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enherent Corp. Reports Earnings For The Second Quarter of 2008 and Continues its Entrance Into Advanced Analytics Market

FOR IMMEDIATE RELEASE
 
Iselin, New Jersey (August 14, 2008) - enherent Corp. (OTC BB: ENHT, www.enherentcorp.com), an information technology services company, today announced its results for the second quarter of 2008.
 
Second Quarter 2008 Financial Results
 
Revenues for the second quarter ended June 30, 2008 were $7.2 million, compared to revenues of $8.5 million in the quarter ended June 30, 2007. Net income decreased by approximately $103,000 to $39,000, or $0.00 per diluted share, for the second quarter of 2008 as compared to net income of approximately $142,000, or $0.00 per diluted share, for the comparable quarter of 2007. The decrease in net income resulted primarily from a weakening economy and an increase in non-cash compensation and depreciation costs of $45,000 during the quarter. Earnings before interest, taxes, depreciation and amortization, or EBITDA, totaled $266,000 for the second quarter of 2008 as compared to $384,000 for the comparable quarter of 2007. EBITDA, adjusted to add back stock-based compensation, or Adjusted EBITDA, totaled $327,000 for the second quarter of 2008 as compared to $420,000 for the comparable quarter of 2007.


 
Six Months 2008 Financial Results
 
Revenues for the six months ended June 30, 2008 were $14.2 million compared to $16.0 million in the six months ended June 30, 2007. Net income decreased by approximately $80,000 to $112,000, or $0.00 per diluted share, for the six months ended June 30, 2008 as compared to net income of approximately $192,000, or $0.00 per diluted share, for the comparable six months ended June 30, 2007. The decrease in net income resulted primarily from a decreased demand related to concerns about a weakening economy and an increase in non-cash compensation and depreciation costs of $39,000 during six months ended June 30, 2008. Earnings before interest, taxes, depreciation and amortization, or EBITDA, totaled $562,000 for the six months ended June 30, 2008 as compared to $666,000 for the six months ended June 30, 2007. EBITDA, adjusted to add back stock-based compensation, or Adjusted EBITDA, totaled $644,000 for the six months ended June 30, 2008 as compared to $751,000 for the six months ended June 30, 2007.
 
         


Pamela Fredette, Chairman, CEO and President, commenting on the financial results for the second quarter 2008, said "Despite a difficult economic environment, we were able to deliver positive bottom line performance while absorbing a market-driven slowdown. While continuing to invest in new service offerings including Advanced Analytics, we have also focused on containing our costs and reducing our debt.  Since December 2005, the Company has reduced its long term debt by $1.0 million. We believe these actions better position us to withstand the challenging economic climate we now face as well as provide us greater flexibility in considering options for future growth.”



 
Forward-Looking and Cautionary Statements
 
Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward- looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on certain assumptions and analyses made by the Company derived from its experience and perceptions. Actual results and developments may vary materially from those described because they are subject to a number of known and unknown risks and uncertainties. Such risks and uncertainties include, but are not limited to, future demand for the Company’s services; general economic, market and business conditions; the Company’s ability to increase the amount of services rendered to existing clients and develop new clients and reduce costs of providing services; the Company’s ability to recruit and retain IT professionals; and various other factors discussed in the Company’s filings with the Securities and Exchange Commission including those set forth under Item 1A of the Company’s recent Form 10-K. The Company disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments, or otherwise.
 
NON-GAAP Financial Measures:
 
enherent Corp. utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall business performance, for making operating decisions and for forecasting and planning future periods. The Company considers the use of non-GAAP financial measures helpful in assessing its current financial performance and prospects for the future. While the Company uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, the Company does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, the Company believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. In assessing the overall health of its business during the three months and six months ended June 30, 2008 and 2007, the Company excluded items in the following general categories, each of which are described below:
 
Stock-based Compensation and Deferred Compensation. The Company believes that because of the variety of equity awards used by companies, varying methodologies for determining stock-based compensation and the assumptions and estimates involved in those determinations, the exclusion of non-cash stock-based compensation enhances the ability of management and investors to understand the impact of non-cash stock-based compensation on our operating results. Further, the Company believes that excluding stock-based compensation expense allows for a more transparent comparison of its financial results to previous periods. In addition, the Company prepares and maintains its budgets and forecasts for future periods on a basis consistent with this non-GAAP financial measure.
 
Earnings Before Interest, Taxes, Depreciation and Amortization. The press release contains references to EBITDA and Adjusted EBITDA and provides reconciliations of EBITDA and Adjusted EBITDA to Net income (loss) on the face of the attached statements of operations. The Company’s management believes that EBITDA is used by investors and analysts as an alternative to GAAP measures when evaluating the Company’s performance in comparison to other companies. In order to fully assess the Company’s financial operating results, management believes that EBITDA is an appropriate measure of evaluating the Company’s operating performance, because it eliminates the effects of financing and accounting decisions. This measure is also significant to institutional lenders, and is considered an important internal benchmark of performance by the Company. The Company’s management uses EBITDA to measure the Company’s performance against internal performance targets, which are based on EBITDA. In addition, the Company further excludes stock-based compensation, deferred compensation and severance charges in calculating Adjusted EBITDA. The Company believes excluding severance and deferred compensation charges, as well as the non-cash charges for stock-based compensation, allows for a better assessment of its normalized internal operations and comparisons to industry performance.
 
Each of the non-GAAP financial measures described above, and used in this press release, should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of each of these non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measure reflect the exclusion of items that are recurring and will be reflected in the Company’s financial results for the foreseeable future. The Company compensates for these limitations by providing specific information in the reconciliation included in this press release regarding the GAAP amounts excluded from the non-GAAP financial measures. In addition, as noted above, the Company evaluates the non-GAAP financial measures together with the most directly comparable GAAP financial information.
 
(1) GAAP stands for Generally Accepted Accounting Principles.
 
CONTACT INFORMATION:
 
Lori Stanley
enherent Corp.
(732) 603-3859
 



 
 
ENHERENT CORP. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
 
  
June 30,
 2008
 (Unaudited)
 
 
December 31,
 2007
 (Audited)
 
ASSETS
  
 
 
 
 
 
 
 
Current assets:
  
 
 
 
 
 
 
 
Cash and cash equivalents
  
$
1,455,249
 
 
$
1,121,694
 
Accounts receivable, net
  
 
4,656,969
 
 
 
3,844,726
 
Prepaid expenses and other current assets
  
 
327,997
 
 
 
143,981
 
 
  
 
 
 
 
 
 
 
Total current assets
  
 
6,440,215
 
 
 
5,110,401
 
Furniture, equipment and improvements, net
  
 
179,547
 
 
 
179,794
 
Goodwill
  
 
4,334,278
 
 
 
4,334,278
 
Other intangibles, net
  
 
175,000
 
 
 
225,000
 
Deferred financing costs, net
  
 
211,679
 
 
 
280,986
 
Other assets
  
 
40,370
 
 
 
41,833
 
 
  
 
 
 
 
 
 
 
TOTAL
  
$
11,381,089
 
 
$
10,172,292
 
 
  
 
 
 
 
 
 
 
LIABILITIES
  
 
 
 
 
 
 
 
Current liabilities:
  
 
 
 
 
 
 
 
Revolving credit facility
  
$
3,419,418
 
 
$
2,824,691
 
Current portion of long-term debt
  
 
656,485
 
 
 
577,311
 
Accounts payable and accrued expenses
  
 
3,562,137
 
 
 
2,884,320
 
Deferred revenue
  
 
124,744
 
 
 
169,647
 
Accrued compensation and benefits
  
 
1,105,307
 
 
 
1,005,359
 
 
  
 
 
 
 
 
 
 
Total current liabilities
  
 
8,868,091
 
 
 
7,461,328
 
Long-term liabilities:
  
 
 
 
 
 
 
 
Long-term debt, net of current portion above
  
 
2,564,289
 
 
 
2,956,189
 
 
  
 
 
 
 
 
 
 
Total liabilities
  
 
11,432,380
 
 
 
10,417,517
 
 
  
 
 
 
 
 
 
 
CAPITAL DEFICIENCY
  
 
 
 
 
 
 
 
Preferred stock, $.001 par value; authorized—10,000,000 shares, issued—none
  
 
—  
 
 
 
—  
 
Common stock, $.001 par value, authorized—101,000,000 shares, issued and outstanding – 52,375,653 as of
 June 30, 2008 and December 31, 2007
  
 
52,376
 
 
 
52,376
 
Additional paid-in capital
  
 
27,698,974
 
 
 
27,616,974
 
Accumulated deficit
  
 
(27,802,641
)
 
 
(27,914,575
)
 
  
 
 
 
 
 
 
 
Total capital deficiency
  
 
(51,291
)
 
 
(245,225
)
 
  
 
 
 
 
 
 
 
TOTAL
  
$
11,381,089
 
 
$
10,172,292
 
 
  
 
 
 
 
 
 
 
 



 
 
 
ENHERENT CORP. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Three Months Ended
June 30,
 
 
Six Months Ended
June 30,
 
 
  
2008
 
 
2007
 
 
2008
 
 
2007
 
Revenues:
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service revenue
  
$
6,307,124
 
 
$
7,373,538
 
 
$
12,749,256
 
 
$
14,523,344
 
Equipment and software revenue
  
 
889,426
 
 
 
1,108,273
 
 
 
1,492,473
 
 
 
1,505,980
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
  
 
7,196,550
 
 
 
8,481,811
 
 
 
14,241,729
 
 
 
16,029,324
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenues:
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
  
 
4,753,304
 
 
 
5,681,184
 
 
 
9,751,073
 
 
 
11,274,762
 
Cost of equipment and software
  
 
738,015
 
 
 
1,002,472
 
 
 
1,267,770
 
 
 
1,248,804
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenues
  
 
5,491,319
 
 
 
6,683,656
 
 
 
11,018,843
 
 
 
12,523,566
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
  
 
1,705,231
 
 
 
1,798,155
 
 
 
3,222,886
 
 
 
3,505,758
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative
  
 
1,438,776
 
 
 
1,413,869
 
 
 
2,661,213
 
 
 
2,839,979
 
Depreciation and amortization expense
  
 
85,972
 
 
 
 
65,876
 
 
 
171,584
 
 
 
129,566
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating expenses
  
 
1,524,748
 
 
 
1,479,745
 
 
 
2,832,797
 
 
 
2,969,545
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
  
 
180,483
 
 
 
318,410
 
 
 
390,089
 
 
 
 536,213
 
Interest  expense
  
 
(147,345
)
 
 
(175,530
)
 
 
(280,225
)
 
 
(338,427)
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
  
 
33,138
 
 
 
144,880
 
 
 
109,864
 
 
 
197,786
 
 
 
 
 
 
Income tax (provision) credit
  
 
5,931
 
 
 
(3,246
)
 
 
2,070
 
 
 
(6,246
)
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET INCOME
  
$
39,069
 
 
$
141,634
 
 
$
111,934
 
 
$
191,540
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per share
  
$
0.00
 
 
$
0.00
 
 
$
0.00
 
 
$
0.00
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares used in computing basic net income per share
  
 
52,375,653
 
 
 
50,661,451
 
 
 
52,375,653
 
 
 
50,661,451
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net income per share
  
$
0.00
 
 
$
0.00
 
 
$
0.00
 
 
$
0.00
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares used in computing diluted net income per share
  
 
53,090,201
 
 
 
51,375,409
 
 
 
 
53,075,948
 
 
 
51,262,355
 
 



 
 
 
ENHERENT CORP. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Three Months Ended
  
Six Months Ended
 
 
  
June 30, 2008
  
June 30, 2007
  
June 30, 2008
  
June 30, 2007
 
Net income, as reported
  
$
39,069
  
$
141,634
  
$
111,934
  
$
191,540
 
 
Interest (income) expense, net
  
 
147,345
  
 
173,530
  
 
280,225
  
 
338,427
 
 
Income tax (credit) provision
  
 
(5,931
)  
 
3,246
  
 
(2,070
)  
 
6,246
 
 
Depreciation and amortization
  
 
85,972
  
 
65,876
  
 
171,584
  
 
129,566
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
EBITDA
  
 
266,455
  
 
384,286
  
 
561,673
 
 
665,779
 
 
Adjustments:
  
 
 
  
 
 
  
 
 
  
 
 
 
 
Stock based compensation
  
 
61,000
  
 
36,000
  
 
82,000
  
 
85,000
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
Adjusted EBITDA
  
$
327,455
  
$
420,286
  
$
643,673
  
$
750,779
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
 
 
 

 
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