EX-99.1 2 v094609_ex99-1.htm Unassociated Document

KeyOn Communications:
  
KeyOn Investors:
 
Jonathan Snyder
  
Christiane Pelz
 
KeyOn Communications
  
Lippert/Heilshorn & Assoc.
 
402-998-4000
  
415-433-3777
     
cpelz@lhai.com

 
KeyOn Reports Third Quarter 2007 Financial Results

OMAHA, NE, November 14, 2007 -- KeyOn Communications Holdings, Inc. (OTC BB: KEYO), a leading provider of wireless broadband and voice over Internet protocol (VoIP) services to rural and underserved markets, reported results for its third quarter of 2007.

“With the goal to consolidate wireless broadband companies across the Midwest and Western U.S., we have been identifying accretive opportunities and acquiring wireless broadband and licensed spectrum assets,” Jonathan Snyder, President and CEO of KeyOn Communications, stated. “Given our track record of integrating these assets and organically growing our business, we hope to experience significant subscriber growth over the next twelve months. We see great opportunities in the rural marketplace and are excited for 2008.”

Third Quarter Financial Results
For the third quarter of 2007, revenue was $1.9 million, up from $600,000 in the third quarter of 2006. The operating loss for the quarter ended September 30, 2007 was $2.7 million, which included $1.3 million of stock-based compensation, as compared to an operating loss of $640,000 for the quarter ended September 30, 2006. The company reported a net loss of $2.9 million, or $0.40 per share, for the quarter ended September 30, 2007, compared to $704,000, or $0.15 per share, for the quarter ended September 30, 2006.

This press release includes disclosure regarding “Adjusted EBITDA,” which is a non-GAAP (generally accepted accounting principles) financial measure defined as earnings or loss from operations adjusted for depreciation, amortization and other non-cash expenses. Adjusted EBITDA should not be construed as an alternative to operating loss as defined by GAAP. Adjusted EBITDA for the third quarter of 2007 was $(526,000), compared to $(352,000) in the third quarter of 2006.

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Nine-Month Financial Results
For the nine months ended September 30, 2007, revenue was $5.2 million, up from $1.8 million for the same period in 2006, reflecting subscriber growth resulting from acquisitions and organic growth. The operating loss for the nine months ended September 30, 2007 was $4.4 million, which included $1.3 million of stock-based compensation, compared to an operating loss of approximately $1.4 million for the nine months ended September 30, 2006. The company reported a net loss of $4.9 million, or $0.81 per share, for the nine months ended September 30, 2007, compared to a net loss of $1.6 million, or $0.35 per share, for the nine months ended September 30, 2006.

Adjusted EBITDA for the nine months ended September 30, 2007 was $(1.0) million, compared to $(685,000) in the prior year.

As the company completed the acquisition of SpeedNet Services, Inc. on January 31, 2007 and MicroLnk, LLC on October 22, 2007, management has provided pro forma revenue and adjusted EBITDA for the nine months ended September 30, 2007. For the nine months ended September 30, 2007, pro forma revenues were $6.2 million and adjusted EBITDA was $(604,000).

At September 30th, the company had $1.6 million in cash and cash equivalents.

Subscriber Growth
KeyOn’s subscriber base totaled 14,712 as of September 30th and exceeded 16,400 by October 31st.

-Tables follow-

Page 2 of 6
KEYON COMMUNICATIONS HOLDINGS, INC. AND RELATED ENTITIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2007 (UNAUDITED) AND DECEMBER 31, 2006

 
  
2007
  
2006
  
ASSETS
          
           
CURRENT ASSETS:
          
Cash
 
$
1,569,403
  
$
4,690
  
Accounts receivable, net of allowance for doubtful accounts
    
93,757
   
17,341
 
Prepaid expenses and other current assets
    
84,289
   
8,035
 
Total current assets
    
1,747,449
   
30,066
 
               
PROPERTY AND EQUIPMENT - Net
   
4,450,880
   
2,957,341
 
               
OTHER ASSETS
              
Goodwill
    
1,630,609
   
348,557
 
Subscriber base -net
    
832,749
   
135,963
 
Trademarks
    
16,667
   
-
 
Refundable deposits
    
73,211
   
65,619
 
Debt issuance costs - net
    
71,883
   
39,996
 
Other assets
    
-
   
36,761
 
Total other assets
    
2,625,119
   
626,896
 
               
               
TOTAL ASSETS
  
$
8,823,448
  
$
3,614,303
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
CURRENT LIABILITIES:
              
Accounts payable and accrued expenses
  
$
1,309,666
  
$
613,186
  
Cash overdraft
    
46,614
   
63,860
 
Revolving line of credit
    
100,000.00
   
100,000
 
Loan payable to shareholder
    
-
   
160,000.00
 
Term loan payable - related party
    
3,000,000
   
-
 
Current portion of notes payable
    
163,927
   
35,176
 
Current portion of notes payable to shareholders
    
-
   
1,085,999.00
 
Current portion of deferred rent liability
    
57,007
   
-
 
Current portion of capital lease obligations
    
650,041
   
461,679
 
Deferred revenue
    
444,821
   
31,196
 
Total current liabilities
    
5,772,076
   
2,551,096
 
               
               
LONG-TERM LIABILITIES
              
Deferred rent liability, less current maturities
    
214,572
   
-
 
Notes payable, less current maturities
    
75,278
   
128,736
 
Notes payable to shareholders, less current maturities
    
-
   
5,000
 
Capital lease obligations, less current maturities
    
670,285
   
526,634
 
Total long term liabilities
    
960,135
   
660,370
 
               
COMMITMENTS AND CONTINGENCIES
              
               
STOCKHOLDERS' EQUITY:
              
Series A preferred stock, $0.001 par value ; 5,000,000 shares
              
authorized; 0 shares issued and outstanding at September
              
30, 2007 and at December 31, 2006
              
Common stock, $0.001 par value; 95,000,000 shares authorized;
              
8,101,770 shares issued and outstanding at September, 2007;
              
4,712,308 shares issued and outstanding at December 31, 2006.
    
8,102
   
4,712
 
Additional paid-in capital
    
12,985,409
   
6,446,036
 
Accumulated deficit
    
(10,902,274
)
  
(6,047,911
)
Total stockholders' equity
    
2,091,237
   
402,837
 
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  
$
8,823,448
  
$
3,614,303
  

Page 3 of 6
KEYON COMMUNICATIONS HOLDINGS, INC. AND RELATED ENTITIES
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

   
Three months
 
Nine months
  
   
ended September 30,
  
ended September 30,
  
   
2007
  
2006
  
2007
  
2006
  
REVENUES:
                  
Service and installation revenue
  
$
1,829,891
  
$
581,672
  
$
5,119,460
  
$
1,626,725
  
Support and other revenue
    
33,531
   
17,987
   
97,516
   
145,557
 
                           
Total revenues
    
1,863,422
   
599,659
   
5,216,976
   
1,772,282
 
                           
OPERATING COSTS AND EXPENSES:
                          
Payroll, bonuses and taxes
    
914,045
   
334,607
   
2,403,899
   
986,585
 
Depreciation and amortization
    
668,354
   
288,713
   
1,862,646
   
748,799
 
Other general and administrative expense
    
391,025
   
279,578
   
1,306,298
   
535,826
 
Network operating costs
    
673,478
   
186,210
   
1,662,310
   
497,136
 
Marketing and advertising
    
166,958
   
73,129
   
397,593
   
205,638
 
Installation expense
    
124,850
   
14,366
   
239,192
   
71,816
 
Professional fees
    
319,341
   
63,528
   
429,991
   
160,514
 
Stock based compensation
    
1,335,306
   
-
    
1,339,891
   
-
  
                           
Total operating costs and expenses
    
4,593,357
   
1,240,131
   
9,641,820
   
3,206,314
 
                           
LOSS FROM OPERATIONS
    
(2,729,935
)
  
(640,472
)
  
(4,424,844
)
  
(1,434,032
)
                           
OTHER INCOME (EXPENSE):
                          
Interest expense - Net of interest income
    
(136,621
)
  
(64,526
)
  
(429,520
)
  
(148,955
)
Minority interest in income
    
-
    
1,353
   
-
    
(238
)
Total other income (expense)
    
(136,621
)
  
(63,173
)
  
(429,520
)
  
(149,193
)
                           
PROVISION FOR INCOME TAXES
    
-
    
-
    
-
    
-
  
                           
NET LOSS
  
$
(2,866,556
)
$
(703,645
)
$
(4,854,363
)
$
(1,583,225
)
                           
Net loss per common share--basic and diluted
  
$
(0.40
)
$
(0.15
)
$
(0.81
)
$
(0.35
)
                           
Weighted average common shares outstanding--basic and diluted
    
7,217,569
   
4,712,308
   
6,001,741
   
4,471,791
 

Page 4 of 6
Keyon Communications Holdings, Inc. and Related Entities
Pro forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 2007 (Unaudited)
(Dollars in Millions)

   
KeyOn
nine months
ended
09/30/2007
  
Jan 2007
SpeedNet
Services
  
Microlnk
nine months
ended
09/30/2007
  
Adjustments
  
Pro forma
nine month
total
KeyOn
  
                       
Revenue
  
$
5,216,976
  
$
482,435
  
$
539,911
  
$
-
  
$
6,239,322
  
                                 
Total Operating Costs and Expenses
    
9,641,820
   
710,670
   
676,782
   
(2,125,442
) a,b,c,d
  
8,903,829
 
                                 
Loss from Operations
    
(4,424,844
)
  
(228,235
)
  
(136,870
)
  
2,125,442
   
(2,664,507
)
                                 
Total Other Income (Expense)
    
(429,520
)
  
(18,869
)
  
(662
)
  
14,651
 e  
(434,400
)
                                 
Net Loss
  
$
(4,854,363
)
$
(247,104
)
$
(137,532
)
$
2,140,093
  
$
(3,098,907
)
                                 
Reconciliation of Net Loss to EBITDA
                                
Loss from Operations
  
$
(4,424,844
)
$
(228,235
)
$
(136,870
)
$
2,125,442
  
$
(2,664,507
)
                                 
Depreciation and Amortization
    
1,862,646
   
170,567
   
77,681
   
(50,228
)
  
2,060,666
 
Q3 2007 Non-Cash Items-Other
   
1,539,891
   
-
   
-
   
(1,539,891
) f
  
-
 
                                 
Adjusted EBITDA
 
$
(1,022,307
)
$
(57,668
)
$
(59,189
)
$
535,323
  
$
(603,841
)
 
a.
$0.3 million represents the elimination of retention bonuses (plus payroll taxes) paid to top employees to stay during sale of business and elimination of duplicative resource salaries
b.
$0.05 million represents the depreciation adjustment for January for new fair market valuation of assets
c.
$0.2 million represents an adjustment rent due to relocation into one location
d.
$1.6 million represents an adjustment to Q3 2007 for one time non-cash related expenses
e.
$0.02 million represents an adjustment of interest charged on SpeedNet Services other debt that is not a liability under KeyOn SpeedNet
f.
To reverse the $1.5 million non-cash items already included in adjustment in total operating costs and expense
 
Keyon Communications Holdings, Inc. and Related Entities
Pro forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 2007 (Unaudited)
(Dollars in Millions)

   
For the three months ended,
  
For the nine months ended,
  
   
September 30,
2007
  
September 30,
2006
  
September 30,
2007
  
September 30,
2006
  
Revenue
  
$
1,863,422
  
$
599,659
  
$
5,216,976
  
$
1,772,282
  
                           
Loss from Operations
    
(2,729,935
)
  
(640,472
)
  
(4,424,844
)
  
(1,434,032
)
                           
Net Loss
  
$
(2,866,556
)
$
(703,645
)
$
(4,854,363
)
$
(1,583,225
)
                           
Reconciliation of Loss from Operations to Adjusted EBITDA
                          
                           
Loss from Operations
  
$
(2,729,935
)
$
(640,472
)
$
(4,424,844
)
$
(1,434,032
)
Add:
                          
Depreciation and Amortization Expense
    
668,354
   
288,713
   
1,862,646
   
748,799
 
Non-Cash Expenses - Other
    
1,535,306
   
-
   
1,539,891
   
-
 
                           
Adjusted EBITDA
  
$
(526,275
)
$
(351,759
)
$
(1,022,307
)
$
(685,233
)
 
Page 5 of 6
About KeyOn Communications Holdings, Inc.
KeyOn Communications Holdings Inc. (OTC BB: KEYO) is a leading provider of wireless broadband services to rural and underserved markets with populations generally less than 250,000.  KeyOn offers its broadband services along with voice over Internet protocol (VoIP) and satellite video services to both residential and business subscribers across 11 Western and Midwestern states. Through a combination of organic growth and four acquisitions, KeyOn has expanded its network footprint to reach approximately 50,000 square miles covering more than 2.1 million people as well as small-to-medium businesses.  With its successful track record of acquiring companies and growing its core subscriber base, KeyOn has established itself as one of the largest wireless broadband companies in the United States.  Management intends to drive subscriber growth through additional asset acquisitions as well as organic growth across the company’s expanding footprint by offering bundled services including the best value broadband, video and VoIP. The company intends to purchase spectrum licenses and opportunistically build mobile and/or nomadic WiMAX networks in and around its market footprint. 

Safe Harbor Statement
Certain statements contained in this press release are "forward-looking statements" within the meaning of applicable federal securities laws, including, without limitation, anything relating or referring to future financial results and plans for future business development activities, and are thus prospective. Forward-looking statements may include, without limitation, the company’s expectations regarding: future financial and operating performance and financial condition; plans, objectives and strategies; product development; industry conditions; the strength of its balance sheet; and liquidity and financing needs. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside of the company’s control, which could cause actual results to differ materially from such statements. For a more detailed description of the factors that could cause such a difference, please refer to the company’s filings with the Securities and Exchange Commission, including the information under the headings “Risk Factors” and “Forward-Looking Statements” in our Registration Statement on Form SB-2 filed on November 7, 2007. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements contained herein. The company undertakes no obligation to update or supplement such forward-looking statements.

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