Burntsand Releases Second Quarter Results



    TORONTO, Aug. 6 /CNW/ - Burntsand Inc. (Burntsand) (TSX:BRT) a North
American business consulting and technology services company today reported 
revenue and earnings results for its second quarter ended June 30, 2008.

    
    Second Quarter Financial Results Highlights (000's CDN dollars) -
    unaudited

                        Three Months ended June 30  Six months ended June 30
                        --------------------------- -------------------------
                                2008         2007         2008         2007

    Service Revenue        $    5,127   $    5,621   $   10,159   $   12,193
    Revenue                $    5,830   $    6,506   $   11,169   $   14,155
    EBITDA(1)              $     (184)  $     (443)  $     (279)  $     (323)
    Net loss               $     (265)  $     (609)  $     (452)  $     (607)

                                                                 As at
                                                     ------------------------
                                                      30-Jun-08    31-Dec-07
    Cash and cash equivalents                             2,995        3,644
    Working capital                                       4,551        4,716
    


    Results for the Second Quarter ended June 30, 2008

    Service revenue for the second quarter was $5.1 million compared to
$5.6 million for the second quarter of 2007. The Company's top 10 accounts
accounted for approximately 60% of revenue and US operations contributed 66%
of the revenues for the quarter. Approximately $0.3 million of the
$0.5 million decrease in service revenue is a result of the strengthening of
the Canadian dollar vs. the United States dollar with average exchange rates
of $1.010 and $1.098 in the three months ended June 30, 2008 and June 30, 2007
respectively. The balance of the decrease in service revenue of $0.2 million
was primarily due to the decrease in service revenue in our Canadian business.
    EBITDA loss for the second quarter decreased to ($184,000) compared to a
($443,000) for the second quarter of 2007 and was primarily due to the
decrease in expenses of 21%. Net loss for the second quarter of 2008 was
($265,000) or ($0.00) per share, compared with a net loss of ($609,000) or
($0.01) per share in the second quarter of 2007.
    Backlog at June 30, 2008 increased to $7.5 million up $0.4 million or
5.6% over the backlog at March 31, 2008. During the second quarter of 2008,
the Company signed 17 new contracts valued at $100,000 or more up from 14 new
contracts valued at $100,000 or more signed during the first quarter of 2008.
    "Q2 2008 services revenue was up 2% over Q1 2008 service revenue with our
US operations increasing service revenue by 10% as we continued to add new
customers," said Martin Glover, Burntsand's President and Chief Executive
Officer. "We are seeing the market opportunities developing from our
significant increase in marketing programs in our Microsoft, EMC and BMC
practice areas," added Mr. Glover. During the second quarter the Company's
marketing programs included its Elite-level sponsorship at EMC's annual user
conference, EMC World, where it showcased Burntsand's thought leadership in
Integrated Information Management. In addition during the second quarter,
Burntsand was recognized for achieving 5 Microsoft certified competencies and
nominated for Microsoft's Global Partner of the Year awards for 3 of them as
part of Microsoft's Gold Certified Partner Excellence Program.

    Financial Position at June 30, 2008

    The Company finished the period ended June 30, 2008 with cash and
short-term investments of $3.0 million and working capital of $4.5 million.
The Company has not borrowed under its Line of Credit.
    The Company has filed its financial statements and management's
discussion and analysis on SEDAR at www.sedar.com. This information includes
various metrics and performance measurements used by the company, including
headcount information, average bill rates, utilization, project data, new
customers and new contract information.
    As always we invite your comments and encourage you to follow the
progress of your company on the Burntsand website at www.burntsand.com.

    About Burntsand

    With a unique and forward-thinking focus on helping clients unify
enterprise information to increase productivity and insight, Burntsand is a
North American leader in the delivery of Enterprise Content Management,
Enterprise Operations and Service Management, Collaboration, and Customer
Relationship Management services. Burntsand delivers business advantage to its
mid-market clients through risk-managed projects and unmatched customer
experience. Strong partnerships with EMC, BMC and Microsoft reflect the
company's business maturity and ensure technology depth. Headquartered in
Toronto, Burntsand operates from locations across North America. The Company's
shares (TSX: BRT) are traded on the Toronto Stock Exchange. More information
about Burntsand can be found at www.burntsand.com.

    Forward Looking Statements

    Certain information in this press release and in other public
announcements contains forward-looking information. Such statements include,
but are not limited to, statements which indicate the results, events or
activities that Burntsand expects or anticipates will or may occur in the
future, including statements which give guidance as to future revenues or
other financial results of Burntsand and statements regarding the growth of
business or operations, competitive strengths and strategic initiatives and
plans. Such forward-looking statements can generally be identified by words
such as "outlook", "guidance", "estimate", "forecast", "objective",
"anticipate", "intend", "likely", "will", "may", "should", "could", "expect",
"believe", and similar expressions and statements relating to matters that are
not historical facts.
    The forward-looking statements in these documents are based upon the
reasonable beliefs of Burntsand and its management as of the date the
information; however, forward-looking statements involve risks and
uncertainties and are based upon factors that may change and assumptions that
may prove, with the passage of time, to be incorrect. Accordingly, undue
reliance should not be placed upon such statements. If factors materially
change or assumptions are materially incorrect, the actual results,
performance or achievements of Burntsand may be materially different from any
future results, performances or achievements expressed or implied by such
forward-looking statements.
    Important factors that could cause actual results, events or activities
to differ materially from the forward-looking statements contained in this
press release include: general economic business conditions; loss of key
employees; integration of acquisitions; stock market volatility; supply and
demand for services offered by Burntsand; changes in laws and regulations;
Burntsand's ability to compete successfully, protect its intellectual property
rights, and adapt to technological advances and changing industry standards
and other factors. Important assumptions that were used in making the
forward-looking statements include: effective daily rates, estimated
utilization, estimated new bookings and realization on contracts.
    All statements made in these documents that contain forward-looking
information are made as of the date of this document. Burntsand disclaims any
intention and undertakes no obligation to update or revise any forward-looking
statements to reflect new information, future events or otherwise.

    
    Notes

    (1) EBITDA
        ------
    EBITDA is defined as operating revenues less operating expenses and
    therefore reflects earnings before interest, taxes, depreciation and
    amortization, as well as any restructuring charges and impairment for
    goodwill. Burntsand uses EBITDA, amongst other measures, to assess the
    operating performance of its on-going businesses. The term EBITDA does
    not have a standardized meaning prescribed by Canadian generally accepted
    accounting principles and therefore may not be comparable to similarly
    titled measures presented by other companies. EBITDA should not be
    construed as the equivalent of net cash flows from operating activities.



    BURNTSAND INC.
    Consolidated Balance Sheets

    -------------------------------------------------------------------------
                                                      June 30,   December 31,
                                                        2008         2007
                                                   ------------ -------------
                                                    (unaudited)
    ASSETS

    CURRENT
      Cash and cash equivalents                     $ 2,995,335  $ 3,643,932
      Accounts receivable                             3,923,603    3,781,308
      Prepaid expenses                                  265,014      192,530
    -------------------------------------------------------------------------
                                                      7,183,952    7,617,770
    Capital assets                                      996,104    1,172,430
    Goodwill                                            148,657      144,517
    -------------------------------------------------------------------------
                                                    $ 8,328,713  $ 8,934,717
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Accounts payable and accrued liabilities      $ 1,847,223  $ 2,068,648
      Deferred revenue                                  669,443      706,250
      Current portion of obligations under
       capital leases                                   115,987      127,298
    -------------------------------------------------------------------------
                                                      2,632,653    2,902,196
    Long-term portion of deferred revenue                     -       59,820
    Long-term portion of obligations
     under capital leases                                49,238      101,173
    -------------------------------------------------------------------------
                                                      2,681,891    3,063,189
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
      Common shares                                   9,611,454    9,602,855
      Contributed surplus                             1,237,505    1,159,680
      Deficit                                        (2,474,002)  (2,022,371)
      Accumulated other comprehensive loss           (2,728,135)  (2,868,636)
    -------------------------------------------------------------------------
                                                     5,646,822     5,871,528
    -------------------------------------------------------------------------
                                                    $ 8,328,713  $ 8,934,717
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying Notes to the Consolidated Financial Statements



    BURNTSAND INC.
    Consolidated Statements of Operations

    -------------------------------------------------------------------------
                              Three months ended         Six months ended
                                   June 30,                  June 30,
                         -------------------------- -------------------------
                              2008         2007         2008         2007
                         ------------ ------------- ------------ ------------
                          (unaudited)  (unaudited)  (unaudited)  (unaudited)

    REVENUE
      Services            $ 5,126,548  $ 5,621,109  $10,159,478  $12,192,774
      License and
       maintenance            457,625      621,839      586,936    1,461,738
      Other revenue           245,970      262,582      422,550      500,252
    -------------------------------------------------------------------------
                            5,830,143    6,505,530   11,168,964   14,154,764
    -------------------------------------------------------------------------

    COSTS
      Cost of services      3,557,279    3,865,357    7,176,881    8,361,216
      Cost of license
       and maintenance        435,720      580,097      552,474    1,336,503
      Cost of other revenue   230,344      246,280      390,191      468,324
    -------------------------------------------------------------------------
                            4,223,343    4,691,734    8,119,546   10,166,043
    -------------------------------------------------------------------------
    GROSS PROFIT            1,606,800    1,813,796    3,049,418    3,988,721
    -------------------------------------------------------------------------
    EXPENSES
      Sales and marketing     578,353      583,171      969,978    1,065,721
      General and
       administrative         613,068      900,864    1,250,088    1,759,166
      Other expenses          599,342      772,424    1,107,856    1,486,621
    -------------------------------------------------------------------------
                            1,790,763    2,256,459    3,327,922    4,311,508
    -------------------------------------------------------------------------
    Loss before
     amortization, interest
     and income taxes        (183,963)    (442,663)    (278,504)    (322,787)
    Amortization of
     capital assets           (84,293)    (122,299)    (170,543)    (234,843)
    Interest and investment
     income                    13,777       12,170       40,569       40,767
    Interest expense and
     financing costs          (10,555)     (46,395)     (17,956)     (53,370)
    Income Taxes                    -      (10,160)     (25,197)     (37,100)
    -------------------------------------------------------------------------
    NET LOSS FOR
     THE PERIOD           $  (265,034) $  (609,347)    (451,631)    (607,333)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Loss, basic and
       diluted, per share $     (0.00) $     (0.01) $     (0.01) $     (0.01)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average
     number of common
     shares used to
     calculate per share
     amounts, basic and
     diluted               72,612,601   72,510,219   72,603,078   72,507,261
    -------------------------------------------------------------------------

    See accompanying Notes to the Consolidated Financial Statements



    BURNTSAND INC.
    Consolidated Statements of Cash Flows

    -------------------------------------------------------------------------
                              Three months ended         Six months ended
                                   June 30,                  June 30,
                         -------------------------- -------------------------
                              2008         2007         2008         2007
                         ------------ ------------- ------------ ------------
                          (unaudited)  (unaudited)  (unaudited)  (unaudited)

    CASH FLOWS FROM
     OPERATING ACTIVITIES
      Net loss for the
       period                (265,034)    (609,347)    (451,631)    (607,333)
      Items not affecting
       cash:
        Amortization of
         capital assets
         and intangibles       84,293      122,299      170,543      234,843
        Amortization of
         assets used in
         outsourcing contract  44,260       44,260       88,520       88,520
        Stock-based
         compensation          27,873       14,995       81,425       52,031
        ------------------------------------------- -------------------------
        ------------------------------------------- -------------------------
                             (108,608)    (427,793)    (111,143)    (231,939)
      Changes in operating
       assets and
       liabilities:
        Accounts receivable   (45,640)     475,535      (73,617)  (1,115,657)
        Prepaid expenses      293,016      137,939      (69,156)     177,056
        Accounts payable
         and accrued
         liabilities         (182,619)      26,199     (224,348)     299,475
        Deferred revenue     (274,210)     112,696     (101,857)    (340,181)
    ----------------------------------------------- -------------------------
    ----------------------------------------------- -------------------------
                             (318,061)     324,576     (580,121)  (1,211,246)
    ----------------------------------------------- -------------------------

    CASH FLOWS FROM
     INVESTING ACTIVITIES
      Short term investments        -    1,240,319            -    2,696,558
      Purchase of capital
       assets, net of
       related accounts
       payable                (49,764)     (30,236)    (105,100)    (118,802)
    ----------------------------------------------- -------------------------
                              (49,764)   1,210,083     (105,100)   2,577,756
    ----------------------------------------------- -------------------------

    CASH FLOWS FROM
     FINANCING ACTIVITIES
      Payments on capital
       lease obligations      (30,810)     (30,751)     (62,679)     (57,267)
      Issue of common
       shares                   5,000            -        5,000        1,563
    ----------------------------------------------- -------------------------
                              (25,810)     (30,751)     (57,679)     (55,704)
    ----------------------------------------------- -------------------------
    NET CASH INFLOW
     (OUTFLOW)               (393,635)   1,503,908     (742,900)   1,310,806
    EFFECT OF FOREIGN
     EXCHANGE RATE CHANGES
     ON CASH                  (16,003)     (73,871)      94,303      (77,330)
    CASH (EXCLUDING
     SHORT TERM
     INVESTMENTS),
     BEGINNING OF PERIOD    3,404,973      971,763    3,643,932    1,168,324
    ----------------------------------------------- -------------------------
    CASH (EXCLUDING SHORT
     TERM INVESTMENTS),
     END OF PERIOD          2,995,335    2,401,800    2,995,335    2,401,800
    ----------------------------------------------- -------------------------
    ----------------------------------------------- -------------------------

    See accompanying Notes to the Consolidated Financial Statements
    

    %SEDAR: 00007529E




For further information:

For further information: Martin Glover, President & CEO, Voice: (617)
923-6611, Email: MGlover@burntsand.com; Stephen W. Massel, CFO, Voice: (416)
234-3852, Email: SMassel@burntsand.com

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BURNTSAND INC.

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