Northcore Technologies loses $590,000 in Q2 2007
Northcore Technologies Inc (C:NTI)
Shares Issued 86,895,798
Last Close 8/13/2007 $0.09
Tuesday August 14 2007 - News Release
Mr. Duncan Copeland reports
NORTHCORE REPORTS SECOND QUARTER 2007 RESULTS
Northcore Technologies Inc. has released its interim financial results for the second quarter ended June 30, 2007.
Northcore reported consolidated second quarter revenues of $285,000, a decrease of 11 per cent from the $322,000 the company generated in the first quarter of 2007, and an improvement of 68 per cent over the $170,000 that company produced in the second quarter of 2006. Northcore derives its revenues through fees from application hosting activities provided to customers, the sale of software licences, and the delivery of application development, software customization and other technology services.
"Despite a 6-per-cent revenue increase in our North America business unit over the first quarter results, I'm disappointed with our overall performance in the second quarter, which was hurt by the strengthening Canadian dollar and a decline in royalty fee payments from our relationship with ADB Systemer," said Duncan Copeland, chief executive officer of Northcore Technologies. "The North America revenue growth was driven from the services component of our offerings. These application development and software customization projects provide a steadily growing revenue stream and continued strengthening of our relationships with key customers such as GE. Our focus, however, needs to be on product sales."
As was announced recently (see news issued in Stockwatch), Duncan Copeland was named chief executive officer of Northcore Technologies effective July 12, 2007. As part of the same management restructuring, James Moskos was appointed chief operating officer.
"Jim Moskos and his team have built a proven set of tools for buying, selling and managing industrial assets that have allowed Northcore to build a trusted relationship with GE," said Mr. Copeland. "And as the importance of corporate infrastructure quickly ascends to the forefront of senior management attention everywhere, I'm confident that our strengths in asset optimization and helping our customers control their infrastructure will meet this need."
Northcore reported a net loss for the second quarter of $590,000 or one cent per share, basic and diluted. This compares with a net loss of $550,000 or one cent per share, basic and diluted, in the first quarter of 2007. In the second quarter of 2006, Northcore reported a net gain of $1.04-million or one cent per share basic and diluted. This total included income from discontinued operations of $1.92-million, resulting from the sale of the company's Norway business unit. As has been reported previously (see news issued in Stockwatch), the company sold its Norway business unit for $2.69-million in cash and debt settlement effective June 30, 2006.
Northcore also reported an EBITDA (earnings before interest, taxes, depreciation and amortization) loss in the second quarter of 2007 of $419,000. This compares with an EBITDA loss of $368,000 in the first quarter of 2007 and an EBITDA loss of $607,000 in the second quarter of 2006.
EBITDA loss is defined as losses before interest, taxes, depreciation, amortization, employee stock options and discontinued operations. Northcore considers EBITDA to be a meaningful performance measure as it provides an approximation of operating cash flows.
As at June 30, Northcore held cash and cash equivalents of $44,000, and accounts receivable of approximately $237,000.
Subsequent to the close of the second quarter, Northcore announced that it will raise working capital through a rights offering to all eligible shareholders of the company's common stock. The rights offering expires at 4 p.m. Eastern Time on Aug. 22, 2007.
Operating highlights
Northcore completed the following customer and operating activities in the period:
Northcore's joint venture with GE successfully conducted a sales and marketing event for a major transportation equipment leasing company.
Northcore's joint venture with GE signed a memorandum of understanding with a Fortune 500 organization to provide asset disposition services that will facilitate the sale and marketing of third party owned equipment.
The company signed a three-year application hosting agreement with a leading Fortune 500 company to provide Web-based capabilities for asset disposition, asset tracking and asset appraisal.
The company completed a private placement, issuing a new Series K subordinated notes with a face amount of $1.36-million to existing holders of Series G notes. In addition, Northcore completed a private placement issuance of 2.99 million common shares in consideration of the $449,000 Series G accrued debt interest.
The company received operating loans from a private investor in the amount of $280,000.
Outlook
"I'm very excited about our future. The recent management changes provide us an opportunity to better focus our strategic direction," said Mr. Copeland. "The core of our activities will continue to be devoted to supporting our joint venture with GE, combined with an increased effort on product sales and a further expansion of our services revenues on a stable expense base. As a result, we can expect improved financial and operational results in the periods to come."
Northcore will hold a conference call at 10 a.m. (Eastern Time) on Wednesday, Aug. 15, to discuss its financial results and review operational activities. Investors and followers of the company can listen to a live broadcast of the call from the investor relations section of the company's website.
CONSOLIDATED STATEMENTS OF OPERATIONS
(thousands of dollars, except per share amounts)
Three months ended Six months ended
June 30, June 30,
2007 2007 2006 2007 2007 2006
($C) ($US) ($C) ($C) ($US) ($C)
Revenue $ 285 $ 268 $ 170 $ 607 $ 571 $ 541
------- ------- ------- ------- ------- -------
Operating
expenses
General and
administrative 448 421 498 895 842 940
Customer
service and
technology 178 168 159 350 329 325
Sales and
marketing
costs 78 73 120 149 140 256
Employee stock
options 6 6 37 13 12 72
Depreciation
and amortization 10 9 20 19 18 45
------- ------- ------- ------- ------- -------
Total
operating
expenses 720 677 834 1,426 1,341 1,638
------- ------- ------- ------- ------- -------
(Loss) from
operations (435) (409) (664) (819) (770) (1,097)
------- ------- ------- ------- ------- -------
Interest expense
Cash interest
expense 67 63 93 131 123 200
Accretion of
secured
subordinated
notes 88 83 123 191 180 268
Interest income - - (5) (1) (1) (5)
------- ------- ------- ------- ------- -------
155 146 211 321 302 463
------- ------- ------- ------- ------- -------
(Loss) from
continuing
operations (590) (555) (875) (1,140) (1,072) (1,560)
Income from
discontinued
operations - - 1,918 - - 2,123
------- ------- ------- ------- ------- -------
Net income
(loss) for the
period (590) (555) 1,043 (1,140) (1,072) 563
------- ------- ------- ------- ------- -------
Other
comprehensive
income, net
of tax
Foreign
currency
translation
adjustment - - - - - 17
------- ------- ------- ------- ------- -------
Comprehensive
income (loss) $ (590) $ (555) $ 1,043 $(1,140) $(1,072) $ 580
======= ======= ======= ======= ======= =======
Earnings (loss)
per share
From
continuing
operations,
basic and
diluted $ (0.01) $ (0.01) $ (0.01) $ (0.01) $ (0.01) $ (0.02)
======= ======= ======= ======= ======= =======
Net earnings
(loss) per
share, basic
and diluted $ (0.01) $ (0.01) $ 0.01 $ (0.01) $ (0.01) $ 0.01
======= ======= ======= ======= ======= =======
© 2007 Canjex Publishing Ltd.
