INTERIM REPORT TO THE SHAREHOLDERS OF BCB HOLDINGS INC.
FOR SIX MONTHS ENDED MARCH 31, 1998 PLUS SUBSEQUENT EVENTS
PRODUCT DEVELOPMENT: At the BCB annual meeting on March 25, 1998, management
of your company reported to shareholders on our new digital hand held
recorder and audio player software scheduled to be brought to market this
summer. This bundle provides an entry-level PC-DART digital dictation
system. Retailing for less than US$1,000, the combination of a hand held
digital recorder, which also offers real-time TrueSpeech voice compression,
and audio player software requires no installation expertise. As a result,
this product combination will be sold by up to 1,000 dealers, compared to
under 100 BCB dealers, at present, greatly increasing BCB's distribution
network and also expanding the market for upgrades to our full PC-DART
system solution.
We also expanded on the growing importance to BCB of the courtroom market.
In addition to the ongoing installation of up to 17 COURTROOM-DART systems
in Tampa, the U.S. Federal Bankruptcy courts have ordered 5 systems for
installation and another 2 systems are currently being tested by the
Province of Alberta court system. Results have been highly successful and a
report is being prepared by provincial court staff which may result in
additional system sales.
The main source of our sales volume continues to be our digital dictation
system, PC-DART, which accounted for 57.8% of our revenue in the first six
months of our current fiscal year. However, our COURTROOM-DART and its
legislative assembly counterpart, MURF (as installed in the Canadian House
of Commons and now being installed in the Canadian Senate), accounted for
32.2% of our sales in the same period and both offer potential for very
rapid growth.
FINANCIAL RESULTS: At the annual meeting, we stated that sales revenue for
the month of March 1998 should exceed $400,000. As it turned out, sales for
this one month reached $459,000. This compares to sales of $405,182 for the
entire first quarter ended December 31, 1997, and sales of $1,167,415 for
the first six months ended March 31, 1998, up over 59% from the same period
during the previous year.
Gross profit increased in the latest six months to 49.0% from 32.2% a year
ago. While net loss for the latest six month period was $952,711 compared to
a net loss of $932,952 the previous year, the Company came close to a
break-even result for the final month of March 1998. Our backlog of
confirmed or near-confirmed orders was $1,531,885 at March 31, 1998.
WORKING CAPITAL: Management expects sales for the current quarter to be
good, but still not equal to potential due to our tight working capital
position. As stated below, we are striving to overcome this hurdle.
STRATEGIC ALLIANCES: We also advised shareholders at the annual meeting that
BCB was in discussion with regard to several prospective, strategic
alliances, any one of which, if successfully consummated, should have a
significant favourable effect on our Company.
NEW PERSONNEL: We are most pleased to welcome to our organization Mr. Robert
S. Armstrong our new Vice President, Channel and Product Management. Bob's
business career to date found him, most recently, in the position of Vice
President of Purchasing & Product Management at Globelle Inc. one of
Canada's major computer products distributors. Prior to almost 3 years with
Globelle, Bob was with Ingram Micro, the dominant computer products
distributor in the USA, most recently in the capacity of Purchasing
Manager-Hardware. His focus throughout his career has been on distribution,
purchasing and product management with marketing and sales experience along
the way. Bob will play a leading role in the future of BCB.
MANAGEMENT CHANGES: To recognize his major contribution, effective May 6,
1998, Mr. Peter Vanderlee has been promoted from the position of Executive
Vice President to that of President and Chief Operating Officer of the
Company. Ken Murton will continue to occupy the position of Chairman and
Chief Executive Officer. Leo Halpern and Daryl Duda will each assume the
position of Senior Vice President and General Manager, Leo for the
Legislative Assembly and Courtroom Markets and Daryl for the Business
Markets we address with our digital dictation and related products including
our new hand held recorder.
RECENT AND FUTURE FINANCING: On April 3, 1998, the Company placed privately,
with one individual in an arms length transaction, a total of 600,000 common
shares at a price of $0.25 per share. This small issue was effected merely
to provide short-term working capital. BCB intends to raise additional
equity capital in order to achieve the significant opportunity ahead.
Several prospective, institutional investors plus one prospective corporate
investor have been identified and we are in the advanced stages of
discussion with one of these prospective investors. Of course, we will
continue to aggressively seek investors until such discussions lead to your
Company securing sufficient capital to achieve our objectives.
On behalf of the Board May 8, 1998
Kenneth G. Murton D. Peter Vanderlee
Chairman and CEO President and COO
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