BSML Invesco BulletShares 2021 Municipal Bond

WALNUT CREEK, Calif., Nov. 14 /PRNewswire-FirstCall/ -- BSML, Inc. (NASDAQ:BSML) formerly BriteSmile, Inc., a leading provider of state-of-the- art teeth-whitening services and products, today released results for the third quarter ended September 30, 2006. The results of BSML's continuing operations for the third quarter 2006 and all prior comparative quarters presented in this report reflect the results of BSML's 17 whitening centers, our retail product sales, supporting overhead, and related assets and liabilities. Discontinued operations presented in this report for all earlier comparative periods reflect the results of the Associated Centers business that was sold in March, 2006. For BSML's continuing business, total revenue reported for the third quarter was $6.7 million, up 30% compared to $5.2 million in the third quarter of 2005. The net loss in the third quarter of 2006 was $5.7 million or $(0.54) per share. This compares to a net loss of $2.7 million or $(0.25) per share for continuing operations in the third quarter of 2005. The loss in the third quarter 2006 reflects approximately $5.8 million of reserves and expenses due to certain legal matters. Excluding the impact of these legal reserves and expenses, BSML was close to breakeven on a net-income basis. At the end of September, the Company had $6.5 million of restricted cash reserved for the settlement of legal claims. EBITDA (earnings before interest, tax, depreciation, and amortization) for the third quarter ended September 30, 2006 was a negative $5.8 million, compared to a negative EBITDA of $2.3 million in the third quarter of 2005. Excluding the $5.8 million of reserves and expenses related to legal claims, BSML achieved breakeven EBITDA for the third quarter. EBITDA is a non-GAAP financial measure. More information regarding this non-GAAP financial measure, and a reconciliation of EBITDA to net loss, the most directly comparable GAAP measure, is provided below. "I am pleased with the performance of BSML in the third quarter," said John Reed, CEO of BSML. "Total whitening procedures performed in our 17 centers increased by 72% in the third quarter of 2006 compared to a year ago. This increase reflects a continued strong response to our lower procedure price of $399 combined with our free Smile Forever promotion, and higher sales of BriteSmile-to-Go whitening pen through the QVC television channel. While I am disappointed with the amount of legal expenses and accrual charges required in the third quarter, the Company is working very hard to resolve these legacy litigation issues as quickly and as cost-effectively as possible. Our whitening center and retail business has continued to show significant improvement over the prior year, including tight operating expense controls both in the centers and in our corporate office," said Mr. Reed. BSML will not have an earnings conference call this quarter. Please consult the Company's third quarter Form 10-Q filed with the SEC for more information regarding third quarter 2006 results. BSML markets the most advanced teeth whitening technology available through 17 state-of-the-art BSML Professional Teeth Whitening Centers under the "BriteSmile" brand. BSML Centers are currently operating in Beverly Hills, Irvine, Palo Alto, Walnut Creek, San Francisco and La Jolla, CA; Houston, TX; Denver, CO; Boston, MA; McLean, VA; Atlanta, GA; New York, NY; Chicago and Schaumburg, IL; and, Phoenix, AZ. For more information about BSML's procedure, call 1-800-BRITESMILE or visit the Company's Website at http://www.britesmile.com/ . This release, other than historical information, consists of forward- looking statements that involve risks and uncertainties such as the Company's ability to successfully and profitably operate the Spa Center business. Readers are referred to the documents filed by BSML with the Securities and Exchange Commission, specifically the Company's most recent reports on Forms 10-K and 10-Q, that identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. BSML and its affiliates disclaim any intent or obligation to update these forward- looking statements. Non-GAAP Financial Information BSML provides non-GAAP EBITDA or earnings before interest, taxes, depreciation and amortization as additional information for its operating results. These measures are not in accordance with, or an alternative for financial measures calculated in accordance with generally accepted accounting principles, including net income or loss, the most directly comparable GAAP measure, and may be different from non-GAAP measures used by other companies. BSML's management believes this non-GAAP measure is useful to investors because of: (i) the significant amount of non-cash depreciation and amortization historically incurred by the Company in its operating results ($0.7 million in 2005 and $0.4 million in 2006), (ii) the non-cash amortization of the discount on debt of $0.7 million in the third quarter of 2005, and (iii) the loss on the early extinguishment of debt of $5.0 million reported year-to-date 2006. Investors are cautioned that the items excluded from EBITDA are significant components in understanding and assessing BSML's financial performance. BSML, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In Thousands Except Share Data) 13 Weeks 13 Weeks 39 Weeks 39 Weeks Ended Ended Ended Ended 9/30/2006 9/24/2005 9/30/2006 9/24/2005 REVENUES: Center whitening fees, net $5,768 $4,178 $16,711 $12,758 Product and other revenue $943 $972 $3,795 $2,798 Total revenues, net $6,711 $5,150 $20,506 $15,556 OPERATING COSTS AND EXPENSES: Operating and occupancy costs $3,713 $3,420 $10,715 $10,122 Selling, general and administrative expenses $8,726 $3,742 $18,100 $11,668 Research and development expenses $45 $266 $135 $607 Total Operating Expense before depreciaton & amortization $12,484 $7,428 $28,950 $22,397 Operating Income/(Loss) before depreciation & amortization $(5,773) $(2,278) $(8,444) $(6,841) (EBITDA) Depreciation and amortization $415 $660 $1,236 $1,821 Gain/(Loss) from Continuing Operations $(6,189) $(2,938) $(9,680) $(8,662) OTHER INCOME/(EXPENSES): Amortization of discount on debt $-- $(652) $(530) $(1,952) Loss on early extinguishment of debt $-- $-- $(5,039) $-- Gain [loss] on mark-to-market of convertible note Instruments $-- $1,163 $-- $3,794 Gain on settlement of legal claim $-- $-- $1,257 $-- Other income/(expense), net $185 $(251) $(660) $(976) Gain/(Loss) from Continuing Operations before income tax $(6,004) $(2,678) $(14,652) $(7,796) INCOME TAX $(271) $30 $(225) $151 Net Income/(loss) from Continuing Operations $(5,733) $(2,708) $(14,427) $(7,947) Gain/(Loss) from Discontinued Operations, net of tax $-- $(1,777) $19,602 $(6,530) (2006 includes gain from sale of AC business, $14,664 and gain from lawsuit settlement, $5,202, net of tax) Net Income/(Loss) $(5,733) $(4,485) $5,175 $(14,477) BASIC/DILUTED NET LOSS PER SHARE FOR CONTINUING OPERATIONS $(0.54) $(0.25) $(1.37) $(0.75) BASIC NET INCOME/( LOSS) PER SHARE FOR DISCONTINUED OPERATIONS $-- $(0.17) $1.86 $(0.62) BASIC/DILUTED NET INCOME/(LOSS) PER COMMON SHARE $(0.54) $(0.42) $0.49 $(1.37) WEIGHTED AVERAGE SHARES - BASIC 10,549,423 10,549,130 10,549,326 10,529,321 WEIGHTED AVERAGE SHARES - DILUTED 10,549,423 10,549,130 10,565,632 10,529,321 Reconciliation of EBITDA to Net Income: 13 Weeks 13 Weeks 39 Weeks 39 Weeks Ended Ended Ended Ended 9/30/2006 9/24/2005 9/30/2006 9/24/2005 Net Income/(loss) from Continuing Operations $(5,733) $(2,708) $(14,427) $(7,947) Add back/(Subtract): Loss on early extinguishment of debt $-- $-- $5,039 $-- Add back/(Subtract): Other income/(expense), net $(185) $251 $660 $976 Add back/(Subtract): Amortization of debt discount $-- $652 $530 $1,952 Add back/(Subtract): Income tax expense $(271) $30 $(225) $151 Add back/(Subtract): Depreciation and amortization $415 $660 $1,236 $1,821 Add back/(Subtract) gain on settlement of legal claim $-- $-- $(1,257) Add back/(Subtract): mark-to-market of financial instruments related to conv. debt $-- $(1,163) $-- $(3,794) EBITDA $(5,773) $(2,278) $(8,444) $(6,841) BSML, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands, except share data) September 30, December 31, 2006 2005 ASSETS (unaudited) CURRENT ASSETS: Cash and cash equivalents $5,692 $5,518 Trade accounts receivable, net $610 $113 Inventories $926 $375 Assets held for sale $-- $12,214 Cash, restricted as to use $3,500 $-- Prepaid expenses and other $473 $1,159 Total current assets $11,201 $19,379 Property and equipment, net $4,640 $5,847 Cash, restricted as to use $7,812 $1,466 Other assets $924 $1,150 TOTAL ASSETS $24,577 $27,842 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $2,027 $3,695 Accrued liabilities $14,377 $7,533 Accrual for Center closures $179 $403 Gift certificate liability $982 $1,235 Smile Foreve - Deferred Revenue $1,872 $1,197 Liabilities held for sale $-- $803 Accrued interest due to a related party $264 Long-term debt with related party - current portion $-- $6,024 Convertible debt - current portion $-- $6,828 Convertible debt with a related party - current portion $-- $621 Financial instruments related to convertible debt - current portion $-- $9 Capital lease obligations with related parties - current portion $-- $73 Total current liabilities $19,437 $28,685 LONG TERM LIABILITIES: Accrual for Center closures $331 $242 Smile Forever Deferred Revenue-LT $972 $313 Other Long Term Liabilities $935 $1,053 Total long-term liabilities $2,238 $1,608 Total liabilities $21,675 $30,293 SHAREHOLDERS' EQUITY (DEFICIT): Common stock, $.001 par value; 50,000,000 shares authorized; 10,549,130 shares issued and outstanding $38 $38 Preferred Stock, no par value; 5,000,000 shares authorized and none issued or outstanding $-- $-- Additional paid-in capital $173,516 $173,340 Accumulated Deficit $(170,652) $(175,829) Total shareholders' equity (deficit) $2,902 $(2,451) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $24,577 $27,842 DATASOURCE: BSML, Inc. CONTACT: Kenneth A. Czaja, CFO, +1-925-941-6260 Web site: http://www.britesmile.com/

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