Datatrak International Reports First Quarter Results for 2008

May 9, 2008
Company News Release

Technology and services company Datatrak reports its 2008 first quarter results.

Cleveland, OH-May 8, 2008-Datatrak International, a technology and services company focused on global eClinical solutions for the clinical trials industry, today reported its operating results for the first quarter of 2008.

For the three months ended March 31, 2008, revenue decreased approximately 41% to $2,088,000 and the company reported a net loss of $2,233,000, or $0.16 per share on both a basic and diluted basis. These results compared with revenue of $3,542,000 and a net loss of $1,895,000 or $0.16 per share on both a basic and diluted basis in the first quarter of 2007.

The gross profit margin for the first quarter was 55% compared to 62% for the same period a year ago. The decline in gross profit margin was a result of the 41% decrease in revenue partially offset by a 30% reduction in direct costs.

Datatrak's backlog at March 31, 2008 was $13.9 million and backlog currently stands at approximately $12.9 million.  This compares to a backlog of $13.0 million at December 31, 2007. Backlog is defined as the remaining value of signed contracts or authorization letters to commence services.  The company does not include in its backlog potential contracts or authorization letters that have passed the verbal stage, but have not been signed. All contracts are subject to possible delays or cancellation or can change in scope in a positive or negative direction. Therefore, current backlog is not necessarily indicative of the company's future quarterly or annual revenue. Historically, backlog has been a poor predictor of the company's short-term revenue.

"In our last financial release and conference call in late February we stated that we were seeing early signs of a building sales momentum as we entered this year and felt we were moving in such a direction that we believed 2008 would place us back on a positive sales growth trend," stated Dr. Jeffery A. Green, president and chief executive officer of Datatrak International. "This optimism was supported by a near record volume of approximately $4.1 million of new business during the fourth quarter of 2007, a reflection of positive results from our reorganized marketing and sales efforts. We were careful to frame our anticipated return to growth as a gradual, but positive trend, stating it was certainly possible that as we progressed through the remainder of 2008 and beyond, a particular quarter's sales may not necessarily be greater than the prior, however, looking out, the trend should be progressively upward."

Green continued, "Based partially on our first quarter 2008 revenues, which represented our first sequential quarterly revenue increase in quite some time (going from $1.8 million in the fourth quarter of 2007 to $2.1 million during the first quarter of this year) and new backlog additions totaling approximately $3 million, I am pleased to report to you today that during this first quarter we continued to make progress towards achieving our recovery goals for 2008."

"Our relationship with NTT DATA continues to advance. During this quarter our respective teams have been working closely on continued training on our eClinical platform and we are working hand-in-hand with NTT DATA's marketing and sales team in Japan. NTT DATA will be present in our booth at the upcoming Annual DIA trade show in Boston in June."  

"While challenges and uncertainties still confront us, we are encouraged with our progress during the most recent quarter and remain positive about our future potential. We are focused on, and working to return the company to a positive cash flow environment as quickly as possible. I encourage you to join our conference call later today where these and other topics will be discussed in more detail."

The company will also host a conference call today at 4:30 p.m. ET.  To participate via phone, participants are asked to dial 412-858-4600 a few minutes before 4:30 p.m. ET. The conference call will also be available via live web cast on Datatrak International's Web site by clicking the button labeled "Click here for Live Web Cast, 1st Quarter Earnings Call" on the Company's homepage at www.datatrak.net a few minutes before 4:30 p.m. ET.

A replay of the phone call and web cast will each be available at approximately 6:30 p.m. ET on May 8, 2008 and will run until 9:00 a.m. ET on May 15, 2008.  The phone replay can be accessed by dialing 412-317-0088 (access code 419020). To access the Webcast replay go to the company's homepage at www.datatrak.net and click the button labeled "Click here for Replay of Webcast, 1st Quarter Earnings Call."

 


DATATRAK International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet Data
(Unaudited)


                                                  March 31,      December 31,
                                                    2008             2007
 
    Cash and investments                         $5,950,860       $8,514,361
    Accounts receivable, net                      1,395,989        1,070,688
    Property & equipment, net                     3,214,069        3,534,799
    Deferred tax assets                           1,301,700        1,399,000
    Intangible assets, net                          333,808          520,458
    Goodwill                                     10,856,113       10,856,113
    Other                                           511,102          577,792
       Total assets                             $23,563,641      $26,473,211
                                                                        
    Accounts payable and other current                                  
     liabilities                                 $6,452,693       $3,971,883
    Long-term liabilities                         2,674,241        5,931,962
    Shareholders' equity                         14,436,707       16,569,366
       Total liabilities and shareholders'                              
        equity                                  $23,563,641      $26,473,211
                                                                         
 
                                                                        
                  DATATRAK International, Inc. and Subsidiaries              
                 Condensed Consolidated Statements of Operations             
                                   (Unaudited)  
                            
                                                      For the Three Months
                                                          Ended March 31,
                                                     2008             2007
 
    Revenue                                      $2,088,229       $3,542,095
    Direct costs                                    933,879        1,337,471
       Gross profit                               1,154,350        2,204,624
                                                                        
    Selling, general and administrative
     expenses                                     2,856,600        3,422,671
    Depreciation and amortization                   522,426          622,403
       Loss from operations                      (2,224,676)      (1,840,450)
                                                                        
    Interest income                                  59,740           70,192
    Interest expense                                 66,567           98,669
    Loss on disposal                                  1,382                -
       Loss before income taxes                  (2,232,885)      (1,868,927)
                                                                         
    Income tax expense                                    -           26,300
       Net loss                                 $(2,232,885)     $(1,895,227)
         Net loss per share:                                             
              Basic:                                                    
              Net loss per share                     $(0.16)          $(0.16)
              Weighted-average shares                                    
               outstanding                       13,681,901       11,858,949
              Diluted:                                                  
              Net loss per share                     $(0.16)          $(0.16)
              Weighted-average shares                                   
               outstanding                       13,681,901       11,858,949