Exhibit 99.1

 

 

Sysorex Announces Financial Results for the Quarter Ended March 31, 2015

 

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 first quarter ended March 31, 2015.

 

First Quarter Financial Highlights:

 

· Q1 2015 Revenue of $14.1 Million
· Q1 2015 Gross Margin of 29%
· Q1 2015 GAAP net loss of $0.15 per share
· Proforma Non-GAAP net loss1 of $0.08 per share
· Q1 2015 Non-GAAP Adjusted EBITDA1 loss of $1.3 Million

 

"We continue to make progress in growing our higher margin services business and in strengthening our technology portfolio specifically around data analytics”, said Nadir Ali, CEO of Sysorex Global Holdings Corp. “We have also been awarded several government contract awards this year that support our overall business strategy and revenue base”, he continued.

 

Revenue: Total revenue for the three months ended March 31, 2015 was $14.1 million compared to $16.3 million for the comparable period in the prior year. The $2.2 million decrease in revenue, or approximately 13%, was attributable primarily to an unusually large order in our Storage and Computing segment fulfilled during the three months ended March 31, 2014 that was not repeated in the three months ended March 31, 2015. Total first quarter 2015 revenue included $143,000 of Sysorex Mobile, IoT & Big Data Products revenue, $10.3 million of Storage and Computing revenue, $973,000 of SaaS revenue and $2.7 million of Professional Services revenue.

 

Gross Profit: Total gross profit for the three months ended March 31, 2015 was $4 million compared to $4.4 million for the comparable period in the prior year. The gross profit margin for the three months ended March 31, 2015 was approximately 29% compared to approximately 27% for the three months ended March 31, 2014. The increase in gross margin is a result of shifting our sales to higher margin products and an increase in revenue from our data analytics and managed services in the Professional Services segment.

 

Net Loss: GAAP net loss attributable to common stockholders for the three months ended March 31, 2015 was $2.9 million compared to $780,000 for the comparable period in the prior year. GAAP net loss per share for the three months ending March 31, 2015 was $0.15, compared to a net loss per share of $0.05 for the comparable period in the prior year. This increase in net loss of $2.1 million was primarily attributable to the inclusion of AirPatrol’s operating expenses during the first quarter 2015, and the additional professional fees and administrative costs associated with being a public company.

 

 

 

 

Non-GAAP net loss1: Pro-forma non-GAAP net loss1 for the three months ended March 31, 2015 was $1.6 million compared to non-GAAP net loss of $131,000 for the comparable period in the prior year. Pro-forma non-GAAP net loss per basic and diluted common share for the three months ended March 31, 2015 was $0.08 compared to $0.01 for the comparable period in the prior year. 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 acquisition costs and the costs associated with the public offering.

 

Non-GAAP adjusted EBITDA1: Total Non-GAAP adjusted EBITDA for the three months ended March 31, 2015 was a loss of $1.3 million compared to income of $51,000 in the comparable period in the prior year. 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.”

 

Q1 2015 Business Highlights

 

· Sysorex awarded sub-contract on $249 Million Army Enterprise IT Services contract.
· AirPatrol joins the TELUS IoT Marketplace.
· Sysorex named one of the largest big data firms in the Seattle area.
· Sysorex announces strategic partnership with Cloudian.
· AirPatrol and Pay Tel announce partnership to end contraband cell phone use in correctional facilities.

 

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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, which will be filed with the Securities and Exchange Commission on or about May 14, 2015.

 

Conference Call Information

 

Management will host a conference call on Thursday, May 7, 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 Global Holdings Corp. conference call. The conference call will also be available through a live webcast at www.sysorex.com.

 

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A replay of the call will be available approximately one hour after the end of the call through June 8, 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 10065211.

 

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 @SysorexGlobal and Like us on Facebook.

 

Sysorex:

A. Sage Osterfeld, 760-707-0459

sage.osterfeld@sysorex.com

 

or

 

Sysorex Investor Relations:

CorProminence LLC

Scott Arnold, 516-222-2560

scotta@corprominence.com

www.corprominence.com

 

 

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SYSOREX
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

 

 

 

    March 31,     December 31,  
    2015     2014  
    (Unaudited)     (Audited)  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 2,695     $ 3,228  
Accounts receivable, net     9,069       8,225  
Notes receivable, related party     90       90  
Notes and other receivables     1,702       1,294  
Inventory     542       610  
Prepaid licenses and maintenance contracts     7,179       7,151  
Other current assets     1,490       1,463  
Total current assets     22,767       22,061  
Prepaid licenses and maintenance contracts     5,818       6,200  
Property and equipment, net     1,227       1,308  
Software development costs, net     357       278  
Intangible assets, net     16,794       17,676  
Goodwill     13,166       13,166  
Other assets     1,350       1,371  
Total assets   $ 61,479     $ 62,060  
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 8,282     $ 7,468  
Accrued liabilities     2,811       3,299  
Deferred revenue     8,888       8,689  
Short-term debt     7,272       5,418  
Total current liabilities     27,253       24,874  
Deferred revenue     6,781       7,181  
Long-term debt     100       100  
Other liabilities     650       684  
Total liabilities     34,784       32,839  
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 19,707,262 issued and outstanding     20       20  
                 
Additional paid-in capital     52,508       52,122  
Due from Sysorex Consulting Inc.     (666 )     (666 )
Accumulated other comprehensive income (loss)     (25 )     (18 )
Accumulated deficit     (23,541 )     (20,641 )
Stockholders’ equity     28,296       30,817  
Non-controlling interest     (1,601 )     (1,596 )
Total stockholders’ equity attributable to common stockholders     26,695       29,221  
Total liabilities and stockholders’ equity   $ 61,479     $ 62,060  

 

 

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 SYSOREX
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share data)

 

    Three Months Ended  
    March 31,  
    2015     2014  
  (Unaudited)     (Unaudited)  
Revenues                
Products   $ 10,388     $ 13,225  
Services     3,734       3,095  
Total Revenues     14,122       16,320  
Cost of Revenues                
Products     8,650       10,708  
Services     1,425       1,262  
Total Cost of Revenues     10,075       11,970  
Gross Profit     4,047       4,350  
Operating expenses:                
Research and development     163       --  
Sales and marketing     2,463       2,297  
General and administrative     3,274       2,315  
Acquisition related costs     76       104  
Amortization of intangibles     882       328  
Total operating expenses     6,858       5,044  
Loss from operations     (2,811 )     (694 )
Other income (expense):                
Interest expense     (99 )     (108 )
Other     5       14  
Total other income (expense)     (94 )     (94 )
Loss before income taxes     (2,905 )     (788 )
Provision for income taxes     --       (35 )
Net loss     (2,905 )     (823 )
Net loss attributable to non-controlling interest     (5 )     (43 )
Net loss attributable to common stockholders   $ (2,900 )   $ (780 )
Comprehensive loss:                
Net Loss   $ (2,905 )   $ (823 )
Unrealized holding loss in marketable securities including reclassification adjustment of realized gains included in net income     --       (3 )
Unrealized foreign exchange loss from cumulative translation adjustments     (7 )     --  
Comprehensive loss   $ (2,912 )   $ (826 )
                 
Net loss per basic and diluted common share   $ (0.15 )   $ (0.05 )
Weighted average common shares outstanding:                
Basic and Diluted     19,765,585       14,244,699  
                 

 

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SYSOREX
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands, except share data)

 

             
    Three Months Ended  
    March 31,  
    2015     2014  
  (Unaudited)     (Unaudited)  
Cash flows from operating activities:                
Net loss   $ (2,905 )   $ (823 )
Adjustment to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     121       39  
Amortization of intangible assets     882       328  
Stock based compensation     386       192  
Investment income     --       (3 )
Amortization of deferred financing costs     23       --  
Changes in operating assets and liabilities:                
Accounts receivable and other receivables     (1,252 )     (94 )
Inventory     68       (52 )
Other current assets     (27 )     (648 )
Prepaid licenses and maintenance contracts     354       (1,454 )
Other assets     (2 )     319  
Accounts payable     814       304  
Accrued liabilities     (488 )     (186 )
Deferred revenue     (201 )     1,760  
Other liabilities     (34 )     (16 )
Total Adjustments     644       489  
Net Cash Used in Operating Activities     (2,261 )     (334 )
Cash Flows From (Used in) Investing Activities:                
Purchase of property and equipment     (22 )     (11 )
Proceeds from the sale of marketable securities     --       125  
Investment in capitalized software     (97 )     (70 )
Net Cash Flows From (Used in) Investing Activities:     (119 )     44  
Cash Flows from Financing Activities                
Net proceeds (repayments) from bank facility     1,980       (423 )
Repayment of term loan     (125 )     --  
Net proceeds from issuance of common stock     --       2,080  
Repayment of notes payable     (1 )     (136 )
Net Cash Provided by Financing Activities     1,854       1,521  
Effect of Foreign Exchange Rate on Changes on Cash     (7 )     --  
Net increase in Cash and Cash Equivalents     (533 )     1,231  
Cash and Cash Equivalents - Beginning of period     3,228       2,104  
Cash and Cash Equivalents - End of period   $ 2,695     $ 3,335  

 

 

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Reconciliation of Non-GAAP Financial Measures:

 

 

    Three Months Ended  
(In thousands)   March 31,  
    2015     2014  
Net loss attributable to common stockholders   $ (2,900 )   $ (780 )
Adjustments:                
Non-recurring one-time charges:                
Acquisition transaction/financing costs     76       84  
Stock-based compensation – acquisition costs     --       20  
Costs associated with public offering     --       45  
Stock-based compensation – compensation and related benefits     386       172  
Interest expense     99       108  
Taxes     --       35  
Depreciation and amortization     1,003       367  
Adjusted EBITDA   $ (1,336 )   $ 51  
                 

 

(In thousands)   Three Months Ended  
  March 31,  
    2015     2014  
Net loss attributable to common stockholders   $ (2,900 )   $ (780 )
Adjustments:                
Non-recurring one-time charges:                
Acquisition transaction/financing costs     76       84  
Stock-based compensation – acquisition costs     --       20  
Costs associated with public offering     --       45  
Stock-based compensation – compensation and related benefits     386       172  
Amortization of intangibles     882       328  
Proforma non-GAAP net loss   $ (1,556 )   $ (131 )
Proforma non-GAAP net loss per basic and diluted common share   $ (0.08 )   $ (0.01 )
Weighted average basic and diluted common shares outstanding     19,766       14,245  
                 

 

 

 

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