Category: Uncategorized
- Published: 29 November -0001
News Release: Extreme CCTV Earns $0.15 per Share in Fiscal 2003
Extreme CCTV Inc., (TSX:EXC) the security industry's leading supplier of active infrared night vision surveillance equipment, today reported fiscal fourth quarter and year-end financial results for the period ended September 30, 2003. The Company posted its 10th consecutive profitable quarter, with net earnings of $0.02 per share for the fiscal fourth quarter, and $0.15 per share for fiscal 2003.
For the fiscal year ended September 30, 2003, revenues were $20.5 million, an increase of 16% over revenues of $17.6 million for the year ended September 30, 2002. Gross margins were 48% for fiscal 2003 and 50% for fiscal 2002. The Company reported a decrease in net income for the year to $1,788,000, or $0.15 per share, from net earnings of $1,854,000, or $0.17 per share, in fiscal 2002. While the Company reported another year-over-year increase in revenues, growth was lower than the Company's budget and historical growth rates. This was due to the stronger Canadian dollar as well as significant events including a senior TSX listing, subsequent equity financing, and a strategic investment in Obzerv Technologies Inc., which combined, resulted in the utilization of significant management resources during the year.
Currency exchange rates for both the UK pound and US dollar weakened over the course of the year and Extreme CCTV recorded a net foreign exchange loss of $277,000 for the fiscal year, which is included in general and administrative expenses. General and administrative expenses have also increased in the following areas: professional fees, compliance costs, travel, rent, office and salary costs.
'In addition to record sales levels, 2003 was a year of major corporate achievements for Extreme CCTV,'stated Jack Gin, President and CEO of Extreme CCTV. 'We have had a strong start to fiscal 2004 and a recovering USA economy will make for a better year.'
Sales and marketing expenses have increased to $3.6 million for the twelve-month period ended September 30, 2003 from $2.7 million for the twelve-month period ended September 30, 2002.
As a percentage of revenue, sales and marketing expenses have increased to 17% for the twelve-month period ended September 30, 2003, from 15% for the twelve-month period ended September 30, 2002. The increases are associated with programs to increase sales levels through strategic sales targeting, alliances and integration of Extreme CCTV products with leading mainstream security systems components.
Mr. Gin added, 'We are witnessing a strengthening of demand through our sales channels. New marketing programs, strategic alliances and upcoming advanced technology product releases will enhance our sales potential.'
For the three months ended September 30, 2003, revenues were $5.0 million, a decrease from revenues of $5.4 million, for the same period last year. The Company reported gross margin of $2.4 million for September 30, 2003 as compared to $2.8 million for September 30, 2002 for a gross margin percentage of 48% and 51%, respectively. Currency fluctuations negatively impacted cost of sales and gross margins for the quarter. Earnings before income taxes were $276,000 for the fourth quarter compared to $930,000 for the comparable quarter ended September 30,2002. Net earnings after tax for the quarter were $192,000, or $0.02 per share, versus $553,000, or $0.05 per share, in the same period in 2002.
The current income tax expense for the company has dropped as a percentage of income before taxes. This decrease for the twelve months of 2003 is representative of the tax rates for income earned in lower tax rate jurisdictions.
As of September 30, 2003, the Company's cash position had increased to $4.1 million, from $674,000 reported at September 2002. The increase is a result of the Company's consistent profitability in fiscal 2003, and a private placement financing that closed on September 12, 2003. The financing provided gross proceeds of $8.0 million, of which $4.0 million were used for an initial investment in Obzerv Technologies Inc. of Quebec City. Remaining net proceeds were placed into working capital, which stood at $8.3 million at September 30, 2003. Management of working capital resources has been an ongoing initiative for the Company.
Investment in research and development is important in maintaining Extreme's competitive position. Investment in R&D increased for fiscal 2003 to $685,000 from $599,000 for fiscal 2002. Throughout the year the Company continued to release new products, and improve its established product line with new and improved features including the SuperLED(TM) and ZX55. The Company's investment in Obzerv has allowed Obzerv to build a development team to proceed with commercial development of its ATV2000i, for which a lead customer has been identified. Extreme's global research and development engineers work closely together as an integrated international design group.
Throughout the fiscal year, Extreme CCTV received widespread recognition for its corporate performance, including:
- A prestigious British Security Industry Association (BSIA) Export Award for the Best New Exporter of 2003 (through its UK subsidiary, Derwent)
- The 2003 Canadian Smaller Exporter Achievement Award in association with Canadian Manufacturers &Exporters
- Extreme was named the number one Fastest Growing High Tech Company in Canada according to the Deloitte &Touche Canadian Technology Fast 50 survey, reporting an immense growth in revenues of more than 12,000% from 1998 to 2002.
Extreme achieved its extraordinary five-year revenue growth by aggressive global product export and by continuing its tradition of strong industry leadership in engineering and innovation.
'It is certainly rewarding to receive recognition for our success,'said Gin. 'These awards reflect on the value of our people and the hard work of our entire team. Our success results from our commitment to technology leadership, customer focus and innovation within the global security market.'
To leverage the global brand recognition achieved by its successful exports, Extreme restructured its sales department and implemented new marketing initiatives in the fiscal fourth quarter. Extreme CCTV has recently experienced success in Asian markets such as China, Japan and Singapore.
Extreme also increased its sales with the United States government, targeting the requirements of the Department of Homeland Security (DHS). The Company is encouraged by the growing sales activities with the DHS and Extreme's UF500 infrared illuminators and EX82 Integrated Day Night (IDN(TM)) cameras are now being purchased for various government installations.
Extreme CCTV applied for several patents during the year, and was granted a US Patent on its infrared day/night surveillance camera system with infrared and visible light bandpass control circuit. This patent is utilized in the Company's new model EX38Q IDN(TM) camera that won Best New Product Award at the International Security Conference in New York in 2000. The product has since progressed to its model EX82DXL and is one of the Company's leading revenue generators.
The patented light bandpass control circuit enables surveillance cameras to operate in color mode during bright day-time conditions and switch to infrared monochrome mode in dark night-time conditions.
The Company currently has seven additional patents submitted and pending approval.
Extreme CCTV markets its technology worldwide in six different categories under three brands: Extreme CCTV(R), Derwent and WizKid Optotech(TM). In total, there are more than 25 Extreme products customized into more than 200 models. The Company continues to develop leading new products, releasing several during the year, including:
Moonlight-IR(TM) - an infrared accessory that adapts to all box-type CCTV cameras to instantly convert conventional 'box cameras'to night vision effectiveness with an easy installation that pulls power from the camera itself. Multiple unit sales orders for Moonlight-IR(TM) have recently commenced for medical research operations.
The ZX55 - IDN(TM) SuperLED(TM) Camera is the Company's latest and most powerful Integrated Day Night camera. The ZX55 is ideally suited for integration with new intelligent software that is being developed by numerous software-based organizations. CCTV software applications that provide Object Tracking, Object Identification, Scene Analysis, and Number Plate Recognition all require 24/7 lighting in order to deliver useful information.
Obzerv Technologies
In June 2003, Extreme announced a strategic partnership with Quebec City-based Obzerv Technologies Inc., including a direct investment into Obzerv and commercial agreements between the two companies. Obzerv's patented DALIS laser illuminator is a complementary technology to Extreme's and will strengthen Extreme's current market leadership in advanced night vision video surveillance products based upon active imaging.
Extreme is designing new products incorporating components supplied by Obzerv. In addition, a lead customer has been identified for Obzerv's flagship product, the ATV 2000i, an electro-optic device that performs range-gated long-range night vision functions in complete darkness and in degraded weather conditions such as rain, fog and snow. It can read a vehicle license plate at up to 2km, recognize a human being at 5km, classify a vehicle at 10km and pinpoint people in search and rescue activities at distances greater than 10km.
'We view range-gated active imaging cameras as the technology for security in the decade ahead and believe that Obzerv has developed a leading position in the defense sector with this technology,'said Mr. Gin. 'Product designs for the commercialization of this technology for Extreme are underway.'
Extreme CCTV Inc.
Based in Burnaby, British Columbia, Extreme CCTV Inc. (www.ExtremeCCTV.com) specializes in the design, development, and manufacturing of advanced infrared illuminators and precision-engineered video surveillance products. The Company's common shares trade on The Toronto Stock Exchange under the trading symbol 'EXC', with approximately 14.7 million outstanding.
Note: Certain of the statements contained in this news release may contain forward-looking statements which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of Extreme CCTV, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Extreme does not expect to update forward-looking statements continually as conditions change and you are referred to the full discussion of Extreme's business and the risk factors associated with Extreme's business contained in Extreme's Annual Information Form dated December 31, 2002, filed with the securities regulatory authorities in British Columbia and Alberta.
EXTREME CCTV INC.
Interim Consolidated Statements of Operations and Retained Earnings
(Unaudited)
-----------------------------------------------------------------------
Three months ended Twelve months ended
September 30, September 30,
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
REVENUE $ 5,008,448 $ 5,422,560 $20,456,732 $17,648,667
COST OF SALES 2,588,515 2,638,904 10,538,573 8,899,135
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GROSS MARGIN 2,419,933 2,783,656 9,918,159 8,749,532
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OPERATING
EXPENSES
Sales and
marketing 849,760 904,066 3,555,236 2,712,632
General and
administrative 1,037,078 574,045 3,017,985 2,086,908
Research and
development 151,717 279,217 685,220 598,681
Amortization
of capital
assets 91,396 75,492 284,531 242,080
Financing 14,102 21,334 56,138 201,439
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2,144,053 1,854,154 7,599,110 5,841,740
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INCOME BEFORE
PROVISION FOR
INCOME TAXES 275,880 929,502 2,319,049 2,907,792
PROVISION FOR
INCOME TAXES 83,674 376,941 530,803 1,053,353
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NET INCOME 192,206 552,561 1,788,246 1,854,439
RETAINED
EARNINGS,
BEGINNING
OF PERIOD 4,441,532 2,292,931 2,845,492 991,053
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RETAINED
EARNINGS,
END OF PERIOD $ 4,633,738 $ 2,845,492 $ 4,633,738 $ 2,845,492
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BASIC EARNINGS
PER SHARE $ 0.02 $ 0.05 $ 0.15 $ 0.17
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WEIGHTED
AVERAGE
NUMBER OF
SHARES
OUTSTANDING,
BASIC 11,911,412 11,247,218 11,827,069 11,129,058
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DILUTED
EARNINGS
PER SHARE $ 0.01 $ 0.04 $ 0.13 $ 0.15
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WEIGHTED
AVERAGE
NUMBER OF
SHARES
OUTSTANDING,
DILUTED 13,631,106 12,588,955 13,420,170 12,460,998
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EXTREME CCTV INC.
Interim Consolidated Balance Sheets
----------------------------------------------------------------------
September 30, September 30,
2003 2002
------------ ------------
ASSETS (Unaudited) (Audited)
CURRENT
Cash $ 4,085,298 $ 673,557
Accounts receivable 3,630,315 3,539,382
Inventories 2,755,306 4,000,903
Prepaid expenses and other 281,733 204,069
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10,752,652 8,417,911
INVESTMENT IN AND ADVANCES TO
OBZERV TECHNOLOGIES INC. 4,153,965 -
CAPITAL ASSETS 1,224,420 915,453
FUTURE INCOME TAXES 272,260 133,089
GOODWILL 797,700 876,504
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$17,200,997 $10,342,957
----------------------------------------------------------------------
----------------------------------------------------------------------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 2,129,847 $ 3,318,686
Income taxes payable 158,974 702,034
Current portion of capital lease
obligations 35,700 35,647
Current portion due to shareholders 139,355 300,000
----------------------------------------------------------------------
2,463,876 4,356,367
CAPITAL LEASE OBLIGATIONS - 35,700
DUE TO SHAREHOLDERS - 141,157
----------------------------------------------------------------------
2,463,876 4,533,224
----------------------------------------------------------------------
SHAREHOLDERS'EQUITY
Share capital 10,325,758 2,666,320
Cumulative translation adjustment (222,375) 297,921
Retained earnings 4,633,738 2,845,492
----------------------------------------------------------------------
14,737,121 5,809,733
----------------------------------------------------------------------
$17,200,997 $10,342,957
----------------------------------------------------------------------
----------------------------------------------------------------------
EXTREME CCTV INC.
Interim Consolidated Statements of Cash Flows
(Unaudited)
Three months ended Twelve months ended
September 30, September 30,
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
OPERATING
ACTIVITIES
Net income $ 192,206 $ 552,561 $ 1,788,246 $ 1,854,439
Items not
involving cash:
Amortization 91,396 75,492 284,531 242,080
Future income
taxes 75,508 (135,184) 88,464 (59,456)
Deferred
financing
fees written
off - 7,473 - 107,044
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359,110 500,342 2,161,241 2,144,107
Changes in
non-cash
operating
accounts (328,185) (335,082) (954,286) (1,704,607)
-----------------------------------------------------------------------
30,925 165,260 1,206,955 439,500
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INVESTING
ACTIVITIES
Investment
in Obzerv (4,153,965) - (4,153,965) -
Purchase of
capital
assets (290,937) (280,364) (593,498) (468,643)
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(4,444,902) (280,364) (4,747,463) (468,643)
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FINANCING
ACTIVITIES
Due to
shareholders (76,070) (3,491) (301,802) (3,491)
Capital
lease
obligations (9,325) (8,295) (35,647) (31,533)
Long-term
debt - - - (854,335)
Issue of
common
shares on
IPO - 1,272,000 - 2,272,000
IPO and
private
placement
costs
capitalized
in share
capital - (101,925) - (337,321)
Issue of
Special and
Agents
Warrants on
private
placement 8,000,100 - 8,000,100 -
Private
placement
costs (754,405) - (754,405) -
Warrants
exercised 23,238 8,875 58,378 11,375
Options
exercised 41,922 20,833 86,646 35,766
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7,225,460 1,187,997 7,053,270 1,092,461
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INCREASE
IN CASH 2,811,483 1,072,893 3,512,762 1,063,318
EFFECT OF
FOREIGN
EXCHANGE ON
CASH HELD IN
FOREIGN
CURRENCY (1,712) 6,203 (101,021) 35,908
CASH (BANK
INDEBTEDNESS),
BEGINNING
OF PERIOD 1,275,527 (405,539) 673,557 (425,669)
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CASH (BANK
INDEBTEDNESS),
END OF
PERIOD $ 4,085,298 $ 673,557 $ 4,085,298 $ 673,557
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Extreme CCTV Inc.J. M. (Jack) GinPresident &CEO(604) 420-7711Email: This email address is being protected from spambots. You need JavaScript enabled to view it. CCTV Inc.Corbet PalaInvestor Relations(416) 657-2400Email: This email address is being protected from spambots. You need JavaScript enabled to view it. CCTV Inc.Terry KrepiakevichCFO(604) 420-7711Email: This email address is being protected from spambots. You need JavaScript enabled to view it.: www.ExtremeCCTV.com
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