THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION TO CANADIAN INVESTORS ONLY.
Brainhunter Inc. ("Brainhunter" or the "Company") (TSX:BH) announces the release
of its financial statements for the 3rd quarter ending June 30, 2009. All
amounts discussed below are in thousands of Canadian dollars.
The Company recorded a net loss of $6,652 from continuing operations for the
quarter which included a restructuring provision of $3,771, financing fees of
$687 and an investment write-down of $162. The company has embarked upon a major
restructuring and repositioning of the Company to substantially reduce its
operating costs and improve profitability
Raj Singh, the newly appointed CEO, stated "The Company is taking major steps to
restructure and re-organize itself to meet the realities of the economy."
The Company has reduced its workforce by more than 80 positions and has taken
steps to shrink the amount of space it uses. As well, the Company is reviewing
all available strategic alternatives, including refinancing of its debt and the
possible sale of portions of the business or all of the business.
Management of the Company is being assisted by its new board of directors, 7 of
9 of whom were newly elected at the Company's annual general meeting on July 20,
2009.
Following are statements extracted from the unaudited financial statements of
Brainhunter for the period ending June 30, 2009. The following statements should
be read in conjunction with the notes to the financial statements attached to
the unaudited financial statements as filed on SEDAR. Amounts are in thousands
of Canadian dollars except earnings per share.
As at June 30, September 30,
2009 2008
$ $
------------ ------------
ASSETS
Current
Accounts receivable 32,941 35,848
Prepaid expenses 431 319
Current assets of discontinued operations 27 23
------------ ------------
Total current assets 33,399 36,190
------------ ------------
Property, plant and equipment, net 2,676 3,025
Deposits 240 366
Other assets - 471
Intangible assets, net 4,674 7,718
Goodwill 6,571 6,571
Due from related parties 319 853
------------ ------------
47,879 55,194
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current
Accounts payable and accrued liabilities 19,605 21,713
Current portion of restructuring cost 1,659 91
Current portion of deferred lease inducement 103 103
Current portion of long-term debt 16,369 16,144
Term bank credit facility 17,864 15,409
Deferred revenue 650 336
------------ ------------
Total current liabilities 56,250 53,796
------------ ------------
Restructuring cost 1,539 -
Deferred lease inducement 555 637
Long-term debt 108 339
Long-term future income tax liabilities 74 74
------------ ------------
Total liabilities 58,526 54,846
------------ ------------
Commitments and contingencies
Shareholders' (deficit) equity
Capital stock 19,117 19,472
Warrants 33 1,531
Contributed surplus 3,323 1,567
Equity component of convertible note obligation 1,951 1,951
Deficit (35,071) (24,173)
------------ ------------
Total shareholders' (deficit) equity (10,647) 348
------------ ------------
47,879 55,194
------------ ------------
------------ ------------
For the three For the nine
months ended months ended
-------------- -------------
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
$ $ $ $
------------------ ------------------
Revenue 53,421 60,978 160,308 179,658
Cost of revenue 47,066 52,469 139,586 154,061
------------------ ------------------
Gross profit 6,355 8,509 20,722 25,597
------------------ ------------------
Expenses
Other staffing costs 3,660 5,281 13,051 16,082
Selling, general and
administrative 2,766 1,840 6,461 8,105
------------------ ------------------
6,426 7,121 19,512 24,187
------------------ ------------------
Income before the undernoted
costs (71) 1,388 1,210 1,410
------------------ ------------------
Restructuring costs 3,771 - 4,135 -
Writedown of investment 162 - 162 -
Interest expense 792 706 2,068 2,427
Interest expense - accreted 33 131 433 876
Amortization
Property, plant and equipment 157 476 497 826
Intangible assets 979 790 3,044 3,005
Financing Cost 687 30 1,218 159
------------------ ------------------
6,581 2,133 11,557 7,293
------------------ ------------------
Loss before income taxes (6,652) (745) (10,347) (5,883)
Recovery of current income
taxes - - - (1,547)
Recovery of future income
taxes - - - (221)
------------------ ------------------
Net loss from continuing
operations (6,652) (745) (10,347) (4,115)
------------------ ------------------
Discontinued Operations
Loss from discontinued
operations (204) (153) (508) (342)
Gain (loss) from disposal of
discontinued operations (net
of tax) (293) 1,625 (43) 7,070
------------------ ------------------
Net profit (loss) from
discontinued operations (497) 1,472 (551) 6,728
------------------ ------------------
Net profit (loss) for the
period (7,149) 727 (10,898) 2,613
------------------ ------------------
Deficit, beginning of period (27,922) (9,951) (24,173) (11,837)
------------------ ------------------
Deficit, end of period (35,071) (9,224) (35,071) (9,224)
------------------ ------------------
------------------ ------------------
Earnings (loss) per share
Continuing Operations - Basic
and diluted (0.15) (0.02) (0.23) (0.10)
Discontinued Operations -
Basic and diluted (0.01) 0.04 (0.01) 0.16
------------------ ------------------
For the three For the nine
months ended months ended
-------------- -------------
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
$ $ $ $
------------------ ------------------
OPERATING ACTIVITIES
Net loss for the period (6,652) (746) (10,347) (4,115)
Add (deduct) items not
involving cash
Current income taxes - - - (1,547)
Future income taxes - - - (221)
Loss on disposal of fixed
assets - - 8 6
Reserve for restructuring 3,197 - 3,197 -
Writedown of investment 152 - 152 -
Accretion of interest 33 131 433 876
Amortization of deferred lease
inducement (24) (29) (81) (80)
Amortization of provision for
lease restructuring (15) (62) (91) (184)
Stock-based compensation
expense 4 67 16 142
Amortization of property,
plant and equipment 157 476 497 826
Amortization of intangible
assets 979 790 3,044 3,005
------------------ ------------------
(2,169) 627 (3,172) (1,292)
Net change in non-cash working
capital balances
related to operations 2,042 3,004 1,661 3,397
------------------ ------------------
Cash provided by (used in)
operating activities (127) 3,631 (1,511) 2,105
------------------ ------------------
FINANCING ACTIVITIES
Exercise of common share
options - - - 36
Purchase of common shares - (289) (113) (289)
Proceeds from (repayment of)
term bank credit facility 470 (3,908) 2,455 (6,398)
Repayment of long-term debt (110) (785) (438) (2,986)
------------------ ------------------
Cash provided by (used in)
financing activities 360 (4,982) 1,904 (9,637)
------------------ ------------------
INVESTING ACTIVITIES
Additions to property, plant
and equipment (18) (123) (156) (658)
Increase in other assets - - 26 61
Contingent payments relating
to prior years' acquisitions - - - (135)
------------------ ------------------
Cash used in investing
activities (18) (123) (130) (732)
------------------ ------------------
Net cash flows provided by
(used in) continuing operations 215 (1,474) 263 (8,264)
------------------ ------------------
DISCONTINUED OPERATIONS
Cash used in operating
activities of discontinued
operations (215) (151) (513) (353)
Cash provided from disposal of
discontinued operations - 1,625 250 7,070
Recovery of current income
taxes - - - 1,547
------------------ ------------------
Net cash flows provided by
(used in) discontinued
operations (215) 1,474 (263) 8,264
------------------ ------------------
Net increase in cash during
the period - - - -
Cash, beginning of period - - - -
------------------ ------------------
Cash, end of period - - - -
------------------ ------------------
------------------ ------------------
Supplemental cash flow
information
Interest paid 792 579 2,069 2,095
Additions to capital assets -
non-cash - - - 245
------------------ ------------------
Business Overview
Brainhunter Inc. ("Brainhunter" or the "Company") is specialized in the
provision of staffing solutions (contingent staffing, managed staffing,
permanent staffing and staffing software solutions) to major companies and
governments in Canada and the U.S. Currently, the largest part of the business
is providing IT and engineering staffing consultants, on a contract basis, to
major companies and government entities in Canada. The Company also sells
recruiting related software including applicant tracking systems ("ATS"), vendor
management software ("VMS"), and job board software. Brainhunter deploys over
1,400 contractors with an internal staff of over 170 personnel. Operations are
ISO 9001:2000 Certified.
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