Brainhunter Inc.
TSX : BH

Brainhunter Inc.

May 15, 2009 19:31 ET

Brainhunter Issues Financial Statements for Second Quarter Fiscal 2009

TORONTO, ONTARIO--(Marketwire - May 15, 2009) -

THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION TO CANADIAN INVESTORS ONLY.

Brainhunter Inc. ("Brainhunter" or the "Company") (TSX:BH) today released its financial statements for the three month period ended March 31, 2009.

The down turn in the North American economy has created a challenging business environment for every industry. Many of Brainhunter's clients have been impacted and this has put downward pressure in the first half on margins and revenue growth opportunities. Despite this, Brainhunter has maintained a strong base of business. Post the end of the second quarter, Brainhunter announced the following:

1. Managed Services: Renewal of a contract valued at approximately $5.0 million per annum for a period of three years with an option for a further two years.

2. Engineering: Signed a two year contract with automatic extensions for consecutive one year periods. The contract is valued in excess of $35.0 million per annum.

3. Federal Government: Signed in excess of $26.5 of Federal Government contracts, increasing backlog over the next 6 quarters to in excess of $50.0 million

4. Financing: Closed financing totaling $31.0 million.

In addition, Brainhunter's consolidated backlog including expected renewals of existing business over the period to September 30, 2010 is approximately $327.0 million. Of this amount, approximately $100.0 million is deliverable for the fiscal year ending September, 2009. To extract optimal financial results, Brainhunter has introduced major cost reduction initiatives throughout fiscal 2009 that by the end of May, 2009 will exceed $4.0 million per annum. The full benefit of this cost savings will be reflected in Q4 results. The cost structure is now at the point where over 50% of every dollar increase in gross margin will fall directly to EBITDA.

The Company announced in February, 2009 that it had engaged a global corporate finance advisory firm to assist the management and Board in exploring strategic opportunities that will remove all debt concerns and put the Company back on a solid footing to take advantage of its growth opportunities.

Business Overview

Brainhunter is an ISO9001:2000 Certified "Staffing Services and Solutions" Company. Brainhunter's business is focused on using a leading technology platform to provide end to end recruiting and staffing services and solutions in information technology, engineering and other selected market sectors. These services are provided to clients throughout Canada, United States, and globally under the Brand "Brainhunter".

Brainhunter's technology platform and best practices strive to deliver the most cost effective and flexible recruiting and staffing services and solutions in the marketplace today. The solutions are modular in nature and customizable to suit both small and large scale business processes. Brainhunter has over 2000 clients including a number of America's leading corporations and over 30 federal and provincial government groups. Brainhunter's Jobseeker database currently holds in excess of 1.2 million professionals 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. Brainhunter deploys over 1,600 consultants and has an internal staff of over 200 personnel. The Company has delivery capability across Canada and in the United States including Toronto, Ottawa, Maritimes, Montreal, Calgary, Vancouver, activities in Dalian, China, and an office in Hyderabad, India, and the UK.

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; collectability 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.

Following are statements extracted from the unaudited financial statements of Brainhunter for the period ending March 31, 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 $,000 except earnings per share.



As at March 31, September 30,
2009 2008
$ $
------------------------
ASSETS
Current
Accounts receivable 36,861 35,876
Prepaid expenses 278 332
------------------------
Total current assets 37,139 36,208
------------------------
Property, plant and equipment, net 2,821 3,032
Deposits 524 366
Other assets 445 471
Intangible assets, net 5,653 7,718
Goodwill 6,571 6,571
Due from related parties 1,117 853
------------------------
54,270 55,219
------------------------
------------------------

LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current
Accounts payable and accrued liabilities 22,690 21,737
Current portion of deferred lease inducement 103 103
Current portion of provision for lease restructuring 15 91
Current portion of long-term debt 16,369 16,144
Term bank credit facility 17,394 15,409
Deferred revenue 362 337
------------------------
Total current liabilities 56,933 53,821
------------------------
Deferred lease inducement 580 637
Long-term debt 185 339
Long-term future income tax liabilities 74 74
------------------------
Total liabilities 57,772 54,871
------------------------
Commitments and contingencies

Shareholders' (deficit) equity
Capital stock 19,117 19,472
Warrants 69 1,531
Contributed surplus 3,283 1,567
Equity component of convertible note obligation 1,951 1,951
Deficit (27,922) (24,173)
------------------------
Total shareholders' (deficit) equity (3,502) 348
------------------------
54,270 55,219
------------------------



Consolidated Income Statement


For the three For the six
months ended months ended
------------ ------------
March 31, March 31, March 31, March 31,
2009 2008 2009 2008
$ $ $ $
--------------------- --------------------

Revenue 52,701 60,290 106,921 118,683
Cost of revenue 46,055 51,862 92,530 101,594
--------------------- --------------------
Gross profit 6,646 8,428 14,391 17,089
--------------------- --------------------
--------------------- --------------------

Expenses
Other staffing costs 4,914 5,849 10,006 10,950
Selling, general and
administrative 2,185 4,010 3,771 6,310
--------------------- --------------------
7,099 9,859 13,777 17,260
--------------------- --------------------
--------------------- --------------------
Income before the following (453) (1,431) 614 (171)
--------------------- --------------------
Interest expense 605 873 1,277 1,749
Interest expense - accreted 83 410 400 745
Amortization
Property, plant and
equipment 167 172 342 350
Intangible assets 1,026 1,094 2,065 2,215
Financing Cost 462 100 530 100
--------------------- --------------------
2,343 2,649 4,614 5,159
--------------------- --------------------
Loss before income taxes (2,796) (4,080) (4,000) (5,330)
Recovery of current income
taxes - (1,547) - (1,547)
Recovery of future income
taxes - (5) - (221)
--------------------- --------------------
--------------------- --------------------
Net loss from continuing
operations (2,796) (2,528) (4,000) (3,562)
--------------------- --------------------

Discontinued Operations
Income from discontinued
operations - (37) - 4
Gain from disposal of
discontinued operations (net
of tax) 125 5,445 250 5,445
--------------------- --------------------
--------------------- --------------------
Net profit (loss) from
discontinued operations 125 5,408 250 5,449
--------------------- --------------------
Net loss for the period (2,671) 2,880 (3,750) 1,887
--------------------- --------------------

Deficit, beginning of period (25,251) (12,831) (24,172) (11,838)
--------------------- --------------------
Deficit, end of period (27,922) (9,951) (27,922) (9,951)
--------------------- --------------------
--------------------- --------------------

Loss per share
Continuing Operations - Basic
and diluted (0.06) (0.09) (0.09) (0.12)
Discontinued Operations -
Basic - 0.16 - 0.16
Discontinued Operations -
Basic and diluted - 0.14 - 0.14
--------------------- --------------------
--------------------- --------------------



Consolidated Statement of Cash Flows

For the three For the six
months ended months ended
------------ ------------
March 31, March 31, March 31, March 31,
2009 2008 2009 2008
$ $ $ $
--------------------- --------------------
OPERATING ACTIVITIES
Net loss for the period (2,796) (2,528) (4,000) (3,562)
Add (deduct) items not
involving cash
Current income taxes - (1,547) - (1,547)
Future income taxes - (5) - (221)
Loss on disposal of fixed
assets 8 - 8 6
Accretion of interest 83 410 400 745
Amortization of deferred
lease inducement and
provisions (28) (31) (57) (51)
Amortization of provision
for lease restructuring (33) (62) (76) (123)
Stock-based compensation
expense 5 31 12 76
Amortization of property,
plant and equipment 167 172 342 350
Amortization of intangible
assets 1,026 1,094 2,065 2,215
--------------------- --------------------
(1,568) (2,466) (1,306) (2,112)
Net change in non-cash working
capital balances related to
operations 3,766 3,806 (111) 790
--------------------- --------------------
Cash provided by (used in)
operating activities 2,198 1,340 (1,417) (1,322)
--------------------- --------------------

FINANCING ACTIVITIES
Exercise of common share
options - - - 36
Loans to related parties (58) (410) (264) (410)
Purchase of common shares (76) - (113) -
Proceeds from (repayment of)
term bank credit facility (2,035) (6,896) 1,986 (2,490)
Repayment of long-term debt (110) (785) (329) (2,201)
--------------------- --------------------
Cash provided by (used in)
financing activities (2,279) (8,091) 1,280 (5,065)
--------------------- --------------------

INVESTING ACTIVITIES
Additions to property, plant
and equipment (62) (158) (139) (535)
Increase in other assets 18 89 26 61
Contingent payments relating
to prior years' acquisitions - (135) - (135)
--------------------- --------------------
Cash used in investing
activities (44) (204) (113) (609)
--------------------- --------------------
Net cash flows used for
continuing operations (125) (6,955) (250) (6,996)
--------------------- --------------------

Cash provided from discontinued
operations
Cash provided by (used in)
operating activities of
discontinued operations - (37) - 4
Cash provided from the disposal
of discontinued operations 125 5,445 250 5,445
Recovery of current income
taxes - 1,547 - 1,547
--------------------- --------------------
--------------------- --------------------
Net cash flows provided from
discontinued operations 125 6,955 250 6,996
--------------------- --------------------

Net increase in cash during
the period - - - -
Cash, beginning of period - - - -
--------------------- --------------------
--------------------- --------------------
Cash, end of period - - - -
--------------------- --------------------
--------------------- --------------------

Supplemental cash flow
information
Interest paid 605 866 1,277 1,516
Additions to capital
assets - non-cash - - - 245
--------------------- --------------------
--------------------- --------------------


The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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