MTM Technologies Receives $2 Million in Funding and Announces Financial Results for Third Fiscal Quarter of 2009 Ended December 31, 2008

Business Wire, Feb 13, 2009

* Columbia Partners increases its debt facility by $1 million

* Investor FirstMark lends $1 million

* Achieves Positive EBITDA of $617,000

STAMFORD, Conn. -- MTM Technologies, Inc. (NASDAQ: MTMC), a leading national provider of innovative IT solutions and services to Global 2000 and mid-size companies, today announced financial results for its third fiscal quarter ended December 31, 2008 and receipt of additional funding to improve its working capital position.

Columbia Partners LLC, MTM's existing secured debt facility lender, increased the existing debt amount by lending an additional $1.0 million. Columbia also agreed to ease certain financial covenants on a temporary basis.

MTM's existing investor, FirstMark Capital (formerly Pequot), agreed to loan MTM an additional $1.0 million. Principal and interest are due in December 2009, with interest payable in cash or preferred stock at MTM's option. In connection with the loan, FirstMark received warrants to purchase 137,931 shares of preferred stock at an exercise price of $0.725 per share.

MTM's credit facility lender, GE Commercial Distribution Finance Corporation ("GE CDF"), also modified its agreement to ease certain financial covenants on a temporary basis and to allow MTM to proceed with the new funding.

Key Financial Highlights for Third Quarter of Fiscal Year 2009

* Positive EBITDA of $617,000;

* Gross Margin increased 2.5% over prior quarter;

* Selling, General & Administrative expenses, net of depreciation, amortization and stock-based compensation costs, decreased $1.6 million over the prior quarter.

Third Quarter Fiscal Year 2009 Results

Net revenue was $40.6 million for the quarter ended December 31, 2008, representing a decrease of 19% over the prior quarter and a decline of 31% over the comparable prior year period. Product revenue was $26.7 million or 66% of total revenue. Product revenue was down 26% as compared to the previous quarter and down 35% over the comparable prior year period. For the quarter, services revenue was $13.9 million, representing 34% of total revenue. Services revenue was down 2% as compared to the previous quarter and down 24% on a year-over-year basis.

Gross profit was $10.1 million for the third quarter of fiscal 2009, resulting in an overall gross margin of 24.9%. Gross margins increased 2.5% from the previous quarter and were up 0.8% as compared to the comparable prior year period. Product gross margin for the third quarter of fiscal 2009 was 17.1%, an increase of 0.7% as compared to the previous quarter and relatively flat as compared to the prior year's quarter. Services gross margin was 39.9% in the third quarter of fiscal 2009, which was up 2.4% from the previous quarter and relatively flat as compared to the prior year's quarter.

Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation costs, were $9.5 million, a decrease of approximately $1.6 million over the prior quarter and a decrease of $3.0 million as compared to the same quarter in the prior year.

EBITDA for the third fiscal quarter ended December 31, 2008 was $617,000 as compared to a positive EBITDA of $52,000 in the previous quarter and $1.8 million in the third quarter of fiscal 2008.

Net loss available to common shareholders was $5.2 million, which includes $5.3 million of non-cash items related to depreciation, amortization, stock-based compensation, taxes, interest and preferred stock dividends, or $5.78 loss per share on a split-adjusted basis, for the quarter ended December 31, 2008, compared to a loss of $3.6 million, or $4.03 loss per share on a split adjusted basis, in the same quarter a year ago. Earnings per share take into account the one-for-fifteen reverse stock split that was completed on June 25, 2008.

Financial Outlook

As previously announced, given the uncertainties in the overall economy, MTM has withdrawn any previous financial guidance and is suspending future guidance.

Steve Stringer, President and Chief Executive Officer, said "While our third quarter top line was disappointing, we are pleased that we have remained EBITDA positive and maintained impressive product and service margins. We believe the additional financing and modifications by Columbia, GE CDF and FirstMark further demonstrate their support and belief in our business model even in this current global economic environment."

Inquiries concerning this earnings press release and subsequent financial information can be made by contacting MTM at investorrelations@mtm.com.

MTM and MTM Technologies are trademarks of MTM Technologies, Inc. All other company and trademark names are the property of their respective owners.

Non-GAAP Financial Measures

MTM Technologies believes that EBITDA, which is not a recognized measure for financial presentation under United States generally accepted accounting principles ("GAAP"), provides investors and management with a useful supplemental measure of its operating performance because it more closely approximates the cash generating ability of the Company as compared to operating income (loss). EBITDA excludes the impact of interest, taxes, depreciation, amortization, stock based compensation and other expense. A table reconciling net loss calculated in accordance with GAAP to EBITDA is included in the financial statements in this release. EBITDA does not have any standardized definition and is therefore unlikely to be comparable to similar measures presented by other reporting companies.