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QCC Technologies
Release Date: September 14, 2003
QCC Reports Continued Revenue Growth
16:30 EDT Friday, August 22, 2003
CALGARY, ALBERTA–Sid Dutchak, President and Chief Executive Officer of QCC Technologies Inc. (“QCC” or “the Company”), is pleased to report QCC’s 2003 second quarter financial and operating results. “Following a year of building and streamlining, QCC has produced excellent results in the first half of 2003, with much improved revenues and income” says Dutchak.
Financial Highlights ($)
Three Months ended June 30, 2003
2003 2002
————————
Revenue 2,573,219 2,388,486
Gross Profit 427,822 473,299
EBITDA 41,363 123,454
Net Earnings 10,465 58,476
Earnings per share
Basic 0.0005 0.0026
Diluted 0.0004 0.0026
Financial Highlights ($)
Six Months ended June 30, 2003
2003 2002
————————
Revenue 5,363,457 4,747,836
Gross Profit 1,192,160 955,103
EBITDA 311,174 174,959
Net Earnings 169,466 71,557
Earnings per share
Basic 0.0082 0.0033
Diluted 0.0071 0.0033
For the quarter ended June 30, 2003, consolidated gross revenues reached $2,573,219 compared to $2,388,486 for the same quarter in 2002, an increase of 8%.
Gross profit of $427,822 (17% of sales) was generated in the quarter compared to $473,299 (20% of sales) for the same period last year. Margins improved on product sales, but were reduced on services due to competitive conditions and certain contract completions.
General and administrative expenses for the quarter were $416,883 (16% of sales) compared to $387,739 (16% of sales) for the same period last year.
During the quarter ended June 30, 2003, Net Earnings were $10,465 compared to Net Earnings of $58,476 for the same period last year. Completion of several contracts in the QCC Communications division in the quarter resulted in lower staff utilization and lower earnings. New contracts have been obtained to replace this revenue; however commencement of work will not occur until mid third quarter when growth in earnings is expected to resume.
For the six months ended June 30, 2003, consolidated gross revenues reached $5,363,457 compared to $4,747,836 for the same period in 2002, an increase of 13%.
Gross profit of $1,192,160 (22% of sales) was generated in the period compared to $955,103 (20% of sales) for the same period last year.
General and administrative expenses for the period were $942,270 (18% of sales) compared to $859,110 (18% of sales) for the same period last year.
During the six months ended June 30, 2003, Net Earnings reached $169,466 compared to Net Earnings of $71,557 for the same period last year.
The consolidated cash position at June 30, 2003 was $(83,415) compared to consolidated cash of $(1,047) at December 31, 2002. Details of cash provided by operations and used in financing and investing activities are disclosed in the Consolidated Statement of Cash Flows.
Consolidated long-term debt excluding current portion and repayable government contributions payable at June 30, 2003 was $70,200 a reduction of $35,100 during the period.
Consolidated working capital at June 30, 2003 was $93,829 compared to $(82,553) at December 31, 2002 an increase of $176,382. The revolving loan facility of $525,000 with a major Canadian chartered bank is adequate for current operations. $305,000 of this facility was drawn at quarter end.
For the period ended June 30, 2003, shareholders’ equity increased to $4,499,110 from $4,329,644 at December 31, 2002.
During the remainder of 2003 QCC will continue to focus on growth of revenue and earnings in each of the operating subsidiaries. We continue to focus on strengthening our balance sheet in order to be strategically positioned to capitalize on acquisitions and other growth opportunities as they arise.
QCC Technologies Inc. through its operating subsidiaries in Calgary, Saskatoon and Red Deer, provides Applied Advanced Information and Networking Technology Services in the forms of technology management; systems and software engineering; technology development; consulting; systems integration; technical support; and, automated network-based services.
Consolidated Financial Statements of
QCC Technologies Inc.
Six months ended June 30, 2003
(Unaudited)
QCC Technologies Inc.
Consolidated Balance Sheets
As at June 30, 2003 (Unaudited) and December 31, 2002 (Audited)
———————————————————————-
June 30 December 31
2003 2002
———————————————————————-
Assets
Current
Income taxes receivable 80,523 87,725
Accounts Receivable 1,610,773 1,421,439
Other Current Assets 64,790 69,398
———————————————————————-
1,756,086 1,578,562
Investment tax credits unapplied 207,476 207,476
Deferred royalties 5,953 13,105
Future taxes 252,315 333,175
Capital assets 335,042 342,044
Goodwill 4,135,173 4,135,173
Other 14,668 14,668
———————————————————————-
6,706,713 6,624,203
———————————————————————-
———————————————————————-
Liabilities
Current
Bank overdraft 83,415 1,047
Bank indebtedness 305,000 145,000
Accounts payable and accrued liabilities 876,590 1,000,363
Deferred revenue – 11,971
Notes payable to shareholders 107,000 211,700
Royalty payable 128,005 118,424
Current portion of long-term liabilities 162,247 172,610
———————————————————————-
1,662,257 1,661,115
Government contributions repayable 475,146 528,144
Long-term debt 70,200 105,300
———————————————————————-
2,207,603 2,294,559
———————————————————————-
Shareholders’ Equity
Share Capital 4,565,884 4,565,884
Deficit (66,774) (236,240)
———————————————————————-
4,499,110 4,329,644
———————————————————————-
6,706,713 6,624,203
———————————————————————-
———————————————————————-
QCC Technologies Inc.
Consolidated Statements of Earnings(Unaudited)
For the three months and six months ended June 30, 2003 and 2002
———————————————————————-
Three months Six months
————————————-
2003 2002 2003 2002
———————————————————————-
Revenue
Services 1,590,606 1,836,654 3,593,008 3,372,894
Products 982,613 551,832 1,770,449 1,374,942
———————————————————————-
2,573,219 2,388,486 5,363,457 4,747,836
Cost of sales
Project costs 1,330,612 1,432,551 2,678,446 2,584,640
Cost of product sales 814,785 482,636 1,492,851 1,208,093
———————————————————————-
2,145,397 1,915,187 4,171,297 3,792,733
———————————————————————-
Gross profit 427,822 473,299 1,192,160 955,103
———————————————————————-
Administrative Expenses
Development expenditures 62,854 18,718 105,023 94,640
Marketing 103,947 38,816 187,382 104,722
General and administrative 244,191 321,975 637,739 640,591
Interest on long-term debt 5,891 8,230 12,126 19,157
———————————————————————-
416,883 387,739 942,270 859,110
———————————————————————-
Earnings from operations 10,939 85,560 249,890 95,993
———————————————————————-
Other income 164 516 436 857
———————————————————————-
Earnings before income taxes 11,103 86,076 250,326 96,850
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Income Taxes (recoverable)
Current 34,195 38,801
Future 638 (6,595) 80,860 (13,508)
———————————————————————-
638 27,600 80,860 25,293
———————————————————————-
Net earnings for the period 10,465 58,476 169,466 71,557
———————————————————————-
Earnings per share
Basic 0.0005 0.0026 0.0082 0.0033
Diluted 0.0004 0.0026 0.0071 0.0033
———————————————————————-
QCC Technologies Inc.
Consolidated Statements of Deficit (Unaudited)
As at June 30, 2003 and 2002
———————————————————————-
2003 2002
——————–
Deficit, beginning of year (236,240) (227,183)
Dividends – (62,030)
Net earnings for the period 169,466 71,557
———————————————————————-
Deficit, end of the period (66,774) (217,656)
———————————————————————-
QCC Technologies Inc.
Consolidated Statements of Cash Flows (Unaudited)
For the three months and six months ended June 30, 2003 and 2002
———————————————————————–
Three months Six months
———————————————————————–
2003 2002 2003 2002
—————————————
Cash provided by (used for)
the following activities
Operating
Net earnings for the period 10,465 58,476 169,466 71,557
Items not affecting cash:
Amortization
of deferred royalties 3,576 7,152
Amortization of capital assets 24,369 29,148 48,722 58,952
Future taxes 638 (6,595) 80,860 (13,508)
———————————————————————–
39,048 81,029 306,200 117,001
Net changes in working capital (183,379) 129,483 (314,050) (36,537)
———————————————————————–
(144,331) 210,512 (7,850) 80,464
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Financing
Issuance of common shares – – – 1,800,000
Exchange of preferred shares – – – (1,750,000)
Share issuance costs – (25,176) – (25,176)
Long term facility costs – – – (77,684)
Dividends paid – (62,030) – (62,030)
Repayment of notes payable
to shareholders (52,350) (104,700)
Advances (repayments)
of bank financing 140,000 (52,000) 160,000 195,000
Proceeds of note assumed
in business acquisition – – – 300,000
Repayment of long-term debt (32,550) (59,788) (88,098) (81,958)
———————————————————————–
55,100 (198,994) (32,798) 298,152
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Investing
Purchase of capital assets (20,281) (26,986) (41,720) (98,231)
Disposal of capital assets – 21,954 21,954
Acquisitions, net of cash acquired – – – (350,000)
———————————————————————–
(20,281) (5,032) (41,720) (426,277)
———————————————————————–
Increase (decrease)
in cash resources (109,512) 6,486 (82,368) (47,661)
Cash resources,
beginning of period 26,097 57 (1,047) 54,204
———————————————————————–
Cash resources, end of period (83,415) 6,543 (83,415) 6,543
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FOR FURTHER INFORMATION PLEASE CONTACT:
QCC Technologies Inc.
Sid Dutchak
(403)777-1721 ext. 34
or
QCC Technologies Inc.
Investor Relations
(800) 694-9909
Email: info@qcctech.com
Website: www.qcctech.com
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© CCNMatthews
