Blue Tree Wireless Data Inc. reports 2005 year end results
10 April 2006
Blue Tree Wireless Data Inc. ("BlueTree") reports on its financial and operating results for the year ended December 31, 2005. All amounts are in Canadian dollars unless indicated otherwise.
Year ended December 31, 2005
Revenues
For the year ended December 31, 2005, operating revenues totalled $1,725,217, compared to $2,879,919 for the same period last year. The decrease in revenue is directly attributable to the delay of carrier approvals and was further impacted by the transition from BlueTree's legacy modems to its new 4000 and 5000 series of modems. However, in early Q4, BlueTree did announce the successful completion of carrier approvals for its 4000 and 5000 Series products by the following major North American cellular carriers: Alltel, Bell Mobility, Cingular, Rogers, Sprint and Verizon.
Gross Margin
The operating gross margin was $267,815 for the year ended December 31, 2005 as compared to $894,347 for the same period in 2004. Gross margin as a percentage of sales was 15.5% for 2005 (gross margin before inventory write-offs was $498,221 or 28.9% of sales), compared to 31.1% for the year ended December 31, 2004. These inventory write-offs related to BlueTree's previous generation products and totalled $230,406 for the year ended December 31, 2005.
Research and Development Expenses
BlueTree's net R&D expenses were $674,345 for the year ended December 31, 2005, a decrease from $836,244 for the same period of 2004. The decrease is related to the elimination of the Vancouver office and its employees in consolidating R&D resources in Montreal and Quebec City.
Selling Expenses
Selling expenses were $1,319,060 for the year ended December 31, 2005, an increase from $697,340 for the same period in 2004. This increase is primarily attributable to the additional resources that were hired in support of strengthening BlueTree's customer facing Sales and Customer Solutions teams, a full year of compensation and related expenses for the CEO (hired in September 2004), as well as compensation expense relating to the Company's stock option plan and the amortization of demonstration products loaned to prospective customers.
Administrative Expenses
Administrative expenses were $833,524 for the year ended December 31, 2005, an increase from $583,790 in 2004. The increase was attributable to higher operating costs for the new head office, compensation expense relating to the Company's stock option plan and higher legal, accounting and other costs attributable to additional reporting requirements of a public company.
Net Loss
The net loss for the year ended December 31, 2005 amounted to $2,889,286, compared with $1,403,978 in 2004. The loss before interest, foreign exchange and amortization was $2,559,114 in 2005 and $1,223,027 for 2004. The increase in the loss related to the lower sales and higher selling expenditures, the year end inventory write-off, as well as the interest on convertible debentures and other administrative costs relating to BlueTree becoming a public company.
Liquidity
Cash, cash equivalents and short term investments of BlueTree amounted to $1,632,954 as at December 31, 2005 as compared to $3,103,155 as at December 31, 2004. During the year, the Company raised $1,170,004 comprised of $702,000 through a private placement and $468,004 through a rights offering. In light of the lower than plan sales performance, management took action in the second quarter to reduce operating expenses and improve inventory management. This impact of this focused effort to improve cash management was visible in the fourth quarter of 2005 where the business's use of cash was reduced to $117,000, which represents an improvement as compared to the first three quarters of 2005.
Fourth quarter ended December 31, 2005
Revenues
Operating revenues were $358,260 for the quarter ended December 31, 2005 as compared to $829,209 in 2004. The revenue decrease is primarily attributable to the delay of anticipated orders.
Gross Margin
Operating gross margin was a loss of $96,935 in the fourth quarter of 2005 as compared to $237,216 for the same period in 2004. Gross margin as a percentage of sales was -27.1% for the fourth quarter of 2005 (gross margin before inventory write-offs was $121,065 or 33.8% of sales) compared to 28.6% for the quarter ending December 31, 2004. These inventory write-offs related to BlueTree's previous generation products and totalled $218,000 for the fourth quarter ended December 31, 2005.
Research and Development Expenses
BlueTree's net R&D expenses were $149,588 for the fourth quarter of 2005, a decrease from $291,616 for the same period of 2004.
Selling Expenses
Selling expenses were $282,194 in the fourth quarter of 2005, a decrease from $292,125 for the same period in 2004. Selling expenses decreased by $51,935 compared to $334,129 in the third quarter ended September 30, 2005.
Administrative Expenses
Administrative expenses were $176,756 in the fourth quarter of 2005, a decrease from $235,227 in 2004. The decrease was mainly attributable to a reduction in recruiting fees in 2005 and a decrease in operating costs attributed to management's focus on reducing administrative expenses.
Total Operating Expenses
Total operating expenses were $608,538 in the fourth quarter of 2005, a decrease from $818,968 in 2004. This 25.7% reduction in operating costs for the quarter compared to the same quarter last year is attributed to management's focus on reducing administrative expenses.
Net Loss
The net loss for the fourth quarter ended December 31, 2005 was $792,084, compared to $630,759 in 2004. The loss before interest, foreign exchange and amortization was $705,473 for the fourth quarter in 2005 and $581,752 for the fourth quarter in 2004. As explained above, the increase in the Company's loss for the fourth quarter is due primarily to lower sales and year end inventory write-offs.
Forward-looking Statements
The statements in this report relating to matters that are not historical facts are forward-looking statements and are subject to important assumptions, risks and uncertainties, including, but not limited to, general business and economic conditions, the condition of the financial markets and the other risks and uncertainties detailed in Management's Discussion and Analysis and the risks factors described in our annual report for the year ended December 31, 2005.
About Blue Tree Wireless Data Inc.
BlueTree Wireless Data Inc. is a leading developer and manufacturer of wireless modems and software solutions for commercial and industrial applications. BlueTree Wireless's CDMA & GSM based modems are designed to operate on cellular networks worldwide enabling Mobile Computing and M2M applications in the Public Safety, Fleet Management, Field Service Automation, SCADA and Telemetry markets. BlueTree Wireless is publicly traded on the Canadian (TSX) Venture Exchange.
BlueTree Wireless Data has its main offices located in Montreal, Québec and Reston, Virginia, Please visit www.BlueTreeWireless.com for more information.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
For further information: Mr. Daniel Becker, CA, Director of Finance, Blue Tree Wireless Data Inc., (514) 422-9110 Ext. 460, dbecker@bluetreewireless.com, http://www.bluetreewireless.com/
Source: newswire
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