Exhibit 99.1

 

Sysorex Reports Fourth Quarter and 2014 Financial Results

 

Conference Call to be Held Today at 4:30 pm Eastern Time

 

Palo Alto, CA -- Sysorex (NASDAQ: SYRX), a global leader in big data analytics and location-based mobile solutions, today reported financial results for the fourth quarter and year ended December 31, 2014.

 

2014 Fourth Quarter Financial Highlights:

● 2014 revenue of $15 million
● 2014 gross margin of 29%
● 2014 GAAP net loss of $0.09 per share
● Proforma Non-GAAP net loss1 of $0.05 per share
● 2014 Non-GAAP Adjusted EBITDA1 loss of $0.9 million

 

2014 Fiscal Year End Financial Highlights:

● 2014 revenue of $63 million
● 2014 gross margin of 30%
● 2014 GAAP net loss of $0.42 per share
● Proforma Non-GAAP net loss1 of $0.14 per share
● 2014 Non-GAAP Adjusted EBITDA1 loss of $1.9 million

 

Nadir Ali, CEO of Sysorex stated: "I am proud of all that our team achieved in 2014. We have successfully executed on our transformation from a lower margin systems integrator to a higher margin technology company delivering data analytics. Blending real world data and digital data using our proprietary location-based technologies coupled with our analytics products and services, we believe Sysorex is positioned to be a leader in big data, security, and the Internet of Things.”

 

2014 Fiscal Year End Financial Results

 

Revenue: Total revenue for the year ended December 31, 2014 was $63 million, an increase of approximately 25% over 2013 total revenue of $51 million. The increase is primarily due to the acquisitions we have completed and excludes approximately $1 million in sales from our IT commercial operating segment that was not recognized in the fourth quarter as a result of a shipment that was delayed until the first week of 2015. Total 2014 revenue included $52 million of IT commercial revenue, $5 million of IT government revenue, $4 million of eSolutions revenue, and $2 million of Location-based Technology revenue.

 

Gross Profit: Total gross profit for the year ended December 31, 2014 was $18.7 million, compared to $12.2 million in 2013. Gross margin for 2014 was approximately 30% compared to approximately 24% for 2013. The increase in gross margin is a result of our sales shifting to higher margin products from recent acquisitions and an increase in revenue from our data analytics and managed services in the IT commercial operating segment.

 

 

 

Net Loss: GAAP net loss attributable to the stockholders for 2014 was $7.5 million, compared to a net loss of $4.3 million for 2013. GAAP net loss per share for 2014 was $0.42, compared to a net loss per share of $0.35 for 2013. The increase in net loss was primarily attributable to the AirPatrol acquisition, amortization of intangibles, stock-based compensation and other expenses related to being a public company.

 

Non-GAAP net loss1: 2014 pro-forma non-GAAP net loss was $2.6 million, compared to a non-GAAP net income of $132,000 for 2013. 2014 pro-forma non-GAAP net loss per share was $0.14, compared to a non-GAAP net income per share of $0.01 for 2013. Non-GAAP net loss or income per share is defined as net loss or income per basic and diluted share adjusted for non-cash items including stock based compensation, amortization of intangibles and one time charges including gain on the settlement of obligations, acquisition costs and the costs associated with the public offering.

 

Non-GAAP adjusted EBITDA1: Total non-GAAP adjusted EBITDA was a loss of $1.9 million compared to income of $569,000 for 2013. Non-GAAP adjusted EBITDA is defined as net income (loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation.

 

1 A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.”

 

2014 Business Highlights

 

● Sysorex announces strategic partnership with Geneseo’s subsidiary ColoHub; Geneseo Completes $2M Strategic Investment in Sysorex.
  ● Sysorex raises net proceeds of $17.7 million in a closing of its initial public offering and uplists to the Nasdaq Capital Market.

● Sysorex completes acquisition of AirPatrol Corporation.
● Lilien Systems named to CIO Review’s 100 most promising big data companies for 2014.
● AirPatrol joins Good Technology’s Partner Eco-system.
● AirPatrol announces support for Airwatch Enterprise Mobility Management Platform.
● AirPatrol received two patents for mobile location and security.
● Lilien Systems joins FireEye Fuel Partner Program.
● Sysorex named one of the largest Big Data firms in Seattle area and announces $1.3 million in new Pacific Northwest projects.
● Sysorex’s next generation analytics solution wins customers in biopharmaceuticals, fraud prevention and online gaming.

 

All results summarized in this press release (including the financial statement tables) should be considered preliminary, are qualified in their entirety by the financial statement tables included in this press release and are subject to change. Please refer to Sysorex’s Annual Report on Form 10-K for the year ended December 31, 2014, which will be filed with the Securities and Exchange Commission on or about March 26, 2015.

 

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Conference Call Information

 

Management will host a conference call today, Thursday, March 5, 2015, at 4:30pm Eastern Time to review financial results and corporate highlights. Following management's formal remarks, there will be a question and answer session.

 

To listen to the conference call, interested parties within the U.S. should call 1-866-652-5200. International callers should call +1-412-317-6060. All callers should ask for the Sysorex conference call. The conference call will also be available through a live webcast at www.sysorex.com.

 

A replay of the call will be available approximately one hour after the end of the call through April 6, 2015. The replay can be accessed via Sysorex’s website or by dialing 1-877-344-7529 (U.S.) or +1-412-317-0088 (international). The replay conference playback code is 10061604.

 

Forward-Looking Statements

 

All statements in this release that are not based on historical fact are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While management has based any forward looking statements included in this release on its current expectations, the information on which such expectations were based may change. These forward looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties and other factors, many of which are outside of our control, which could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not limited to, the fluctuation of global economic conditions, the performance of management and our employees, our ability to obtain financing, competition, general economic conditions and other factors that are to be detailed in our periodic and current reports available for review at www.sec.gov. Furthermore, we operate in a highly competitive and rapidly changing environment where new and unanticipated risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. We disclaim any intention to, and undertake no obligation to, update or revise forward-looking statements.

 

Non-GAAP Financial Measures

 

Management believes that certain financial measures not in accordance with generally accepted accounting principles ("GAAP") are useful measures of operations. EBIDTA, Adjusted EBITDA and pro forma net loss per share are non-GAAP measures. Sysorex defines “EBITDA” as net income (loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization. Management uses Adjusted EBITDA as the matrix in which it manages the business and Sysorex defines “Adjusted EBITDA” as EBITDA plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation. Sysorex defines “pro forma net loss per share” as GAAP net loss per share adjusted for stock-based compensation, amortization of intangibles and one time non-recurring charges such as acquisition and offering costs.

 

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Management provides Adjusted EBITDA and pro forma net loss per share measures so that investors will have the same financial information that management uses, which may assist investors in assessing Sysorex’s performance on a period-over-period basis. Adjusted EBITDA or pro forma net loss per share is not a measure of financial performance under GAAP, and should not be considered an alternative to net income (loss) or any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. Adjusted EBITDA and pro forma net loss per share have limitations as analytical tools and should not be considered either in isolation or as a substitute for analysis of Sysorex’s results as reported under GAAP.

  

About Sysorex

 

Through focused, custom technology solutions, Sysorex (NASDAQ:SYRX) provides cyber security, data analytics, cloud solutions, Mobile/BYOD solutions and strategic outsourcing to government and commercial clients in major industries around the world. From identifying security risks to helping clients realize value from their big data strategies, Sysorex has the experience, technology, partners, and agility to be your trusted IT partner. Visit www.sysorex.com, follow @Sysorex and Like us on Facebook.

 

Sysorex Investor Relations Contact:

 

Scott Arnold

Managing Director

CorProminence LLC

377 Oak Street

Concourse 2

Garden City, NY 11530

+1-516-222-2560

www.corprominence.com

 

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SYSOREX

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data) 

 

    December 31,     December 31,  
    2014
(Unaudited)		     2013
(Audited)		  
ASSETS            
Current assets:                
Cash and cash equivalents   $ 3,228     $ 2,104  
Marketable securities     -       125  
Accounts receivable, net     8,225       9,581  
Notes receivable, related party     90       -  
Notes and other receivables     1,294       1,377  
Inventory     610       75  
Prepaid licenses and maintenance contracts     7,151       6,120  
Other current assets     1,463       453  
Total current assets     22,061       19,835  
Prepaid licenses and maintenance contracts     6,200       4,268  
Property and equipment, net     1,308       291  
Software development costs, net     278       57  
Intangible assets, net     17,676       7,328  
Goodwill     13,166       5,708  
Other assets     1,371       1,386  
Total assets   $ 62,060     $ 38,874  
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 7,468     $ 8,435  
Accrued liabilities     3,299       3,842  
Deferred revenue     8,689       7,402  
Short-term debt     5,418       7,761  
Total current liabilities     24,874       27,440  
Deferred revenue     7,181       4,845  
Long-term debt     100       292  
Other liabilities     684       -  
Total liabilities     32,839       32,577  
Commitments and contingencies     -       -  
Stockholders’ equity:                
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued
or outstanding		     -       -  
Common stock, $0.001 par value; 50,000,000 shares authorized; 19,707,262 and
14,094,532 issued and outstanding		     20       14  
Additional paid-in capital     52,122       21,532  
Due from Sysorex Consulting Inc.     (666 )     (666 )
Accumulated other comprehensive income (loss)     (18 )     3  
Accumulated deficit     (20,641 )     (13,106 )
Stockholders’ equity     30,817       7,777  
Non-controlling interest     (1,596 )     (1,480 )
Total stockholders’ equity attributable to common stockholders     29,221       6,297  
Total liabilities and stockholders’ equity   $ 62,060     $ 38,874  

 

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 SYSOREX

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share data)

 

    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2014 (Unaudited)     2013 (Unaudited)     2014 (Unaudited)     2013 (Audited)  
Net revenues   $ 15,201     $ 16,480     $ 62,949     $ 50,572  
Cost of net revenues     10,767       12,463       44,209       38,317  
Gross profit     4,434       4,017       18,740       12,255  
Operating expenses:                                
Compensation and related benefits     4,434       3,101       15,706       8,859  
Professional fees and consulting expenses     595       636       2,553       1,700  
Occupancy     376       150       1,066       417  
Acquisition transaction/financing costs     (179 )     244       1,016       1,813  
Costs associated with public offering     -       269       45       543  
Amortization of intangibles     893       329       2,913       822  
Other administrative     497       799       3,147       2,017  
Total operating expenses     6,616       5,528       26,446       16,171  
Loss from operations     (2,182 )     (1,511 )     (7,706 )     (3,916 )
Other income (expense):                                
Interest expense     (80 )     (136 )     (387 )     (315 )
Gain on settlement of obligation     394       -       394       155  
Change in fair value of derivative liability     -       -       -       (489 )
Other     15       18       47       30  
Total other income (expense)     329       (118 )     54       (619 )
Loss before income taxes     (1,853 )     (1,629 )     (7,652 )     (4,535 )
Provision for income taxes     35       -       -       -  
Net loss     (1,818 )     (1,629 )     (7,652 )     (4,535 )
Net loss attributable to non-controlling interest     (12 )     (168 )     (116 )     (272 )
Net loss attributable to common stockholders   $ (1,806 )   $ (1,461 )   $ (7,536 )   $ (4,263 )
Comprehensive loss:                                
Unrealized holding loss in marketable securities including reclassification adjustment of realized gains included in net income     -       -       (3 )     3  
Unrealized foreign exchange loss from cumulative translation adjustments     (7 )     -       (18 )     -  
Comprehensive loss   $ (1,813 )   $ (1,461 )   $ (7,557 )   $ (4,260 )
                                 
Net loss per basic and diluted common share   $ (0.09 )   $ (0.10 )   $ (0.42 )   $ (0.35 )
Weighted average common shares outstanding:                                
Basic and Diluted     19,649,288       14,085,208       18,111,210       12,287,778  

 

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 SYSOREX

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except share data)

 

    Twelve Months Ended  
    December 31,  
    2014
(Unaudited)		     2013
(Audited)		  
Cash flows from operating activities:            
Net loss   $ (7,651 )   $ (4,535 )
Adjustment to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     293       122  
Amortization of intangible assets     2,913       822  
Acquisition shares adjustment     (12 )     -  
Stock based compensation     1,723       1,202  
Other     (4 )     (3 )
Amortization of debt discount     -       17  
    Change in the fair value of derivative liability     -       489  
Gain on settlement of obligations     (394 )     (155 )
Provision for doubtful accounts     (14 )     414  
Amortization of deferred financing costs     91       30  
Changes in operating assets and liabilities:                
Accounts receivable     1,391       (4,597 )
Other receivables     (394 )     -  
Inventory     (269 )     (20 )
Other current assets     (922 )     (83 )
Prepaid licenses and maintenance contracts     (2,963 )     (1,241 )
Deposits     -       370  
Other assets     245       266  
Accounts payable     (1,204 )     2,376  
Accrued Liabilities     (1,498 )     939  
Deferred revenue     3,623       859  
Other liabilities     510       -  
        Total Adjustments     3,115       1,807  
Net Cash Used in Operating Activities     (4,536 )     (2,728 )
Cash Flows From (Used in) Investing Activities:                
Purchase of property and equipment     (1,053 )     (79 )
Proceeds from the sale of marketable securities     125       486  
Investment in capitalized software     (235 )     (57 )
Cash paid for Lilien     -       (3,000 )
Cash acquired in Lilien acquisition     -       1,112  
Cash acquired in Shoom acquisition     -       3,669  
Loan to non-related company     -       (1,000 )
Cash paid for AirPatrol     (9,514 )     -  
Cash acquired in AirPatrol acquisition     71       -  
Repayment of loans to other parties     1,000       -  
        Release of restricted cash     70       -  
Net Cash Flows From (Used in) Investing Activities:     (9,536 )     1.131  
Cash Flows from Financing Activities                
Advances from bank facility     -       5,698  
Proceeds from term loan     -       750  
Repayment of line of credit     (1,799 )     -  
Repayment of term loan     (375 )     -  
Net proceeds from issuance of common stock     2,080       -  
Net proceeds from capital raise     16,615       -  
Net proceeds from conversion of employee options     13       -  
Repayment of advances to related parties     -       (184 )
Repayment of notes payable     (300 )     (2,168 )
Repayment of factor     -       (46 )
Advance from Duroob Technology     -       567  
Deferred financing fees     -       (7 )
Cash deposited in escrow – restricted cash     -       (500 )
        Advance to related party     (90 )     -  
Advances to third parties     (950 )     -  
Repayment of advance from Duroob Technology     (160 )     (312 )
Repayment of notes receivable from third parties     180       -  
Repayment of convertible notes     -       (105 )
Net Cash Provided by Financing Activities     15,214       3,693  
Effect of Foreign Exchange Rate on Changes on Cash     (18 )     -  
Net increase in Cash and Cash Equivalents     1,124       2,096  
Cash and Cash Equivalents - Beginning of period     2,104       8  
Cash and Cash Equivalents - End of period   $ 3,228     $ 2,104  

  

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Reconciliation of Non-GAAP Financial Measures:

 

(thousands, except per share data)   Three Months Ended
December 31,		     Twelve Months Ended
December 31,		  
    2014     2013     2014     2013  
Net income (loss) attributable to common stockholders   $ (1,806 )   $ (1,461 )   $ (7,536 )   $ (4,263 )
Adjustments:                                
Non-recurring one-time charges:                                
Acquisition transaction/financing costs     (179 )     230       676       1,495  
Stock-based compensation – acquisition costs     -       14       340       318  
Costs associated with public offering     -       269       45       543  
Gain on fair value of adjustment of earn-out liability     -       -       -       -  
Gain on settlement of obligations     (394 )     -       (394 )     (155 )
Change in the fair value of derivative liability     -       -       -       489  
Stock-based compensation – compensation and related benefits     444       469       1,382       883  
Amortization of intangibles     893       329       2,913       822  
Proforma non-GAAP net loss   $ (1,042 )   $ (150 )   $ (2,574 )   $ 132  
Proforma non-GAAP net loss per basic and diluted common share   $ (0.05 )   $ (0.01 )   $ (0.14 )   $ (0.01 )
Weighted average basic and diluted common shares outstanding     19,649,288       14,085,208       18,111,210       12,287,778  

  

    Three Months Ended
December 31,		     Twelve Months Ended
December 31,		  
    2014     2013     2014     2013  
Net income (loss) attributable to common stockholders   $ (1,806 )   $ (1,461 )   $ (7,536 )   $ (4,263 )
Adjustments:                                
Non-recurring one-time charges:                                
      Acquisition transaction/financing costs     (179 )     230       676       1,495  
      Stock-based compensation – acquisition costs     -       14       340       318  
      Costs associated with public offering     -       269       45       543  
      Gain on fair value of adjustment of earn-out liability     -       -       -       -  
      Gain on settlement of obligations     (394 )     -       (394 )     (155 )
      Change in the fair value of derivative liability     -       -       -       489  
Stock-based compensation – compensation and  related benefits     444       469       1,382       883  
Interest expense     80       136       387       315  
Taxes     (35 )     -       -       -  
Depreciation and amortization     989       371       3,205       944  
Adjusted EBITDA   $ (901 )   $ 28       (1,895 )   $ 569  

 

 

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