16 April 2007
SofTech Announces Third Quarter Financial Results for FY 2007
SofTech, Inc. announced Q3 fiscal 2007 results. Revenue for Q3 FY 2007 was $2.9 million as compared to $2.9 million for the same period in fiscal 2006. The net loss for the current quarter was ($116,000) or ($.01) per share as compared to ($581,000) or ($.05) per share for the same period in the prior fiscal year.
Revenue for the nine months ended February 28, 2007 was about $8.4 million as compared to about $9.4 million for the same period in the prior fiscal year. The net loss for the nine months ended February 28, 2007 was ($1,077,000) or ($.09) per share as compared to a net loss of ($1,017,000) or ($.08) per share for the same period in the prior fiscal year.
The net loss adjusted for non-cash expenses related to amortization of intangible assets resulting from acquisitions, a non-GAAP financial measure, was $238,000 for the current quarter as compared to $(227,000) for the same period in the prior fiscal year. This same non-GAAP financial measure for the nine months ended February 28, 2007 was $(15,000) as compared to $501,000 for the same period in the prior year. A reconciliation is provided on the attached Financial Summary.
The Company's revenue is derived almost entirely from technology acquisitions completed between 1997 and 2002. As a result, management believes the Company's financial profile is very unique, at least in the industry in which it operates. As of February 28, 2007 approximately 64% of its assets are composed of intangible assets related to these acquisitions. For the current quarter, the amortization of these intangible assets was approximately 12% of its total expenses and its revenue. Further, the periods over which these intangible costs are expensed are highly judgmental.
It is management's opinion that comparing results of operations from period to period and to other companies in our industry absent these non-cash expenses related to acquisitions is a more meaningful measure of our performance given the Company's unique financial profile detailed above. It is also management's belief that this non-GAAP measure of performance is one of the most critical measures of Company valuation for investors. Lastly, this measure of performance has been, and is expected to continue to be, a significant component of the incentive compensation plan for the Company's President.
"Our Q3 product revenue increased from the prior quarter and even though total revenue decreased from Q2 it was consistent to our performance in the same period of the prior year," said Jean Croteau, President of SofTech. "We have had an overwhelming response from our latest release of Cadra, which contributed to a 36% increase from Q2. Our ProductCenter offering continues to establish itself as a proven product lifecycle management solution, we are optimistic that we will have continued success in the upcoming quarters," he added.
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