TORONTO, Aug. 12, 2005 (PRIMEZONE) -- ActiveCore Technologies, Inc. (OTCBB:ATVE), a Company that operates a group of subsidiaries and divisions in the US and Canada which offer a Smart Enterprise Suite of products, today announced that it has filed its Second Quarter Financial Results with the United States Securities and Exchange Commission on Form 10-QSB for the quarter ended June 30th, 2005.
Second Quarter Results
For the second quarter ended June 30th, 2005, ActiveCore reported revenues of $1.9 million (a), which represents an increase of 78% over $1.1 million for the same period last year. This also represents sequential revenue growth of 268% over the $0.5 million reported during the Company's first quarter of 2005. The increase in revenues over both periods is a result of both organic growth and strategic acquisitions, including the consolidation of the operating results of Cratos Technology Solutions Inc. effective May 1, 2005.
ActiveCore reported a net loss of $1.3 million for the second quarter. However, in its Form 10-QSB, the Company highlighted that $0.3 million of this loss was incurred by its U.K. subsidiary, Twincentric. Additionally, during the quarter ended June 30, 2005, a further $0.3 million of one-time expenses were incurred in respect of restructuring certain elements of its business.
Sale of Twincentric, Inc.
The Company also announced that subsequent to the end of its second quarter, it completed a sale of its U.K. subsidiary to the majority shareholder of the group that originally sold the business to ActiveCore during fiscal 2004. Consideration for this transaction represents a return to ActiveCore of 1.4 million of its Common Shares -- almost all of the original share consideration issued by the Company to initially acquire the Twincentric business. This will allow the Company to further focus its efforts on growing the profitable components of its two operating divisions -- Systems Integration and Modernization (SIM), and Corporate Disclosure and Messaging (CDM) -- as it moves towards profitability.
"The ability to effectively unwind the Twincentric acquisition is a strategic step in our plan to restructure our organization," announced Peter Hamilton, President and CEO of ActiveCore. "Since being acquired, this division has incurred significant losses, and it has become evident that this acquisition was not going to perform to our expectations. To be able to recoup our original purchase price is a shrewd move for our shareholders, as it will provide us with flexibility to use those shares for other purposes as we continue to build this organization."
Updated Guidance
The Company also announced updated guidance for the remainder of fiscal 2005. Earlier in the year, the Company announced its expectation that it would generate revenue of CAD $20 million, and Earnings Per Share of $0.03 per share. This guidance had contemplated, among other things, a pending acquisition of Infolink Technologies Limited, which remains unconsummated at the current time.
For the Company's third quarter ending September 30, 2005, the Company expects revenues of US $2.50 - $2.75 million, and an adjusted loss of $0.1 to $0.3 million (b). For the Company's fourth quarter ending December 31, 2005, the Company expects revenue to be in the range of $2.75 - $3.00 million, and adjusted income of $0.0 to $0.2 million.
The Company anticipates that in accordance with GAAP the Company will report net losses of $0.3 - $0.5 million during the quarter ending September 30, 2005, and $0.2 - $0.0 million for the quarter ending December 31, 2005. These amounts do not contemplate any pending acquisitions or any consideration to be received from the SilverBirch transaction, either of which would be accretive to the aforementioned guidance.
While it remains uncertain as to whether the Company will acquire Infolink during the balance of 2005, this guidance indicates that the Company expects to exit 2005 with an annual run rate of revenue of approximately CAD $15 million (USD $12 million). A comparison of this amount to the Company's previously issued guidance must consider the delay associated with the Infolink acquisition, the lost revenue associated with the disposition of Twincentric, and delays experienced in closing the Cratos acquisition. Once these factors are considered, the Company's current revenue outlook is in fact stronger for its underlying CDM and SIM divisions than had been initially forecasted by management earlier in the year.
Efrem Ainsley, CFO, stated, "We are excited about the Company's prospects for the balance of 2005 from both a top and bottom line perspective. We believe that the Company is on the verge of turning a corner financially, and although there is still a lot of work to be done, we think that the Twincentric transaction allows us to take a big step forward towards profitability, while at the same time helping us clean up some of the debt from our balance sheet."
This press release is available on the company's official online investor relations site for investor commentary, feedback and questions. Investors are asked to visit the ActiveCore IR Hub located at http://www.Agoracom.com/IR/ActiveCore Alternatively, investors can e-mail AGORA Investor Relations directly at ATVE@Agoracom.com.
About ActiveCore Technologies, Inc. (www.ActiveCore.com)
ActiveCore Technologies, Inc., operates a group of subsidiaries and divisions in the U.S. and Canada that offer a Smart Enterprise Suite of products and services. We integrate, enable, and extend functions performed by current and legacy IT systems. Our products encompass web portals, enterprise middleware, mobile data access, data management and system migration applications. The Systems Integration & Modernization Division of ActiveCore operates under the trade names of CRATOS, MDI Solutions. The Corporate Disclosure and Messaging Division of ActiveCore operates under the trade names C Comm Network Corporation, DisclosurePlus and ActiveCast. ActiveCore services clients in health care, financial services, government and manufacturing worldwide.
Note(a) All amounts disclosed in this press release are in US dollars unless otherwise noted.
Note(b) Use of Non-GAAP financial measures
In addition to reporting financial results in accordance with United States generally accepted accounting principals ("GAAP"), the Company provides certain non-GAAP financial measures which are not in accordance with GAAP. The Company's definition of these non-GAAP financial measures does not have a standardized meaning prescribed by GAAP and may be different from similar non-GAAP financial measures used by other companies and may differ from period to period. The Company uses the financial measure adjusted net income (or loss, as applicable) to supplement the information provided in its consolidated financial statements, which are presented in accordance with GAAP. The presentation of adjusted net income is not meant to substitute for net income presented in accordance with GAAP, but rather should be evaluated in conjunction with such GAAP measure. Adjusted net income is calculated as net income, excluding the amortization of intangibles assets, depreciation, interest expense, and stock-based compensation. The Company's management believes that the presentation of adjusted net income provides useful information to investors because it excludes certain charges which management excludes in its period-to-period evaluation of its operating results.
The following chart provides a reconciliation (unaudited) of GAAP based financial measures to non-GAAP based financial measures referred to in this press release using the mid-point of the guidance ranges provided herein:
Reconciliation (unaudited) of GAAP based net income to adjusted net income for guidance relating to the fiscal quarters ending September 30, 2005 and December 31, 2005:
Three months Three months
ending ending
September 30, 2005 December 31, 2005
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GAAP based "net income" ($505,000) ($205,000)
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Amortization of intangible
assets 175,000 175,000
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Depreciation 35,000 35,000
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Interest expense 60,000 60,000
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Stock-based compensation 35,000 35,000
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Non-GAAP Based "adjusted net
income" ($200,000) $ 100,000
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Statements contained in this news release regarding ActiveCore Technologies, Inc. formerly IVP Technology and planned events are forward-looking statements, subject to uncertainties and risks, many of which are beyond ActiveCore's control, including, but not limited to, reliance on key markets, suppliers, and products, currency fluctuations, dependence on key personnel and trade restrictions, each of which may be impacted, among other things, by economic, competitive or regulatory conditions. These and other applicable risks are summarized under the caption "Risk Factors" in ActiveCore's Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on January 4, 2005. Forward-looking statements by their nature involve substantial risks and uncertainties. As a result, actual results may differ materially depending on many factors, including those described above.