CALGARY, April 20 /CNW/ - Decision Dynamics Technology Ltd. (the "Company") (Decision Dynamics; TSX-V: DDY), a leading provider of project cost control and productivity management software for the energy industry, today reported sales of $467K and $3.2 million for the three and twelve months ending December 31, 2009, respectively. The financial highlights presented below are for the Oncore(TM) continuing operation only, pursuant to the disposition of the Wellcore product line during Q3 2008.
2009 revenues increased 45% over 2008, as a result of the signing of a number of new license contracts during the year. The license contracts will provide approximately $1.8 million in revenue to the Company over the contract terms. Of the $1.8 million in revenue, approximately $1.2 million has been recognized in 2009. Cost of sales for 2009 increased 7% over 2008. Although 2009 includes lower personnel related expenses than 2008, due to restructuring, this has been offset by higher third party consulting expenses to deliver customer projects, higher commissions on new license sales and expenses incurred to relocate the customer data centre facility. Total operating expenses for 2009 increased 14% over 2008, reflecting expenses incurred in execution of the Company's strategic objectives - recruitment of an experienced and talented sales, marketing and development teams, sales and marketing initiatives to build the customer opportunity pipeline, investments in the Oncore(TM) technology and restructuring.
Three Months Ending Twelve Months Ending
Dec 31, Dec 31, Dec 31, Dec 31,
$'000 except per share amounts 2009 2008 2009 2008
Revenue 467 549 3,198 2,212
Cost of sales 192 174 1,090 1,018
Gross profit(4) 275 375 2,108 1,194
Gross margin(4) 59% 68% 66% 54%
Operating expenses 877 974 3,731 3,283
Loss before discontinued
operations (677) (682) (1,866) (3,003)
Net income (Loss) (677) (660) (1,866) 254
Loss per share, before
operations (0.01) (0.01) (0.03) (0.05)
Net income (loss per share),
operations (0.01) (0.01) (0.03) 0.004
EBITDA(4) (602) (589) (1,623) (1,930)
Income (loss) from
operations - - - (277)
Cash 2,075 3,815
Working capital(4) 2,197 4,064
Total assets 3,525 5,391
(1) "Gross profit" is revenue less cost of sales and "gross margin" is
gross profit divided by revenue expressed as a percentage.
(2) "EBITDA" is defined as net income (loss) before interest, income
taxes, depreciation and amortization.
(3) "Working capital" is current asset less current liabilities.
(4) Gross profit, gross margin, EBITDA and working capital 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.
2009 was a year of steady and positive change for the Company. Strategic investments made in the sales and development groups have provided the Company with a steady increase in customer-facing opportunities. Year to date license revenue increased 118% in 2009 due to the closing of two significant customer contracts in Q2 2009, followed by two new customer license contracts signed in Q3 2009 and Q4 2009. The number and value of new license opportunities in the customer opportunity pipeline has grown throughout the last half of the year. However, converting these opportunities into revenue is unpredictable, as it is impacted by factors beyond our control, such as timing of customer decisions, project delays, and contract execution. Services revenue for 2009 was down 36% from 2008, as most of the new license sales in 2009 were to existing customers, in which Oncore(TM) is well deployed. The Company believes the expansion of product licensing within these customers will continue to provide future license and services revenue opportunities. Recurring revenues increased 18% over 2008. The growth in the recurring revenue base has been generated from maintenance and hosting contracts from new license sales, as well as license fees on contracts for which the revenue is recognized ratably.
Year-to-date 2009 expenses increased 14% over 2008, reflecting the Company's strategic objectives to invest in sales, marketing and development. Investments in sales and marketing include the recruitment of an experienced sales team, adoption of a successful customer centric selling methodology and process and targeted sales and marketing campaigns and initiatives. The Company recruited a talented product development team that has focused on providing an innovative, progressive product offering to both new and existing customers. The Company has invested in new development initiatives that it believes will protect our recurring revenue stream, and increase the potential to generate new license and service revenue opportunities, both with new and existing customers. The Company undertook additional restructuring during the first half of the year, to ensure that the Company's resources were allocated to these strategic initiatives.
In order to allow the Company to continue execution of its strategic objectives, the Company reviewed its operational strategy and determined that more significant investment was required. On March 2, 2010, the Company and Coreworx Inc. ("Coreworx"), a subsidiary of Acorn Energy Inc. ("Acorn") (NASDAQ; ACFN) executed a definitive agreement for the sale of the Company. Subject to shareholder approval at the Special Meeting to be held on April 27, 2010, the sale is expected to close by April 30, 2010. The sale will provide the Company with 1,000,000 shares of Acorn Energy Inc., in exchange for all outstanding common shares of the Company. As of April 16, 2010, assuming a per share value of $6.37 per Acorn share, the sale attributes a value of $0.107 per Company share, based on outstanding Company Common stock on that date of 59,748,599, on a diluted basis.
Acorn is a holding company focused on improving the efficiency and environmental impact of the energy infrastructure, fossil fuel and nuclear industries. Acorn's operating companies leverage advanced technologies to transform the existing energy infrastructure. Acorn aims to acquire primarily controlling positions in companies led by promising entrepreneurs and to add value by supporting those companies with financing, branding, positioning, and strategy and business development. The combined company, in which Company shareholders will hold an equity interest (assuming completion of the sale), will have increased scale to conduct research and development, sell internationally and realize operating and capital-raising efficiencies, while reducing its exposure to any one product.
About Decision Dynamics Technology Ltd.
Decision Dynamics Technology Ltd. is a leading provider of an innovative project controls and productivity management software for the energy sector, including major electrical power companies.
Its product, Oncore(TM), is a project cost management solution that provides high volume, real-time capture of field labor, equipment, and material cost information, contract validation and approvals for operations management and capital projects. Oncore(TM) unifies the project data, information, and knowledge needed for complete project visibility thereby enabling better, faster project management decisions. Decision Dynamics is a Microsoft Gold Certified Partner. The Company's head office is located in Calgary, Alberta, Canada. It operates a wholly-owned foreign subsidiary in the United States.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
In this news release Decision Dynamics makes forward-looking statements or provides forward looking information (collectively "forward-looking statements"). These statements relate to future events or Decision Dynamics' future performance. The use of any of the words "anticipates", "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. By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that such forward-looking statements will not be achieved. Some of the material assumptions that Management has made are:
- the condition of the financial markets will remain at current levels
- our customers will continue to look for, and make investments in
project cost control software
- the customer opportunities in our sales pipeline will result in
- we will be able to attract, motivate and retain talented employees at
a sufficient level to achieve our strategic plans
Readers of this analysis are cautioned not to place undue reliance on these forward-looking statements as a number of important factors could cause actual results to differ materially from the plans, objectives and intentions expressed in such forward-looking statements. Some of the key factors we have considered are:
- impact of the current financial markets condition
- impact of market demand for Oncore(TM) on revenue growth
- reliance on key clients
- degree of competition in target markets
- our ability to control expenses
- technological changes to Oncore(TM)
- length of sales cycle required to close customer opportunities
- our ability to execute our strategic plans
- our ability to recruit and retain high caliber employees
The Financial Risks section of the Company's interim and annual Management Discussion and Analysis is filed with applicable securities regulatory authorities and accessible through the SEDAR website www.sedar.com. 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.
SOURCE DECISION DYNAMICS TECHNOLOGY LTD.
For further information: For further information: Justin Zinke, Chief Executive Officer, Decision Dynamics Technology Ltd., (403) 451-0731