Frontline Reports Second Quarter 2011 Financial Results

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Aug 11, 2011, 07:11 ET

TORONTO, Aug. 11, 2011 /PRNewswire/ - Frontline Technologies Inc. (TSX:FLC), a provider of technology-based equity and options trading services, IT infrastructure support and network managed services, released its second quarter results for the quarter ended June 30, 2011, the second set of consolidated financial statements prepared under International Financial Reporting Standards (IFRS). The net loss was $2.3 million compared to a net loss of $1.2 million in the same quarter of the previous year. Included in the $2.3 million loss are restructuring and acquisition costs of $0.7 million related to severances and legal fees incurred during the quarter.

Major elements of the second quarter statements include:

Revenue increased by 38% to $1.9 million for the second quarter of 2011 from the same year-ago quarter as a result of the acquisition of Frontline Technologies Corporation.
Operating expenses in continuing operations increased 45% or $1.2 million for the second quarter of 2011 from the same year-ago quarter as a result of the acquisition of Frontline Technologies Corporation which accounted for $1.0 million of the increase and a further $0.4 million was due to restructuring and acquisition costs.
Net loss before foreign exchange, acquisition and restructuring expenses for the three months ended June 30, 2011 decreased $0.1 million to $1.5 million from $1.6 million as compared to the same year-ago quarter.
Working capital position of $4.4 million at June 30, 2011 as compared to $10.3 million at December 31, 2010.
Completion of the acquisition of Frontline Technologies Corporation for $3.9 million in cash and Class A restricted shares.

"We are excited by the integration of the two companies as it is allowing us to rationalize costs while strengthening our product suite and improving service delivery for clients" said Hoss Astaraki, Chairman and CEO.


Financial Highlights	Three months ended		Six months ended
(in millions of dollars, except per share data)	June 30,		June 30,
(Three and six month periods unaudited) (note 1)	2011	2010	2011	2010
Revenue	$ 1.9	$ 1.4	$ 3.2	$ 2.8
Operating expenses	$ 4.0	$ 2.7	$ 7.0	$ 6.0
Loss from continuing operations	$ (2.1)	$ (1.3)	$ (3.9)	$ (3.2)
Net loss	$ (2.3)	$ (1.2)	$ (4.3)	$ (3.5)
Basic and diluted loss per share	$ (0.11)	$ (0.08)	$ (0.24)	$ (0.23)
_{Note 1}_{The financial statements for the period ended June 30, 2011 have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The company adopted IFRS as at January 1, 2011 with a transition date of January 1, 2010. The comparative figures for 2010 have been restated to comply with IFRS and are presented accordingly.}

About Frontline Technologies

Frontline Technologies Inc. is a provider of trading technology services for equities and options and also offers IT infrastructure support and network managed services. Frontline Technologies is listed on the Toronto Stock Exchange (Ticker-FLC) - additional information is available at www.belzberg.com / www.frontline.ca.

Forward looking statement disclaimer

Except for historical information contained herein, the matters discussed in this press release are based on forward-looking statements that involve risk and uncertainty. A variety of important factors could cause results to differ materially from such statements, including but not limited to economic, competitive, governmental and technological factors affecting the company's operation, markets, products, prices and other factors.

FRONTLINE TECHNOLOGIES INC.
(FORMERLY BELZBERG TECHNOLOGIES INC.)
Condensed Interim Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
(Not audited or reviewed by the Company's external auditor)

			June 30,		December 31,
			2011		2010

ASSETS

Current assets:
	Cash and cash equivalents	$	3,908	$	8,319
	Cash and cash equivalents segregated under regulations and other		-		2,143
	Cash and cash equivalents on deposit with clearing and depository organizations		-		1,630
	Receivable from brokers, dealers and clearing organizations		-		168
	Accounts receivable		1,142		1,718
	Prepaid expenses and other receivables		206		346
	Securities borrowed		-		6,186
	Assets held for sale		2,835		-
			8,091		20,510
Equipment			1,326		1,075
Investments			-		30
Long-term investment tax credits recoverable			-		-
Goodwill and intangible assets			5,993		77
Total assets		$	15,410	$	21,692

LIABILITIES

Current liabilities:
	Bank indebtedness	$	167	$	-
	Accounts payable and accrued liabilities		1,702		2,336
	Payable to customers		-		1,733
	Deferred revenue		188		-
	Securities loaned		-		6,186
	Current portion of long-term debt		480		-
	Current portion of obligations under finance leases		100		-
	Liabilities held for sale		1,013		-
			3,650		10,255
Non-current liabilities:
	Long-term debt		1,400		-
	Obligations under finance leases		116		-
	Deferred revenue		23		-
	Future income taxes		432		-
Total liabilities			5,621		10,255

SHAREHOLDERS' EQUITY

Share capital			2		23,612
Contributed surplus			4,575		4,570
Retained earnings (deficit)			5,964		(16,220)
Foreign currency translation reserve			(752)		(525)
Total shareholder's equity			9,789		11,437
Total liabilities and shareholder's equity		$	15,410	$	21,692



FRONTLINE TECHNOLOGIES INC.
(FORMERLY BELZBERG TECHNOLOGIES INC.)
Condensed Interim Consolidated Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars, except per share amounts)
(Not audited or reviewed by the Company's external auditor)
		Three months ended				Six months ended
		June 30,				June 30,
		2011		2010		2011		2010

Revenue	$	1,904	$	1,383	$	3,156	$	2,799

Operating expenses:
Compensation and related benefits		1,662		781		2,584		1,965
Telecommunication and data-feed services		1,257		1,007		2,208		2,112
Administrative and other		1,053		943		2,237		1,945
		3,972		2,731		7,029		6,022

Loss before the undernoted		(2,068)		(1,348)		(3,873)		(3,223)

Foreign exchange loss (gain)		23		(156)		55		52
Interest expense		4		-		5		1
Interest income		-		-		-		(2)
		27		(156)		60		51

Loss before discontinued operations		(2,095)		(1,192)		(3,933)		(3,274)

Loss from discontinued operations		(207)		(2)		(409)		(192)

Loss for the period		(2,302)		(1,194)		(4,342)		(3,466)

Other comprehensive income (loss):
Change in accumulated foreign currency
translation adjustment:
	Current operations	44		(490)		(902)		(206)
	Discontinued operations	(36)		942		675		107
		8		452		(227)		(99)

Total comprehensive loss		(2,294)		(742)		(4,569)		(3,565)

Loss per share:
Loss from continuing operations per common and
Restricted Class A share - basic and diluted		(0.10)		(0.08)		(0.22)		(0.22)
Loss per common and Restricted Class A
share - basic and diluted		(0.11)		(0.08)		(0.24)		(0.23)


Weighted average number of common and Restricted Class A shares outstanding (in thousands)		21,394		14,638		18,035		14,676


FRONTLINE TECHNOLOGIES INC.
(FORMERLY BELZBERG TECHNOLOGIES INC.)
Condensed Interim Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
(Not audited or reviewed by the Company's external auditor)
			Three months ended		Six months ended
			June 30,		June 30,
			2011	2010	2011	2010
Cash provided by (used in):

Operating activities:
	Loss for the period		(2,302)	(1,194)	(4,342)	(3,466)
	Loss from discontinued operations		(207)	(2)	(409)	(192)
	Loss from continuing operations		(2,095)	(1,192)	(3,933)	(3,274)

	Adjusted for:
		Depreciation of property and equipment	324	327	530	680
		Amortization of intangible assets	85	23	89	46
		Unrealized foreign exchange (gain) loss	(401)	916	(620)	623
		Interest expense	4	-	5	1
		Interest income	-	-	-	(2)
		Stock-based compensation	5	76	29	169
	Changes in non-cash working capital items		288	(954)	552	(1,379)
	Interest paid		(4)	-	(5)	(1)
	Interest received		-	-	-	2
			(1,794)	(804)	(3,353)	(3,135)

Financing activities:
	Increase in bank indebtedness		17	-	17	-
	Payment of obligations under finance leases		(56)	-	(56)	-
	Issuance of Class A restricted shares		2,916	-	2,916	-
	Repurchase of common shares		-	-	-	(67)
			2,877	-	2,877	(67)

Investing activities:
	Business acquisition		(3,916)	-	(3,916)	-
	Purchase of equipment		(33)	(283)	(260)	(371)
			(3,949)	(283)	(4,176)	(371)

Net decrease in cash and cash equivalents from continuing operations			(2,866)	(1,087)	(4,652)	(3,573)

Net decrease in cash and cash equivalents from discontinued operations			292	852	241	(1,535)

Net change in cash and cash equivalents			(2,574)	(235)	(4,411)	(5,108)

Cash and cash equivalents, beginning of period			6,482	10,797	8,319	15,670

Cash and cash equivalents, end of period			3,908	10,562	3,908	10,562