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Company continues to maintain consistent revenue levels while focusing on
cost control and growth opportunities. Sale of Wellcore assets will
provide Company with capital required to continue enhancement and growth
of Oncore software and revenue potential.
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THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY
CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS./
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CALGARY, Aug. 29 /CNW/ - Decision Dynamics Technology Ltd. (the "Company" or "Decision Dynamics") (Decision Dynamics; TSX-V: DDY), a leading provider of operations management software for the energy industry, today reported sales of $1.5 million and $3.0 million for the three and six month periods ending June 30, 2008, respectively.
Revenue for the first half of 2008 was down over the first half of 2007 as a result of two major sales in 2007 which were not repeated in 2008. The Company has maintained consistent revenue levels over the first two quarters of 2008. Total expenses, including cost of sales, for the first two quarters of 2008 were 21% less than the same period in 2007 due to the Company's cost reduction plan. The Company's emphasis on cost control has resulted in a reduction of over $3.3 million of expenses on an annualized basis.
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Financial Highlights
Three Months Ending Six Months Ending
$'000 except per Jun. 30, Jun. 30, Jun. 30, Jun. 30,
share amounts 2008 2007 2008 2007
Operating Results
Revenue 1,457 2,600 3,074 5,779
Gross profit(1) 986 1,682 2,030 4,101
Gross margin(1) 68% 65% 66% 71%
Income (Loss) (938) (461) (1,786) (201)
Income (Loss per share) (0.02) (0.01) (0.03) (0.00)
EBITDAS(2) (582) (143) (1,092) 438
Financial Position
Cash 511 2,163
Total Assets 4,440 7,760
Notes:
(1) "Gross profit" is revenue less cost of sales and gross margin is
gross profit divided by revenue expressed as a percentage.
(2) "EBITDAS" means earnings from continuing operations before interest,
taxes, depreciation, amortization and stock based compensation. It
may be derived by subtracting stock based compensation (other than
expenses resulting from the Share Accumulation Plan which are cash
based) from the subtotal titled "Loss before the undernoted" on the
Statement of Loss and Deficit.
Gross profit, gross margin and EBITDAS do not have a standardized meaning
under GAAP and may not be comparable to the same terms as used by other
entities in the industry; however, the Company believes they are an
important measure of performance and indicator of success for software
businesses and are relevant to readers within the investment community.
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Quarterly results will fluctuate due in part to the timing of customer decisions and the date of contract signing. In June 2008, the Company began work with a large US customer for implementation of the Wellcore product, and also engaged the Canadian subsidiary of an integrated international oil company for a pilot implementation of Wellcore.
License revenues are down 54% for the six month period ending June 30, 2008 compared to June 30, 2007 largely as a result of the two large license sales of Oncore and Wellcore in 2007. Service revenues are down 36% due to the smaller number of personnel in the services department. The slight increase in gross margin for the second quarter of 2008 is due to higher cross-over of services staff into other departments, such as sales.
Staff reductions and cost cutting has resulted in a decrease in total expenses, including cost of sales of approximately 21% for the six months ended June 30, 2008 as compared to 2007, and 25% for the second quarter of 2008, compared to the second quarter of 2007. This savings is partially offset by approximately $415,000 in restructuring expenses related to the staff reductions since the beginning of 2008. The Company is continuing to reallocate resources from overhead and operations to sales. The decreases in research and development and in sales and marketing are primarily due to staff reductions; however, the Company has targeted cut backs in expenditures in all areas in reduced marketing, facilities, and so on. General and administration expenses remain relatively flat as these expenses are more of a fixed nature such as insurance, executive and public company expenses.
Decision Dynamics minimized its capital expenditures last year and in this quarter and as the Company uses the declining balance method, amortization of property and equipment has declined this year compared to last year. The amount of intangible assets has not changed and the amortization is the same from quarter-to-quarter and year-to-year.
As announced earlier today, the Company signed a formal purchase and sale agreement with a subsidiary of P2 Energy Solutions, Inc. for the sale of the Company's Wellcore oil and gas well life cycle management software platform (the "Wellcore Asset Sale Agreement"), which assets include all of the assets (including all applicable intellectual property) and personnel associated with the development, marketing, sale and support of the Wellcore software application (collectively the "Wellcore Assets"). Completion of the proposed sale transaction is subject to the terms and satisfaction of the conditions set forth in the Wellcore Asset Sale Agreement including, among other conditions, that the Company receive TSX Venture Exchange ("TSXV") approval prior to closing. TSXV approval requires that the Company shareholders holding more than 50% of the outstanding shares have consented in writing to the proposed sale transaction. Under the Wellcore Asset Sale Agreement, the buyer has agreed to cash consideration of CAD$5 Million for the Wellcore Assets, subject to holdback and release conditions. Decision Dynamics is to receive approximately 80% of the proposed consideration upon the proposed transaction closing.
The sale of the Wellcore Assets enables the Company to focus on growing its Oncore software product. In addition, proceeds from the Wellcore Asset sale will allow the Company to aggressively invest in the sales and marketing resources needed to allow the Company to finish the development of its next generation of products. The Company believes that this initiative, along with continued strong cost control, will enable the Company to continue as a going concern.
Additional information regarding the Company is available on SEDAR at www.sedar.com.
About Decision Dynamics Technology Ltd.
Decision Dynamics Technology Ltd. is a leading provider of an innovative knowledge capture, workflow management, reporting and analytics software solution to the energy sector, including major electrical power companies.
Its flagship product, Oncore, is a project cost management solution that provides real-time cost information, contract validation and approvals for operations management and capital projects. Decision Dynamics is a Microsoft Gold Certified Partner. The Company's head office is located in Calgary, Alberta, Canada. It operates wholly-owned foreign subsidiaries in the United States with offices in Houston, Texas.
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The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release
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Forward Looking Statements
In this news release Decision Dynamics makes forward-looking statements or provides forward looking information (collectively "forward-looking statements"). Forward-looking statements relate to future events or Decision Dynamics' future performance Or financial performance and, by their nature, typically involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that such forward-looking statements will not be achieved. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking statements and are based on Decision Dynamics' current belief or assumptions as to the outcome and timing of such future events. These forward-looking statements include but are not limited to comments with respect to objectives and strategies, financial condition, results of operations and industry conditions. Readers of this news release are cautioned not to place undue reliance on forward-looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, estimates and intentions expressed in such forward-looking statements. For example, forward-looking statements may be influenced by the following factors: the level of exploration and development carried on by the Company's customers; crude oil, natural gas and other commodity prices; demand for electricity; weather; availability of capital and financing and government policies. The Financial Risks sections of the interim and annual Management Discussion and Analyses, as filed with applicable security regulatory authorities and available www.sedar.com provides additional information regarding key factors that could cause actual results to differ materially from those projected in our forward-looking statements. The Company cautions that the foregoing list of factors is not exhaustive and that, when relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors as well as other uncertainties and events. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
All trademarks or registered trademarks herein are the property of their respective owners.
For further information: Kim Tremblay, Acting Chief Financial Officer, Decision Dynamics Technology Ltd., (403) 451-0726
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