Conac Update Newsletter.Symbol: COT.V Stock Exchange: CDNX (Canadian Venture) Issued and Outstanding: 21,446,265
Conac Software Corporation is a provider of financial management and accounting software tools primarily, but not restricted to, the construction industry.
Conac provides accounting and management software to allow management to track a job, on a project-by-project basis, from the design stages, through the bidding system, through to contract management and construction. The suite of products provides solutions for all sizes of business, from the small two-man construction firm to the largest of multi national development companies.
The distribution channel is an enormous one and growing annually at a rate of approximately 20%. This US$1 billion channel is fragmented, with the leader in the sector generating US$45 million in revenues last year. The adoption of technology within this sector has been very slow however, the adoption of software, that can provide solutions to the efficiency problems within the industry, is beginning to grow rapidly.
Recent Activity
With the release of the companys second quarter report, this is an opportune time to review activities for the first half of this fiscal year and look forward to next six months.
Financial Statement Highlights
The following numbers reflect the comparison of financial statements for the six-month period ending January 31.
Description
2000
1999
Difference
% Difference
Gross Revenue
1,273,000
923,275
349,725
37.88% Increase
Gross Profit
861,909
359,259
502,650
139.92% Increase
Operating Profit/(Loss)
(420,205)
(1,438,098)
1,017,893
70.78% Reduction
Loss Per Share
(0.019)
(0.081)
0.062
76.54% Reduction
As the company is moving from the R&D stage into the product delivery era of its growth, management has concentrated on an aggressive marketing and awareness campaign, especially in the US. The effect of this strategy is already being felt as the above numbers reflect. An increase in Gross Revenue of approximately 38% has been generated despite the fact that the new US management group was only installed in August 1999 and required some time to get their initiatives in place, which meant revenue generation from that area was restricted in the early months of the year. Secondly, the company did experience a slow period caused by the Christmas and New Year break and the special circumstances created this particular year due to Y2K fears.
The growth in Gross Profit (140% increase) and the considerable reduction in Operating Loss (71% reduction) have been achieved due to revenue growth and the ability to reduce Conacs overhead. Product development costs and marketing costs have been reduced, as one time costs incurred last year are not being carried this year. Initiatives implemented by the US management group has also enabled the company to reduce the cost to do product demonstrations as all sales activities are being done on-line, thereby reducing the need for travel and accommodation expenditures.
The second quarter financial statements do not include the funds raised through the recent financing, totaling $540,000, as it did not close before January 31, 2000. Investors should look for these proceeds to be reported on the third quarter report, which is ending April 30, 2000. The company has also seen many investors that participated in previous financings exercise their share warrants which, in turn, finances the company further.
The Second Half
The company looks forward to the next six months as a period when the efforts and initiatives that were put in place earlier in the year really take effect. Recent trade shows that have been attended in Dallas, Las Vegas, Orlando, San Diego, Atlanta and Seattle has generated approximately 400 sales leads that will be aggressively pursued to turn the leads into real contracts.
In addition, the third and fourth quarters will not be impacted by conditions, as detailed above, such as Y2K and the US management group will have been in place for six months, which has allowed them time to get their strategies in place and fully operational.
Outlook
As detailed in the management discussion of the public filing materials, the Company is presently focused on taking its products to the next level of development, using thin-client architecture to enable deployable over the Internet for business to business (B2B) application use. The development phase is estimated to take approximately 1 year to complete and will launch the company into the next generation of business application software, using the internet as a medium for fast, efficient and cost effective operations.
Finally, we are currently in the process of developing a new investor relation web site. The company will announce the launch of the new site shortly, which has been developed in order to achieve a higher level of information outflow to the investment community. I would encourage you to visit the new site and would appreciate your comments to our e-mail address investor@conac.com or by fax to 604.642.6233.
Please feel free to contact our office at 604.642.0226 or 1.800.663.2338 if you have any questions regarding the above information.
Regards,
Allan Thompson
Corporate Communications |
