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)
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