Kelman Announces 2009 Operating Results and Execution of a Definitive
Agreement for its Going Private Transaction
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Years Ended December 31, %
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($ 000's except per share amounts) 2009 2008 Change
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Operating revenue $ 21,624 $ 29,580 (27)
Operating expenses $ 24,188 $ 26,267 (8)
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Net loss $ (7,419) $ (28) NA
Per share (basic and diluted) $ (14.26) $ (0.00) NA
Cash flow from operations $ (3,212) $ 2,843 N/A
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CALGARY, March 24 /CNW/ - Kelman Technologies Inc ("Kelman") (TSXV: KTI) today announced a loss of $7.4 million, $14.26 per share, for 2009. Capital expenditures during 2009 were $571 thousand, down 86 percent compared to the same period in 2008. The Company ended the year with working capital of $5.6 million, an increase of 5 percent compared to the prior year.
In commenting on the results Rene VandenBrand, President and CEO of Kelman said, "We appreciate the hard work and dedication shown by all of our employees throughout a difficult year in 2009. Virtually all have made a significant sacrifice to help position the Company to return to profitability and to grow as the industry improves in 2010 and beyond."
Kelman also announced today that it has entered into a definitive agreement (the "Amalgamation Agreement") with Seyco Operations Ltd. ("Seyco") and 7504314 Canada Inc. ("Acquisitionco"), a wholly owned subsidiary of Seyco, with respect to Kelman's previously announced going private transaction. Seyco is a corporation controlled by Seymour Epstein, Chairman of the board of directors of Kelman and major shareholder of Kelman.
The going private transaction will be effected by way of an amalgamation of Acquisitionco and Kelman to form an amalgamated company ("Amalco"). Pursuant to the Amalgamation Agreement: (i) each holder of Kelman common shares, other than Seyco and Acquisitionco, shall receive $2.00 for each Kelman common share held, and (ii) each holder of Kelman convertible Series C preferred shares shall receive $0.30 for each Kelman convertible Series C preferred share held, plus any accrued and unpaid dividends thereon. Upon completion of the transactions set forth in the Amalgamation Agreement, Amalco will be a wholly-owned subsidiary of Seyco. Further particulars about the amalgamation can be found in the copy of the Amalgamation Agreement and the information circular for Kelman's annual and special meeting, both of which will be available at www.sedar.com.
Closing of the going private transaction must be approved by special resolution of the holders of Kelman's common shares and special resolution of the holders of Kelman's Series C preferred shares, as well as by an ordinary resolution of the holders of common shares on a "majority of the minority" basis, at the annual and special meeting of the shareholders to be held on May 13, 2010 at 10:00 a.m. in Calgary, Alberta.
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Kelman Technologies Inc. is a publicly traded Canadian company listed on the TSX Venture Exchange under the trading symbol "KTI". With offices in Calgary and Toronto, Canada, and Denver, Houston, and Oklahoma City, United States and Tripoli, Libya, Kelman services oil and gas exploration companies with a full suite of seismic processing and on-line data management and data archival services.
This news release contains statements that constitute "forward-looking information" or "forward-looking statements" within the meaning of applicable securities legislation. To the extent this press release includes forecasts or forward looking statements about future performance of the company such forecasts or statements are believed to be reasonable by the company but are based upon assumptions in respect of commodity pricing and oil and gas exploration activity. In addition, this news release contains forward-looking information concerning an amalgamation involving Kelman, Seyco and Acquisitionco. This forward-looking information is subject to numerous risks and uncertainties, certain of which are beyond the control of Kelman. No assurance can be given as to whether the amalgamation will be completed. Although Kelman believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them as actual results may differ materially from the forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof, and Kelman undertakes no obligation to update publicly or revise any forward-looking statements or information, except as required by law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
KELMAN TECHNOLOGIES INC.
Consolidated Balance Sheets
December 31, 2009 and 2008
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2009 2008
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Assets
Current assets:
Cash $ 1,423,595 $ 2,563,311
Accounts receivable 4,571,477 6,586,727
Work in progress 1,179,441 2,665,747
Prepaid expenses and deposits 494,481 525,844
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7,668,994 12,341,629
Property and equipment 4,031,657 6,786,271
Other assets - 5,694
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$ 11,700,651 $ 19,133,594
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 1,333,549 $ 3,130,522
Deferred revenue 290,000 -
Current portion of long-term debt 172,657 263,609
Preferred shares 195,648 3,622,520
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1,991,854 7,016,651
Long-term debt 6,652,120 1,863,311
Preferred shares - 938,252
Shareholders' equity:
Share capital 13,169,467 13,125,325
Warrants 849,740 -
Equity component of long-term debt 466,127 204,740
Equity component of preferred shares 34,177 812,706
Contributed surplus 1,757,411 973,806
Deficit (13,220,245) (5,801,197)
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3,056,677 9,315,380
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$ 11,700,651 $ 19,133,594
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KELMAN TECHNOLOGIES INC.
Consolidated Statements of Operations, Comprehensive Loss and Deficit
Years ended December 31, 2009 and 2008
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2009 2008
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Revenue $ 21,624,433 $ 29,580,403
Expenses:
Operating 24,188,462 26,266,928
Depreciation and amortization 3,272,393 3,573,701
Foreign exchange loss (gain) 461,941 (902,441)
Interest 1,122,073 692,024
Interest income (1,388) (21,539)
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29,043,481 29,608,673
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Net loss and comprehensive loss $ (7,419,048) $ (28,270)
Deficit, beginning of year (5,801,197) (5,772,927)
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Deficit, end of year $(13,220,245) $ (5,801,197)
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Net loss per Common Share, basic and diluted $ (14.26) $ (0.00)
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KELMAN TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
Years ended December 31, 2009 and 2008
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2009 2008
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Cash provided by (used in):
Operations:
Net loss $ (7,419,048) $ (28,270)
Items not involving cash:
Depreciation and amortization 3,272,393 3,573,701
Foreign exchange gain (loss) 461,941 (902,441)
Accretion of preferred shares 217,035 147,134
Accretion of debentures 157,578 30,716
Loss on disposal of property
and equipment 52,790 -
Amortization of deferred finance
charges 40,490 -
Non-cash interest 25,174 -
Amortization of other assets 5,694 5,694
Stock-based compensation expense 5,076 48,078
Lease inducement benefit (31,345) (31,345)
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(3,212,222) 2,843,267
Change in non-cash working capital items 1,974,455 898,377
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(1,237,767) 3,741,644
Financing:
Advances on long-term debt 1,650,000 1,850,000
Change in non-cash working capital items 10,161 -
Decrease in indebtedness - (487,500)
Repayment of preferred shares (150,000) -
Repayment of capital leases (263,609) (243,860)
Deferred finance charges (414,027) -
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832,525 1,118,640
Investing:
Expenditures on property and equipment (571,359) (4,141,915)
Tenant allowance net of repayment 181,220 -
Shareholder loan repayment 44,142 -
Proceeds on disposal of property and equipment 790 -
Change in non-cash working capital items (143,442) 151,098
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(488,648) (3,990,817)
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Foreign exchange gain (loss) on cash
held in foreign currency (245,825) 30,892
Increase (decrease) in cash (1,139,716) 900,359
Cash, beginning of year 2,563,311 1,662,952
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Cash, end of year $ 1,423,595 $ 2,563,311
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For further information: please visit our web site at http://www.kelman.com/ or contact Mr. Rene VandenBrand, President and CEO at (281) 293-0537, or by email to [email protected]
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