TORONTO, Nov. 11, 2005 (PRIMEZONE) -- ActiveCore Technologies, Inc. (OTCBB:ATVE), a Company that operates a group of subsidiaries and divisions in the U.S., Canada and the U.K. which offer a Smart Enterprise Suite of products, today announced its financial results for the quarter ended September 30th, 2005.
"Our growth and performance is 100% on target," stated Peter Hamilton, CEO of ActiveCore. "Revenues are up by 89% from the same period last year, and our profitability is right where we had guided it to be."
Third Quarter Results
For the third quarter ended September 30th, 2005, ActiveCore reported revenues of $2.7 million (1), which represents an increase of 42% over the $1.9 million reported in Q2 FY05 and an increase of 89% over the $1.4 million reported during the same period a year ago. This strong revenue growth came despite the fact that the Company disposed of its wholly-owned U.K. subsidiary, Twincentric Limited, midway through the quarter. This transaction has been accounted for as a discontinued operation and therefore the Company's revenue for the period does not include any contribution from Twincentric.
ActiveCore reported an adjusted net loss (2) for the period of $0.1 million, and a net loss in accordance with GAAP of $0.5 million. These amounts compare with an adjusted net loss of $1.0 million and a net loss of $1.3 million incurred during the quarter ended June 30, 2005.
At the end of last quarter, the Company issued guidance that their adjusted net loss would be between $0.1-$0.3 million, and that its net loss in accordance with GAAP would be between $0.4 million and $0.6 million.
Other financial highlights for the quarter include a reduction in operating expenses from Q2 FY05 of 29% to $1.4 million from $1.9 million. This includes a reduction in general and administrative expenses from 38% of revenue to 11%, and a reduction of salaries and wages from 29% of revenue to 19% since last quarter.
"This quarter represents a major step forward towards financial stability for ActiveCore," said Efrem Ainsley, CFO. "Not only did the Company reduce its adjusted net loss by 90%, but we've demonstrated that this new management team has clear visibility into the Company's financial performance, and this will continue to build shareholder confidence in future periods."
Balance Sheet Restructuring -- Improved Liquidity
The Company also announced that towards the end of its third quarter, it engaged in a balance sheet restructuring exercise in an attempt to alleviate some of its most pressing debt issues. Numerous creditors agreed to convert their indebtedness to equity and a total of 10.3 million common shares were issued in this regard. Additionally, the Company also issued 5.0 million common shares to certain parties pursuant to agreements which provide for them to continue to support the Company's financing requirements. The shares issued in the period are not currently freely trading, as they are required to be registered pursuant to an upcoming registration statement.
As a result of the above restructuring, as of September 30, 2005 the Company has improved its liquidity substantially as compared to June 30, 2005. Specifically, the Company's working capital deficit improved from $4.8 million to $2.2 million over the most recent quarter.
Q4 Adjusted Net Income Guidance Increased
The Company also increased its guidance for the fourth quarter of fiscal 2005. The Company anticipates that revenue will still be in the range of $2.75-$3.00 million, and that it now expects to report adjusted income of $0.2 to $0.4 million. In accordance with GAAP the Company expects to report net income of between $(0.2)-$0.0 million.
Peter Hamilton further stated, "ActiveCore is on far stronger financial footing than it was a quarter ago. Our management team delivered what it promised, and we will continue to do so. We are also pleased with our fourth quarter outlook - the month of December is seasonally weak for both our SIM and CDM divisions, so our current guidance should be viewed as a strong statement about this Company's prospects as we move towards fiscal 2006."
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 (SIM) of ActiveCore operates under the trade names of CRATOS, MDI Solutions. The Corporate Disclosure and Messaging Division (CDM) 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.
(1) All amounts disclosed in this press release are in US dollars unless otherwise noted.
(2) 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, other income, 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 guidance of GAAP based net income to adjusted net income for the fiscal quarter ending December 31, 2005:
GAAP based "net income" $(100,000) Depreciation and amortization of intangible assets $160,000 Other (income) expense $110,000 Employee stock-based compensation $130,000 Non-GAAP Based "adjusted net income" $300,000
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.
ACTIVECORE TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS ASSETS September 30, 2005 December 31, 2004 (Unaudited) ------------ ------------ CURRENT ASSETS Cash $ 32,105 $ 53,351 Accounts receivable, net 3,495,200 2,390,549 Other receivables -- 20,992 Taxes recoverable 124,713 -- Deferred compensation 516,250 -- Prepaid expenses and other current assets 242,745 137,035 ------------ ------------ Total Current Assets 4,411,013 2,601,927 ------------ ------------ CAPITAL ASSETS 374,123 312,460 ------------ ------------ OTHER ASSETS Goodwill and other intangible assets, net 5,074,018 868,854 Investments at cost -- 262,648 Deferred costs 16,108 175,009 Deferred compensation 165,000 -- Deferred equity line commitment fees -- 16,092 Net assets from discontinued operations -- 593,409 ------------ ------------ Total Other Assets 5,255,126 1,916,012 ------------ ------------ TOTAL ASSETS $ 10,040,262 $ 4,830,399 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank Overdraft $ 155,384 $ 17,566 Line of credit 1,184,666 -- Accounts payable 2,545,421 702,672 Accrued liabilities 1,094,684 354,077 Taxes payable 812,936 957,011 Leases payable 17,752 22,093 Long-term debt, current portion 398,409 857,161 Due to related parties 24,448 132,364 Redeemable preferred shares 125,000 -- Deferred tax liability 100,005 -- Other current liabilities 174,689 27,247 ------------ ------------ Total Current Liabilities 6,633,394 3,070,191 ------------ ------------ LONG-TERM LIABILITIES Long-term debt 254,661 491,622 Redeemable preferred shares 281,250 -- Accrued liabilities 26,484 30,447 Deferred tax liability 250,012 -- ------------ ------------ Total Long-Term Liabilities 812,407 522,069 ------------ ------------ TOTAL LIABILITIES 7,445,801 3,592,260 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, $.001 par value, 50,000,000 shares authorized Preferred Stock issued and outstanding Series A, 8,333,333 shares as of September 30, 2005 and December 31, 2004 respectively 8,333 8,333 Series B, 4,167,667 shares as of September 30, 2005 and December 31, 2004 respectively 4,168 4,168 Common stock, $0.01 par value, 500,000,000 shares authorized, 78,337,692 and 46,711,708 outstanding as of September 30, 2005 and December 31, 2004, respectively 783,378 467,117 Common stock to be returned (68,783) (68,783) Treasury Stock (112,000) -- Warrants 74,463 -- Additional paid-in capital 43,433,395 39,137,498 Accumulated deficit (40,619,541) (37,892,002) Accumulated other comprehensive loss (773,952) (256,204) Subscription Receivable -- Preferred -- (150,000) Deferred compensation (135,000) (11,988) ------------ ------------ Total Stockholders' Equity 2,594,461 1,238,139 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 10,040,262 $ 4,830,399 ============ ============ ACTIVECORE TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the three For the three For the nine For the nine months ended months ended months ended months ended September 30, September 30, September 30, September 30, 2005 2004 2005 2004 ------------ ------------ ------------ ------------ REVENUES $ 2,708,373 $ 1,432,810 $ 4,665,541 $ 2,730,059 COST OF SALES Direct wages 1,593,180 273,460 2,850,559 584,591 Amortization of licensing agreements and other costs 121,215 19,412 224,618 105,139 ------------ ------------ ------------ ------------ Total Cost of Sales 1,714,395 292,872 3,075,177 689,730 ------------ ------------ ------------ ------------ GROSS PROFIT (LOSS) 993,978 1,139,938 1,590,364 2,040,329 ------------ ------------ ------------ ------------ OPERATING EXPENSES Salaries and wages 515,702 394,380 937,411 1,144,904 Consulting fees 131,096 35,215 511,126 197,179 Research and development 55,000 -- 165,000 -- Legal and accounting 281,182 95,026 628,745 258,481 General and administrative 289,288 148,524 996,239 539,439 Financial advisory fees 16,043 2,662 65,679 10,292 Depreciation & amortization of intangible assets 84,045 14,614 300,472 19,931 ------------ ------------ ------------ ------------ Total Operating Expenses 1,372,356 690,421 3,604,672 2,170,226 ------------ ------------ ------------ ------------ INCOME (LOSS) FROM OPERATIONS (378,378) 449,517 (2,014,308) (129,897) ------------ ------------ ------------ ------------ OTHER INCOME (EXPENSE) Gain (loss) on extinguishment of debt (74,463) -- (74,463) 2,000 Interest income -- 25,480 -- 55,456 Interest expense (74,070) (33,204) (189,974) (88,180) Foreign exchange gain (loss) 31,367 37,626 (5,928) 19,735 ------------ ------------ ------------ ------------ Total Other Income (Expense) (117,166) 29,902 (270,365) (10,989) ------------ ------------ ------------ ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (495,544) 479,419 (2,284,673) (140,886) ------------ ------------ ------------ ------------ Income tax recovery (18,600) -- (18,600) -- ------------ ------------ ------------ ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS (476,944) 479,419 (2,266,073) (140,886) ------------ ------------ ------------ ------------ Gain (loss) from discontinued operations -- net (15,165) 120,490 (461,466) (20,901) NET INCOME (LOSS) $ (492,109) $ 599,909 $ (2,727,539) $ (161,787) ============ ============ ============ ============ Preferred Stock Dividend 12,500 -- 36,092 -- NET LOSS ATTRIBUTABLE TO COMMON SHARE- HOLDERS $ (504,609) $ 599,909 $ (2,763,631) $ (161,787) LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS -- BASIC AND DILUTED $ (0.01) $ 0.00 $ (0.05) $ 0.00 ------------ ------------ ------------ ------------ LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS -- BASIC AND DILUTED $ -- $ 0.00 $ -- $ 0.00 ------------ ------------ ------------ ------------ NET LOSS PER COMMON SHARE -- BASIC AND DILUTED $ (0.01) $ 0.00 $ (0.05) $ 0.00 ------------ ------------ ------------ ------------ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING- BASIC AND DILUTED 61,313,668 45,490,996 55,918,440 38,781,040 ============ ============ ============ ============ ActiveCore Technologies Inc. Pro Forma Supplemental Information Reconciliation of GAAP net income to adjusted net income For the three month period ended September 30, 2005 Net Income (492,109) Adjustments: ------------ Depreciation and amortization of intangible assets 143,977 Stock Based Compensation 130,000 Discontinued Operations 15,165 Other expenses 117,166 --------- 406,308 --------- Adjusted net income (85,801) =========