Brainhunter Inc.
TSX : BH

Brainhunter Inc.

April 03, 2009 21:54 ET

Brainhunter Issues Fiscal 2008 Financial Statements

TORONTO, ONTARIO--(Marketwire - April 3, 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 year ended September 30, 2008.

The release of the financial statements was delayed pending resolution of the amount of the adjustment for impairment of Goodwill. Based on an analysis conducted by independent valuators pursuant to CICA Handbook Section 3064 and in consultation with its auditors, the Company elected to record an impairment to Goodwill of $13,662,000.

The Chairman and CEO of the Company stated, "In these unprecedented economic times the Company carefully reviewed its Goodwill and made the adjustment as deemed appropriate under Generally Accepted Accounting Principles. It is important to note that this is a non-cash adjustment and does not affect the day to day operations of the Company Further, it does not reflect the underlying value of the business."

The Company announced earlier that it is reviewing its strategic alternatives with a view to enhancing value to shareholders and to build on its current critical mass of business. The Company has engaged a corporate finance advisory firm, Ernst & Young Orenda Corporate Finance Inc., to advise in the process.

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 350 active client relationships 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 1600 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, Edmonton, Vancouver, activities in Dalian China, and an office in Hyderabad India, and the UK.

Following are statements extracted from the audited financial statements of Brainhunter for the year ending September 30, 2008. The following statements should be read in conjunction with the notes to the financial statements attached to the audited financial statements as filed on SEDAR. Amounts are in $,000 except earnings per share.



As at September 30 2008 2007
$ $
-----------------------
ASSETS
Current
Accounts receivable 35,876 44,317
Prepaid expenses 332 317
Current assets held as discontinued operations - 228
-----------------------
Total current assets 36,208 44,862
-----------------------
Property, plant and equipment, net 3,032 2,563
Deposits 366 241
Other assets 471 524
Intangible assets, net 7,718 12,121
Goodwill 6,571 20,233
Due from related parties 853 443
-----------------------
55,219 80,987
-----------------------
-----------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 21,737 23,689
Current portion of deferred lease inducement 103 69
Current portion of provision for lease restructuring 91 249
Current portion of long-term debt 16,144 3,230
Term bank credit facility 15,409 -
Deferred revenue 337 272
Current liabilities held as discontinued operations - 270
-----------------------
Total current liabilities 53,821 27,779
-----------------------
Deferred lease inducement 637 538
Provision for lease restructuring - 141
Long-term debt 339 14,759
Term bank credit facility - 24,484
Long-term future income tax liabilities 74 221
-----------------------
Total liabilities 54,871 67,922
-----------------------

Shareholders' equity
Capital stock 19,472 20,019
Warrants 1,531 1,531
Contributed surplus 1,567 1,402
Equity component of convertible note obligation 1,951 1,951
Deficit (24,173) (11,838)
-----------------------
Total shareholders' equity 348 13,065
-----------------------
55,219 80,987
-----------------------
-----------------------



Years ended September 30 2008 2007
$ $
-----------------------

Revenue 234,026 221,313
Cost of revenue 200,561 188,731
-----------------------
Gross profit 33,465 32,582
-----------------------

Expenses
Other staffing costs 21,336 18,615
Selling, general and administrative 9,625 6,982
-----------------------
30,961 25,597
-----------------------
Income before the following 2,504 6,985
-----------------------
Internal costs related to the sale of
discontinued operations 710 -
Impairment of goodwill 13,662 -
Write off of capital assets - 120
Transaction costs - 114
Interest expense 3,368 3,003
Interest expense - accreted 1,591 1,474
Amortization
Property, plant and equipment 739 718
Intangible assets 4,403 4,920
Other - 372
-----------------------
24,473 10,721
-----------------------
Loss before income taxes (21,969) (3,736)

Recovery of current income taxes (1,547) -
Recovery of future income taxes (147) (3)
-----------------------
(1,694) (3)
-----------------------
Net loss from continuing operations (20,275) (3,733)
-----------------------

Results of discontinued operations (net of tax) 7,940 782
-----------------------
Net loss for the period (12,335) (2,951)
-----------------------

Deficit, beginning of year
As previously reported (11,838) (7,845)
Adjustment due to change in accounting policy - (1,042)
-----------------------
(11,838) (8,887)
-----------------------
Deficit, end of year (24,173) (11,838)
-----------------------
-----------------------

Profit (loss) per share
Continuing Operations - Basic and diluted (0.48) (0.09)
Discontinued Operations - Basic and diluted 0.18 0.02
-----------------------



Years ended September 30 2008 2007
$ $
-----------------------
OPERATING ACTIVITIES
Net loss for the year (20,275) (3,733)
Add (deduct) items not involving cash
Current income taxes (1,547) -
Future income taxes (147) 49
Loss on disposal of fixed assets 7 -
Write off of other assets 108 -
Accretion of interest 1,591 1,474
Impairment of goodwill 13,662 -
Write-off of capital assets - 120
Changes in fair value of derivative - 30
Non-cash leasehold inducement - 79
Amortization of deferred lease inducement
and provisions (112) (76)
Amortization of provision for lease restructuring (299) (249)
Stock-based compensation expense 109 319
Amortization of property, plant and equipment 739 718
Amortization of intangible assets 4,403 4,920
-----------------------
(1,761) 3,651
Net change in non-cash working capital balances
related to operations 6,414 (4,701)
-----------------------
Cash provided by (used in) operating activities 4,653 (1,050)
-----------------------

FINANCING ACTIVITIES
Exercise of common share options 36 220
Increase in deferred lease inducement - 217
Loans to related parties (410) (253)
Share purchase loans - (236)
Purchase of common shares (392) -
Proceeds from (repayment of) term bank
credit facility (9,075) 2,689
Proceeds from long-term debt - 2,586
Repayment of long-term debt (3,097) (3,099)
-----------------------
Cash provided by (used in) financing activities (12,938) 2,124
-----------------------

INVESTING ACTIVITIES
Proceeds from restricted short-term investments - 125
Additions to property, plant and equipment (970) (1,301)
Increase in other assets (55) (373)
Contingent payments relating to prior years'
acquisitions (135) (349)
-----------------------
Cash used in investing activities (1,160) (1,898)
-----------------------
Net cash flows used for continuing operations (9,445) (824)
-----------------------

Cash provided from discontinued operations
Cash provided by (used in) operating activities
of discontinued operations (42) 824
Cash provided from the disposal of discontinued
operations, net of tax 7,940 -
Recovery of current income taxes 1,547 -
-----------------------
Cash flows provided from discontinued operations 9,445 824
-----------------------

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

Supplemental cash flow information
Interest paid 2,872 2,780
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.

Contact Information