NXRA Nextera Enterprises Inc (CE)

Nextera Enterprises, Inc. (OTCBB:NXRA) today reported financial results for the second quarter ended June 30, 2007 included in its Quarterly Report on Form 10-Q filed with the SEC. Net sales for the second quarter of 2007 were $3.0 million, a decrease of $0.6 million or 17%, from $3.6 million recorded for the second quarter of 2006, while net sales quarter over quarter increased by $0.6 million, or 25%, from $2.4 million recorded in the first quarter of fiscal year 2007. For the six-month period ended June 30, 2007 net sales increased $0.7 million or 16% from $4.7 million for the same period last year. Net sales for 2006 reflect the operating results of the Woodridge Labs business from the March�9, 2006 acquisition date forward. Woodridge Labs represents Nextera�s sole operations and generates all of its revenue. The 2007 year-to-date net sales include a $0.2 million charge for expected returns related to the March 2007 voluntary recall of certain DermaFreeze365� products sold during the first quarter of 2007. Gross profit and gross margins for the three months ended June 30, 2007 and 2006 were $1.9 million and 64% and $1.8 million and 49%, respectively. Included within gross profit for the period ended June 30, 2006 is a $1.0 million charge associated with the amortization of the step up to fair value in the inventory acquired from Woodridge Labs, as required by related accounting literature. For the six-month period ended June 30, 2007 gross profit and gross margin increased $0.9 million and 10%, to 3.2 million and 59% from $2.3 million and 49% for the same period last year. The 2007 year-to-date gross profit includes a $0.2 million charge for expected returns related to the March 2007 product recall of related products sold during the first quarter of 2007. Included within gross profit for the period ended June 30, 2006 is a $1.3 million charge associated with the amortization of the step up to fair value in the inventory acquired from Woodridge Labs, as required by related accounting literature. Selling, general and administrative expenses for the three months ended June 30, 2007 decreased $0.3 million or 23% to $2.0 million from $2.3 million recorded for the same period last year. For the six-months ended June 30, 2007 selling, general and administrative expenses increased $0.5 million or 14% to $4.0 million from $3.5 million for the same period a year ago. Selling, general and administrative expense for the six months ending June 30, 2006 reflect the operating results of the Woodridge Labs business only from the March 9, 2006 acquisition to June 30, 2006. Included in the year-to-date 2007 period expenses are approximately $0.1 million of professional fees associated with the March 2007 recall and $0.2 million of general and administrative costs associated with the relocation of the corporate headquarters to the Woodridge Labs facility in Panorama City, California. Net loss applicable to common stockholders for the second quarter of 2007 was $0.9 million, or $0.02 per diluted common share, compared to $1.1 million, or $0.03 per diluted common share, for the first quarter of 2006. For the three months ended June 30, 2007, non-cash charges were $0.8 million, or $0.02 per share. Non-cash charges included $0.3 million of amortization of intangible assets and depreciation, $0.4 million for provisions and allowances and $0.1 million for stock-based compensation. During the quarter ended June 30, 2007, Nextera received $2.5 million of cash from financing activities related to the issuance of preferred stock and warrants. Additionally during the quarter, the Company recovered $2.0 million from indemnity claims on the escrow account originally established in the Woodridge Labs acquisition. With such proceeds the Company paid-down the entire balance of its credit line leaving an available borrowing balance of $2.8 million as of June 30, 2007. Nextera also had cash on-hand at June 30, 2007 of $0.1 million. Joe Millin, President of Nextera Enterprises, said, �Though we feel that we are rebounding from the effects of the first-quarter product recall, we still have work ahead to deliver new products scheduled for launch during the second half of 2007.� Mr. Millin added, �We are pleased with the trade�s response to products presented under recently acquired brands, including a skin and hair care line under the Heavy Duty� brand, acquired in March, and nutritionally-based skin care products newly developed in connection with the Keri Glassman license agreement we completed in June.� About Nextera Enterprises, Inc. Nextera Enterprises Inc. operates through its wholly-owned subsidiary, Woodridge Labs, Inc. Woodridge Labs 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 This release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, estimates of future performance. Actual results may differ materially from the results predicted, and reported results should not be considered an indication of future performance. Important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements are detailed under �Item 1A.Risk Factors� and elsewhere in filings with the Securities and Exchange Commission made from time to time by Nextera, including, but not limited to: its Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission on April 17, 2007; recent quarterly reports on Form 10-Q; and other current reports on Form 8-K. All forward-looking statements included in this news release should be considered in the context of these risk factors. Nextera undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 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 share amounts; unaudited) � Three Months Ended June 30, Six Months Ended June 30, � 2007 � � 2006 � � 2007 � � 2006 � � Net sales $ 2,958 $ 3,564 $ 5,392 $ 4,660 Cost of sales � 1,075 � � 1,817 � � 2,200 � � 2,357 � Gross profit 1,883 1,747 3,192 2,303 � Selling, general and administrative expenses 2,017 2,318 4,014 3,530 Amortization of intangible assets � 275 � � 152 � � 532 � � 183 � Operating loss (409 ) (723 ) (1,354 ) (1,410 ) � Interest income � 30 6 155 Interest expense (309 ) (313 ) (591 ) (387 ) Other income � 2 � � � � � 2 � � � � Loss from continuing operations before income taxes (716 ) (1,006 ) (1,937 ) (1,642 ) � Provision for income taxes � 60 � � � � � 120 � � 29 � Loss from continuing operations (776 ) (1,006 ) (2,057 ) (1,671 ) � Income from discontinued operations � � � � 35 � � � � � 35 � Net loss (776 ) (971 ) (2,057 ) (1,636 ) � Preferred stock dividends � (102 ) � (90 ) � (210 ) � (174 ) Net loss applicable to common stockholders $ (878 ) $ (1,061 ) $ (2,267 ) $ (1,810 ) � Net loss per common share, basic and diluted Continuing operations $ (0.02 ) $ (0.03 ) $ (0.05 ) $ (0.05 ) Discontinued operations � � � � � � � � � � � � Net loss per common share, basic and diluted $ (0.02 ) $ (0.03 ) $ (0.05 ) $ (0.05 ) � Weighted average common shares outstanding, basic and diluted � 42,337 � � 42,337 � � 42,337 � � 39,139 � Nextera Enterprises, Inc. Condensed Consolidated Balance Sheets (Amounts in thousands, except share amounts) � June 30, 2007 (Unaudited) December 31, 2006 Assets Current assets: Cash and cash equivalents $ 108 $ 597 Inventories 1,911 2,595 Due from supplier � 127 Prepaid expenses and other current assets � 471 � � 260 � Total current assets 2,490 3,579 � Property and equipment, net 265 284 Goodwill 8,969 10,969 Intangible assets, net 12,589 12,827 Other assets � 508 � � 484 � Total assets $ 24,821 � $ 28,143 � � Liabilities and Stockholders� Equity Current liabilities: Accounts payable and accrued expenses $ 2,544 $ 4,364 Current portion of long-term debt � 500 � � � � Total current liabilities 3,044 4,364 � Long-term debt, net of current portion 9,000 11,718 � Deferred taxes 356 236 Other long-term liabilities 1,334 1,334 Commitments and contingencies � � � Redeemable Preferred Stock, $0.001 par value. Liquidation preference of $100 per share: Series B Cumulative Non-Convertible, 200,000 authorized shares designated, 25,355 and 0 issued and outstanding at June 30, 2007 and December 31, 2006, respectively. 1,889 � Series C Cumulative Non-Convertible, 200,000 authorized shares designated, none outstanding at June 30, 2007 and December 31, 2006. � � � Stockholders� equity: Preferred Stock, $0.001 par value, 10,000,000 shares authorized. Liquidation preference of $100 per share: Series A Cumulative Convertible, 600,000 authorized shares designated, 54,445 and 52,429 issued and outstanding at June 30, 2007 and December 31, 2006, respectively. � 5,445 � 5,243 Class A Common Stock, $0.001 par value, 95,000,000 shares authorized, 38,492,851 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively 38 38 Class B Common Stock, $0.001 par value, 4,300,000 shares authorized, 3,844,200 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively 4 4 Additional paid-in capital 165,779 165,218 Accumulated deficit � (162,068 ) � (160,012 ) Total stockholders� equity � 9,198 � � 10,491 � Total liabilities and stockholders� equity $ 24,821 � $ 28,143 � Nextera Enterprises, Inc. Condensed Consolidated Statements of Cash Flows (Amounts in thousands; unaudited) � Six Months Ended June 30, � 2007 � � � 2006 � Operating activities Net loss $ (2,057 ) $ (1,636 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 31 24 Amortization of intangible assets 532 183 Provision for allowances and returns 176 � Inventory write-down 130 � Deferred taxes 120 � Stock based compensation 141 98 Gain on sale of fixed assets (2 ) � Change in operating assets and liabilities: Accounts receivable (1,200 ) (506 ) Inventories 554 982 Prepaid expenses and other assets (242 ) (55 ) Accounts payable and accrued expenses � (669 ) � 290 � Net cash used in operating activities (2,486 ) (620 ) � Investing activities Cash recovered from acquisition escrow 2,000 � Acquisition of business, net of cash acquired � (23,232 ) Purchase of intellectual property and licensing agreement (275 ) � Purchase of fixed assets � (10 ) � (14 ) Net cash (used in) /provided by investing activities 1,715 (23,246 ) � Financing activities Borrowing (payments) under revolving credit facility (2,218 ) 2,500 Borrowings under term note � 10,000 Payment of note acquired in acquisition � (1,000 ) Payment of debt issuance costs � (490 ) Proceeds from issuance of note payable � 2,500 � � � � Net cash provided by financing activities 282 11,010 � � Net decrease in cash and cash equivalents (489 ) (12,856 ) � Cash and cash equivalents at beginning of period � 597 � � 15,043 � Cash and cash equivalents at end of period $ 108 � $ 2,187 � Supplemental Disclosure of Cash Flow Information Cash paid during the period for: Conversion of note payable to preferred stock $ 2,500 $ � Interest 591 387 Income Taxes 1 �