Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Unitec Int. Controls Inc. -- Ignore unavailable to you. Want to Upgrade?

To: GARNET who wrote (820)	5/31/1999 4:30:00 PM
From: Link Lady	Read Replies (1) \| Respond to of 856

taken from filing dated May 27/99 sedar.com May 28, 1999 To Our Shareholders This past year was pivotal in the evolution of your company as it emerged from its product and market development phases. Successful introduction of Unitec's SCADA technology in the energy and utility sectors combined with continued growth in the water markets maintained a growing order backlog. Project financing from conventional sources was not available for many of our large international contracts, while declining stock prices made equity financing prohibitive. Consequently, your Board and Management determined that a slowing of growth and focus on generating profitable operations was an appropriate strategy while sources of reasonable financing were being pursued. That strategy proved successful, as your Company achieved modest profits for the year through the judicious containment of expenses and focusing on improving its operating margins on existing projects. In November, Management's efforts to locate reasonable financing culminated with an agreement between Unitec and the Saskatchewan Opportunities Corporation (SOCO) to provide $2 million in a combination of loan and debenture financing. As part of this agreement, Unitec agreed to establish engineering and manufacturing operations in the Province of Saskatchewan. Unitec Energy Systems Inc. formally launched its operations this month in Regina. Its initial staff includes 16 engineers, programmers, technologists and related personnel is expected to double by year end. Unitec Energy will assume responsibility for all oil & gas and electricity projects world wide, while the Burnaby facilities will focus on the water and environmental sectors. Hardware manufacturing will also be transferred to the Regina plant where manufacturing costs are significantly lower. Management's focus for 1999 will be to bring the Regina operations on line as quickly and smoothly as possible with minimum disruption to revenue growth during the training period for its new staff. Several strategic alliance initiatives were commenced over the past several months. Management intends to formalize these in long term relationships to leverage its technology leadership with the financial and market strengths of prospective alliance partners. Research and development efforts over the past 24 months are nearing completion and a new hardware platform will soon be launched which will provide magnitudes of greater processing power (at lower cost), to maintain your Company's technology leadership. New software development is planned to dramatically enhance the system capability and cost effectiveness of the integration process. Last years downturn in the Asian market appears to have bottomed out as demonstrated by new contract awards in Indonesia and Malaysia. Brazil's currency problems have affected two projects underway in that country, however, recent discussions with our customer and agent holds promise of a near term resolution. Saudi Arabia has emerged as a new market this year. After two years of hard work by our local agent, Al Harbi Trading and Contracting, Unitec has won a major water SCADA system for Qurayat. This system will communicate over 180km of buried telephone cable. The first shipment is anticipated for early July. In summation, your Company has weathered the difficult road of developing and introducing a new technology to a vast market, successfully competing against major competitors domestically and internationally. With improved financial resources, I am confident of our capabilities and more optimistic of our future potential. “John B. Smyth” John B. Smyth President & CEO Financial Report Revenues for the year were $2,474,029 marginally higher than last year, reflecting management's containment of growth and focus on profitability. Fifty seven percent (57%) of the revenues were generated from international sales, coming from Asia, Latin America and the Caribbean. Cost of sales were reduced from the 84% level in 1997 to 57% reflecting the maturity of the product development as reduced engineering efforts were required to customize the products for new applications. Gross margin for the year was $1,066,433 (43%) as compared to $389,604 (16%) in the prior year. International projects provided a 49% margin while domestic sales contributed a 36% margin. A significant reduction of $422,836 was achieved in reduced Marketing Expenses from 1997 levels of $648,361 to $225,525. Reduced wages, lower professional fees and other expenses contributed to a $97,788 reduction in General and Administrative Expenses. The net income before Amortization was $163,099 as compared to a $1,034,354 loss in the prior year. After Amortization and Other Items, the Company realized a $16,645 profit for the year as opposed to a $1,222,664 loss for 1997. Recent financing arrangements will improve the Company's working capital position by $2,000,000 allowing it to accelerate work on its large order backlog. The establishment of new operations in Regina will assist in the long term growth of the Company, but will incur significant startup costs in the 1999 fiscal year. The ability for the Company to generate continued profits for 1999 will be dependent upon its ability to bring the Regina facility on line quickly. “William Leung” William Leung Controller