NXRA Nextera Enterprises Inc (CE)

Nextera Enterprises, Inc. (OTC BB: NXRA) today reported results for the third quarter ended September 30, 2006. In the third quarter of 2006, Nextera recorded a net loss of $0.5 million, or $0.01 per share, compared to a net loss of $0.6 million, or $0.02 per share in the 2005 third quarter. Included in this third quarter loss is a $0.1 million non-cash charge related to the amortization of the step-up in value of inventory acquired as part of Nextera�s acquisition of the Woodridge business in March 2006. Net sales for the 2006 third quarter were $3.8 million. The Company had no sales in the 2005 third quarter as it did not have any operations until the March 9, 2006 acquisition of the Woodridge business. �In August, we began distributing our Virtual Laser brand through several of our major retail channels, contributing to a 7% increase in net sales over the previous quarter,� said Joe Millin, President of Nextera. As of September 30, 2006, Nextera had cash on-hand of $1.5 million. Outstanding debt under the Company�s credit facility was $11.8 million at September 30, 2006, $0.7 million lower than the prior quarter and $1.2 million lower than the initial debt balance at March 9, 2006. Contributing to the ability of the Company to repay its� debt was its receipt of $0.3 million with respect to an indemnity claim under the purchase agreement for the acquisition of the Woodridge business. Nextera also has net operating loss carry-forwards exceeding $54.0 million. A full valuation allowance is maintained on the Company�s deferred tax assets, which includes the loss carry-forwards, due to the uncertainty of utilization of the future tax benefits. Non-cash charges were $0.8 million in the quarter, or $0.02 per share. Non-cash charges included $0.5 million in deferred tax expense relating to the goodwill generated in the Woodridge acquisition, $0.1 million of amortization of intangible assets, $0.1 million related to the one-time inventory step-up charge, and $0.1 million related to the expensing of stock options. The allocation of purchase price in excess of book value for finished goods inventory on hand at the date of acquisition is referred to as inventory step-up. Inventory step-up represents an assumed manufacturing profit attributable to the acquired business which is added to the acquired inventory value and results in much lower margins being realized by the acquiring business when the inventory is sold. The inventory step-up charge of $1.4 million related to the acquisition of the Woodridge business will only impact the year ended December 31, 2006 and is estimated to be $0.03 per share for such period. The inventory step-up charge was $0.3 million in first quarter of 2006, $1.0 million in the second quarter of 2006 and $0.1 million in the third quarter of 2006. No further inventory step-up charges will be recorded in connection with the inventory acquired as part of the acquisition of the Woodridge business. About Nextera Enterprises, Inc. Nextera Enterprises Inc. owns all of the stock of Woodridge Labs, Inc. Woodridge is an independent developer and marketer of branded consumer products that offer simple, effective solutions to niche personal care needs. More information can be found at www.nextera.com and www.woodridgelabs.com. Forward-Looking Statements Except for the historical information contained herein, this news release contains "forward-looking statements" reflecting management's current forecast of certain aspects of Nextera�s future. Some forward-looking statements can be identified by forward-looking words such as "believe," "think," "may," "could," "will," "estimate," "continue," "anticipate," "intend," "seek," "plan," "expect," "should," "would" and similar expressions. This news release is based on current information, which we have assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. Factors that could cause actual results to differ are detailed in �Item 1A.Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2005 filed with the Securities and Exchange Commission on March 31, 2006, as updated by our subsequently filed Quarterly Reports on Form 10-Q. All forward-looking statements included in this news release should be considered in the context of these risk factors. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. NEXTERA ENTERPRISES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS � (amounts in thousands, except per share amounts) � � Three Months Ended Nine Months Ended September 30,2006 September 30,2005 September 30,2006 September 30,2005 (unaudited) (unaudited) � Net sales $ 3,800� $ -� $ 8,460� $ -� Cost of sales � 1,282� � -� � 3,639� � -� Gross profit 2,518� -� 4,821� -� Selling, general and administrative expenses 2,129� 491� 5,659� 1,623� Amortization expense � 146� � -� � 329� � -� Operating income (loss) 243� (491) (1,167) (1,623) Interest income 23� 64� 178� 182� Interest expense (319) -� (706) -� Other expense � -� � (142) � -� � (179) Loss from continuing operations before income taxes (53) (569) (1,695) (1,620) Provision for income taxes � 475� � 6� � 504� � 18� Loss from continuing operations (528) (575) (2,199) (1,638) Income from discontinued operations � -� � 19� � 35� � 131� Net loss $ (528) $ (556) $ (2,164) $ (1,507) Preferred stock dividends � (90) � (84) � (264) � (245) Net loss applicable to common stockholders $ (618) $ (640) $ (2,428) $ (1,752) � Net loss per common share, basic and diluted from Continuing operations $ (0.01) $ (0.02) $ (0.06) $ (0.06) Discontinued operations $ -� � 0.00� � 0.00� � 0.00� Net loss per common share, basic and diluted $ (0.01) $ (0.02) $ (0.06) $ (0.05) � � Weighted average common shares outstanding, basic and diluted 42,337� 33,870� 40,205� 33,870� NEXTERA ENTERPRISES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS � (amounts in thousands) � ASSETS September 30, 2006 December 31, 2005 (unaudited) CURRENT ASSETS: Cash and cash equivalents $ 1,532� $ 15,043� Accounts receivable, net 1,685� -� Inventory 2,522� Other current assets � 773� � 128� Total current assets 6,512� 15,171� � Goodwill 17,790� -� Intangible Assets 6,003� -� Other assets � 827� � 64� Total assets $ 31,132� $ 15,235� � LIABILITIES AND STOCKHOLDERS' EQUITY � Accounts payable and accrued expenses $ 1,872� $ 542� Revolver 1,068� -� Current portion of long-term debt 1,000� -� Other current liabilities � -� � -� Total current liabilities 3,940� 542� � Long-term debt 9,750� -� Deferred tax liability 504� -� Other long-term liabilities 1,334� 1,334� � Total stockholders' equity 15,604� 13,359� � � Total liabilities and stockholders' equity $ 31,132� $ 15,235� Nextera Enterprises, Inc. (OTC BB: NXRA) today reported results for the third quarter ended September 30, 2006. In the third quarter of 2006, Nextera recorded a net loss of $0.5 million, or $0.01 per share, compared to a net loss of $0.6 million, or $0.02 per share in the 2005 third quarter. Included in this third quarter loss is a $0.1 million non-cash charge related to the amortization of the step-up in value of inventory acquired as part of Nextera's acquisition of the Woodridge business in March 2006. Net sales for the 2006 third quarter were $3.8 million. The Company had no sales in the 2005 third quarter as it did not have any operations until the March 9, 2006 acquisition of the Woodridge business. "In August, we began distributing our Virtual Laser brand through several of our major retail channels, contributing to a 7% increase in net sales over the previous quarter," said Joe Millin, President of Nextera. As of September 30, 2006, Nextera had cash on-hand of $1.5 million. Outstanding debt under the Company's credit facility was $11.8 million at September 30, 2006, $0.7 million lower than the prior quarter and $1.2 million lower than the initial debt balance at March 9, 2006. Contributing to the ability of the Company to repay its' debt was its receipt of $0.3 million with respect to an indemnity claim under the purchase agreement for the acquisition of the Woodridge business. Nextera also has net operating loss carry-forwards exceeding $54.0 million. A full valuation allowance is maintained on the Company's deferred tax assets, which includes the loss carry-forwards, due to the uncertainty of utilization of the future tax benefits. Non-cash charges were $0.8 million in the quarter, or $0.02 per share. Non-cash charges included $0.5 million in deferred tax expense relating to the goodwill generated in the Woodridge acquisition, $0.1 million of amortization of intangible assets, $0.1 million related to the one-time inventory step-up charge, and $0.1 million related to the expensing of stock options. The allocation of purchase price in excess of book value for finished goods inventory on hand at the date of acquisition is referred to as inventory step-up. Inventory step-up represents an assumed manufacturing profit attributable to the acquired business which is added to the acquired inventory value and results in much lower margins being realized by the acquiring business when the inventory is sold. The inventory step-up charge of $1.4 million related to the acquisition of the Woodridge business will only impact the year ended December 31, 2006 and is estimated to be $0.03 per share for such period. The inventory step-up charge was $0.3 million in first quarter of 2006, $1.0 million in the second quarter of 2006 and $0.1 million in the third quarter of 2006. No further inventory step-up charges will be recorded in connection with the inventory acquired as part of the acquisition of the Woodridge business. About Nextera Enterprises, Inc. Nextera Enterprises Inc. owns all of the stock of Woodridge Labs, Inc. Woodridge is an independent developer and marketer of branded consumer products that offer simple, effective solutions to niche personal care needs. More information can be found at www.nextera.com and www.woodridgelabs.com. Forward-Looking Statements Except for the historical information contained herein, this news release contains "forward-looking statements" reflecting management's current forecast of certain aspects of Nextera's future. Some forward-looking statements can be identified by forward-looking words such as "believe," "think," "may," "could," "will," "estimate," "continue," "anticipate," "intend," "seek," "plan," "expect," "should," "would" and similar expressions. This news release is based on current information, which we have assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. Factors that could cause actual results to differ are detailed in "Item 1A.Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2005 filed with the Securities and Exchange Commission on March 31, 2006, as updated by our subsequently filed Quarterly Reports on Form 10-Q. All forward-looking statements included in this news release should be considered in the context of these risk factors. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. -0- *T NEXTERA ENTERPRISES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2006 2005 2006 2005 ------------- ------------- ------------- ------------- (unaudited) (unaudited) Net sales $ 3,800 $ - $ 8,460 $ - Cost of sales 1,282 - 3,639 - ------------- ------------- ------------- ------------- Gross profit 2,518 - 4,821 - Selling, general and administrative expenses 2,129 491 5,659 1,623 Amortization expense 146 - 329 - ------------- ------------- ------------- ------------- Operating income (loss) 243 (491) (1,167) (1,623) Interest income 23 64 178 182 Interest expense (319) - (706) - Other expense - (142) - (179) ------------- ------------- ------------- ------------- Loss from continuing operations before income taxes (53) (569) (1,695) (1,620) Provision for income taxes 475 6 504 18 ------------- ------------- ------------- ------------- Loss from continuing operations (528) (575) (2,199) (1,638) Income from discontinued operations - 19 35 131 ------------- ------------- ------------- ------------- Net loss $ (528) $ (556) $ (2,164) $ (1,507) Preferred stock dividends (90) (84) (264) (245) ------------- ------------- ------------- ------------- Net loss applicable to common stockholders $ (618) $ (640) $ (2,428) $ (1,752) ============= ============= ============= ============= Net loss per common share, basic and diluted from Continuing operations $ (0.01) $ (0.02) $ (0.06) $ (0.06) Discontinued operations $ - 0.00 0.00 0.00 ------------- ------------- ------------- ------------- Net loss per common share, basic and diluted $ (0.01) $ (0.02) $ (0.06) $ (0.05) ============= ============= ============= ============= Weighted average common shares outstanding, basic and diluted 42,337 33,870 40,205 33,870 *T -0- *T NEXTERA ENTERPRISES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands) ASSETS September 30, 2006 December 31, 2005 ------------------ ----------------- (unaudited) CURRENT ASSETS: Cash and cash equivalents $ 1,532 $ 15,043 Accounts receivable, net 1,685 - Inventory 2,522 Other current assets 773 128 ------------------ ----------------- Total current assets 6,512 15,171 Goodwill 17,790 - Intangible Assets 6,003 - Other assets 827 64 ------------------ ----------------- Total assets $ 31,132 $ 15,235 ================== ================= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $ 1,872 $ 542 Revolver 1,068 - Current portion of long-term debt 1,000 - Other current liabilities - - ------------------ ----------------- Total current liabilities 3,940 542 Long-term debt 9,750 - Deferred tax liability 504 - Other long-term liabilities 1,334 1,334 Total stockholders' equity 15,604 13,359 ------------------ ----------------- Total liabilities and stockholders' equity $ 31,132 $ 15,235 ================== ================= *T