Lyrtech announces 2006 fourth quarter and fiscal year-end financial results



    QUEBEC CITY, April 2 /CNW/ - Lyrtech Inc. (TSX-V: LYT), a worldwide
leader in digital signal processing (DSP) technologies, today announced its
financial results for the fourth quarter and fiscal year, ended December 31,
2006.

    
    2006 Highlights

       - Revenues for 2006 totaled $16.6 million, a 137% increase compared
         to 2005
       - 2006 gross profit amounted to $1.9 million
       - Closed $6.0 million in equity financing in May 2006
       - Completed acquisition of Innovator Electronic Assembly Inc.
       - Concluded contracts with leading companies such as Texas
         Instruments, ITT Industries, Harris Corporation, Dolby Laboratories,
         and several others.
       - Consolidated distributor network in Asia to ensure a more effective
         presence in key markets and bolstered its position by doubling its
         revenues from its network in 2006.

    "I am pleased with our achievements in 2006 which enhanced our corporate
profile in the DSP technologies market and resulted in greater international
recognition" said Miguel Caron, President and CEO of Lyrtech. "The addition of
Innovator Electronic Assembly Inc. to our core business operations and the
numerous contracts concluded during the year have broadened our technology
portfolio and solidified our position in a very specialized industry. We also
posted record revenues and consolidated our distribution networks around the
world which will increase our strategic customers' market penetration. We now
intend to use our augmented leverage capacity's full potential and generate a
successful 2007."

    Subsequent Events

    On March 7, 2007, Lyrtech Inc. raised $10.0 million through a private
placement. Lyrtech engaged Paradigm Capital Inc., Quest Securities Corporation
and Dundee Securities Corporation as agents to offer the Units on a "best
efforts" basis.
    On March 15, 2007, Lyrtech Inc. announced the addition of Mr. Jean-Guy
Goulet to the Company's Board of Directors, effective March 15, 2007. "We are
very pleased to welcome Mr. Goulet to our Board of Directors," said Miguel
Caron, President and Chief Executive Officer of Lyrtech. "Mr. Goulet is a
successful executive and we are confident that his participation on our Board
will provide additional financial expertise and business acumen to help
Lyrtech increase its leadership position and enhance shareholder value."
Mr. Goulet has been the President and Chief Executive Officer of ratiopharm
Canada, a subsidiary of ratiopharm GmbH, one of the largest generic drug
companies in the world, since 2006.
    The Board of Directors has granted 300,000 stock options each to Mr. Jules
Pleau, Mr. Jean-Guy Goulet and Mr. Vitale Santoro, the Company's corporate
secretary. The stock options are exercisable at $0.10 per share for a period
of ten years, subject to Lyrtech's stock option plan.
    On March 26, 2007, Lyrtech Inc. retained The Equicom Group Inc. to provide
the Company with strategic investor relations and financial communications
services. "Equicom will provide us with strategic communications that will
allow us to build the corporate reputation and awareness levels essential to
the success of our business and to the realization of our growth potential,"
said Miguel Caron, President and CEO of Lyrtech. Lyrtech will pay Equicom a
monthly retainer fee of $5,500 for their services for an initial term of 12
months.

    Financial Results

    Revenues for the fourth quarter of 2006 increased 188% to $4.9 million
compared to $1.7 million in the fourth quarter of 2005. For the year ended
December 31, 2006, revenues increased 137% to a record $16.6 million compared
to $7.0 million in 2005. The company backlog of contracts for work to be
delivered in 2007 totaled $6.1 million.
    Sales of electronic manufacturing services increased 58% to $9.6 million
for the fiscal year ended December 31, 2006 compared to $2.2million in 2005.
This increase can be attributed to the integration of the acquisition of
Innovator Electronic Assembly in May 2006 and the consolidation of all
manufacturing activities in the new facility in Pointe-Claire, Quebec. Lyrtech
generated 90% of its 2006 annual sales in North America and 3% in Asia. North
American sales amounted to $14.9 million.
    Gross profit decreased from $3.4 million in 2005 to $1.9 million in 2006
and represented 11% of revenues in 2006, compared to 49% in 2005. Management
believes that the majority of these charges are one-time in nature and
unlikely to recur in future periods.
    Revenues grew every quarter during 2006, compared to the corresponding
quarter of 2005.The sales for the fourth quarter reaches $4.9 million compared
to $1.7 million a year ago. This represents a 188% increase over the
corresponding period in 2005.
    The Company reported a loss before stock-based compensation costs of
$4.7 million or $0.04 per diluted share for the fourth quarter, compared to a
net loss of $0.2 million or $0.003 per diluted share a year ago.
    In the fourth quarter the gross profit was negatively impacted by a
provision of $1.067 million related to R&D tax credit that are under
assessment with the federal tax authority, negative adjustments related to the
integration of our manufacturing activities into one facility for $787,000 and
additional labour costs incurred because of disruptions in the supply of
certain components of $639,000.
    Sales from manufacturing accounted for 58% of the total sales in 2006
compared to 32% in 2005. In the fourth quarter, sales from manufacturing
represented 67% of total sales. Gross margin of EMS sales are generally lower
than that of our other activities.
    The 2006 annual financial statements and management's discussion and
analysis can be found at www.sedar.com

    Conference Call Notice

    Lyrtech will host a conference call to discuss its fourth quarter and
year-end results April 4th at 1:30 P.M. EST.
    The dial-in number for the conference call is 1-800-814-4859. The
conference i.d. number is 21225651.


    Financial highlights

    Fiscal years ended December 31          2006          2005          2004
    (in thousands of CAD,
    except per-share information)
    -------------------------------------------------------------------------
    Revenues                              16,578         7,011         4,509
    Gross profit                           1,864         3,439         2,227
    Selling and marketing expenses         1,662         1,576         1,346
    Administrative expenses                3,266         1,884         1,542
    Research and development expenses net
     of tax credits                          803           176           573
    Net loss                               5,970           899         1,823
    Basic and diluted net loss per share   0,057         0,012         0,027
    Loss before stock-based
     compensation costs                    5,450           639         1,459


    As of December 31                       2006          2005          2004
    (in thousands of CAD)
    -------------------------------------------------------------------------
    Cash and cash equivalents                 73           114           -27
    Accounts receivable                    6,010         2,276         1,686
    Tax credits recoverable                2,129         1,624           844
    Working capital                       -3,198           977           734
    Long-term assets                       9,518         1,775         1,407
    Shareholders' equity                   4,768         2,351         2,060



    CONSOLIDATED BALANCE SHEETS
    As of December 31,                                    2006          2005
    -------------------------------------------------------------------------

    ASSETS

    CURRENT ASSETS
      Cash                                        $     72,842  $    113,513
      Accounts receivable                            6,010,013     2,276,448
      Tax credits recoverable (Note 2)               2,128,613     1,623,691
      Inventories (Note 5)                           3,674,337       852,363
      Work in process                                  340,278       156,320
      Prepaid expenses                                 407,371        57,658
      Current portion of investments (Note 6)          137,400             -
                                                  ---------------------------
                                                    12,770,854     5,079,993

    INVESTMENTS (Note 6)                               143,334        71,667

    CAPITAL ASSETS (Note 8)                          2,124,501       551,567

    INTANGIBLE ASSETS (Note 9)                         251,153       117,842

    GOODWILL                                         6,724,651       494,835

    DEFERRED DEVELOPMENT EXPENSES                      247,096       296,009

    DEFERRED CHARGES (Note 10)                          26,944       242,883
                                                  ---------------------------
                                                  $ 22,288,533  $  6,854,796
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    As of December 31,                                    2006          2005
    -------------------------------------------------------------------------

    CURRENT LIABILITIES
      Bank loan (Note 11)                         $  3,994,845  $    975,000
      Accounts payable                               8,823,146     2,818,489
      Deferred revenue                                 397,484       233,084
      Demand loan (Note 12)                          2,052,345             -
      Current portion of long-term debt (Note 13)      700,886        76,161
                                                  ---------------------------
                                                    15,968,706     4,102,734

    LONG-TERM DEBT (Note 13)                         1,551,710       401,319
                                                  ---------------------------
                                                    17,520,416     4,504,053
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
      Capital stock (Note 14)                        7,197,959     1,868,055
      Warrants (Notes 13 and 15)                     2,617,795        80,000
      Contributed surplus (Notes 14 and 16)          3,584,282     3,064,536
      Convertible options on debenture (Note 13)        60,098        60,098
      Deficit                                       (8,692,017)   (2,721,946)
                                                  ---------------------------
                                                     4,768,117     2,350,743
    -------------------------------------------------------------------------
                                                  $ 22,288,533  $  6,854,796
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF INCOME
    For the years ended December 31,                      2006        2005
    -------------------------------------------------------------------------

    REVENUES                                      $ 16,577,940  $  7,010,911

    COST OF GOODS SOLD                              14,713,538     3,571,608
                                                  ---------------------------
    GROSS PROFIT                                     1,864,402     3,439,303
    -------------------------------------------------------------------------

    OPERATING EXPENSES
      Selling and marketing expenses                 1,662,481     1,576,053
      Administrative expenses                        3,266,388     1,884,478
      Stock-based compensation costs                   519,746       259,798
      Research and development expenses,
       net of tax credits                              802,916       176,228
                                                  ---------------------------
                                                     6,251,531     3,896,557
    -------------------------------------------------------------------------

    LOSS BEFORE NON-RECURRING CLOSING COST
    AND FINANCIAL EXPENSES                          (4,387,129)     (457,254)

    NON-RECURRING CLOSING COST                         107,056             -

    FINANCIAL EXPENSES                               1,475,886       441,379
                                                  ---------------------------
    NET LOSS (Note 4)                             $ (5,970,071) $   (898,633)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per share (Note 17)
      Non-diluted and diluted                     $     (0.057) $     (0.012)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the years ended December 31,                      2006          2005
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
      Net loss                                    $ (5,970,071) $   (898,633)
      Items not affecting cash
        Amortization of capital assets                 333,093       146,655
        Amortization of deferred development costs     127,652       135,194
        Amortization of intangible assets               44,686        17,166
        Amortization of deferred charges                65,187        20,442
        Stock-based compensation costs                 519,746       259,798
        Accretion of convertible term loan              41,746        20,301
        Revenue earned in exchange of
         a convertible debenture                       (71,667)      (71,667)
        Write-off of deferred development cost         118,785             -
        Loss on disposal of capital assets              36,027             -
                                                  ---------------------------
                                                    (4,754,816)     (370,744)
      Net change in non-cash working capital items   1,159,336      (697,634)
                                                  ---------------------------
                                                    (3,595,480)   (1,068,378)
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
      Acquisition of investments                      (137,400)            -
      Acquisition of capital assets                   (184,856)       (7,956)
      Acquisition of intangible assets                (134,086)      (17,606)
      Increase in development costs                   (197,524)     (245,979)
      Increase in deferred charges                    (100,852)      (13,475)
      Business acquisition                          (3,440,687)            -
                                                  ---------------------------
                                                    (4,195,405)     (285,016)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
      Variation in bank loan                         1,462,275       295,000
      Increase of demand loan                        1,647,331             -
      Payments on demand loan                          (84,569)            -
      Additional financing                                   -       500,000
      Payments on long-term debt                      (442,041)      (90,445)
      Payments of shareholder loan                    (341,650)            -
      Issuance of capital stock                      3,710,498       797,500
      Issuance costs                                  (739,425)       (7,687)
      Issue of warrants                              2,537,795             -
                                                  ---------------------------
                                                     7,750,214     1,494,368
    -------------------------------------------------------------------------
    INCREASE (DECREASE) IN CASH                        (40,671)      140,974

    CASH (BANK OVERDRAFT), beginning of year           113,513       (27,461)
                                                  ---------------------------
    CASH, end of year                             $     72,842  $    113,513
    -------------------------------------------------------------------------


    About Lyrtech Inc.

    Lyrtech develops and manufactures advanced digital signal processing
solutions for companies worldwide, a vital technology to network and wireless
communications, audio and video processing, as well as electronic systems in
all fields of technology. Lyrtech offers a full range of DSP-FPGA development
platforms, as well as design, prototyping, and manufacturing of electronic
products through its Innovator division. From the company's state-of-the-art
facility, Innovator offers prototyping services, new product introduction
services, turnkey assembly, box build assembly, and other electronic
manufacturing services, providing customers with a quality production run of
highly complex products with a fast turnaround. For more information, please
visit www.lyrtech.com.

    Forward looking Statements

    Certain statements made in this press release regarding Lyrtech's future
operations, expected financial position, future revenues, projected costs,
prospects, plans and objectives are forward-looking statements. These
forward-looking statements, by their nature, necessarily involve risks and
uncertainties that could cause actual results to differ materially from those
contemplated by the forward-looking statements. Lyrtech considers the
assumptions on which these forward-looking statements are based to be
reasonable at the time they were prepared, but cautions that these assumptions
regarding future events, many of which are beyond Lyrtech's control, may
ultimately prove to be incorrect. Factors and risks which could cause actual
results to differ materially from current expectations are discussed in
Lyrtech's annual report for the year ended December 31, 2006. Lyrtech
disclaims any intention or obligation to update or revise any forward-looking
statements. For additional information on risks and uncertainties relating to
these forward-looking statements, investors should consult Lyrtech's ongoing
filings, including its most recent annual report, found on SEDAR at
www.sedar.com

    The TSX Venture Exchange Inc. has not reviewed and does not accept
    responsibility for the adequacy and accuracy of this release.
    




For further information:

For further information: Alain Landry, Chief Financial Officer, Lyrtech
Inc., (418) 877-4644, ext.246, Fax: (418) 877-7710, info@lyrtech.com;
www.lyrtech.com; Eric Bouchard, Investor relations, The Equicom Group
Inc.,(514) 844-7997, ebouchard@equicomgroup.com

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