Burntsand Releases Second Quarter Results



    TORONTO, Aug. 9 /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, 2007.

    
    Second Quarter Financial Results Highlights (000's)

                              Three months ended          Six months ended
                                    June 30                   June 30
                          ------------------------- -------------------------
                               2007         2006         2007         2006
    Service Revenue        $    5,621   $    4,790   $   12,193   $    9,246
    Revenue                $    6,506   $    5,462   $   14,155   $   10,597
    EBITDA (1)             $     (443)  $     (131)  $     (323)  $     (403)
    Net Income (Loss)      $     (609)  $     (225)  $     (607)  $     (610)

                                                               As At
                                                    -------------------------
                                                       30-Jun-07   31-Dec-06

    Cash and equivalents                             $    2,402   $    3,902
    Working capital                                  $    4,122   $    5,015

    Highlights

    The second quarter results include a number of highlights for the company.
These include:

    -   Our opening backlog for Q3 2007 was $8.5 million compared to $5.8
        million opening backlog in Q3 2006. This is the seventh consecutive
        quarter of increasing backlog.
    -   We signed 14 contracts which were valued over $100,000 compared to 13
        new contracts in Q2 2006. Two of the Q2 2007 contracts were valued at
        $750,000 and $1,300,000.
    -   We worked on 152 projects for 74 customers in Q2 2006 compared to 124
        projects for 65 customers in Q2 2006 - an increase in three metrics
        of number of projects; number of customers and number of projects per
        customer.
    -   We incurred marketing expenses of $200,000 to increase our sales
        pipeline and identify additional opportunities. We presented at
        EMCWorld in Orlando as a Diamond Sponsor; including three
        presentations of solutions by our most senior technical people to
        potential clients and we presented at itSMF Conference in Calgary as
        a Gold sponsor.
    

    "The activities in the second quarter of 2007 represented a continuation
of the work we are doing in building a stable and sustainable business at
Burntsand. Our growing backlog, new contracts and projects per customer
demonstrates this progress." said Martin Glover, Burntsand's President and
Chief Executive Officer, "The second quarter results include $250,000 of one
time costs incurred to reduce future expenses and improve regional
performance. With these one time costs behind us our commitment is to focus on
those parts of our business that are growing and profitable to improve
financial performance".

    Results for the Second Quarter ended June 30, 2007

    Total revenue for the second quarter was $6.5 million compared to $5.5
million for the second quarter of 2006. The Company's top 10 accounts
accounted for approximately 63% of revenue; and US operations contributed 65%
of the revenues for the quarter.
    EBITDA(1) for the second quarter was a loss of ($443,000) compared to a
loss of ($131,000) for the second quarter of 2006. The Q2 2007 loss included
$250,000 in one-time charges to reduce future rent costs and a reduction in
management overhead.
    Net loss for the second quarter of 2007 was ($609,000) or $0.01 per
share, compared with a net loss of ($225,000) or ($0.00) per share in the
second quarter of 2006.

    Financial Position at June 30, 2007

    The Company finished the period ended June 30, 2007 with cash and
short-term investments of $2.4 million compared to $2.2 million at March 31,
2007. The increase in cash and short term investments was a result of reducing
working capital requirements ($752,000); offset by the current period cash
loss ($428,000) and other miscellaneous items ($134,000). The Company has no
bank debt.
    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, Microsoft and BMC 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,
                                                        2007         2006
                                                   ------------ -------------
                                                    (unaudited)
    ASSETS

    CURRENT
      Cash and cash equivalents                     $ 2,401,800  $ 1,168,324
      Short-term investments                                  -    2,734,121
      Accounts receivable                             5,062,239    4,272,488
      Prepaid expenses                                  288,970      483,736
    -------------------------------------------------------------------------
                                                      7,753,009    8,658,669
    Capital assets                                    1,386,877    1,585,936
    Goodwill and other intangibles                      155,319      169,898
    -------------------------------------------------------------------------
                                                    $ 9,295,205  $10,414,503
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT

      Accounts payable and accrued liabilities      $ 2,686,295  $ 2,454,187
      Deferred revenue                                  821,123    1,067,246
      Current portion of obligations
       under capital leases                             123,549      121,871
    -------------------------------------------------------------------------
                                                      3,630,967    3,643,304
    Long-term portion of deferred revenue                     -      105,839
    Long-term portion of obligations
     under capital leases                               171,187      236,578
    -------------------------------------------------------------------------
                                                      3,802,154    3,985,721
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
      Common shares                                   9,591,165    9,588,902
      Contributed surplus                             1,104,076    1,052,745
      Deficit                                        (2,635,708)  (2,028,375)
      Accumulated other comprehensive loss           (2,566,482)  (2,184,490)
    -------------------------------------------------------------------------
                                                      5,493,051    6,428,782
    -------------------------------------------------------------------------
                                                    $ 9,295,205  $10,414,503
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying Notes to the Consolidated Financial Statements



    BURNTSAND INC.
    Consolidated Statements of Operations

    -------------------------------------------------------------------------
                              Three months ended         Six months ended
                                   June 30,                  June 30,
                         -------------------------- -------------------------
                              2007         2006         2007         2006
                         ------------ ------------- ------------ ------------
                          (unaudited)  (unaudited)  (unaudited)  (unaudited)

    REVENUE
      Services            $ 5,621,109  $ 4,790,352  $12,192,774  $ 9,246,415
      License and
       maintenance            621,839      485,395    1,461,738    1,033,546
      Other revenue           262,582      185,876      500,252      316,815
    -------------------------------------------------------------------------
                            6,505,530    5,461,623   14,154,764   10,596,776
    -------------------------------------------------------------------------

    COSTS
      Cost of services      3,865,357    3,172,691    8,361,216    6,118,516
      Cost of license
       and maintenance        580,097      381,234    1,336,503      853,974
      Cost of other
       revenue                246,280      185,876      468,324      316,815
                            4,691,734    3,739,801   10,166,043    7,289,305
    -------------------------------------------------------------------------
    GROSS PROFIT            1,813,796    1,721,822    3,988,721    3,307,471
    -------------------------------------------------------------------------
    EXPENSES
      Sales and marketing     583,171      462,808    1,065,721      916,124
      General and
       administrative         900,864      682,665    1,759,166    1,454,216
      Other expenses          772,424      706,945    1,486,621    1,340,458
    -------------------------------------------------------------------------
                            2,256,459    1,852,418    4,311,508    3,710,798
    -------------------------------------------------------------------------
    Earning (loss) before
     amortization,
     interest and
     income taxes            (442,663)    (130,596)    (322,787)    (403,327)
    Amortization of
     capital assets          (122,299)    (119,103)    (234,843)    (248,147)
    Interest and
     investment income         12,170       24,869       40,767       42,649
    Interest expense
     and financing costs      (46,395)        (179)     (53,370)      (1,443)
    Income Taxes              (10,160)           -      (37,100)           -
    -------------------------------------------------------------------------
    NET INCOME/(LOSS)
     FOR THE PERIOD       $  (609,347) $  (225,009)    (607,333)    (610,268)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

    Weighted average
     number of common
     shares used to
     calculate per share
     amounts, basic
     and diluted           72,510,219   72,897,863   72,507,261   72,940,636
    -------------------------------------------------------------------------

    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,
                         -------------------------- -------------------------
                              2007         2006         2007         2006
                         ------------ ------------- ------------ ------------
                          (unaudited)  (unaudited)  (unaudited)  (unaudited)
    CASH FLOWS FROM
     OPERATING ACTIVITIES
      Net loss for
       the period         $  (609,347) $  (225,009) $  (607,333) $  (610,268)
      Items not
       affecting cash:
        Amortization of
         capital assets
         and intangibles      122,299      119,103      234,843      248,147
        Amortization of
         assets used in
         outsourcing
         contract              44,260            -       88,520            -
        Stock-based
         compensation          14,995       40,604       52,031       84,196
    ----------------------------------------------- -------------------------
                             (427,793)     (65,302)    (231,939)    (277,925)
      Changes in operating
       assets and
       liabilities:
        Accounts receivable   475,535     (170,367)  (1,115,657)    (465,648)
        Prepaid expenses      137,939      254,255      177,056      (11,106)
        Accounts payable
         and accrued
         liabilities           26,199      (54,584)     299,475      376,195
        Deferred revenue      112,696     (152,939)    (340,181)     (38,274)
        Accrued
         restructuring
         charge                     -      (91,581)           -     (177,771)
    ----------------------------------------------- -------------------------
                              324,576     (280,518)  (1,211,246)    (594,529)
    ----------------------------------------------- -------------------------

    CASH FLOWS FROM
     INVESTING ACTIVITIES
      Short term
       investments          1,240,319      250,057    2,696,558      474,710
      Purchase of capital
       assets, net of
       related accounts
       payable                (30,236)     (45,009)    (118,802)     (99,298)
    ----------------------------------------------- -------------------------
                            1,210,083      205,048    2,577,756      375,412
    -------------------------------------------------------------------------

    CASH FLOWS FROM
     FINANCING ACTIVITIES
      Payments on capital
       lease obligations      (30,751)      (1,549)     (57,267)      (3,079)
      Issue of common
       shares                       -      (44,785)       1,563      (44,785)
    ----------------------------------------------- -------------------------
                              (30,751)     (46,334)     (55,704)     (47,864)
    ----------------------------------------------- -------------------------
    NET CASH OUTFLOW        1,503,908     (121,804)   1,310,806     (266,981)
    EFFECT OF FOREIGN
     EXCHANGE RATE
      CHANGES ON CASH         (73,871)     (75,789)     (77,330)     (75,302)
    CASH (EXCLUDING SHORT
     TERM INVESTMENTS),
     BEGINNING OF PERIOD  $   971,763  $ 2,611,785  $ 1,168,324  $ 2,756,475
    ----------------------------------------------- -------------------------
    ----------------------------------------------- -------------------------
    CASH (EXCLUDING SHORT
     TERM INVESTMENTS),
     END OF PERIOD        $ 2,401,800  $ 2,414,192  $ 2,401,800  $ 2,414,192
    ----------------------------------------------- -------------------------
    ----------------------------------------------- -------------------------
    

    %SEDAR: 00007529E




For further information:

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

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