TARPON SPRINGS, Fla., April 3, 2007 (PRIME NEWSWIRE) -- Solomon Technologies, Inc. (OTCBB:SOLM), a developer and manufacturer of high-efficiency regenerative electric power drive systems as well as high-voltage, high-power direct current power supplies and power supply systems, today announced its operating results for the year ended December 31, 2006. The Company filed its Form 10-KSB with the Securities Exchange Commission (SEC) on April 2, 2007.
Revenue for the year ended December 31, 2006 was $2.3 million, an increase of $2.2 million, or approximately 3,200%, compared with $0.07 million for the year ended December 31, 2005. Revenues in our Power Electronics Division grew $2.2 million to $2.2 million as a direct result of the acquisition of Technipower LLC, which closed August 17, 2006. Revenue in the Motive Power Division was $0.04 million compared with $0.07 million in 2005. This revenue shift reflects the Company's effort to focus on building critical mass of revenue and profitability through product diversification into Power Electronics as a complement to its Motive Power products and technology.
Gross Profit for the year ended December 31, 2006 was $0.6 million, or 27% of revenue, up dramatically compared with the Gross Loss of ($0.01) million, for the year ended December 31, 2005. Net cash used by operating activities was ($1.2) million for the year ended December 31, 2006 compared with ($1.2) million used in the year ended December 31, 2005.
Fourth quarter 2006 financials provide an early indication of the significant impact that the Technipower acquisition will have on the 2007 financial statements. Fourth quarter 2006 revenue was $1.45 million and order backlog as at December 31, 2006 was at an all-time high of approximately $2.5 million.
"Our strategy is taking shape and, with the completion of our 2006 financial statements, we have the first full quarter consolidating the Technipower acquisition -- which provides some early evidence that we will orient our business decisions towards adding incremental revenue on an accretive basis," commented Gary Brandt, Chief Executive Officer. "For the quarter and year ended December 31, 2006, our financial results reveal the profitability inherent in the Power Electronics division and give us confidence that the investment we are making in new product development will contribute to improved profitability. Over the past year, we have made a conscious effort to become more product and market focused versus solely technology driven, and we are seeing the benefits of that in both our revenue and backlog growth."
Operating loss for the year ended December 31, 2006 increased to $8.9 million compared with an operating loss of $2.9 million for the same period in 2005. The primary contributors to the increased operating loss were: a non-cash goodwill impairment charge of $3.3 million and increased operating expenses associated with both financing activities and the Technipower acquisition, including deferred compensation of $1.8 million. These increases were partially offset by the increased gross profit from Power Electronics. The Company has increased its investment in R&D, on an annualized basis, by over $1.0 million. These R&D investments were steps taken to drive the strategic shift in the Power Electronics business towards industrial high-voltage, high-power electrical energy conversion devices to accelerate future revenue growth. These initiatives are not only expected to drive revenue growth in Power Electronics but also benefit the Motive Power division as it targets new markets.
Net loss for the year ended December 31, 2006 was ($16.3) million, or ($0.60) per share, compared with a net loss of ($6.6) million, or ($1.00) per share, for the same period in 2005. Major contributors to the increase in net loss for the year (as compared with 2005) were non-cash charges of $5.6 million related to the extinguishment of debt, $3.3 million associated with the goodwill impairment, and $1.8 million in deferred compensation.
"We have taken steps to establish a strong platform from which we expect to add revenue on an accretive basis," said Gary Brandt. "With one acquisition pending and others contemplated, we are committed to building a business which not only addresses the growing market demand for high-efficiency power electronics and energy conversion devices, but also delivers positive financial returns. In order to put the Company in a position to consistently achieve positive cash flows we are working to establish a critical mass within our Power Electronics business which is expected to provide sufficient cash flow to support our investment in Motive Power products and technologies."
CONFERENCE CALL SCHEDULED
The Company has scheduled a conference call with investors on Wednesday April 4, 2007 at 9:00 AM Eastern Time, to discuss the Company's financial results for the year ended December 31, 2006.
Gary G. Brandt, Chief Executive Officer, will be joined by Gary Laskowski, Chairman of the Company's Board of Directors, Michael D'Amelio, Director and Secretary of the Company and Sam Occhipinti, Chief Financial Officer on the call to review the company's financial and operational highlights.
Interested parties should call 1-800-565-5442 (U.S. and Canada) or 1-913-312-1298 (International) five minutes in advance to participate. The call will also be open to all interested investors through a live audio Web broadcast accessible at the Solomon Technologies, Inc. corporate website, www.solomontechnologies.com. For those unable to listen to the live broadcast, the call will be archived on the above-mentioned site.
Information about Solomon Technologies, Inc.:
Solomon Technologies, Inc., through its Motive Power and Power Electronics divisions, develops, licenses, manufactures and sells precision electric power drive systems, including those utilizing its patented Electric Wheel(tm), Electric Transaxle(tm) and hybrid and regenerative technologies as well as direct current power supplies and power supply systems requiring high levels of reliability and ruggedness for defense, aerospace, marine, commercial, automotive, 'hybrid-electric' and 'all-electric' vehicle applications.
FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements regarding Solomon Technologies, Inc. in this release that are not historical in nature, particularly those that utilize the terminology such as "may," "will," "should," "likely," "expects," "anticipates," "estimates," "believes," or "plans," or comparable terminology, are forward-looking statements based on current expectations about future events, which management has derived from the information currently available to it. It is possible that the assumptions made by management for purposes of such statements may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements. Important factors known to management that could cause forward-looking statements to turn out to be incorrect are identified and discussed from time to time in the company's filings with the Securities and Exchange Commission. The forward-looking statements contained in this release speak only as of the date hereof, and the company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.
Solomon Technologies, Inc.
Consolidated Balance Sheet
December 31, 2006
Assets
Current assets
Cash $ 97,777
Accounts receivable, less allowance of $2,200 876,441
Inventories 1,429,249
Due from related parties 75,315
Deferred debt costs 387,486
Prepaid expenses and other current assets 22,776
------------
2,889,044
------------
Noncurrent assets
Property and equipment, less accumulated depreciation
of $64,805 105,202
Goodwill 2,873,576
Intangible assets, less accumulated amortization of
$628,712 1,922,450
------------
4,901,228
------------
$ 7,790,272
============
Liabilities and Stockholders' Equity
Current liabilities
Revolving note payable to bank $ 750,000
Accounts payable, including $404,662 to related
parties 1,236,137
Accrued compensation 2,071,146
Other accrued expenses 438,829
Capital lease obligations 10,707
Notes payable 531,150
Notes payable to related parties 1,877,085
------------
6,915,054
------------
Stockholders' Equity
Preferred stock, par value $0.001 per share;
authorized 20,000,000 shares; 4,700,000 shares
designated as series C convertible preferred stock;
4,615,381 issued and outstanding (liquidation value
$5,361,164) 3,111,164
Common stock, par value $0.001 per
share; authorized 100,000,000 shares; 33,789,827
issued and outstanding 33,789
Additional paid-in capital 36,522,146
Accumulated deficit (38,791,881)
------------
875,218
------------
$ 7,790,272
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Solomon Technologies, Inc.
Consolidated Statements of Operations
Years Ended December 31,
--------------------------
2006 2005
------------ ------------
Net sales $ 2,278,848 $ 68,717
Cost of goods sold 1,674,064 81,429
------------ ------------
Gross profit (loss) 604,784 (12,712)
------------ ------------
Operating expenses:
Selling, general and administrative 5,579,760 2,923,470
Research and development 372,718 --
Goodwill impairment 3,346,153 --
------------ -----------
9,298,631 2,923,470
------------ -----------
Operating loss (8,693,847) (2,936,182)
Other expenses
Interest expense (1,912,727) (3,656,854)
Other expenses (20,910) --
Loss on extinguishment of redeemable
preferred stock and other debt (5,635,030) (39,924)
------------ ------------
(7,568,667) (3,696,778)
------------ ------------
Net loss (16,262,514) (6,632,960)
Preferred stock dividends (171,164) --
------------ ------------
Loss applicable to common
stockholders $(16,433,678) $ (6,632,960)
============ ============
Basic and diluted net loss per common
share $ (0.60) $ (1.00)
============ ============
Weighted average common shares
outstanding - basic and diluted 27,342,337 6,624,074
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Solomon Technologies, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31,
2006 2005
------------ ------------
Operating activities
Net loss $(16,262,514) $ (6,632,960)
------------ ------------
Adjustments to reconcile net
loss to cash used by
operations
Loss on extinguishment of
redeemable preferred stock
and other debt 5,635,030 39,924
Stock based compensation to
employees and directors 590,767 552,214
Common stock and warrants
issued for services 235,000 877,489
Common stock warrant expense 190,507 --
Impairment of goodwill 3,346,153 --
Accretion, dividends, and
amortization of debt costs
included in interest expense 1,714,796 3,603,641
Depreciation 17,535 11,268
Amortization 198,889 83,629
Principal shareholder paid
expenses on behalf of the
Company 129,949 236,620
Gain on sale of equipment - (3,563)
Change in operating assets
and liabilities
Accounts receivable (407,376) 433
Inventories 605,926 (7,749)
Prepaid expenses and other
current assets 201,321 37,474
Accounts payable and accrued
expenses 2,631,519 6,024
------------ ------------
Net cash used by operating
activities (1,172,498) (1,195,556)
------------ ------------
Investing Activities
Cash received from
Technipower LLC
acquisition 123,137 --
Purchase of equipment (12,718) (1,998)
Proceeds from sale of
equipment -- 11,910
------------ ------------
Net cash provided by
investing activities 110,419 9,912
------------ ------------
Financing Activities
Proceeds from issuance of
notes payable to related
parties 1,331,876 1,178,219
Repayments of notes payable
to related parties (404,611) (237,906)
Proceeds from revolving note
payable 50,000 --
Proceeds from Rule 16B 184,271 --
Repayment of capital lease
obligations (5,373) --
------------ ------------
Net cash provided by
financing activities 1,156,163 940,313
------------ ------------
Change in cash 94,084 (245,331)
Cash at beginning of period 3,693 249,024
------------ ------------
Cash at end of period $ 97,777 $ 3,693
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