BOCA RATON, Fla., May 20 /PRNewswire-FirstCall/ — Sunair Services Corporation (NYSE Amex: SNR) announced financial results for its second fiscal quarter ended March 31, 2009.

Revenues from continuing operations for the second quarter ended March 31, 2009 were $12.6 million, compared to revenues of $14.3 million for the second quarter of the prior year. The Company incurred a loss from continuing operations of $(1,086,685) for the second fiscal quarter ended March 31, 2009, or $(0.08) per basic and diluted share, compared to a loss of $(1,239,404) for the same quarter last year, or $(0.09) per basic and diluted share.

The Company incurred a tax affected income from discontinued operations of $275,000 for the second quarter of 2009, or $0.02 per basic and diluted share, compared to tax affected income of $172,208 from discontinued operations for the comparable period last year, or $0.01 per basic and diluted share.

The Company reported a net loss of $(811,685) for the second quarter ended March 31, 2009, or $(0.06) per basic and diluted share, compared to a net loss of $(1,067,196) for the same quarter last year, or $(0.08) per basic and diluted share.

Comments from Management

Jack I. Ruff, Chief Executive Officer and President of Sunair Services stated, “This is our third consecutive quarter of improved operating results over last year. Unfortunately our earnings results were negatively impacted in the second quarter by significant increased legal expenses due to a shareholder dispute. Despite this, our commitment to improving Sunair’s operations and profitability were demonstrated through our enhanced financial performance. We have instituted various initiatives that focus on revenue growth which will both help our Company in the current challenging business environment and strengthen Sunair’s long-term growth prospects. Our focus remains revenue growth, increasing profitability and deleveraging.”

ABOUT SUNAIR

Sunair Services Corporation, a Florida corporation, through its wholly owned subsidiary, Middleton Pest Control, Inc., with headquarters located in Orlando, Florida, provides pest control and lawn care services to both residential and commercial customers. Middleton provides essential pest control services and protection against termites and insects to homes and businesses. In addition, Middleton supplies lawn care services to homes and businesses, which includes fertilization treatments and protection against disease, weeds and insects for lawns and shrubs. For more information about Sunair, please visit http://www.sunairservices.com.

Information Regarding Forward Looking Statements

Some of the statements in this press release, including those that contain the words “anticipate,” “believe,” “plan,” “estimate,” “expect,” “should,” “intend” and other similar expressions, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or those of our industry to be materially different from any future results, performance or achievements expressed or implied by those forward-looking statements. Among the factors that could cause actual results, performance or achievement to differ materially from those described or implied in the forward-looking statements include the success of the Company’s growth initiatives, demand for the Company’s lawn care and pest control services, general economic conditions, competition, potential technology changes, the risks inherent in new product and service introductions, the risks inherent in the entry into new geographic markets, and other factors included in Sunair’s filings with the SEC, including but not limited to the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2009. Copies of Sunair’s SEC filings are available from the SEC or may be obtained upon request from Sunair. Sunair does not undertake any obligation to update the information contained herein, which speaks only as of this date.

                   SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                    AS OF MARCH 31, 2009 AND SEPTEMBER 30, 2008
                                    (UNAUDITED)

                                                   March 31,    September 30,
                                                     2009           2008
                                                  ----------     ----------
                                      ASSETS
      CURRENT ASSETS:

      Cash and cash equivalents                   $1,267,875     $2,974,382
      Accounts receivable, net                     1,905,884      2,597,447
      Inventories, net                             1,185,965      1,403,832
      Prepaid and other current assets               631,856      2,829,535
                                                     -------      ---------
        Total Current Assets                       4,991,580      9,805,196
                                                   ---------      ---------

      PROPERTY, PLANT, AND EQUIPMENT, net          1,601,888      1,907,213

      OTHER ASSETS:

      Software costs, net                            439,849        246,979
      Customer list, net                           5,594,502      7,456,704
      Goodwill                                    62,112,528     62,112,528
      Other assets                                   227,751        254,790
                                                     -------        -------
        Total Other Assets                        68,374,630     70,071,001
                                                  ----------     ----------

      TOTAL ASSETS                               $74,968,098    $81,783,410
                                                 ===========    ===========

            LIABILITIES AND STOCKHOLDERS' EQUITY

      CURRENT LIABILITIES:

      Accounts payable                            $1,218,066     $1,787,406
      Accrued expenses                             3,470,494      3,256,342
      Unearned revenues                              665,272        863,770
      Customer deposits                            2,855,478      3,149,715
      Revolving line of credit, current portion            -      4,100,000
      Notes payable and capital leases,
       current portion                             2,574,012      2,306,189
                                                   ---------      ---------
        Total Current Liabilities                 10,783,322     15,463,422
                                                  ----------     ----------

      LONG TERM LIABILITIES:

      Notes payable and capital leases,
       net of current portion                      3,101,922      3,682,184
      Note payable -related party                  5,000,000      5,000,000
      Revolving line of credit, net of
       current portion                             5,500,000      5,500,000
                                                   ---------      ---------
        Total Long Term Liabilities               13,601,922     14,182,184
                                                  ----------     ----------

      TOTAL LIABILITIES                           24,385,244     29,645,606
                                                  ----------     ----------

      STOCKHOLDERS' EQUITY:

      Preferred stock, no par value                        -              -
      Common stock, $.10 par value                 1,309,110      1,309,110
      Additional paid-in capital                  52,872,519     52,756,311
      Accumulated deficit                         (3,598,775)    (1,927,617)
                                                  ----------     ----------
        Total Stockholders' Equity                50,582,854     52,137,804
                                                  ----------     ----------

      TOTAL LIABILITIES AND
       STOCKHOLDERS' EQUITY                      $74,968,098    $81,783,410
                                                 ===========    ===========

                    SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (UNAUDITED)

                              FOR THE SIX MONTHS       FOR THE THREE MONTHS
                                ENDED MARCH 31,           ENDED MARCH 31,
                              2009         2008         2009         2008
                              ----         ----         ----         ----

      SALES               $25,324,234  $27,815,388  $12,604,368  $14,337,757

      COST OF SALES         9,604,002   10,855,628    4,552,309    5,615,361
                            ---------   ----------    ---------    ---------

      GROSS PROFIT         15,720,232   16,959,760    8,052,059    8,722,396

      SELLING,
       GENERAL AND
       ADMINISTRATIVE
       EXPENSES            17,143,024   19,821,852    8,926,832    9,667,352
                           ----------   ----------    ---------    ---------
      LOSS FROM
       OPERATIONS          (1,422,792)  (2,862,092)    (874,773)    (944,956)

      OTHER INCOME
       (EXPENSES):
        Interest income         1,852      108,726          151       62,689
        Interest expense     (476,559)    (725,937)    (213,534)    (346,310)
        (Loss) gain
         on disposal
         of assets            (10,353)      (6,157)       1,471      (10,827)
        Gain on
         extinguishment
         of debt               25,000            -            -            -
                               ------         ----         ----         ----
          Total Other
           Income
           (Expenses)        (460,060)    (623,368)    (211,912)    (294,448)
                             --------     --------     --------     --------
      LOSS FROM
       OPERATIONS
       BEFORE
       INCOME TAXES        (1,882,852)  (3,485,460)  (1,086,685)  (1,239,404)

      INCOME TAX
       PROVISION                    -            -            -            -
                                 ----         ----         ----         ----
      LOSS FROM
       CONTINUING
       OPERATIONS          (1,882,852)  (3,485,460)  (1,086,685)  (1,239,404)

      (LOSS) INCOME
       FROM
       DISCONTINUED
       OPERATIONS,
       NET                    211,694      304,451      275,000      172,208
                          -----------  -----------    ---------  -----------
      NET LOSS            $(1,671,158) $(3,181,009)   $(811,685) $(1,067,196)
                          ===========  ===========    =========  ===========

      BASIC AND
       DILUTED
       (LOSS) INCOME
       PER SHARE:
        CONTINUING
         OPERATIONS            $(0.14)      $(0.26)      $(0.08)      $(0.09)
                               ======       ======       ======       ======
        DISCONTINUED
         OPERATIONS             $0.01        $0.02        $0.02        $0.01
                                =====        =====        =====        =====
        NET LOSS               $(0.13)      $(0.24)      $(0.06)      $(0.08)
                               ======       ======       ======       ======

      WEIGHTED AVERAGE
       SHARES
       OUTSTANDING:
        BASIC and
         DILUTED           13,091,088   13,091,088   13,091,088   13,091,088

                    SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE SIX MONTHS ENDED MARCH 31, 2008 AND 2007
                                     (UNAUDITED)

                                                          2008         2007
                                                          ----         ----
      CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                       $(1,671,158) $(3,181,009)
      Adjustments to reconcile net loss to
       net cash provided by (used in)
       operating activities:
        Depreciation                                     417,499      454,946
        Amortization                                   1,862,202    1,952,805
        Bad debt reserve                                 107,646      168,194
        Inventory reserve                                      -     (423,193)
        Loss on sale of assets                            10,353        6,157
        Gain on extinguishment of debt                   (25,000)           -
        Stock-based compensation expense                 116,208      203,087
        (Increase) decrease in assets:
          Accounts receivable                            583,917   (1,382,957)
          Inventories                                    217,867      202,980
          Prepaid and other current assets             2,197,679      400,471
          Other assets                                    27,039        3,875
        Increase (decrease) in liabilities:
          Accounts payable and accrued expenses         (355,188)    (758,450)
          Unearned revenue                              (198,498)      50,619
          Customer deposits                             (294,237)     392,892
                                                        --------      -------
      Net Cash Provided By (Used In)
       Operating Activities                            2,996,329   (1,909,583)
                                                       ---------   ----------

      CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of property, plant, and equipment        (156,784)    (289,352)
      Software development costs                        (192,870)           -
      Cash paid for business acquisitions                      -   (1,000,000)
      Net proceeds from sale of assets                    34,257       30,796
                                                          ------       ------
      Net Cash (Used In) Investing Activities           (315,397)  (1,258,556)
                                                        --------   ----------

      CASH FLOWS FROM FINANCING ACTIVITIES:
      Repayment of line of credit (net)               (4,100,000)           -
      Proceeds from line of credit                             -    3,800,000
      Repayment of notes payable and capital leases     (287,439)     (80,638)
                                                        --------      -------
      Net Cash (Used In) Provided By
       Financing Activities                           (4,387,439)   3,719,362
                                                      ----------    ---------

      Effect of exchange rate fluctuations on cash             -      (56,457)
                                                            ----      -------
      NET DECREASE IN CASH AND CASH EQUIVALENTS       (1,706,507)     494,766

      CASH AND CASH EQUIVALENTS,
       BEGINNING OF PERIOD                             2,974,382    2,781,838
                                                       ---------    ---------

      CASH AND CASH EQUIVALENTS,
       END OF PERIOD                                  $1,267,875   $3,276,604
                                                      ==========   ==========

      SUPPLEMENTAL DISCLOSURE OF
       CASH FLOW INFORMATION:
        Cash paid during the period for interest        $529,822     $676,228
                                                        ========     ========

      SUPPLEMENTAL DISCLOSURE OF NON-CASH
       INVESTING AND FINANCING ACTIVITIES:
        Debt incurred in acquisitions                         $-     $600,000
                                                            ====     ========

SOURCE Sunair Services Corporation

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