Mindready Solutions Inc.
TSX : MNY

Mindready Solutions Inc.

November 14, 2006 10:21 ET

Mindready Solutions Reports Third Quarter 2006 Results

- Operational break-even - Significant improvements to cost structure - New product drives sales growth

MONTREAL, QUEBEC--(CCNMatthews - Nov. 14, 2006) - Mindready Solutions Inc. (TSX:MNY), a leading supplier of innovative solutions for test and embedded systems, today reported its financial results for the third quarter ended September 30, 2006.

Sales for the third quarter of 2006 were $5.1 million, an increase of $1.9 million compared to $3.2 million for the same period in 2005. This increase is mainly driven by the sales generated by the businesses acquired during fiscal 2005, Specialized Test Engineering Inc. in Colorado and Radical Systems, Inc. in Alabama, sales from our newly launched product, the Universal Radio Tester (URT), and the increase in sales generated by Mindready's subsidiary based in Northern Ireland.

The third quarter of 2006 ended with operating losses before amortization, interest, exchange gains, stock-based compensation and non-recurring items of $34,000 compared to operating losses of $561,000 for the corresponding period in 2005. This improvement is mainly driven by the cost reduction efforts undertaken the last year, which brought sales and administrative expenses from 44% to 28% of sales. However, the third quarter of 2006 ended with a net loss of $631,000, or $0.02 per share, compared to a net loss of $1.04 million, or $0.08 per share, for the corresponding period in 2005.

"We're pleased to report meaningful progress in the commercialization of the URT launched in June 2006. This RF generator, jointly marketed with National Instruments is the only generator that can emulate about all public radio signals in the world such as AM, FM, RDS, XM®, Sirius®, HD Radio® (IBOC) and Digital Audio Broadcast (DAB) and has attracted first orders from 7 of the 20 largest radio manufacturers in the world and proposals requests from many more. We interpret this reaction, which surpasses our estimates, to mean that our product meets a growing need not addressed by the market and benefits from the explosive growth in digital radios worldwide," said Marc Lamy, President and Chief Executive Officer.

About Mindready Solutions

Mindready Solutions Inc. (TSX:MNY) is a leading supplier of innovative end-to-end solutions for new electronic product introduction, from design to manufacturing and test systems, serving the aerospace & defense, wireless telecommunication and automotive & transportation markets. Mindready serves clients such as Alcatel, Boeing, Faurecia, FlightSafety International, Lockheed Martin, Samsung, Nortel, Northrop Grumman, Rockwell Collins, Delphi and Visteon. More information about Mindready and its products, systems and engineering services can be found at www.mindready.com.

The statements regarding the company's future operating results, performance and business prospects contained in this press release, and any other statements not constituting historical information, are forward-looking statements. These forward-looking statements reflect the company's current opinions and assumptions with respect to future business decisions and results, and are based on the information currently available to the company. Accordingly, these statements are subject to risks, uncertainties and contingencies that could cause the company's future operating results, performance or business prospects to differ from those expressed in, or implied by, these statements.



Mindready Solutions Inc.
Consolidated statements of operations
(in thousands of dollars, except per share amounts)
(unaudited)
Three-month ended Nine-month ended
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September September September September
30, 2006 30, 2005 30, 2006 30, 2005
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Sales $5,074 $3,155 $15,445 $11,677
Cost of sales 3,594 2,309 11,017 8,127
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Gross margin 1,480 846 4,428 3,550
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Expenses:
Selling and
administrative 1,441 1,399 4,891 4,214
Research and development 73 8 181 (31)
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1,514 1,407 5,072 4,183
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Loss before the
following items: (34) (561) (644) (633)

Amortization of
property and equipment 66 139 208 398
Interest expense 453 114 1,181 105
Exchange loss (gain) (1) 157 (46) 108
Stock-based compensation 71 82 250 284
Non-recurring gain - - (9,143) -
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589 492 (7,550) 895

Earnings (loss)
before income taxes (623) (1,053) 6,906 (1,528)

Income taxes
Current 8 (12) 16 (7)
Future - - 1,866 -
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8 (12) 1,882 (7)
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Net earnings (loss) $(631) $(1,041) $5,024 $(1,521)
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Basic and diluted
net earnings (loss)
per share $($0.02) $(0.08) $0.17 $(0.12)

Weighted average
number of common
shares outstanding 28,845,898 13,427,694 30,434,610 13,220,135
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Mindready Solutions Inc.
Consolidated balance sheets
(in thousands of dollars)
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September 30, December 31,
2006 2005
(unaudited) (audited)
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ASSETS

Current assets:
Cash and cash equivalents $699 $1,776
Accounts receivable 3,416 4,059
Income taxes receivable - 8
Tax credits receivable 1,060 663
Work in progress 979 1,080
Inventories 1,800 1,355
Prepaid expenses 199 150
Future income taxes - 1,866
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8,153 10,957

Property and equipment 303 474
Deferred financing costs 548 699
Goodwill 4,961 4,640
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$13,965 $16,770
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,980 $2,011
Accrued liabilities 2,532 2,385
Income taxes payable 99 -
Deferred revenue 468 495
Current portion of obligations,
long-term debt and convertible
notes 548 7,271
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6,627 12,162

Obligations, long-term debt and
convertible notes 2,383 7,057
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9,010 19,219

Shareholders' equity:
Share capital 23,929 22,082
Equity component of convertible notes 2,181 1,977
Contributed surplus 2,923 2,674
Deficit (23,967) (28,991)
Cumulative translation adjustment (111) (191)
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4,955 (2,449)
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$13,965 $16,770
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