CriticalControl Solutions Corp.
TSX : CCZ

CriticalControl Solutions Corp.

September 28, 2010 18:33 ET

CriticalControl Provides Update on National Service Bureau Operations

CALGARY, ALBERTA--(Marketwire - Sept. 28, 2010) - CriticalControl Solutions Corp. (TSX:CCZ) ("CriticalControl" or the "Corporation") is pleased to advise on the progress it has achieved in the integration of its Service Bureau Operations business catered to governments, health care organizations and the financial sector in Canada.

In order to integrate the acquisitions completed in 2009 in Manitoba and Ontario, CriticalControl continues to make progress in the streamlining of operations and has made the following structural changes:

  1. In order to increase gross margins, the Corporation is integrating its internal operational networks such that its three service bureaus in Toronto, Winnipeg and Edmonton will use common infrastructure located in the Corporation's Calgary offices. This will enable the processing of imaging services for national accounts in any of the Corporation's service bureaus while creating economies of scale from the completion of data entry and business process tasks from a single location.
  1. The Corporation will expand its micrographic processing capability in one location and channel all microfilm development to a single facility using its new infrastructure.
  1. The Corporation has signed an agreement with Cranel, Incorporated of Columbus, Ohio to integrate certain of CriticalControl's imaging hardware and supplies distribution and administration of third party maintenance contracts with Cranel's back office. This move enables CriticalControl to maintain a superior level of service in the sale of imaging equipment, supplies and imaging equipment maintenance without bearing the administrative cost.

The success of the Corporation's effort has resulted in:

  1. The award of a contract for the imaging of signature cards for all branches of a Canadian Schedule A Bank. Cards will be imaged at different locations and indexing of such cards will be completed from the images at a single facility by the Corporation using the Corporation's new infrastructure. This contract is expected to generate revenue of approximately $1 Million over a one-year period commencing in late Q4 2010.
  1. The selection of CriticalControl by a fourth Canadian Province for the imaging of Vital Statistics data. This project will make use of CriticalControl's new infrastructure and is expected to commence in late Q4 2010 or early Q1 2011 generating revenue of over $1 Million over a one-year period.
  1. One of the Corporation's operating subsidiaries, CriticalControl Solutions Inc. ("CSI") was also selected by a federal Crown corporation for the outsource of an ongoing critical business process through a public tender. However, the tender was cancelled as a result of allegations that an employee of the incumbent service provider provided confidential information to a former employee of the incumbent service provider who was by then employed by CSI. It is expected that the contract will be retendered later in 2010. In the meantime, the incumbent service provider has commenced a law suit against CSI and its employee for unspecified damages in the monetary amount of $7.5 million. Management is of the opinion that the lawsuit is tactical and is intended to interfere with the pending retender of the contract by CSI because (a) the incumbent service provider continues to perform the contract pending its retender and therefore has to date apparently suffered no losses and (b) it will have an opportunity to rebid the contract. CSI denies that it gained an unfair advantage at the expense of the incumbent service provider and has retained counsel to vigorously defend the lawsuit.

About CriticalControl:

CriticalControl enables its clients to increase operational performance through the better control of critical business information. Integrating technology with labour-intensive processes of imaging and data entry, CriticalControl empowers its clients to increase their competitiveness, reduce operating expenses and improve margins. For more information please visit www.criticalcontrol.com.

About Cranel, Incorporated:

Cranel, Incorporated, via the corporate divisions of Cranel Imaging and Versitec, offers a unique distribution experience to enterprise content management (ECM) Value Added Resellers, bringing its customers comprehensive, integrated products and solutions tailored to their specific requirements. Cranel, Incorporated offers broad and deep inventories of products and supplies from industry leading supply chain partners, including capture hardware and software technologies. For more information please visit www.cranel.com.

Forward Looking Information:

This press release contains forward looking information regarding revenue expected from contracts and work which has been awarded to the Corporation. Actual revenue from these sources may differ from expectations due to changes in the business environment and client plans. Although the Corporation anticipates the federal Crown corporation referred to herein to retender the contract, there is no assurance that the contract will be retendered in 2010 or at all.

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