PDT.to 17c reports 9 mo. EPS of 2c...here's the PR...
Precision Assessment reports strong nine month results
Wednesday November 10, 11:47 am ET
$0.02 per share of earnings for the nine months
VANCOUVER, Nov. 10 /CNW/ - Precision Assessment Technology Corporation (TSX:PDT - News) today announced results for the nine months ended September 30, 2004. All funds are in Canadian dollars unless otherwise stated.
Year-to-Date and Third Quarter Results: (nine months ended
September 30, 2004 compared with nine months ended September 30, 2003 and
three months ended September 30, 2004 compared with three months ended
September 30, 2003)
<<
Nine Months Nine Months % Change
Ended Ended Year
September 30, September 30, over
2004 Q3-2004 2003 Q3-2003 Year
------------ ------------ ------------ ------------ ------
Revenue $ 8,126,276 $ 2,790,355 $ 7,418,413 $ 3,017,417 9
EBITDA(x) $ 1,195,711 $ 588,036 $ 787,851 $ 608,412 52
Net Profit
(Loss) $ 706,335 $ 459,795 $ 21,284 $ 427,881 3219
EPS $ 0.02 $ 0.01 $ Nil $ 0.01 200
Weighted average shares outstanding at September 30, 2004 44,997,239
(x) Earnings before interest, taxes, depreciation, amortization
Robert Nowack, Chairman and C.E.O., said, "We are extremely pleased with the financial progress and growth that Precision has achieved in 2004. A number of strategic objectives have been met this year and the Company looks forward to continuing to build upon the levels of profitability we have achieved in 2004. While the Company performed well in Q3 last year no momentum was sustained for Q4. This year by focusing on long term contracts and improving the services offered the momentum is anticipated well into Q4."
While the Company's topline grew 9% year over year EBITDA has increased by 50% and net profit has increased from almost nothing to $706,335. This growth is attributed to higher utilization rates on equipment, meeting internal objectives, the quality and strength of the Company's site characterization and remediation services and of securing larger longer-term client contracts.
During the third quarter:
Precision announced the acquisition of Nedatek, Inc., which provides Precision with the exclusive use of key direct sensing data collection and mapping technologies. The acquisition cost was approximately $180,000 and is anticipated to contribute just under $1 million in revenues in 2005 without requiring significant additional costs.
Precision signed an exclusive sonic license with Eijkelkamp Agrisearch Equipment of Giesbeek Netherlands granting Precision the exclusive right to provide sonic drilling services and equipment distribution using Eijkelkamp's technology throughout North America. Eijkelkamp has developed a specialized smaller sonic drilling and sampling system for use in the environmental, geotechnical, seismic, energy and mineral markets.
Eijkelkamp's sonic drilling systems will facilitate increased productivity and improved quality for Precision's site assessment and remediation services throughout the United States. Each smaller sonic rig is anticipated to add $400,000 annually to Precision's revenues. Previously announced, Precision has purchased two rigs in 2004 and anticipates purchasing 8 rigs in 2005.
Subsequent to Q3 2004 period end, Precision raised $1,600,000 in equity financing which will be used for general corporate purposes and future growth opportunities.
Precision Assessment Technology Corporation provides drilling services for site assessment and remediation and groundwater assessment, monitoring and mitigation in the U.S. These services are provided using specialized and innovative drilling and sampling equipment and technologies from offices in California and Florida. Precision Assessment Technology Corporation operates through its wholly owned U.S. subsidiary, Precision Sampling, Inc. Further information can be found at www.precisiontecha.com. Precision's common shares are listed on the Toronto Stock Exchange under the symbol "PDT".
If you wish to receive company press releases via email, please advise Alison Tullis at alison(at)chfir.com
FORWARD-LOOKING STATEMENTS: Except for statements of historical fact, all statements in this news release - including, without limitation, statements regarding future plans and objectives of Precision are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements.
Precision Assessment Technology Corp.
MANAGEMENT DISCUSSION AND ANALYSIS
Quarter Ended September 30, 2004
November 10th 2004
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with, and is qualified by, PATC's 2004 consolidated financial statements and notes for the three months ended September 30, 2004, which are incorporated by reference herein. This report assumes the reader has access the annual M D & A, therefore if factors and events are substantially unchanged they can be found in the annual M D & A. Date of this report is July 26, 2004.
Profile
-------
PATC provides drilling services for site and ground water characterization and remediation. Precision specializes in the use of tools, equipment and technologies that provide the highest quality data and the most rapid results for site characterization and in-situ remediation. PATC services environmental and geotechnical engineers throughout the U.S. PATC also maintains a specialized environmental and geotechnical consulting practice, which assists in remediation and consults independently.
Exchange Rates
--------------
All of the Company's operations are in the U.S. however for historical purposes the Company continues to report in Canadian Dollars. The US/Cdn dollar exchange rate used in 2004 results is the period end rate for the balance sheet being 1.2699 for September 2004 and 1.35 for December 31, 2003. An average rate for each quarter is used to convert all revenue and expenses. For Quarter 3, 2004 the rates used were 1.30913 for 2004 and 1.35012 for 2003. All amounts are reported in Canadian Dollars unless otherwise stated. The change in exchange rates is reflected in the reported numbers.
Insurance and Risk Management
-----------------------------
PATC attempts to minimize and transfer risk wherever possible. Where appropriate, PATC adopts the policy of insuring its risks.
Three-months ending September 30, 2004 Financial Review
-------------------------------------------------------
Gross Revenue
Gross revenue for the three months ending September 30, 2004 was $2,790,355 Cdn compared to $3,017,417 for the same period in 2003. However revenue by operating segment is the best analyzed.
1) Precision Sampling Inc. ("PSI") generated sales of $1.64 million USD
in Q3 2004 compared with $1.71 million USD in Q3 2003. Despite the
decrease in gross revenue from last year the operating contribution
for PSI has increased considerably. This is the result of phasing out
the smaller jobs where the profit margin is inadequate and
concentrating on the larger projects which provide better margins.
This step and the development of the two new Sonic Rigs have resulted
in improved and more consistent profitability. Demand for Sonic Rigs
continues to improve, as does the backlog for larger projects.
September was PSI's strongest month ever from the standpoint of
utilization and profitability. Performance is better reflected in the
year to date numbers where for the nine months ended September 2004
revenue has increase from $4.1 to $4.5 million US for the same period
in 2003.
2) EFW generated approximately $301,343 USD in Q3 2004 compared with
$410,474 USD in Q3 2003.
3) Corporate produced approximately $253,135 Cdn mainly from the final
payment on the sale of debt due from an inactive subsidiary to an
unrelated company, which occurred in Q2.
Operating Contributions
Operating Contributions represent the EBITDA generated by each operating unit for quarter ended September 30, 2004 after taking into account their individual operating expenses, including executive salaries and administration costs. Contributions from the respective operating units were as follows:
1) PSI generated $394,931 USD of operating contribution in Q3 2004 up
from $187,593 USD in Q3 2003. Canadian dollar equivalents totaled
$517,018 of operating contribution in 2004 up from $253,881 in 2003.
2) EFW generated $37,580 USD of operating contribution in Q3 2004
compared with $44,969 USD in Q3 2003. Canadian dollar equivalents
were $54,774 in 2004 down from $60,812 in 2003.
3) The $121,668 from the corporate transactions came mainly from the
sale of debt due from inactive subsidiary to an unrelated company.
Corporate Expenses
Corporate expenses were $90,500 in Q3 2004 up from $2,034 in Q3 2003. These expenses included consulting fees, travel and public listing costs. Corporate costs increased due to the increase in activity, certain costs to complete the financing and increased investor relations activities and due diligence costs, which have been expensed.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
EBITDA was $1,195,711 for the period ending September 30, 2004 compared to $787,851 in the period ending September 30, 2003.
Net Income
Reported net income in Q3 2004 was $489,376 Cdn compared to $427,881 Cdn in Q3 2003. Reported net income was reduced by the higher Canadian dollar. If the exchange rate had remained static reported net income would be up 11%.
This year's Q3 income increased as a result of the addition of the two Sonic Rigs, eliminating marginal contracts and managing costs incurred in operations. August and September were strong months with September being a record month for the Corporation.
Key Initiatives
The Company continues to work on increasing its marketing efforts and securing larger longer term contacts. These initiatives coupled with the addition of value added service and technologies are improving the Company's position and profitability. The Company signed an exclusive North American licensing agreement with Eijkelkamp, which will provide Precision with the exclusive right to smaller sonic rigs. This initiative will allow the Company to continue to expand its drilling fleet and lead the industry in sonic drilling. Two new small sonic rigs have been ordered. Delivery is expected around the year end. The Company has also begun recruiting additional sales and marketing staff. An initial acquisition (Nedatek) was completed in the quarter. The Company is currently working on additional acquisition targets.
The Company had also been working as a team member on a pilot project at the BOMARC site at Maguire Air Force Base to perform additional site investigation and restoration. This site is the national showcase site utilizing various methods to reduce the cost and time to complete the remediation process. Revenue is now beginning to flow from this particular project and future similar sites as a result of the efforts made.
Liquidity and Capital Resources
PATC finished the quarter with approximately $244,000 of cash. Excluding the current portion of long-term debt, working capital was approximately $1,603,502 at September 30, 2004. PATC is now generating positive cash flow. It is therefore expected that liquidity and capital resources will continue to improve.
The Company is committed under operating leases for its office premises along with the following aggregate minimum long-term debt payments of:
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2005 2006 2007 2008
-------------------------------------------------------------------------
Operating Obligations $ 238,000 250,500 250,500 250,500
Long-term Debt 628,937 689,275 542,970 496,259
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$ 866,937 939,775 793,470 746,759
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Risks
Exchange Rate Risk
The success of PATC's operations and its ability to continue to sell its services is dependent on the health and growth of the U.S. economy. Management does not anticipate that its operations will be adversely affected in a material way by the business cycles unless a major economic catastrophe was to occur.
PATC's operations are in the U.S., and therefore its revenues and its purchases are from U.S. customers and suppliers respectively. Fluctuations in the exchange rate will not have an impact on the actual results of operations, however the effect is noticed in the Canadian dollar reporting because of the increase in the Canadian dollar on the prevailing year-end and average exchange rates.
Interest Rate Risk
PATC's interest obligations are primarily variable, based on prime lending rates. Management carefully monitors interest rate trends and will continue to assess the need to fix the interest charged.
Products and Technologies
PATC will continue to seek to acquire and exploit its proprietary technologies and equipment. At the present time there are no known technologies that will significantly affect the company's operations. The company will also be pursuing initiatives to help alleviate the seasonality of the environmental drilling industry. Fluctuations are demonstrated in the quarterly results shown below:
HISTORICAL QUARTERLY RESULTS
Three month period ending (shown in Canadian Dollars)
-------------------------------------------------------------------------
March 31, June 30, September 30, December 31,
2003 2003 2003 2003
-------------------------------------------------------------------------
Revenue 2,199,145 2,201,851 3,017,417 2,371,310
Operating Income (171) 204,837 608,412 (299,306)
Earnings (Loss)
per share (0.00) 0.01 0.01 (0.00)
Net Income (Loss) (554,295) (217,251) 427,881 (297,199)
Earnings (Loss)
per share (0.01) (0.00) 0.01 (0.01)
Three month period ending (shown in Canadian Dollars)
-------------------------------------------------------------------------
March 31, June 30, September 30, December 31,
2002 2002 2002 2002
-------------------------------------------------------------------------
Revenue 2,525,027 3,019,415 2,329,295 2,598,864
Operating Income (134,889) 43,468 (153,132) (112,564)
Earnings (Loss)
per share (0.00) 0.00 (0.00) (0.01)
Net Income (Loss) (268,427) (163,531) (268,610) (1,827,835)
Earnings (Loss)
per share (0.01) (0.00) (0.03) (0.17)
Credit Risk
Historically the company has not had material issues with respect to the collections of its receivables. As the company grows, management will standardize the credit policies to manage the increased activity.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements of PATC and notes thereto which are incorporated by reference herein.
Consolidated Statements Years ended December 31,
of Loss and Deficit 2003(1) 2002 2001
NOTE: These are
presented at the
prevailing exchange
rate at the time
(1.3, 1.4 and 1.6
for 2003, 2002 and
2001 respectively).
Drilling and
Consulting $ 9,789,723(2) $ 10,472,601(2)(3) $ 11,259,584(2)(3)
Construction - - 5,399,362
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Gross Revenue 9,789,723 10,472,601 16,658,946
Direct Costs (5,302,563) (5,850,482) (10,427,392)
-------------------------------------------------------------------------
Gross Profit 4,487,160 4,622,119 6,231,554
Operating Expenses (3,362,437) (3,396,403) (3,273,137)
-------------------------------------------------------------------------
Contribution (Loss)
From Operations 1,124,723 1,225,716 2,958,417
Corporate Expenses (610,951) (1,294,052) (744,467)
-------------------------------------------------------------------------
Earnings (Loss) Before
Interest, Taxes,
Depreciation,
Amortization and
Non-Recurring Items 513,772 68,336 2,213,950
Interest and finance
fees (162,009) - -
Gain on disposition
of subsidiary debt 250,000 - -
Depreciation (600,532) (620,067) (381,893)
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Earnings (Loss) Before
the Following 1,232 (688,403) 1,832,057
Write-downs and
reserves - (1,840,000) (409,000)
Interest Expense
- shareholder loans (327,333) (1,274,282) (386,358)
Loss from Discontinued
Operations and
Disposition (314,762) (1,109,160) (4,884,430)
Provision for
Income Taxes - - (39,179)
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Net Loss $ (640,863) $ (4,911,845) $ (3,885,910)
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Loss per share
Basic 0.00 (0.21) (0.17)
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Notes:
(2) For comparison purposes U.S. dollar revenue was $6,840,140;
6,515,619; 6,959,409 for 2003, 2002 and 2001 respectively.
(3) The revenue represented in the prior years annual financial
statements of discontinued operations included $2,352,521,
1,054,288 for 2002 and 2001. Results attributable to the discontinued
operations were reclassified to be consistent with current year's
presentation.
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As of December 31,
-------------------------------------------------------------------------
Consolidated Balance Sheet 2003(1) 2002 2001
-------------------------------------------------------------------------
Assets
-------------------------------------------------------------------------
Current Assets $ 4,084,295 $ 3,762,346 $ 5,442,502
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Brownfield Property and
Real Estate - 14,465,687 13,633,887
Technology - - 1,840,000
Machinery and Equipment 3,114,637 2,349,765 1,818,522
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$ 7,198,932 $ 20,577,798 $ 22,734,911
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Liabilities and Shareholders'
Equity
-------------------------------------------------------------------------
Current Liabilities $ 3,810,609 $ 4,312,459 $ 5,341,366
-------------------------------------------------------------------------
Deferred Revenue - 1,628,005 -
Long-Term Debt 1,343,717 10,164,130 8,006,633
Shareholder Loans 168,442 2,998,290 3,129,238
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5,322,768 19,239,346 16,477,237
-------------------------------------------------------------------------
Shareholders' Equity 1,876,164 1,338,452 6,257,674
-------------------------------------------------------------------------
$ 7,198,932 $ 20,577,798 $ 22,734,911
-------------------------------------------------------------------------
Notes:
(1) PATC completed the "Debt Settlement Agreement" on June 27th, 2003.
The Brownfield Property and Real Estate, cash and shares were
exchanged for reduction of debt to 157. The settlement of debt is
included in the 2003 financial information.
As of June 2003, PATC divested of its real estate operations. Its core-business is now providing drilling services with an emphasis on site characterization and remediation. For further details of the corporate restructuring please review the previous annual information forms.
Precision Assessment Technology Corp.
PRECISION ASSESSMENT TECHNOLOGY CORP.
(formerly CONOR PACIFIC GROUP INC.)
CONSOLIDATED FINANCIAL STATEMENTS
as at September 30th 2004.
(UNAUDITED)
Precision Assessment Technology Corp.
Management's Report
November 10, 2004
To the Shareholders of
Precision Assessment Technology Corporation
(formerly Conor Pacific Group Inc.)
We have included the consolidated balance sheets of Precision Assessment Technology Corporation (formerly Conor Pacific Group Inc.) as at September 30, 2004 and December 31, 2003 and the consolidated statements of loss and deficit and cash flows for the three and nine months ended September 30th for 2004 and 2003. An auditor has not reviewed these financial statements or the Management Discussion and Analysis or any information associated with the results of 2004 quarter ending September 30, 2004.
Robert E. Nowack
Chairman & Chief Executive Officer
PRECISION ASSESSMENT TECHNOLOGY CORPORATION
(formerly CONOR PACIFIC GROUP INC.)
CONSOLIDATED BALANCE SHEETS
September 30, 2004 and December 31, 2003 (unaudited)
-------------------------------------------------------------------------
September 30, December 31,
2004 2003
-------------------------------------------------------------------------
Assets
CURRENT ASSETS:
Cash $ 243,915 $ 706,488
Accounts receivable 3,113,455 2,789,856
Inventory 246,745 118,828
Deposits, prepaid expenses and other 657,183 469,123
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4,261,298 4,084,295
MACHINERY AND EQUIPMENT 3,528,011 3,114,637
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$ 7,789,309 $ 7,198,932
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Liabilities and Shareholders' Equity
CURRENT LIABILITIES:
Bank Indebtedness $ 1,297,838 $ 1,758,832
Accounts payable and accrued liabilities 1,359,958 1,442,219
Long-term debt - current portion 646,371 609,558
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3,304,167 3,810,609
LONG-TERM DEBT 1,902,630 1,343,717
SHAREHOLDER LOANS 168,442 168,442
-------------------------------------------------------------------------
5,375,239 5,322,768
SHAREHOLDERS' EQUITY:
Share capital (Note 2) 2,607,161 2,607,160
Contributed surplus 34,786 -
Cumulative foreign currency
translation adjustment (663,815) (496,729)
Retained Earnings (Deficit) 435,938 (234,267)
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2,414,070 1,876,164
-------------------------------------------------------------------------
$ 7,789,309 $ 7,198,932
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PRECISION ASSESSMENT TECHNOLOGY CORPORATION
(formerly CONOR PACIFIC GROUP INC.)
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the nine months ended September 30, 2004 and 2003 (unaudited)
-------------------------------------------------------------------------
Three months Three months
ended ended Nine Months Nine Months
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
-------------------------------------------------------------------------
Gross Revenue $ 2,790,355 $ 3,017,417 $ 8,126,276 $ 7,418,413
Direct costs (1,334,026) (1,550,850) (4,171,723) (3,962,673)
-------------------------------------------------------------------------
GROSS PROFIT 1,456,329 1,466,567 3,954,553 3,455,740
Operating expenses (777,793) (856,121) (2,379,851) (2,173,010)
-------------------------------------------------------------------------
CONTRIBUTION
FROM OPERATIONS 678,536 610,446 1,574,701 1,282,730
Corporate Expenses (90,500) (2,034) (380,335) (494,879)
Stock-Based
Compensation - - 1,345 -
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EARNINGS BEFORE
INTEREST,
DEPRECIATION,
TAXES AND
OTHER ITEMS 588,036 608,412 1,195,711 787,851
Interest Expenses (37,483) (74,668) (126,558) (118,870)
Depreciation (90,758) (105,863) (362,818) (373,348)
-------------------------------------------------------------------------
(128,241) (180,531) (489,376) (492,218)
-------------------------------------------------------------------------
INCOME FROM
CONTINUING OPERATIONS 459,795 427,881 706,335 295,633
Interest Expense -
Shareholders loan - - - (303,882)
Discontinued operations - - - 29,533
-------------------------------------------------------------------------
NET INCOME 459,795 427,881 706,335 21,284
RETAINED EARNINGS
(DEFICIT),
beginning of period (23,857) - (234,267) (8,987,101)
Policy change
adjustment - - (36,130) 9,204,352
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RETAINED EARNINGS,
end of period $ 435,938 $ 427,881 $ 435,938 $ 238,535
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Profit per share:
Basic and diluted
Profit per share $0.02 $0.01 $0.02 $0.01
Weighted average
number of common
shares outstanding
(000s) 44,997 44,998 44,997 44,998
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PRECISION ASSESSMENT TECHNOLOGY CORPORATION
(formerly CONOR PACIFIC GROUP INC.)
CONSOLIDATED STATEMENTS OF CASHFLOW
For the nine months ended September 30, 2004 and 2003 (unaudited)
-------------------------------------------------------------------------
Three months Three months
ended ended Nine Months Nine Months
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
-------------------------------------------------------------------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Income $ 459,795 $ 427,881 $ 706,335 $ 295,633
Items not
involving cash:
Depreciation and
amortization 90,758 105,863 362,818 373,348
Stock-Based
Compensation - - (1,345) -
Net change in
non cash working
capital items: (546,100) (596,653) (888,921) (960,390)
-------------------------------------------------------------------------
4,453 (62,909) 178,887 (291,409)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of machinery
and equipment (600,932) (855,799) (776,192) (1,559,244)
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(600,932) (855,799) (776,192) (1,559,244)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Drawings on line
of credit, net (367,545) 313,876 (460,994) 1,356,454
Increase (decrease)
in long-term debt,
net 1,088,603 624,310 595,726 1,104,116
Increase (decrease)
in shareholder loans - - - (1,030,176)
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721,058 938,186 134,732 1,430,394
INCREASE (DECREASE)
IN CASH FROM
CONTINUING OPERATIONS 124,579 19,478 (462,573) (420,259)
CASH, BEGINNING
OF PERIOD 119,336 81,658 706,488 613,666
DISCONTINUED
OPERATIONS NET
CASH ACTIVITY - - - (92,271)
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CASH, END
OF PERIOD $ 243,915 $ 101,136 $ 243,915 $ 101,136
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SUPPLEMENTARY
INFORMATION
Interest $ 36,626 $ 74,668 $ 125,701 $ 118,870
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PRECISION ASSESSMENT TECHNOLOGY CORPORATION
(formerly CONOR PACIFIC GROUP INC.)
Notes to Consolidated Financial Statements
September 30, 2004 (Unaudited)
1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
a) Basis of presentation
The accompanying unaudited interim consolidated financial
statements of Precision Assessment Technology Corporation
(formerly Conor Pacific Group Inc.) (the Company) have been
prepared in accordance with Canadian generally accepted accounting
principles on a basis consistent with those followed in the most
recent annual consolidated financial statements, except as
described below. These unaudited interim consolidated financial
statements do not include all information and note disclosures
required by Canadian generally accepted accounting principles for
annual financial statements, and therefore, should be read in
conjunction with the said audited consolidated financial
statements and the notes below.
(i) Description of business
The Company's principal business is the operation of
drilling equipment and provision of drilling services for
site characterization ground water assessment and
remediation.
Effective August 13, 2003, the Company changed its name to
Precision Assessment Technology Corporation from
Conor Pacific Group Inc.
(ii) Shareholder Debt Settlement Resolution
The financial statements presented reflect the steps taken
to complete the restructuring of the Company, which were
approved by the majority of the minority shareholders at the
last annual general and special meeting of shareholders held
on June 27, 2003 (the "Debt Settlement Resolution"). The
steps approved to repay the shareholder loans were as
follows:
(a) Payment of $1.0 million in cash.
(b) Conveyance of the shares of Conor Pacific Development
Inc. ("CPDI") for net proceeds of $1.0 million. This
conveyance was completed on August 21, 2003. All
obligations of the Company related to the assets held
by CPDI have been assumed by the purchaser at closing.
(c) Conversion of $1.77 million of shareholder debt into
22,125,000 common shares.
The amount of $168,442 remains unpaid.
(iii) Share capital reduction
Effective June 30, 2003, the shareholders also authorized a
reduction of the stated share capital for the common shares
of the Company by $9,204,352, being an amount equal to the
accumulated deficit of the Company as at June 30, 2003.
(iv) Inventory
Inventory is valued at the lower weighted average cost or
net realizable value. Measures have been taken to control
costs which have created an internal process to track and
value inventory. The current valuation is management's
estimate of value as at September 30, 2004.
2. SHARE CAPITAL
(a) Authorized
Unlimited number of common shares
Unlimited number of Class A preferred shares
Unlimited number of Class B preferred shares
Common Shares Amount
Issued
--------------------------------
Balance September 30, 2004 44,997,239 $2,607,160
(b) Stock options
To conform with CICA Handbook Section 3870, Stock-Based
Compensation and Other Stock-Based Payment, the Company has
adopted retroactive with no restatement treatment to present the
expensing of stock-based compensation. No options were granted
during the three month period ending September 30, 2004.
During the first quarter of 2004, 2,322,810 options were cancelled
without having been exercised resulting in 3,015,000 options
outstanding. The cancelled options created a credit of $44,583
resulting in a net credit of $19,417.
The following pro forma financial information presents the net
earnings for the three months ending September 30, 2004 and the
basic earnings per common share had the Company adopted the fair
value method of accounting for stock options as set out in CICA
Handbook Section 3870, Stock-Based Compensation and Other
Stock-Based Payments, in prior periods. Results have been
retroactively adjusted through retained earnings account.
--------------------------------------------------------
Three Months Ending
September 30, 2004
Net income for the period
Continuing operations $ 706,335
Stock-based compensation costs -
--------------------------------------------------------
Pro forma net profit $ 706,335
--------------------------------------------------------
Pro forma basic profit per share $ 0.02
--------------------------------------------------------
--------------------------------------------------------
The fair values of the options were determined using a
Black-Scholes option pricing model, recognize forfeitures as they
occur and uses the following weighted average assumption: the
weighted average grant-date fair value of stock options granted
during 2003 was between Cdn.$0.07 and Cdn.$0.09
(2002 - Cdn.$0.11). These amounts were determined assuming no
dividends were paid, volatility of the Company's share price of
60% (2002 - 155%), an expected life of three years
(2002 - five years) and a weighted average annual risk free rate
of approximately 3.8% (2002 - 4.65%).
3. DISCONTINUED OPERATIONS
Pursuant to the Debt Settlement Resolution, the Company's real estate
operations were exchanged for a reduction of $1 million in
shareholders loans. The effective date of disposal was June 30, 2003.
Summarized results of these operations have been reported separately
as discontinued operations in these consolidated financial statements
as follows:
Three Months ending
September 30
----------------------------
2004 2003
----------------------------
Gross revenue $ - $ 522,684
Direct costs - 209,160
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Gross profit - 313,524
Operating expenses - 54,477
---------------------------------------------------------------------
Contribution from operations - 259,047
Corporate expenses - -
---------------------------------------------------------------------
Income before interest, taxes,
depreciation and amortization - 259,047
Interest on long-term debt - 140,809
Depreciation - 86,651
---------------------------------------------------------------------
Net loss $ - $ 31,587
---------------------------------------------------------------------
There were no balances showing for discontinued operations balance
sheets as at September 30, 2004 or December 31, 2003.
The consolidated statements of cash flows include the following
amounts related to discontinued operations:
Three Months Ended
September 30
----------------------------
2004 2003
----------------------------
Net (loss) income from
discontinued operations $ - $ 31,587
Items not involving cash - -
Decrease in deferred revenue - 85,180
Decrease in tenant leasehold improvements - (97,680)
Depreciation - 86,651
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- 105,738
Changes in operating assets and liabilities - 641,088
---------------------------------------------------------------------
- 746,826
---------------------------------------------------------------------
Financing activity
Increase/decrease in long-term debt - (89,113)
---------------------------------------------------------------------
$ - $ 657,713
---------------------------------------------------------------------
Supplementary information regarding
non-cash transactions:
Interest accrued on shareholder loans $ - $ 329,370
4. SEGMENTED FINANCIAL INFORMATION
Continuing segments are presented based on the way that the business
is organized for making operating decisions and assessing
performance.
The significant accounting policies of the segments are consistent
with those described in Note 1.
Operating Segments 2004
Precision EFW
U.S. U.S.
(Drilling (Consulting Corporate
services) services) Canada Total
------------ ------------ ------------ ------------
Total segment
revenue $ 6,037,544 $ 1,435,615 $ 653,117 $ 8,126,276
Total segment
revenue - US$ 4,546,378 1,079,109 - -
Contribution(1) 898,267 137,512 538,922 1,574,701
Corporate expense - - 380,335 462,438
Capital expenditures 776,192 - - -
Total assets 6,451,886 525,476 811,947 7,789,309
Depreciation 347,257 12,823 2,738 362,818
Operating Segments 2003
Precision EFW
U.S. U.S.
(Drilling (Consulting Corporate
services) services) Canada Total
------------ ------------ ------------ ------------
Total segment
revenue $ 5,501,985 $ 1,495,344 $ 421,084 $ 7,418,413
Total segment
revenue - US$ 4,075,847 1,107,745 - -
Contribution(1) 619,184 121,785 379,960 1,120,929
Corporate expense - - 494,879 494,879
Capital expenditures - - - -
Total assets 5,673,136 676,355 29,012 6,378,503
Depreciation 182,956 43,872 - 134,188
(1) Contribution does not include income taxes, interest expense,
depreciation, write-downs and reserves or head office expenses
in the determination of each subsidiary's performance
5. SUBSEQUENT EVENTS
Subsequent to the period ended September 30, 2004 on October 21, 2004
the Company closed a $1,600,000 brokered private placement of
10,664,221 units at a price of $0.15 per unit. Each unit consists of
one common share and one half of one common share purchase warrant.
Each whole purchase warrant entitles the holder to acquire one common
share at an exercise price of $0.20 per share until October 20, 2006.
>>
%SEDAR: 00003754E
newswire.ca
For further information
Please Contact: Robert (Bob) E. Nowack, Chairman and Chief Executive Officer, Precision Assessment Technology Corporation, Tel: (604) 669-3373 (Ext. 201)
Cathy Hume, CEO, Investor Relations Counsel, Cavalcanti Hume Funfer Inc., (416) 868-1079, Ext 231
Linda Armstrong, Vice President, Investor Relations Counsel, Cavalcanti Hume Funfer Inc., (416) 868-1079, Ext 229 |
