Rapid Solutions Corporation (TSX-V: RPD), an enterprise process solutions company that provides data and information management through its professional services and software offerings, today announced its financial results for the twelve months ended April 30, 2008.
During the year, Rapid undertook a repositioning of its US business unit to create an emphasis on software licensing, similar to that of its Canadian business unit. A summary of the business events for the year include:
- Replacement of management in the US business unit;
- Services revenues at 76% of the level in the previous year, reflecting lower pure services revenue from certain engagements;
- The execution of new service and software contracts valued at $2.5 million, representing a new industry vertical in the United States;
- Engagement by a tier one integrated energy exploration for implementation of the Company's latest software offering; and
- Software licensing fee revenue increase of 10%
The financial results for the year reflect the Company's actions with respect to the repositioning:
- Overall decline in revenue of 19% to $4.4 million;
- Provision for impairment of goodwill of $2.9 million reflecting lower levels of recent and future revenue from pure services engagements;
- A reduction in year over year total expenses before goodwill impairment provision of 5%; and
- Net loss of $4.2 million including the goodwill impairment charge compared to $0.7 million the previous year.
"This past year represented a period of challenges, new opportunities and progress for the Company," commented Michael W. Jones, Chief Executive Officer. "Following our management changes in the US business unit we reduced our reliance on and concentration in pure professional services engagements and began the successful transition of that business unit to the provision of technology based solutions. The US market presents significant opportunity for Rapid's services and technology applied to process intensive, high risk industries. Clients operating refineries, manufacturing and processing facilities have expressed keen interest in our solution to aggregate procedures and safe operating conditions data into a robust technology platform that includes field mobility. The success of our evolution is being demonstrated by new business and our growing pipeline of opportunities."
Revenue for the twelve months ended April 30, 2008 was $4,422,796 compared to $5,456,939 a year earlier. Software license revenue increased 10% and revenue from professional services declined 24%. During the year, the Company's revenue from professional services engagements experienced seasonal cyclicality, followed by a permanent shift away from one of the Company's largest pure services accounts.
Total expenses before the impairment of goodwill provision were 5% lower than the prior year representing: a 43% increase in selling, general and administrative expense due in part to employee termination costs; a relatively even level of consulting expense year over year as resources were maintained on payroll during transition to new accounts; and a 44% reduction in product development costs as the Company shifted emphasis on its product development plans.
Net loss for the twelve months ended April 30, 2008 was $4,159,688, which includes $2,932,047 related to a provision for impairment of goodwill. The impairment of goodwill provision is a reflection of the financial results from the professional services segment of the US business unit for the most recent fiscal year and near term anticipated levels of professional services revenue. Recognition of the value of future software licensing revenue from existing and future software licenses was not included in the fair value test. -- www.cnxmarketlink.com
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