Additional Short-Term Financing Arranged with its Banker
& Majority Shareholder
OTTAWA, Canada, Nov. 6 /PRNewswire/ - Fulcrum Technologies Inc. (NASDAQ:
FULCF; TSE: FUL) today announced its results for the third quarter of 1997,
which were consistent with the preliminary results the company announced on
October 14. All financial figures are stated in Canadian dollars.
Revenue for the third quarter ended September 30, 1997 was $7.4 million,
which compares with $16.7 million in revenue in the same quarter in the
previous year. The net loss before restructuring costs was $8.1 million.
Restructuring charges for the quarter were $24.9 million. The net loss in the
quarter was $33.0 million, or $1.95 per share, compared to a profit of $1.2
million, or $0.08 cents per share, in the third quarter of 1996.
For the first nine months of 1997, revenue was $34.5 million, compared to
$44.2 million in the same period of the previous year. The net loss for the
first nine months was $39.8 million or $2.49 per share, compared to a profit
of $2.8 million or $0.19 per share for the same period in the previous year.
Restructuring charges are primarily related to the unexpected sharp drop
in the company's traditional information retrieval business due to the
accelerating commoditization of this market. The company has implemented a
scaled down business model that allows it to refocus its efforts in the
knowledge management market where it has had considerable early success.
The company also announced that it has reached agreements in principle
with both its majority shareholder, Datamat Ingeneria S.p.A, and its banker,
the Royal Bank of Canada, for additional borrowing capacity to address the
current difficult cash flow situation in the short term. The agreement
provides the Royal Bank with warrants to acquire 500,000 common shares at
current market price over a two year term, subject to regulatory approval.
Fulcrum continues to work toward strengthening the capital structure of the
company through a long-term strategic partner. On October 27, Fulcrum
announced that it has retained Midland Walwyn Capital Inc. to assist the
company in evaluating the various financing and strategic options it is
considering.
``As we indicated in our preliminary announcement on October 14, our
significant revenue shortfall in the quarter has led to a very tight cash
position,'' said Eric Goodwin, chairman and chief executive officer at
Fulcrum. ``With the support of our principal banker and our major
shareholder, we can focus on securing a strategic partner so that we may more
rapidly capitalize on the momentum we have in the knowledge management market.
``Our new knowledge management product line, the Fulcrum(R) Knowledge
Network(TM), is enjoying continuing success. We have a leadership position in
this dynamic, high growth market as evidenced by our recent signing of
customers including Texaco, Bank of France, Price Waterhouse, and The White
House,'' Goodwin concluded.
After 14 years, Fulcrum Technologies Inc. continues to be a world leader
in providing software solutions that turn enterprise information into
knowledge. Fulcrum's products allow customers to create multi-platform,
standards-based solutions - for customer care, best practices, publishing, and
other applications that require robust underlying search software. Its
customers include leading organizations, such as Charles Schwab, the European
Union, and Fujitsu. Headquartered in Ottawa, Canada, Fulcrum extends its
global reach with offices throughout the United States, Europe, and in
Australia and Japan, and through a network of partners worldwide. Fulcrum is
publicly traded on the Nasdaq National Market (``FULCF'') and on the Toronto
Stock Exchange (``FUL''). For more information on Fulcrum and Fulcrum
products, visit Fulcrum's Web site: http://www.fulcrum.com.
Any forward-looking statements in this release are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that all forward-looking statements involve
risk and uncertainties, including without limitation, risks relating to low
levels of liquidity and cash flow, risks of intellectual property litigation,
risks in technology development and commercialization, risks in product
development and market acceptance of and demand for the Company's products,
risks of downturns in economic conditions generally, and in the software
application development tools and information retrieval software tools markets
specifically, risks associated with competition and competitive pricing
pressures, risks associated with foreign sales and higher customer
concentration and other risks detailed in the Company's filings with the
Securities and Exchange Commission.
Fulcrum is a registered trademark of Fulcrum Technologies Inc. and Fulcrum
Knowledge Network is a trademark of Fulcrum. Other trademarks used throughout
this document are trademarks of their respective owners.
FULCRUM TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(in thousands of Canadian dollars, Canadian GAAP)
(Unaudited)
Three Months Ended
September 30
1997 1996
Revenue
License fees $ 5,169 $ 14,233
Services 2,193 2,439
---------- ----------
7,362 16,672
---------- ----------
Operating Expenses
Cost of license revenue 683 1,034
Cost of service revenue 1,238 1,670
Selling, general and administrative 9,401 10,045
Research and development 3,639 1,980
Amortization of goodwill 190 260
Foreign exchange and Investment
tax credits (44) (82)
Non-recurring restructuring charge 24,897 --
---------- ----------
40,004 14,907
---------- ----------
Income (loss) from operations (32,642) 1,765
Other expense (income) 322 --
---------- ----------
Income (loss) before income taxes (32,964) 1,765
Income tax expense (recovery) -- 635
---------- ----------
Net income (loss) before minority
interest (32,964) 1,130
Minority interest 76 40
---------- ----------
Net income (loss) for the period (33,040) 1,170
---------- ----------
---------- ----------
Net income (loss) per share
Basic $ (1.95) $ 0.08
Fully diluted $ (1.95) $ 0.08
Weighted average shares outstanding
(000's):
Basic 16,953 15,141
Fully diluted 18,954 16,645
United States GAAP
Net income (loss) per share
Primary $ (1.90) $ 0.07
Weighted average number of common
shares (000's)
Primary 17,379 15,633
FULCRUM TECHNOLOGIES INC.
CONDENSED BALANCE SHEETS
(in thousands of Canadian dollars, Canadian GAAP)
(Unaudited)
September 30 December 31
1997 1996
ASSETS
Cash and cash equivalents $ 825 $ 3,435
Amounts receivable 35,446 22,692
Other current assets 2,834 5,172
Capital assets 7,536 8,951
Goodwill 6,151 6,874
Other non-current assets -- 9,105
-------------------------
$ 52,792 $ 56,229
-------------------------
LIABILITIES AND EQUITY
Bank indebteness $ 17,884 $ --
Accounts payable and accruals 23,010 14,270
Deferred service revenue 2,648 1,796
Other liabilities 1,419 401
Shareholders' equity 7,831 39,762
-------------------------
$ 52,792 $ 56,229
-------------------------
SOURCE: Fulcrum Technologies Inc.
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CONTACT:
Media may contact: Gillian Brouse, Fulcrum,
(613) 238-1761, ext. 251, e-mail: pr(at)fulcrum.com; Investors
may contact: Andy Wolff, Fulcrum, (613) 238-1761, ext. 156,
e-mail: andy.wolff(at)fulcrum.com
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