CIMdata PLM Industry Summary Online Archive
17 October 2008
Financial News
SofTech Announces First Quarter Financial Results for First Quarter FY 2009
SofTech, Inc. announced financial results for the first quarter of Fiscal Year 2009 (quarter ended August 31, 2008). Revenue for Q1 2009 was $2.5 million as compared to $2.7 million for Q1 2008. The Company’s results of operations improved substantially, with the Company’s net income increasing by approximately $418,000 from $1,000 ($.00 per share) in Q1 2008 to approximately $419,000 ($.03 per share) in Q1 2009.
Net Cash flows from operating activities also improved considerably during Q1 2009, increasing from approximately $48,000 (Q1 2008) to approximately $255,000 (Q1 2009). The Consolidated Statement of Cash Flows for the fiscal quarters ended August 31, 2008 and 2007 is provided on the attached Financial Summary.
Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”), a non- GAAP financial measure, also improved during Q1 2009, increasing from $733,000 (Q1 2008) to $766,000 (Q1 2009), a 4.5% increase. A reconciliation of EBITDA to Net Loss is provided on the attached Financial Summary.
The Company’s revenue is derived almost entirely from technology acquisitions completed between 1997 and 2002, and the Company’s operations are not capital intensive. As of August 31, 2008, approximately 5.5% of the Company’s assets represent amortizable intangible assets related to these historical acquisitions. The Company does not anticipate making further acquisitions in the foreseeable future. For the quarter ended August 31, 2008, amortization expense related to these intangible assets was approximately 5% of total expenses and 4% of total revenue. Further, the periods over which these intangible costs are expensed are highly judgmental.
The Company believes that EBITDA is useful supplemental information for investors, when considered along with net income and other income statement data. The Company believes that EBITDA is useful because it provides investors with information concerning the potential longer term profitability of the Company’s technology assets (subsequent to full amortization of costs), as amortization of acquisition costs has been added back to net income in arriving at EBITDA. Further, management believes that EBITDA provides a useful financial metric by which the Company can be compared with other companies that have different capital structures (interest (a cost of capital) has been added back to net income in arriving at EBITDA). It is also management’s belief that this non-GAAP measure of performance continues to be used in the investment community as a financial metric for business valuation purposes.
However, the Company believes that EBITDA is not a substitute for cash flow from operating activities, which is disclosed above and in the Company’s financial statements. Investors should carefully review the financial statements of the Company in their entirety in order to obtain a complete understanding of the Company’s financial condition and results of operations.
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