Bridges Transitions Inc.
TSX : BIT

Bridges Transitions Inc.

November 08, 2005 19:00 ET

Bridges Announces Financial Results for First Interim Period of Fiscal 2006

KELOWNA, BRITISH COLUMBIA--(CCNMatthews - Nov. 8, 2005) - Bridges Transitions Inc. (TSX:BIT) today releases its financial results for the three months ending September 30, 2005. The following comments are excerpts from the Company's Interim Report mailed to shareholders and available online at www.bridges.com on November 14, 2005.

To Our Shareholders:

At the outset of our 2005 fiscal year we set out our 3-point corporate strategy Retain, Deepen and Extend - plans designed to consolidate our significant market share; tactics to deepen the relationships that we have with our large subscriber base through the development and provision of additional products and services; and, efforts to open new business relationships made possible by our unique market position. During the first quarter of fiscal 2006 we continued to apply effort to realize these strategies and we achieved some significant successes. These successes included:

1. The sale to Michigan Virtual University of Bridges' testGEAR™ for MEAP, the Michigan high school exit exam. This sale and the resulting availability of testGEAR to all Michigan high school students provide significant growth of Bridges' market coverage in Michigan and is indicative of how we can deepen our relationship with the provision of new products and services.

2. The establishment of a testGEAR for SAT agreement with Wachovia Education Finance and the Florida Department of Education. This is the first business arrangement that we have completed that demonstrates how Bridges' market position can create value for new, non-traditional customers. Bridges is ideally suited to bring benefit to the student loan industry and we hope to be able to extend this business model to more jurisdictions where we enjoy significant market share.

It has also been our strategy to focus on entering into broader, policy level agreements in our marketplace. To this end, we made considerable changes to our Region management structure at the beginning of the quarter including the realignment of territories and the hiring of three new Regional Managers. While our revised structure is still quite new, we did enjoy success in renewing significant large scale contracts at the large school district or state/province level including contracts with the Fairfax County School District, a two-year contract covering the entire state of Iowa, a renewal of our historical agreement with the Atlantic Canadian provinces and the renewal of our premier longstanding contract relationship with the Florida Department of Education.

While we are continuing to invest in the business and are making sound strategic progress, we do so in a very trying business environment for our traditional customers. Funding for education in the United States remains at low levels and our traditional school and school district customers are facing extraordinarily high unbudgeted expenses resulting from natural disasters and increases in energy costs for heating schools and for transportation. These unbudgeted expenses are causing these customers to defer purchases of items that are discretionary or can be put off to subsequent periods. This is clearly demonstrated in our first quarter revenue that is down substantially on a year over year basis. We are continuing to work with all of our customers through this fiscally challenging but likely short-term period with the expectation that invoicing activity will return to more normal levels in the not too distant future.

While it is our belief that purchasing deferral is a short term phenomenon, we see considerable and longer term risk to our predominantly U.S. dollar revenue as a result of the continued rise in the value of the Canadian dollar. Over the past three years exchange rate changes have removed over one third of our revenue. Some economists predict further, and perhaps substantial, increases in the value of the Canadian dollar over the near term. Given this, we are actively hedging to reduce our near term exposure and considering actions that we might undertake in the event that sustained increases do take place.

Expense management has been a central focus of management's efforts over the past few years and we have been successful in making large reductions in operating expenses. However, as a small, independent public company we incur substantial costs that, in our current structure, are unavoidable. In addition, public company regulatory requirements in Canada are becoming much more stringent and it is clear that costs related to meeting these requirements will continue to grow. This large and growing cost area limits our overall financial success and impairs shareholder value. Accordingly, our Board of Directors announced on October 24, 2005 the hiring of investment bankers to develop alternatives that may allow our shareholders to realize our strategic value.

Through the remainder of the year we will continue to execute on our 3-point corporate strategy. We intend to build on our first quarter successes that prove we can create value for new customer categories while continuing to work with our traditional customers as they adjust and normalize to their changing environment. At the same time, we will work with our Board appointed advisers to seek ways to increase shareholder value. As we complete this important work, we do so mindful and appreciative of the support of our shareholders.



BRIDGES TRANSITIONS INC.
Consolidated Interim Financial Statements -
Three Months Ended September 30, 2005
Balance Sheets (Unaudited)
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September 30, June 30,
2005 2005
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ASSETS
Current
Cash and cash equivalents $ 2,656,021 $ 2,291,780
Accounts receivable 2,053,911 3,231,267
Prepaid expenses and other 1,030,085 775,929
Deferred costs 411,757 450,204
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6,151,774 6,749,180

Property and equipment 1,908,088 1,980,436
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$ 8,059,862 $ 8,729,616
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LIABILITIES
Current
Accounts payable and accrued
liabilities $ 1,742,915 $ 1,790,894
Current portion of long-term debt 214,478 285,883
Deferred revenue 6,936,797 7,102,073
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8,894,190 9,178,850
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Long-term debt 118,306 127,402
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9,012,496 9,306,252
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DEFICIENCY IN ASSETS
Common stock 54,076 54,076
Contributed surplus 97,949 72,650
Deficit (1,104,659) (703,362)
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(952,634) (576,636)
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$ 8,059,862 $ 8,729,616
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BRIDGES TRANSITIONS INC.
Consolidated Interim Statements of Operations and Deficit
(Unaudited)
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Three months Three months
ending ending
September 30, September 30,
2005 2004
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REVENUE $ 2,667,032 $ 3,239,567

COSTS OF REVENUE 1,115,754 1,182,274
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GROSS MARGIN 1,551,278 2,057,293
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EXPENSES
Sales and marketing 945,675 1,196,418
Product development 449,377 195,174
General and administrative 450,951 519,002
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1,846,003 1,910,594
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(LOSS) EARNINGS BEFORE AMORTIZATION,
FOREIGN CURRENCY EXCHANGE AND
OTHER INCOME (LOSS) AND INCOME TAXES (294,725) 146,699

Amortization of property and equipment (137,683) (182,065)
Foreign currency exchange and
other income (loss) 61,249 (223,473)
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LOSS BEFORE INCOME TAXES (371,159) (258,839)
Income tax expense 34,863 1,762
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NET LOSS FOR THE PERIOD (406,022) (260,601)
DEFICIT, BEGINNING OF PERIOD (703,362) (17,633,038)
Interest on shareholder loans 4,725 9,451
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DEFICIT, END OF PERIOD $ (1,104,659) $ (17,884,188)
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Basic loss per share $ (0.03) $ (0.02)
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Weighted average number of shares
used to calculate basic loss
per share 11,762,979 12,143,829
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BRIDGES TRANSITIONS INC.
Consolidated Interim Statements of Cash Flows (Unaudited)
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Three months Three months
ending ending
September 30, September 30,
2005 2004
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CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (406,022) $ (260,601)
Items not affecting cash
Amortization of property and
equipment 137,683 182,065
Stock-based compensation 25,299 8,960
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(243,040) (69,576)
Changes in operating assets
and liabilities:
Accounts receivable 1,177,356 439,794
Prepaid expenses and other (254,156) (392,962)
Deferred costs 38,447 238,827
Accounts payable and accrued
liabilities (111,415) (1,080,378)
Deferred revenue (165,276) 1,180,457
Accrued restructuring charge - (146,470)
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441,916 169,692
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CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment,
net of related accounts payable (1,899) (15,666)
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(1,899) (15,666)
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CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common shares on exercise
of stock options - 1,404
Shares purchased for cancellation - (84,890)
Shares purchased and cancelled - (129,701)
Interest on shareholder loans 4,725 9,451
Repayment of obligations under
long-term debt (80,501) (72,000)
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(75,776) (275,736)
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NET CASH INFLOW (OUTFLOW)
DURING THE PERIOD 364,241 (121,710)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 2,291,780 4,250,069
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CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 2,656,021 $ 4,128,359
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CASH AND CASH EQUIVALENTS
ARE COMPOSED OF:
Cash in bank $ 1,113,545 $ 1,065,809
Short-term deposits $ 1,542,476 $ 2,862,550
Restricted cash $ - $ 200,000
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$ 2,656,021 $ 4,128,359
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Supplemental Cash Flow Disclosure
Interest earned $ 15,088 $ 17,815
Interest paid $ 7,470 $ 11,471
Income taxes paid $ 34,863 $ 52,946
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About Bridges

Bridges is the leading provider of online education planning, career exploration, and high school/college test preparation resources designed to help students achieve education and career success. Over 14,000 schools and other agencies across North America use Bridges' products and services, representing about 30% of North American high schools. Over one million graduating high school students and three million junior, senior and sophomore students use Bridges' educational and career planning products every year. For more information, visit www.bridges.com. The Company is listed on the Toronto Stock Exchange under the symbol: BIT.

Forward-Looking Statements

The foregoing includes forward-looking statements which are based on management's beliefs as well as on a number of assumptions concerning future events made by and information currently available to management.

These forward-looking statements relate to, among other things, plans and timing for the introduction or enhancement to the Company's services and products; customer demand for its products and services; expectations concerning future revenue and earnings; control of costs and expenses; loss of key employees; stock market volatility; changes in laws and regulations; Bridges' ability to compete successfully and adapt to technological advances and changing industry standards; currency exchange rate fluctuations; economic, political, and other risks associated with international sales and operations; U.S. government regulation; price and product competition; the ability to implement in a timely manner the Company's restructuring plans; the ability to form and implement alliances, and other factors and risks.

All forward-looking statements in this news release are based on management's reasonable beliefs, intentions, and expectations with respect to future events and are subject to certain risks, uncertainties, and assumptions as of the date of this release. In light of the many risks and uncertainties, readers are cautioned not to put undue reliance on such forward-looking statements which are not a guarantee of performance and are subject to a number of uncertainties and other factors -- many of which are outside of Bridges' control -- that could cause actual results, performances or achievements of Bridges to differ materially from any future results, performances or achievements expressed or implied by such forward-looking statements. The Company cannot give assurance that the forward-looking statements contained in this news release will be realized. Bridges assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.


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