Speedemissions, Inc. Reports Second Quarter 2012 Results

Marketwired

ATLANTA, GA--(Marketwire -08/15/12)- Speedemissions, Inc. (SPMI), a leading vehicle emissions testing and safety inspections company with stores in Atlanta, Houston, St. Louis and Salt Lake City today announced its financial results for the second quarter ended June 30, 2012.

Second Quarter 2012:

  • Revenue decreased (7.7%) or $166K to $1,986,863 in the second quarter of 2012 versus $2,152,831 in the second quarter of 2011. The decrease in revenue was due to a drop in same store sales of 6.3% or $133K and the closing of an underperforming store in Q2, 2011. The decline in same store sales is mainly attributable to increased competition at our Texas and Utah locations.
  • Same store operating expenses decreased by $66K or (4.9%).
    General and administrative expenses decreased $84K, or (20.1%) compared to the prior year Q2.
    Both the reduction in store operating expense and the decrease in G & A are a direct result of the cost-cutting measures implemented during the middle of the first quarter of 2012.
  • The Company incurred a net loss of $76,000, or ($0.0022) per diluted share in the second quarter of 2012 compared to net loss of $92,000 or ($0.0029) per diluted share in the second quarter of 2011. A large majority of the operating loss is due to one-time legal fees.

YTD 6-Months ended June 2012:

  • Revenue decreased $356K or (8.4%) to $3,907,869 in the first half of 2012 compared to $4,263,957 in the first half of 2011. During the same period of 2011, we closed two underperforming Houston stores which accounted for $83K of the revenue decrease.
  • The decrease in revenue was primarily due to a decrease in same store sales of 6.5%. The decrease in same store sales is mainly attributable to increased competition and pricing discounts.
  • Same store operating expenses decreased by (5.3%) or $146K in the first half of 2012 compared to the first half of 2011.
  • General and administrative expenses were decreased significantly by (16.5%) or $125K mainly due to corporate staff reductions, rents reduced, service contracts renegotiate and a reduction in professional fees.
  • A net loss of $913,000 was recorded in the first half of 2012 compared to net loss of $236,000 share in the first half of 2011.

Rich Parlontieri, President and Chief Executive Officer of Speedemissions, commented, "While we continue to be affected by the increased competition and pricing adjustments, we have taken several positive steps to grow and diversify our business. The selling of light bulbs, windshield wipers, etc. in 24 of our stores has had a positive effect on our top line. In addition, our CARbonga-SRI (safety & recall) iPhone app® continues to attract more customers as the average consumer sees this app as a great 'Life Style' benefit when buying a used car. We see the recent announcement about franchising the Speedemissions as another step in getting the company back to profitability. These measures, coupled with the securing of a $2.0 million revolving line of credit from TCA Global Credit Master Fund LP, should assist us in achieving our long-term growth strategies."

About Speedemissions Inc. http://www.speedemissions.com; http://www.carbonga.com

Speedemissions, Inc., based in Atlanta, Georgia, is a leading vehicle emissions testing and safety inspections company in the United States. We provide services in certain areas where auto testing is mandated by the Environmental Protection Agency (EPA). Since the emissions testing market is highly fragmented, Speedemissions expects to be the first company to create a national brand offering their customers quick and efficient vehicle emissions testing service. The current focus of the company is in the Atlanta, Georgia; Houston, Texas; St. Louis, Missouri and Salt Lake City, Utah markets.

Certain statements contained in this news release regarding matters that are not historical facts may be forward-looking statements. Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, uncertainties pertaining to continued market acceptance for Speedemissions' products and services, its ability to succeed in growing revenue, the effect of new competitors in its market, integration of acquired businesses, and other risk factors identified from time to time in its filings with the Securities and Exchange Commission.

 

Speedemissions, Inc. and Subsidiaries
Consolidated Balance Sheets

June 30, December 31,
2012 2011
------------- -------------
(unaudited)
Assets

Current assets:
Cash $ 189,589 $ 129,095
Notes receivable - current portion 12,000 21,125
Certificate and merchandise inventory 63,646 59,822
Other current assets 114,488 59,320
------------- -------------
Total current assets 379,723 269,362
Notes receivable, net of current portion 75,424 79,914
Property and equipment, at cost less
accumulated depreciation and amortization 450,823 539,673
Goodwill 1,240,152 1,240,152
Other assets 104,363 104,363
------------- -------------
Total assets $ 2,250,485 $ 2,233,464
============= =============

Liabilities and Shareholders' Deficit

Current liabilities:
Line of credit $ 350,000 $ 90,000
Note payable 55,000 55,000
Accounts payable 209,952 220,625
Accrued liabilities 195,801 200,096
Current portion of capitalized lease
obligations 17,010 40,659
Current portion of equipment financing
obligations 12,653 24,780
Current portion - deferred rent 14,795 14,795
------------- -------------
Total current liabilities 855,211 645,955
Capitalized lease obligations, net of current
portion - 681
Deferred rent 122,585 121,390
Other long term liabilities 7,350 7,350
------------- -------------
Total liabilities 985,146 775,376
Commitments and contingencies
Series A convertible, redeemable preferred 4,579,346 4,579,346
stock, $.001 par value, 5,000,000 shares
authorized, 5,133 shares issued and
outstanding; liquidation preference:
$5,133,000
------------- -------------

Shareholders' Deficit:
Common stock, $.001 par value, 250,000,000 34,618 34,618
shares authorized, 34,688,166 shares Issued
and outstanding at June 30, 2012 and December
31, 2011
Additional paid-in capital 15,918,329 15,918,329
Accumulated deficit (19,266,954) (19,074,205)
------------- -------------
Total shareholders' deficit (3,314,007) (3,121,258)
------------- -------------
Total liabilities and shareholders'
deficit $ 2,250,485 $ 2,233,464
============= =============


Consolidated Statements of Operations
(unaudited)

Three Months Ended Six Months Ended
June 30 June 30
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------

Revenue $ 1,986,864 $ 2,152,831 $ 3,907,869 $ 4,263,957
Costs of operations:
Cost of emission
certificates 443,750 480,427 869,496 950,495
Store operating
expenses 1,281,780 1,383,888 2,594,332 2,825,775
General and
administrative
expenses 333,005 416,718 632,047 757,039
(Gain) loss on sale of
non-strategic assets - (39,622) (2,458) (40,622)
----------- ----------- ----------- -----------
Operating loss (71,671) (88,580) (185,548) (228,730)
Interest income
(expense)
Interest income 755 760 1,510 1,519
Interest expense (5,051) (4,648) (8,711) (9,208)
----------- ----------- ----------- -----------
Interest expense,
net (4,296) (3,888) (7,201) (7,689)
----------- ----------- ----------- -----------
Net loss $ (75,967) $ (92,468) $ (192,749) $ (236,419)
=========== =========== =========== ===========

Basic and diluted net
loss per share $ 0.00 $ (0.00) $ (0.01) $ (0.01)
=========== =========== =========== ===========

Weighted average common
shares outstanding,
basic and diluted 34,688,166 31,692,498 34,688,166 31,660,755
=========== =========== =========== ===========


Speedemissions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)

Six Months Ended
June 30,
--------------------
2012 2011
--------- ---------
Cash flows from operating activities:
Net loss $(192,749) $(236,419)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 91,278 107,830
(Gain) loss on sale of assets (2,458) (40,622)
Share-based compensation - 54,842
Changes in operating assets and liabilities:
Certificate and merchandise inventory (3,823) (1,877)
Other current assets (55,169) (32,835)
Other assets - 200
Accounts payable and accrued liabilities (14,968) (17,101)
Other liabilities 1,195 (35,570)
--------- ---------
Net cash used in operating activities (176,694) (201,552)
--------- ---------

Cash flows from investing activities:
Proceeds from note receivable 13,615 6,000
Proceeds from sales of property and equipment 3,100 28,000
Purchases of property and equipment (3,070) (7,006)
--------- ---------
Net cash provided by investing activities 13,645 26,994
--------- ---------

Cash flows from financing activities:
Net proceeds from warrant exercise - 64,000
Proceeds from line of credit 355,000 435,262
Payments on line of credit (95,000) 375,000
Payments on equipment financing obligations (12,127) (9,505)
Payments on capitalized leases (24,330) (21,670)
--------- ---------
Net cash provided by financing activities 223,543 93,087
--------- ---------
Net (decrease) increase in cash 60,494 (81,471)
Cash at beginning of period 129,095 261,600
--------- ---------
Cash at end of period $ 189,589 $ 180,129
========= =========

Supplemental Information:
Cash paid during the period for interest $ 8,469 $ 8,953
========= =========

Supplemental Disclosure of Non-Cash Activity:
Note receivable from sale of assets - $ 15,000
========= =========
Contact:
For Further Information:
Contact
Danny Daughtery
Controller
770-306-7667

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