Brainhunter Releases Results for June Quarter

TORONTO, ONTARIO--(Marketwire - Aug. 10, 2009) - THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION TO CANADIAN INVESTORS ONLY. Brainhunter Inc. ("Brainhunter" or the "Company") BH announces the release of its financial statements for the 3rd quarter ending June 30, 2009. All amounts discussed below are in thousands of Canadian dollars. The Company recorded a net loss of $6,652 from continuing operations for the quarter which included a restructuring provision of $3,771, financing fees of $687 and an investment write-down of $162. The company has embarked upon a major restructuring and repositioning of the Company to substantially reduce its operating costs and improve profitability Raj Singh, the newly appointed CEO, stated "The Company is taking major steps to restructure and re-organize itself to meet the realities of the economy." The Company has reduced its workforce by more than 80 positions and has taken steps to shrink the amount of space it uses. As well, the Company is reviewing all available strategic alternatives, including refinancing of its debt and the possible sale of portions of the business or all of the business. Management of the Company is being assisted by its new board of directors, 7 of 9 of whom were newly elected at the Company's annual general meeting on July 20, 2009. Following are statements extracted from the unaudited financial statements of Brainhunter for the period ending June 30, 2009. The following statements should be read in conjunction with the notes to the financial statements attached to the unaudited financial statements as filed on SEDAR. Amounts are in thousands of Canadian dollars except earnings per share. /T/ As at June 30, September 30, 2009 2008 $ $ ------------ ------------ ASSETS Current Accounts receivable 32,941 35,848 Prepaid expenses 431 319 Current assets of discontinued operations 27 23 ------------ ------------ Total current assets 33,399 36,190 ------------ ------------ Property, plant and equipment, net 2,676 3,025 Deposits 240 366 Other assets - 471 Intangible assets, net 4,674 7,718 Goodwill 6,571 6,571 Due from related parties 319 853 ------------ ------------ 47,879 55,194 ------------ ------------ ------------ ------------ LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY Current Accounts payable and accrued liabilities 19,605 21,713 Current portion of restructuring cost 1,659 91 Current portion of deferred lease inducement 103 103 Current portion of long-term debt 16,369 16,144 Term bank credit facility 17,864 15,409 Deferred revenue 650 336 ------------ ------------ Total current liabilities 56,250 53,796 ------------ ------------ Restructuring cost 1,539 - Deferred lease inducement 555 637 Long-term debt 108 339 Long-term future income tax liabilities 74 74 ------------ ------------ Total liabilities 58,526 54,846 ------------ ------------ Commitments and contingencies Shareholders' (deficit) equity Capital stock 19,117 19,472 Warrants 33 1,531 Contributed surplus 3,323 1,567 Equity component of convertible note obligation 1,951 1,951 Deficit (35,071) (24,173) ------------ ------------ Total shareholders' (deficit) equity (10,647) 348 ------------ ------------ 47,879 55,194 ------------ ------------ ------------ ------------ For the three For the nine months ended months ended -------------- ------------- June 30, June 30, June 30, June 30, 2009 2008 2009 2008 $ $ $ $ ------------------ ------------------ Revenue 53,421 60,978 160,308 179,658 Cost of revenue 47,066 52,469 139,586 154,061 ------------------ ------------------ Gross profit 6,355 8,509 20,722 25,597 ------------------ ------------------ Expenses Other staffing costs 3,660 5,281 13,051 16,082 Selling, general and administrative 2,766 1,840 6,461 8,105 ------------------ ------------------ 6,426 7,121 19,512 24,187 ------------------ ------------------ Income before the undernoted costs (71) 1,388 1,210 1,410 ------------------ ------------------ Restructuring costs 3,771 - 4,135 - Writedown of investment 162 - 162 - Interest expense 792 706 2,068 2,427 Interest expense - accreted 33 131 433 876 Amortization Property, plant and equipment 157 476 497 826 Intangible assets 979 790 3,044 3,005 Financing Cost 687 30 1,218 159 ------------------ ------------------ 6,581 2,133 11,557 7,293 ------------------ ------------------ Loss before income taxes (6,652) (745) (10,347) (5,883) Recovery of current income taxes - - - (1,547) Recovery of future income taxes - - - (221) ------------------ ------------------ Net loss from continuing operations (6,652) (745) (10,347) (4,115) ------------------ ------------------ Discontinued Operations Loss from discontinued operations (204) (153) (508) (342) Gain (loss) from disposal of discontinued operations (net of tax) (293) 1,625 (43) 7,070 ------------------ ------------------ Net profit (loss) from discontinued operations (497) 1,472 (551) 6,728 ------------------ ------------------ Net profit (loss) for the period (7,149) 727 (10,898) 2,613 ------------------ ------------------ Deficit, beginning of period (27,922) (9,951) (24,173) (11,837) ------------------ ------------------ Deficit, end of period (35,071) (9,224) (35,071) (9,224) ------------------ ------------------ ------------------ ------------------ Earnings (loss) per share Continuing Operations - Basic and diluted (0.15) (0.02) (0.23) (0.10) Discontinued Operations - Basic and diluted (0.01) 0.04 (0.01) 0.16 ------------------ ------------------ For the three For the nine months ended months ended -------------- ------------- June 30, June 30, June 30, June 30, 2009 2008 2009 2008 $ $ $ $ ------------------ ------------------ OPERATING ACTIVITIES Net loss for the period (6,652) (746) (10,347) (4,115) Add (deduct) items not involving cash Current income taxes - - - (1,547) Future income taxes - - - (221) Loss on disposal of fixed assets - - 8 6 Reserve for restructuring 3,197 - 3,197 - Writedown of investment 152 - 152 - Accretion of interest 33 131 433 876 Amortization of deferred lease inducement (24) (29) (81) (80) Amortization of provision for lease restructuring (15) (62) (91) (184) Stock-based compensation expense 4 67 16 142 Amortization of property, plant and equipment 157 476 497 826 Amortization of intangible assets 979 790 3,044 3,005 ------------------ ------------------ (2,169) 627 (3,172) (1,292) Net change in non-cash working capital balances related to operations 2,042 3,004 1,661 3,397 ------------------ ------------------ Cash provided by (used in) operating activities (127) 3,631 (1,511) 2,105 ------------------ ------------------ FINANCING ACTIVITIES Exercise of common share options - - - 36 Purchase of common shares - (289) (113) (289) Proceeds from (repayment of) term bank credit facility 470 (3,908) 2,455 (6,398) Repayment of long-term debt (110) (785) (438) (2,986) ------------------ ------------------ Cash provided by (used in) financing activities 360 (4,982) 1,904 (9,637) ------------------ ------------------ INVESTING ACTIVITIES Additions to property, plant and equipment (18) (123) (156) (658) Increase in other assets - - 26 61 Contingent payments relating to prior years' acquisitions - - - (135) ------------------ ------------------ Cash used in investing activities (18) (123) (130) (732) ------------------ ------------------ Net cash flows provided by (used in) continuing operations 215 (1,474) 263 (8,264) ------------------ ------------------ DISCONTINUED OPERATIONS Cash used in operating activities of discontinued operations (215) (151) (513) (353) Cash provided from disposal of discontinued operations - 1,625 250 7,070 Recovery of current income taxes - - - 1,547 ------------------ ------------------ Net cash flows provided by (used in) discontinued operations (215) 1,474 (263) 8,264 ------------------ ------------------ Net increase in cash during the period - - - - Cash, beginning of period - - - - ------------------ ------------------ Cash, end of period - - - - ------------------ ------------------ ------------------ ------------------ Supplemental cash flow information Interest paid 792 579 2,069 2,095 Additions to capital assets - non-cash - - - 245 ------------------ ------------------ /T/ Business Overview Brainhunter Inc. ("Brainhunter" or the "Company") is specialized in the provision of staffing solutions (contingent staffing, managed staffing, permanent staffing and staffing software solutions) to major companies and governments in Canada and the U.S. Currently, the largest part of the business is providing IT and engineering staffing consultants, on a contract basis, to major companies and government entities in Canada. The Company also sells recruiting related software including applicant tracking systems ("ATS"), vendor management software ("VMS"), and job board software. Brainhunter deploys over 1,400 contractors with an internal staff of over 170 personnel. Operations are ISO 9001:2000 Certified.