| News Release | February 13, 2007 |
| Brainhunter Inc. | (TSX - BH) |
Brainhunter Reports Record First Quarter Results
16:05 EST Tuesday, February 13, 2007
TORONTO, ONTARIO--(CCNMatthews - Feb. 13, 2007) -
THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION TO CANADIAN INVESTORS ONLY.
Brainhunter Inc. ("Brainhunter" or the "Company") (TSX:BH) is pleased to report record results for the first quarter ending December 31, 2006. Revenues were $54,730,398 versus $33,861,839 for the quarter ending December 31, 2005. EBITDA for the quarter was $2,007,186 versus $714,514 for the comparable quarter in the previous year.
Brainhunter is now well positioned as one of the largest Staffing and Solutions companies in Canada. During the previous fiscal year Brainhunter established Tier One relationships with a number of customers with staffing budgets in excess of CDN $50.0 million. This positioned Brainhunter very well for strong organic growth in fiscal 2007. The investment Brainhunter has made in infrastructure over the previous two years is expected to translate into significant EBITDA growth in 2007, as the benefit begins to accrue from the improved customer positioning, cost rationalization, synergies from acquisitions and a highly scalable business infrastructure.
Brainhunter has seven core business units - Toronto IT Staffing, Ottawa IT Staffing, Permanent Placement, International (BPO India and US), Engineering, Recruiting Solutions (Job Board and software license sale), and Solutions. In the fourth quarter, all business units showed improvement. This trend is expected to continue for the 2007 fiscal year, largely due to organic growth initiatives.
Over the past three-years, Brainhunter has grown from one of the smallest companies in the industry to become one of the largest Recruiting and Staffing Services and Solutions companies operating in Canada today. Brainhunter has consistently demonstrated steady growth. The closing of the acquisitions in the fall of 2005 has given Brainhunter the critical mass of sales, which when combined with the Brainhunter Technology Platform, Job Board infrastructure and one of the largest professional databases in Canada, positions Brainhunter as the pre-eminent staffing services and solutions companies in Canada. Brainhunter believes its Human Capital Management Platform provides one of the most comprehensive solutions and staffing procurement offerings in the marketplace today.
Brainhunter Inc.
Consolidated Interim Balance Sheets (Unaudited)
As at December 31, September 30,
2006 2006
$ $
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ASSETS
Current
Restricted short-term investment (note 8) 25,000 125,000
Accounts receivable 41,754,758 39,596,147
Deposits and prepaid expenses 930,248 762,314
Future income tax asset 939,664 939,664
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Total current assets 43,649,670 41,423,125
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Capital assets, net (note 4) 7,089,402 6,755,710
Investment tax credits recoverable (note 3) 1,373,122 1,373,122
Deferred financing costs (note 6) 971,475 1,285,194
Intangible assets, net of amortization
(note 7) 11,472,557 12,447,886
Goodwill (note 7) 20,232,800 20,232,800
Due from related parties (note 5) 440,150 190,150
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85,229,176 83,707,987
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 20,987,921 23,518,477
Current portion of deferred lease
inducement 39,490 39,490
Current portion of provision for
lease restructuring 261,756 261,756
Current portion of long-term debt (note 8) 4,053,873 4,139,378
Deferred revenue 539,470 416,714
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Total current liabilities 25,882,510 28,375,815
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Deferred lease inducement 459,251 325,153
Provision for lease restructuring 309,929 377,312
Long-term debt (note 8) 13,640,235 13,818,884
Term bank facility (note 9) 26,304,548 21,795,732
Long-term future income tax liabilities 2,078,017 2,437,234
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Total long-term liabilities 42,791,980 38,754,315
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Shareholders' equity
Capital stock (note 10) 20,534,341 20,309,153
Warrants (note 10) 1,423,498 1,423,498
Contributed surplus (note 10) 1,095,467 1,082,508
Equity component of convertible note
obligation (note 10) 1,607,726 1,607,726
Deficit (8,106,346) (7,845,028)
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Total shareholders' equity 16,554,686 16,577,857
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85,229,176 83,707,987
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Brainhunter Inc.
Consolidated Statements of Operations and Loss (Unaudited)
Three months ended December 31 2006 2005
$ $
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Revenue 54,730,398 33,861,839
Cost of revenues 46,367,778 28,097,362
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Gross profit 8,362,620 5,764,477
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Expenses
Other staffing costs 4,530,733 3,537,834
Selling, general and administrative 1,824,701 1,512,129
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6,355,434 5,049,963
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Income before interest, amortization
and income taxes 2,007,186 714,514
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Interest expense 753,425 396,141
Interest expense - accreted (note 8) 312,529 200,856
Amortization of capital assets 271,206 255,777
Amortization of intangibles 975,329 778,334
Amortization of deferred financing costs 313,719 -
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Total 2,626,208 1,631,108
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Loss before income taxes (619,022) (916,594)
(Recovery of) provision for income taxes (357,704) 21,482
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Net loss for the period (261,318) (938,076)
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Loss per share (note 10)
Basic ($0.01) ($0.02)
Diluted ($0.01) ($0.02)
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Consolidated Statements of Deficit (Unaudited)
2006 2006
$ $
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(Deficit), beginning of period (7,845,028) (3,144,656)
Net loss for the year - (4,700,372)
Net loss for the three month period (261,318) -
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(Deficit), end of period (8,106,346) (7,845,028)
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Brainhunter Inc.
Consolidated Statements of Cash Flows (Unaudited)
Three months ended December 31 2006 2005
$ $
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OPERATING ACTIVITIES
Net loss for the period (261,318) (938,076)
Add (deduct) items not affecting cash
Future income taxes (357,704) 21,482
Amortization of deferred financing costs 313,719 -
Accretion of interest 312,529 200,856
Amortization of lease inducement (10,736) (10,736)
Amortization of provision for lease
restructuring (67,413) (27,687)
Stock-based compensation expense 12,959 -
Amortization of capital assets 271,206 255,777
Amortization of intangible assets 975,329 778,334
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1,188,571 279,950
Net change in non-cash working capital
items (note 11) (4,735,858) 1,329,994
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Cash used in operating activities (3,547,287) 1,609,944
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FINANCING ACTIVITIES
Issue of shares on repayment of debt
(note 10) 225,188 -
Exercise of common share options (note 10) - 16,050
Repayment of bank indebtedness - (9,933,660)
Increase in deferred financing costs - (1,284,269)
Increase in lease inducement 144,863 -
Advances to related parties (250,000) (37,490)
Share purchase loans (note 10) - (242,000)
Proceeds from bank credit facility (note 9) 4,508,818 18,675,359
Proceeds from long-term debt - 12,498,000
Repayment of long-term debt (note 8) (476,684) (152,833)
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Cash provided by financing activities 4,152,185 19,539,157
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INVESTING ACTIVITIES
Additions to capital assets (604,898) (376,711)
Business acquisitions, net of cash
acquired (note 2) - (18,786,362)
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Cash used in investing activities (604,898) (19,163,073)
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Net increase (decrease) in cash during
the period - 1,986,028
(Bank overdraft), beginning of period - (644,821)
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Cash, end of period - 1,341,207
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DISCLAIMER
Certain statements in this News Release may constitute "forward-looking" statements, which involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Brainhunter and its subsidiary entities, or the industry, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this News Release, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in Brainhunter's publicly filed documents (which are available on SEDAR at www.sedar.com) and elsewhere in this document. Those risks and uncertainties include: the ability to maintain profitability and manage growth; reliance on and retention of professionals; competition; performance obligations and client satisfaction; fixed price and contingency engagements; collectibility of accounts receivable; general state of the economy; possible acquisitions; possible future litigation; interest rate fluctuations; insurance limits; legislative and regulatory changes; revenue and cash flow volatility; operating risks; residential market risk; protection of intellectual property; appraisal mandates; restrictions on growth. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this News Release. Although the forward-looking statements contained in this News Release are based upon what management believes to be reasonable assumptions, Brainhunter cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this News Release, and, except in accordance with applicable law, Brainhunter assumes no obligations to update or revise them to reflect new events or circumstances. Additionally, Brainhunter undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Brainhunter, its financial or operating results, or its securities.
BUSINESS OVERVIEW
Brainhunter is an ISO 9001:2000 Certified "Technology Driven Staffing Procurement Services and Solutions" company. Brainhunter's business is focused on using the Brainhunter Human Capital Management Platform to provide fully integrated end-to-end recruiting and staffing services and solutions in the following market sectors: Information Technology, Engineering, Industrial and Health Care.
These services are provided to customers throughout Canada, the United States and globally under the brand Brainhunter. Brainhunter's multifaceted revenue stream is in seven related practice areas including:
Contract Staffing (Annuity Revenue), Permanent Staffing (Transaction Fees / Retainers), Specialized Job Boards (Posting Fees / Subscriptions), Technology Sales (Licenses / Services), Professional Services / Solutions Delivery (Project Revenue), Business Process Outsourcing ("BPO") Centre (Annuity Revenue), Infrastructure Services (Annuity Revenue)
Brainhunter's Technology Platform and Best practices strive to deliver the most cost effective and flexible recruiting and staffing solutions in the marketplace today. Brainhunter offers solutions that are modular in nature and are customizable to suit both small and large scale business processes. Brainhunter's customer base includes over 200 of North America's leading corporation's plus over 30 federal and provincial government departments. Brainhunter's Job Seeker Database currently holds over 1.2 million professional resumes and is one of the largest active databases for professional staffing in North America.
Brainhunter is a publicly traded company with a senior listing on the Toronto Stock Exchange (TSX:BH). Brainhunter deploys over 1,600 Contractors / Consultants with an internal staff of over 200 personnel. The Company has delivery capability in Toronto, Ottawa, Maritimes, Montreal, Calgary, Edmonton, Vancouver, activities in Dalian China, a BPO office in Hyderabad, India and delivery capability in select US jurisdictions.
For further information contact:
| John McKimm, Chairman & CEO Brainhunter Inc. (416) 203-1800 Ext. 300 john.mckimm@brainhunter.com |
Robert Prentice, CFO |
| Grant Howard The Howard Group Inc. Ph: (888) 221-0915 info@howardgroupinc.com www.howardgroupinc.com |
Raj Singh, President |
The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.