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TMCNet: KeyOn Reports 3Q Results

[November 18, 2009]

KeyOn Reports 3Q Results

Nov 19, 2009 (Close-Up Media via COMTEX) -- KeyOn Communications, a provider of wireless broadband, satellite video and voice over Internet protocol (VoIP) services in the United States, reported its financial results for the quarter ended September 30.


"Our efforts to control expenses and improve operating efficiencies in order to generate positive EBITDA continued into the third quarter. While we reported negative EBITDA for the first time in three consecutive quarters, our third quarter was close to EBITDA positive after adjusting for non-cash items and some one-time expenses. In particular, third quarter results from operations include over $370,000 of expenses incurred in connection with KeyOn's $150 million stimulus applications under the American Recovery and Reinvestment Act of 2009 (ARRA)," said Jonathan Snyder, President and CEO of KeyOn Communications. "In this quarter, the capital markets afforded us with the opportunity to think about growth and strategic initiatives again. With the additional equity capital we have raised, our team completed detailed stimulus applications as well as initiating acquisition efforts of similarly situated operators through our Rural UNIFi program. Finally, we began expanded marketing efforts in order to grow our entire customer base - within our existing footprint and in any acquired networks." In a release dated November 17, the company stated: 2009 Third Quarter Consolidated Results - For the third quarter ended September 30, the company reported revenue of $1,672,730, a decrease of approximately 11.0 percent, as compared to $1,878,737 for the third quarter ended September 30, 2008. This decrease is consistent with the company's previous cost restructuring plan focused on reducing overall marketing and advertising costs. While customer disconnects have remained stable, the absence of marketing to acquire new subscribers has resulted in an overall decline in the customer base.

- The operating loss, which included non-cash stock-based compensation expense of $0.5 million for the quarter ended September 30, was $1.4 million for the quarter ended September 30, as compared to an operating loss of $1.3 million for the quarter ended September 30, 2008, which included non-cash based stock compensation of $0.5 million.

- The company reported a net loss of $2.9 million, or $0.20 loss per common share, for the quarter ended September 30, compared to a net loss of $1.3 million, or $0.18 loss per common share, for the quarter ended September 30, 2008, an increase of 95 percent. However, the results for September 2009 quarter included interest expense of $1.5 million which includes $1.2 million for a beneficial conversion (a non-cash item) related to the conversion of the secured subordinated notes that matured on August 31.

- Adjusted EBITDA for the quarter ended September 30, was negative $10,156 compared to negative $66,328 in the third quarter in the prior year, a decrease of $56,172, or 85 percent.

Annette Eggert, KeyOn's CFO, said, "We have continued to show financial strength by significantly improving our working capital position - 49 percent on a quarter over quarter basis. In addition to balance sheet improvements, our focused cost reduction initiatives have provided a solid operating foundation for us to move forward with our current business strategy designed for greater growth and scale." - The company also restated results for the first and second quarters of 2009. These changes were non-cash adjustments resulting in an increase to non-cash stock compensation expense in payroll of $648,155 and a decrease in non-cash stock compensation in professional fees of $66,250, a net increase in total operating expenses of $581,905 for the nine months ended September 30. The restatement resulted in Net Loss changes of $648,155, ($92,750) and $26,500, for the first quarter of 2009, second quarter of 2009, and third quarter 2009, respectively.

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