Empower Technologies™ Second Quarter Report Ended June 30, 2007
Richmond, British Columbia – August 29, 2007 – Empower Technologies Corporation (“The Company” or “Empower”) has filed financial statements for the second quarter ended June 30, 2007.
Empower is a Linux operating software developer for Linux-based embedded system technologies and solutions for the embedded computing industry. The Company was incorporated under the Company Act (British Columbia) on February 21, 2003. The Company operates through its wholly-owned Washington State subsidiary, Empower Technologies, Inc. (“Empower US”), and indirectly; Empower Technologies (Canada) Inc. (“Empower Canada”) and Empower Technologies (Shanghai) Inc. (“Empower Shanghai”). The Company trades on the TSX Venture Exchange under the symbol EPT.
Highlights of the second quarter ended June 30, 2007:
On April 19, the Company completed all steps, including warrant holder and regulatory approval, to reprice its outstanding share purchase warrants (the “Warrants”) with an exercise price of $2.50 per common share expiring June 20, 2007. The exercise price of the warrants was reduced to $1.25 per common share, and in accordance with the policies of the TSX Venture Exchange (the “Exchange”), had the shares of Empower traded on the Exchange for ten consecutive days with the closing price of its shares exceeding the revised exercise price by 25% or $0.31, Empower would have given notice to the warrant holders and thirty days thereafter, the Warrants would have expired if not exercised. These warrants expired on June 20, 2007 and were not exercised.
On May 11, the Company announced the signing of iRep, Inc. of Brownsboro, Alabama (iRep) and North Coast Technical Sales, Inc. of Chesterland, Ohio (North Coast) as exclusive manufacturers’ representatives of Empower Technologies’ products and services. This latest addition to our sales force signifies the start of our new sales & marketing initiative targeting embedded-systems solutions providers in North America.
On May 31, the Company announced that it has retained the services of Exponent Communications Inc.(“Exponent”) of White Rock, BC to provide investor relations services effective June 1, 2007. This is part of Empower’s ongoing effort to consistently make upgrades in all areas of the corporation.
On June 5, the Company announced the signing of a software development license agreement and a strategic partnership agreement with Navigon Inc. (NAVIGON), a privately held software company based in Hamburg, Germany. Recently it strengthened its position in its core competency by acquiring NAVTEQ's navigation software business. Through this acquisition, NAVIGON is now able to use its expertise in consumer electronics and apply them to the automotive industry. Empower's LEOs will benefit from the automotive-grade navigation software to enhance the in-dash navigation and in-dash infotainment platforms it is creating. This new partnership will advance and integrate infotainment, driving safety, and navigation technologies in the automotive and transportation industries.
On June 14, the Company announced it would be exhibiting for the first time at the SEMA 2007 trade show in Las Vegas, Nevada. SEMA (Specialty Equipment Market Association – www.sema.org) is a trade organization for the producers and marketers of specialty equipment products and services for the automotive aftermarket. As part of the AAIW (Automotive Aftermarket Industry Week- www.aaiwshow.com), the SEMA Show (www.semashow.com) is one of the largest automotive specialty products trade events for the automotive aftermarket in the world. It will be held in the Las Vegas Convention Center from October 30 to November 2, 2007. The SEMA Show attracts more than 100,000 industry leaders from over 100 countries in the automotive, truck and SUV, marine and RV markets.
On June 27, the Company announced the appointment of three new sales representative agencies: Engineering Solutions – West (ES-West), Racor Systems, and Radiation Electronics. ES-West has a sales territory that covers northern California, Northern Nevada and Hawaii; Racor systems is responsible for sales in Texas, Oklahoma, Louisiana and Arkansas; while Radiation Electronics’ territory extends to metropolitan New York, New Jersey and lower Connecticut. With this announcement, the total number of manufacturers’ representatives comes to five and sales territories that now cover most of the major technology markets in the United States of America. The Company believes this will have a positive impact on expanding the Company’s revenue and customer base.
Significant projects
LEOs III (LinuxDA Embedded O/S III)
Empower US has commenced work on the next version of LEOs for Texas Instruments' (TI) latest DaVinci TM dual-core microprocessor – DM6441.
LDK6441 Development Kit
Empower US has commenced work on LEOs III for TI DM6441 Development Kit (LDK6441). This will be a brand new kit made specifically for TI's new DaVinci TM family of dual-core microprocessor.
Osaka Technology
With CD, DVD, MP3, user programming and PC connectivity capabilities, the Osaka Technology (formerly “Osaka Project”) is a compact, all-digital intelligent audio/video reference design platform. Supporting a wide range of audio and video functions, it integrates all the elements of a personal computer and home audio/video, in addition to a PDA with QVGA display. It is powered by LEOs for the TI OMAP591x dual core processor. The Company targeted the audio/video developers, designers and manufacturers to use the “Osaka Technology” to fast track their AV product development.
PowerPlay iH
This mobile data terminal model is near the end of development. It was previously named “PowerPlay 1x”. The letters “iH” stands for “industrial Handheld”. The Company is working on the industrial design of the housing of the unit. Besides the regular PDA functions, this new model will have wireless communication capability. The “PowerPlay iH” is targeted toward the industrial control market.
Portable Navigation Device
This is the Portable Navigation Device (PND) reference design Empower is developing using map engine technology licensed from its partner Navigon. It will be exhibited at the SEMA 2007 trade show in Las Vegas in October, 2007.
Results of Operations
Revenues
The Company's activities have shifted in 2007 from primarily the development of the Company's core technologies to commercializing the sales and marketing of LEOs, the LDK development platform and the reference designs using LEOs. Revenues generated for the three months ended June 30, 2007 were $114,434 compared with $22,697 for the three months ended June 30, 2006. This four fold increase is attributed to the successful execution of the Company's decision to change the sales and marketing team to align with the change in the sales focus from distributed and end of life products to the Company's core enabling embedded technology: LEOs (LunuxDA Embedded O/S) and LDK591x. Year to date, our revenues have increased to $131,370, an increase of $94,664 compared with 2006.
The Company anticipates revenue to continue to improve through the new sales and marketing strategies that Empower has devised during the course of the marketing transition:
- Creating an efficient sales network that will consist of manufacturer's representatives and major electronics and technologies distributors to market and to sell LEOs and LDK platform development kits among developers, manufacturers, value-added resellers, and system integrators.
- Advancing, since April, from zero to five Manufacturers Rep Agencies (approximately equivalent to having at least 10 commission salesmen) that have a sales territory covering most of the major technology markets in the United States of America .
- Widening the focus of the Company's sales and marketing efforts from the consumer electronics market to the broader embedded-system market, which includes the automotive, RFID, industrial control, and medical devices sectors.
- Joining, for the first time, the SEMA 2007 trade show in Las Vegas , Nevada . SEMA (Specialty Equipment Market Association – www.sema.org) is a trade organization for the producers and marketers of specialty equipment products and services for the automotive aftermarket. The Company will also exhibit for the first time at the Portable Design Conference in October.
- Accelerating the process of turning Empower customer Design Wins into engineered products and the purchase of LEC (LEOs Enabling Chip) when they are ready to go into production.
The significant increase in revenue in this quarter signals that turning Design Wins into engineered products is progressing well and reinforces the benefits of this marketing strategy.
General and Administrative
General and administrative expenses without stock-based compensation and R&D costs for the three months ended June 30, 2007 decreased to $578,928 (2006 - $714,570) due to the change of the sales and marketing team, programs, and tradeshow exhibition mixes. Advertising and promotion remained the same at $110,010 (2006 - $110,507). Rent increased to $16,439 (2006 - $13,141) due to the relocation of our Shanghai office. Consulting fees decreased to $177,548 (2006 - $207,508). Year to date, our general and administrative expenses without stock-based compensation and R&D costs decreased to $1,079,226, compared with $1,296,347 in 2006. Decreases in wages and benefits, advertising and promotion and travel were partially offset by an increase in consulting.
Research and Development
Research and Development costs (“R&D costs”) are expensed as incurred. R&D costs for the three month period ended June 30, 2007 decreased from $370,026 for the quarter ended June 30, 2006 to $292,545 for the quarter ended June 30, 2007. R&D costs for the six month period ended June 30, 2007 were $583,091 compared to $737,724 for the six month period ended June 30, 2006.
The R&D cost decrease is due to the Company successfully developing its core technology, LEOs operating software and LDK591x. From here on, for these products, our focus will be on regular maintenance, improvement and upgrading the core technology LEOs and adding new embedded CPU platforms such as TI's DM64x+ DaVinci TM Processors.
Capital Resources
The authorized capital of the Company consists of unlimited common shares without par value. As at June 30, 2007, there are 36,545,654 common shares issued and outstanding.
In February 2007, the TSX Venture Exchange approved the repricing of the Company's 1,593,185 share purchase warrants from an exercise price of $2.50 to $1.25 per share. Those repriced warrants expired on June 20, 2007 without being exercised.
The company also has 895,000 warrants outstanding from the brokered private placement. Each warrant entitles the holder to purchase one share of the Company at a price of $1.25 at any time on or before February 20, 2008.
The warrants will be a source of new equity capital for the company in the event that market conditions lead to their being exercised.
About Empower Technologies™
Founded in 2000, Empower Technologies (TSX.V: EPT) is an innovative company that brings the power and flexibility of the LEOs® (LinuxDA™ Embedded Operating System) to the dynamic embedded computing Industry and the emerging Intelligent Appliance Market, through their development of Linux-based operating software, embedded system technologies and solutions.
The products and services that form the base of its business activities include an embedded system development platform for LEOs®, based on Texas Instruments™ embedded CPU platform, that fulfill the needs and demands of developers and the embedded computing Industry. Empower is continuing to develop LEOs® and newer versions of embedded CPUs in line with Texas Instruments™.
By uniting top professionals from within the computer industry and developing quality partnerships and strategic alliances, Empower is committed to being the leading developer of Linux-based operating software and embedded system technologies and solutions for electronics manufacturers and developers.
Empower's brands are “LEOs®”, “LinuxDA™”, Linux-based embedded operating systems and “PowerPlay™”, smart consumer electronics.
|
