
$ (0.22) |
$ 0.00 |
$ (0.25) |
$ 0.02 |
|
|
|
|
|
Weighted average common share - diluted |
78,247,864 |
39,615,792 |
78,220,139 |
38,839,722 |
|
|
6D GLOBAL TECHNOLOGIES,
INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED) |
|
|
|
|
For the Nine Months
Ended |
|
September 30,
2015 |
September 30,
2014 |
Cash Flows From Operating
Activities: |
|
|
Net (loss) income |
$ (8,550,800) |
$ 731,007 |
Adjustments to reconcile net (loss) income to
net cash (used in) provided by operating activities: |
|
|
Depreciation and amortization |
379,294 |
59,048 |
Stock-based compensation |
531,628 |
-- |
Deferred tax benefit |
(464,872) |
(75,558) |
Loss on debt extinguishment |
-- |
57,502 |
Change in contingent consideration
liability |
135,006 |
-- |
Loss on derivative liability |
4,418,867 |
-- |
Changes in Operating Assets and
Liabilities: |
|
|
Accounts receivable |
(429,157) |
(205,433) |
Unbilled revenues |
(647,395) |
(49,429) |
Prepaid expenses and other current
assets |
(203,309) |
(14,305) |
Restricted cash |
(544,863) |
(146) |
Security deposits |
(11,741) |
54,632 |
Accounts payable and accrued
liabilities |
630,973 |
800,610 |
Deferred revenue |
(65,386) |
-- |
Security deposit payable |
20,000 |
-- |
Deferred rent |
74,364 |
(10,956) |
Net Cash (Used in) Provided by Operating
Activities |
(4,727,391) |
1,346,972 |
|
|
|
Cash Flows From Investing
Activities: |
|
|
Purchase of property and equipment |
(273,859) |
-- |
Internal development software |
(138,535) |
-- |
Consideration paid for acquisitions, net
of cash acquired |
(542,399) |
-- |
Loans to related parties |
-- |
(46,433) |
Net Cash Used in Investing
Activities |
(954,793) |
(46,433) |
|
|
|
Cash Flows From Financing
Activities: |
|
|
Gross proceeds from factor borrowing |
4,167,113 |
8,012,245 |
Repayments of factor borrowing |
(5,001,051) |
(8,380,318) |
Distribution to stockholders |
-- |
(45,808) |
Proceeds from the issuance of short-term
debt |
1,091,008 |
-- |
Repayment of capital lease
obligations |
(42,015) |
(41,492) |
Proceeds from the issuance of Series A
redeemable convertible preferred stock, net of issuance costs |
9,385,598 |
-- |
Repayment of notes payable |
(4,950) |
(259,950) |
Proceeds on issuance of notes
payable |
-- |
20,000 |
Proceeds from private placement, net of
issuance costs |
-- |
3,982,887 |
Net Cash Provided by Financing
Activities |
9,595,703 |
3,287,564 |
|
|
|
Net Change in Cash |
3,913,519 |
4,588,103 |
|
|
|
Cash, beginning of period |
4,888,797 |
5,611 |
|
|
|
Cash, end of period |
$ 8,802,316 |
$ 4,593,714 |
|
|
|
Supplemental Disclosures of Cash
Flow Information: |
|
|
Cash paid for taxes |
$ 9,236 |
$ 4,495 |
Cash paid for interest |
$ 91,781 |
$ 108,349 |
|
|
|
Non-Cash
Transactions: |
|
|
Reclassification of due from related
party into common stock issuable |
$ -- |
$ 456,563 |
Conversion of notes payable into common
stock issuable |
$ -- |
$ 345,000 |
Common stock issued in connection with
acquisitions |
$ 3,696,750 |
$ -- |
Deemed divided related to the issuance of
preferred shares |
$ 10,880,000 |
$ -- |
Contingent consideration in connection
with acquisitions |
$ 3,800,000 |
$ -- |
Capital leases |
$ 113,129 |
$ -- |
Cashless exercise of warrants |
$ 178,099 |
$ -- |
|
|
6D GLOBAL
TECHNOLOGIES, INC. |
|
|
|
|
|
Reconciliation to
Non-GAAP Business Segment Performance |
(UNAUDITED) |
|
Three Months
Ended |
Nine Months
Ended |
|
September 30, |
September 30, |
September 30, |
September 30, |
|
2015 |
2014 |
2015 |
2014 |
Net (loss) income attributable to common
stockholders |
$ (17,300,982) |
$ 31,589 |
$ (19,443,064) |
$ 731,007 |
Add back: Deemed dividend for preferred
stock |
10,880,000 |
-- |
10,880,000 |
-- |
Add back: Accretion of equity issuance
costs |
12,264 |
-- |
12,264 |
-- |
Net (loss) income |
$ (6,408,718) |
$ 31,589 |
$ (8,550,800) |
$ 731,007 |
Non-GAAP Adjustments |
|
|
|
|
Share based compensation |
74,137 |
-- |
434,100 |
-- |
Interest expense, net |
60,752 |
81,934 |
248,967 |
192,457 |
Loss on debt extinguishment |
-- |
-- |
-- |
57,502 |
Loss on derivative liability |
4,418,867 |
-- |
4,418,867 |
-- |
Other (expense) income |
57 |
-- |
(7,130) |
(86,588) |
Income tax benefit (expense) |
(6,465) |
7,745 |
(460,092) |
(52,122) |
Non-GAAP business segment (loss)
income |
$ (1,861,370) |
$ 121,268 |
$ (3,916,088) |
$ 842,256 |
CONTACT: Media Contact:
Randall Samborn
(312) 214-2300
ir@6DGlobal.com
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