Frontline Reports Third Quarter 2011 Financial Results

TORONTO, Nov. 10, 2011 /CNW/ - Frontline Technologies Inc. (TSX: FLC), a provider of technology-based equity and options trading services, IT infrastructure support and network managed services, released its third quarter results for the quarter ended September 30, 2011, the third set of consolidated financial statements prepared under International Financial Reporting Standards (IFRS).   The net loss was $0.5 million or ($0.02) per share compared to a net loss of $1.8 million or ($0.12) per share in the same quarter of the previous year.  Included in the $0.5 million loss are restructuring and acquisition costs of $0.4 million related to legal fees and lease write-offs incurred during the quarter.

Major elements of the third quarter statements include:

  • Revenue increased by 53% to $1.9 million for the third quarter of 2011 from the same year-ago quarter mainly as a result of the acquisition of Frontline Technologies Corporation.
  • Operating expenses in continuing operations increased 48% or $1.4 million for the third quarter of 2011 from the same year-ago quarter mainly as a result of an  increase in operating expenses due to the acquisition of Frontline Technologies Corporation and due to restructuring and acquisition costs.
  • Working capital position of $4.8 million at September 30, 2011 as compared to $10.3 million at December 31, 2010.
  • A $1.8 million one time gain on the referral of clients to ConvergEx included in discontinued operations.

"With the integration of the two companies nearing completion, we are very pleased with the outcome from rationalizing our costs and we are continuing to focus our attention on revenue growth with the completion of our strengthened product suite" said Hoss Astaraki, Chairman and CEO.

             
Financial Highlights   Three months ended   Nine months ended
(in millions of dollars, except per share data)   September 30,   September 30,
(Three and nine month periods unaudited) (note) 2011 2010   2011 2010
Revenue    $ 1.9  $ 1.3    $ 5.1  $ 4.1
Operating expenses    $ 4.3  $ 2.9    $ 11.3  $ 8.9
Loss from continuing operations     $ (2.4)  $ (1.7)    $ (6.3)  $ (4.9)
Net loss    $ (0.5)  $ (1.8)    $ (4.8)  $ (5.2)
Basic and diluted loss per share    $   (0.02)  $ (0.12)    $   (0.25)  $ (0.36)
Note:  The financial statements for the period ended September 30, 2011 have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The company adopted IFRS as at January 1, 2011 with a transition date of January 1, 2010. The comparative figures for 2010 have been restated to comply with IFRS and are presented accordingly.

Frontline is also pleased to announce that John Culbert has joined Frontline in the role of Chief Financial Officer.  John has served in various senior financial roles in private financial companies in Canada for over 15 years.   Most recently, John served as Chief Financial Officer of Fidelity Clearing Canada ULC.   John will fill the role vacated by David Evans. "We are excited to welcome John to our leadership team. John's knowledge and experience working with financial companies makes him an extremely valuable addition to our leadership team", said Hoss Astaraki, Chief Executive Officer. "We also would like to take the opportunity to thank David for his contribution to Frontline. He has been an important member of our team and we are very appreciative for all that he has done for the Company."

For further information about Frontline Technologies Inc., the results for the third quarter 2011 and the meaning of certain references, this quarterly earnings release should be read in conjunction with our Third Quarter 2011 Condensed Interim Consolidated Financial Statements and Management's Discussion and Analysis for the three and nine months ended September 30, 2011, which can be accessed at sedar.com. Unless otherwise indicated, all dollar amounts are expressed in Canadian dollars and have been taken from our Third Quarter 2011 Condensed Interim Consolidated Financial Statements prepared in accordance with International Accounting Standard 34: Interim Financial Reporting using the policies we expect to apply in our annual financial statements for the year ending December 31, 2011, prepared in accordance with International Financial Reporting Standards ("IFRS").

About Frontline Technologies

Frontline Technologies Inc. is a provider of trading technology services for equities and options and also offers IT infrastructure support and network managed services.  Frontline Technologies is listed on the Toronto Stock Exchange (Ticker-FLC) - additional information is available at www.frontline.ca.

Forward looking statement disclaimer

Except for historical information contained herein, the matters discussed in this press release are based on forward-looking statements that involve risk and uncertainty. A variety of important factors could cause results to differ materially from such statements, including but not limited to economic, competitive, governmental and technological factors affecting the company's operation, markets, products, prices and other factors.

FRONTLINE TECHNOLOGIES INC.
(FORMERLY BELZBERG TECHNOLOGIES INC.)
Condensed Interim Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
(Not audited or reviewed by the Company's external auditor)

 

                 
 
 
 
 
 
 
  September 30,
2011
 
 
December 31,
2010
ASSETS                
                 
Current assets:                
  Cash and cash equivalents      5,180   $   8,319
  Cash and cash equivalents segregated under regulations and other           2,143
  Cash and cash equivalents on deposit withclearing and depository organizations            1,630
  Receivable from brokers, dealers and clearing organizations           168
  Accounts receivable       713     1,718
  Prepaid expenses and other receivables        177     346
  Securities borrowed           6,186
  Assets held for sale       2,262    
          8,332     20,510
Equipment         1,028     1,075
Investments             30
Goodwill and intangible assets         5,898     77
Total assets     $ 15,258   $ 21,692
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
                 
Current liabilities:                
  Bank indebtedness     513     - 
  Accounts payable and accrued liabilities        1,991     2,336
  Payable to customers           1,733
  Deferred revenue       105    
  Securities loaned           6,186
  Current portion of long-term debt       200    
  Current portion of obligations under finance leases       101    
  Liabilities held for sale       573    
          3,483     10,255
Non-current liabilities:                
  Long-term debt       1,400    
  Obligations under finance leases       91    
  Deferred revenue       17    
  Future income taxes       432    
Total liabilities         5,423     10,255
                 
Shareholders' equity:                
  Share capital       2     23,612
  Contributed surplus       4,589     4,570
  Retained earnings (deficit)       5,475     (16,220)
  Foreign currency translation reserve       (231)     (525)
Total shareholders' equity         9,835     11,437
                 
Total liabilities and shareholders' equity        $ 15,258   $ 21,692
                 

FRONTLINE TECHNOLOGIES INC.
(FORMERLY BELZBERG TECHNOLOGIES INC.)
Condensed Interim Consolidated Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars, except per share amounts)
(Not audited or reviewed by the Company's external auditor)

 

                 
 
 
Three months ended
  September 30,
Nine months ended
September 30,
  2011   2010   2011   2010
                 
Revenue $   1,923   $   1,259   $   5,079   $   4,058
                 
Operating expenses:                
  Compensation and related benefits   1,429   931   4,013   2,896
  Telecommunication and data-feed services   1,091   1,010   3,299   3,122
  Administrative and other   1,729   923   3,966   2,868
    4,249   2,864   11,278   8,886
                 
Loss before the undernoted   (2,326)   (1,605)   (6,199)   (4,828)
                 
Foreign exchange loss   51   58   106   110
Interest expense   12     17   1
Interest income         (2)
    63   58   123   109
               
Loss before discontinued operations   (2,389)   (1,663)   (6,322)   (4,937)
                 
Income (loss) from discontinued operations   1,900   (97)   1,491   (289)
                 
Loss for the period   (489)   (1,760)   (4,831)   (5,226)
                 
Other comprehensive income (loss):                
  Change in accumulated foreign currency translation adjustment:                
    Current operations   (823)   308   (1,725)   102
    Discontinued operations   1,344   (733)   2,019   (626)
    521   (425)   294   (524)
                 
Total comprehensive income (loss) $ 32 (2,185) (4,537) (5,750)
Loss per share:                
  Loss from continuing operations per common and Class A Restricted share - basic and diluted $ (0.10) (0.11) (0.32) (0.34)
                 
  Income (loss) per common and Class A Restricted share - basic and diluted   0.02   (0.12)   (0.25)   (0.36)
                 
Weighted average number of common and RestrictedClass A shares outstanding (in thousands)   22,520   14,638   19,530   14,650

FRONTLINE TECHNOLOGIES INC.
(FORMERLY BELZBERG TECHNOLOGIES INC.)
Condensed Interim Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
(Not audited or reviewed by the Company's external auditor) 

               
 
 
 Three months ended
 September 30,
Nine months ended
 September 30, 
  2011   2010   2011   2010
                  
Cash provided by (used in):                 
                 
Operating activities:                 
  Loss for the period $ (489)  $ (1,760) $ (4,831) $ (5,226)
  Income (loss) from discontinued operations   1,900   (97)   1,491   (289)
  Loss from continuing operations   (2,389)   (1,663)   (6,322)   (4,937)
                   
  Adjusted for:                
    Depreciation of property and equipment   280   291   764   971
    Amortization of intangible assets   114   23   247   69
    Unrealized foreign exchange (gain) loss   170   (417)   (371)   206
    Interest expense   12     17   1
    Interest income         (2)
    Stock-based compensation   14   68   19   237
  Changes in non-cash working capital items   1,009   (214)   1,473   (1,593)
  Interest paid   (12)     (17)   (1)
  Interest received         2
    (802)   (1,912)   (4,190)   (5,047)
                 
Financing activities:                
  Increase in bank indebtedness   345     362  
  Repayment of obligations under finance leases   (24)     (45)  
  Repayment of long-term debt   (280)     (280)  
  Issuance of Class A restricted shares       2,916  
  Repurchase of common shares         (67)
    41     2,953   (67)
                 
Investing activities:                
  Acquisition of business       (3,916)  
  Purchase of equipment     (51)   (260)   (422)
      (51)   (4,176)   (422)
                 
Net decrease in cash and cash equivalents from continuing operations   (761)   (1,963)   (5,413)   (5,536)
                 
Net increase (decrease) in cash and cash equivalents from discontinued operations   2,033   214   2,274   (1,321)
                 
Net change in cash and cash equivalents   1,272   (1,749)   (3,139)   (6,857)
                 
Cash and cash equivalents, beginning of period   3,908   10,562   8,319   15,670
                 
Cash and cash equivalents, end of period $ 5,180  $ 8,813 $ 5,180 $ 8,813

 

 

 

 

SOURCE Frontline Technologies Inc.

For further information:

John Culbert, Chief Financial Officer
Phone: (416) 360-1812
E-mail: InvestorInfo@frontline.ca

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Frontline Technologies Inc.

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