Belzberg Reports Fourth Quarter and Annual 2007 Financial Results

TORONTO, March 6 /PRNewswire-FirstCall/ -- Belzberg Technologies Inc. (TSX - BLZ), a provider of technology-based equity and options trading services, announced today that in the fourth quarter ended December 31, 2007, net earnings were $2.1 million as compared to $3.9 million (including a net income tax recovery of $1.5 million) same quarter last year.

Total revenues for the fourth quarter decreased 12% to $9.0 million versus $10.2 million in the same year-ago period. Approximately $1.0 million of the revenue decline resulted from a strengthening Canadian dollar. Diluted earnings per share for the fourth quarter were $0.14 per share as compared to $0.25 per share in the same year-ago period.

------------------------------------------------------------------------- Financial Highlights Three months ended Twelve months ended
(in millions of dollars, December 31, December 31,
except per share data)
(Three month period unaudited) 2007 2006 2007 2006
------------------------------------------------------------------------- Revenue $ 9.0 $ 10.2 $ 40.7 $ 37.4
Net earnings $ 2.1 $ 3.9(x) $ 7.3 $ 9.2(x)
Diluted earnings per share $ 0.14 $ 0.25 $ 0.48 $ 0.61
------------------------------------------------------------------------- (x) Includes net income tax recovery of $1.5 million

The Company strengthened its financial position with cash and cash equivalents of $21.1 million and working capital of $28.7 million at December 31, 2007, up from cash and cash equivalents of $16.4 million and working capital of $22.3 million at December 31, 2006.

"Despite the dramatic rise of the Canadian Dollar, our revenue continued to grow in 2007," said Sid Belzberg, CEO of Belzberg. "We also delivered three new products that have set the stage for further revenue growth."

The following were added to our main lines of business:

Full Service Self Clearing

A state-of-the-art clearing system was installed and has been running in daily production subsequent to the end of 2007. This has attracted a brand new universe of clients and source of revenue for the company.

DeepBook(TM) for Options Traders - first in the market

This unique options trading product, implemented in the first quarter of 2008, allows traders to automatically sweep the depth of liquidity in all options markets, rather than being restricted to level one. We believe that this is a significant technical innovation.

BestX(TM) smart order routing and algorithmic trading - best in Canada

Belzberg's BestX best market execution product, delivered in Q4 2007, is currently the only market execution software in Canada that can cancel existing orders in one market and send them to another market based on second by second price ticks. BestX routing has also opened a second new source of revenue for the company, by offering various algorithmic trading strategies from the BestX platform.

Patent Update

Belzberg invented much of the technology used today by brokerages and financial institutions for electronic trade execution. Documentation supporting a conception date of 1993-1994 for our US Gateway Patent was recently located in the Canadian government archives and has opened the door for our strategic patent advisor to enter into discussions with litigation teams capable of enforcing our intellectual property rights.

Revenue

Total revenue of option contracts traded both electronically and non-electronically was $3.3 million in the fourth quarter of 2007 compared to $3.5 million in the same year-ago quarter. Options revenue in the fourth quarter decreased by approximately $0.4 million from a strengthening Canadian dollar.

Average total daily volume of electronic equity and index options contracts traded both electronically and non electronically on the floor of the CBOE and on other exchanges were 231,000 contracts per day in the fourth quarters of 2007 and 2006.

Total revenue of U.S. equity order flow was $3.5 million in the fourth quarter of 2007 compared to $4.5 million in the same year-ago quarter. Approximately $0.8 million of the U.S. equity revenue decline resulted from lower pass-through revenues on which the Company makes no mark-up. A strengthening Canadian dollar impacted U.S. equity revenue before pass-throughs by approximately $0.3 million.

Patent Information

In January 1999, Belzberg received a U.S. Patent Number 5,864,827, recognizing its exclusive rights to intellectual property for a System and Method for Providing a Protocol Transaction Gateway. In August 2004, Belzberg was granted European Patent Number 0992014 for a System and Method for Providing an Information Gateway.

The patents protect Belzberg's Transactions Gateway, a system that translates the protocol of incoming transaction messages from customers into the appropriate protocol used by various exchanges and market makers. The technology facilitates electronic stock trading by allowing customers to execute trades on any market they choose from a single screen.

About Belzberg Technologies

Belzberg Technologies Inc. is a provider of technology-based brokerage services, trading equities and options through Electronic Brokerage Systems, Belzberg Technologies' wholly owned agency-only broker-dealer. Electronic Brokerage Systems is a member of most North American stock exchanges, options exchanges and clearing organizations, including the NYSE, NASDAQ, CBOE, NSCC and OCC. Using Belzberg's suite of integrated trading tools and network connectivity, Belzberg's customers have direct access to all North American equities and options markets. The firm's client-base includes over 200 leading U.S and international brokerage houses and financial institutions. Belzberg Technologies is listed on the Toronto Stock Exchange (Ticker-BLZ) - additional information is available at www.belzberg.com.

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.

BELZBERG TECHNOLOGIES INC.
Consolidated Balance Sheets
(in Canadian dollars)
------------------------------------------------------------------------- December 31, December 31,
2007 2006
(Audited) (Audited)
------------- ------------- ASSETS

CURRENT
Cash and cash equivalents $ 21,080,671 $ 16,435,704
Cash and cash equivalents on deposit with
clearing and depository organizations 2,970,524 2,035,713
Receivable from brokers, dealers and
clearing organizations 2,520,948 705,849
Accounts receivable 4,600,583 4,704,665
Prepaid expenses and other receivables 380,360 406,349
Other asset 925,279 176,034
Investment tax credits recoverable 489,384 597,835
Future income tax assets 2,200,878 1,967,560
------------------------------------------------------------------------- 35,168,627 27,029,709

Capital assets 2,955,401 2,296,813

Investment 38,043 35,978

Investment tax credits recoverable 971,614 -
Future income tax assets 290,088 -
Goodwill 1,608,471 1,608,471

Intangible asset 239,976 303,970
------------------------------------------------------------------------- $ 41,272,220 $ 31,274,941
------------------------------------------------------------------------- -------------------------------------------------------------------------
LIABILITIES

CURRENT
Accounts payable and accrued liabilities $ 4,053,426 $ 4,542,478
Payable to brokers, dealers and clearing
organizations 1,915,496 - Income taxes payable 12,817 - Future income tax liabilities 438,531 110,280
Current portion of obligations under
capital lease 27,269 116,473
------------------------------------------------------------------------- 6,447,539 4,769,231

Future income tax liabilities 232,939 61,526
Obligations under capital lease - 32,059
------------------------------------------------------------------------- 6,680,478 4,862,816
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY

Capital stock 39,598,428 38,840,032

Contributed surplus 3,677,327 3,518,871

Deficit (8,684,013) (15,946,778)
------------------------------------------------------------------------- 34,591,742 26,412,125
------------------------------------------------------------------------- $ 41,272,220 $ 31,274,941
------------------------------------------------------------------------- -------------------------------------------------------------------------

BELZBERG TECHNOLOGIES INC.
Consolidated Statements of Operations
(in Canadian dollars)
(Three Month Periods Unaudited)
------------------------------------------------------------------------- Three months ended Twelve months ended
December 31, December 31,
2007 2006 2007 2006
------------ ------------ ------------ ------------ REVENUE
Transaction fees:
Equity order flow $ 3,455,180 $ 4,514,399 $15,201,856 $15,690,345
Options and
futures
contracts 3,294,760 3,457,393 16,644,615 12,854,583
------------------------------------------------------------------------- 6,749,940 7,971,792 31,846,471 28,544,928

Subscription fees 1,884,547 1,872,356 7,454,663 7,391,641
Other revenue 328,374 344,489 1,352,194 1,429,913
------------------------------------------------------------------------- TOTAL REVENUE 8,962,861 10,188,637 40,653,328 37,366,482
-------------------------------------------------------------------------
EXPENSES
Exchange, clearing
and brokerage fees 2,236,417 3,464,603 11,202,941 11,599,458
Compensation and
related benefits 2,598,465 2,654,062 10,783,155 9,002,558
Telecommunication
and datafeed
services 1,459,648 1,369,512 6,069,307 5,111,297
Administrative and
other expenses 1,293,306 1,001,344 4,604,542 3,664,381
Strategic process
expenses - 34,076 191,089 247,843
Amortization of
capital assets 434,155 321,637 1,507,219 1,304,675
Amortization of
intangible assets 15,999 15,998 63,994 15,998
Government assistance (936,327) (778,327) (936,327) (885,336)
Foreign exchange
(gain) loss 156,111 (92,725) 845,342 25,855
------------------------------------------------------------------------- 7,257,774 7,990,180 34,331,262 30,086,729
-------------------------------------------------------------------------
EARNINGS BEFORE THE
UNDERNOTED 1,705,087 2,198,457 6,322,066 7,279,753

Interest expense 1,968 19,930 10,159 38,504
Interest income (220,518) (153,940) (811,149) (377,118)
-------------------------------------------------------------------------
EARNINGS BEFORE
INCOME TAXES 1,923,637 2,332,467 7,123,056 7,618,367

PROVISION FOR
(RECOVERY OF)
INCOME TAXES
Current 123,097 247,447 123,097 247,447
Future (262,806) (1,795,754) (262,806) (1,795,754)
------------------------------------------------------------------------- (139,709) (1,548,307) (139,709) (1,548,307)
------------------------------------------------------------------------- NET EARNINGS 2,063,346 3,880,774 7,262,765 9,166,674

DEFICIT, BEGINNING
OF PERIOD (10,747,359) (19,827,552) (15,946,778) (25,113,452)
------------------------------------------------------------------------- DEFICIT, END OF
PERIOD (8,684,013) (15,946,778) (8,684,013) (15,946,778)
------------------------------------------------------------------------- -------------------------------------------------------------------------
EARNINGS PER SHARE:
Basic $ 0.14 $ 0.27 $ 0.49 $ 0.65
Diluted $ 0.14 $ 0.25 $ 0.48 $ 0.61
------------------------------------------------------------------------- -------------------------------------------------------------------------
WEIGHTED AVERAGE
NUMBER OF COMMON AND
COMMON EQUIVALENT
SHARES OUTSTANDING

Basic 14,786,028 14,596,493 14,692,620 14,211,693
Diluted 14,963,715 15,414,167 15,122,085 15,014,138
------------------------------------------------------------------------- -------------------------------------------------------------------------

BELZBERG TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(in Canadian dollars)
(Three Month Periods Unaudited)
------------------------------------------------------------------------- Three months ended Twelve months ended
December 31, December 31,
2007 2006 2007 2006
------------ ------------ ------------ ------------
CASH PROVIDED BY
(USED FOR)

OPERATING
ACTIVITIES
Net earnings $ 2,063,346 $ 3,880,774 $ 7,262,765 $ 9,166,674
Items not
affecting cash
Amortization of
capital assets 434,155 321,637 1,507,219 1,304,675
Amortization of
intangible assets 15,999 15,998 63,994 15,998
Unrealized foreign
exchange loss
(gain) 23,131 (447,454) 1,150,608 (156,831)
Stock-based
compensation 44,841 73,580 177,129 271,786
Future income
taxes (262,582) (1,795,754) (23,742) (1,795,754)
Gain on disposal
of capital assets - - - (3,476)
Changes in non-cash
working capital items (297,270) 2,234,840 (2,792,986) (388,291)
------------------------------------------------------------------------- 2,021,620 4,283,621 7,344,987 8,414,781
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of capital
assets (469,450) (432,297) (2,165,807) (1,345,803)
Acquisition of
business and assets
of Nandra Group Inc. - (397,580) - (397,580)
Proceeds from disposal
of capital assets - - - 7,717
Purchase of investment (2,065) - (2,065) (35,978)
------------------------------------------------------------------------- (471,515) (829,877) (2,167,872) (1,771,644)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Repayment of
obligations under
capital lease (25,647) (63,253) (121,263) (253,882)
Proceeds from the
exercise of stock
options 24,781 197,927 739,723 2,836,977
------------------------------------------------------------------------- (866) 134,674 618,460 2,583,095
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash and
cash equivalents (23,131) 447,454 (1,150,608) 156,831
NET INCREASE IN CASH
AND CASH EQUIVALENTS 1,526,108 4,035,872 4,644,967 9,383,063

CASH AND CASH
EQUIVALENTS, BEGINNING
OF PERIOD 19,554,563 12,399,832 16,435,704 7,052,641
------------------------------------------------------------------------- CASH AND CASH
EQUIVALENTS,
END OF PERIOD $21,080,671 $16,435,704 $21,080,671 $16,435,704
------------------------------------------------------------------------- -------------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS:
Cash $ 5,675,765 $ 8,132,595 $ 5,675,765 $ 8,132,595
Cash equivalents 15,404,906 8,303,109 15,404,906 8,303,109
------------------------------------------------------------------------- $21,080,671 $16,435,704 $21,080,671 $16,435,704
------------------------------------------------------------------------- -------------------------------------------------------------------------
SUPPLEMENTAL CASH
FLOW INFORMATION
Interest paid $ 1,968 $ 19,930 $ 10,159 $ 38,504
Interest received 234,902 143,598 774,918 357,475

SUPPLEMENTAL
DISCLOSURE OF NON-CASH
FINANCING AND
INVESTING ACTIVITIES

Common stock
issued for
business acquisition - - - 781,200
-------------------------------------------------------------------------

Source: Belzberg Technologies Inc.

CONTACT: Sid Belzberg, Chief Executive Officer, Phone: (416) 360-1812,
E-mail: investorinfo@belzberg.com

2008-03-06 17:32:50 0306868 PRNEWSWIRE