DATATRAK International, Inc. Announces Second Quarter Results for 2010

CLEVELAND, Aug. 11 /PRNewswire-FirstCall/ -- DATATRAK International, Inc. (OTCQX: DATA), a technology and services company focused on global eClinical solutions for the clinical trials industry, today announced its operating results for the second quarter of 2010: $1.9 million revenue, $10.9 million backlog, and continued profitability, resulting in a cash increase over first quarter 2010.

“DATATRAK’s growth continues, fueled by enhanced backlog, profitability and a balance sheet free of debt,” stated Laurence P. Birch, DATATRAK’s Chairman of the Board. “The word is getting out that DATATRAK is back in the game, as evidenced by the significant increase in traffic through our booth at the recent DIA meeting, which resulted in over 500 qualified leads. We started the year with an entire organization focused on customer service, long-term scalability and continued product expansion, and I’m happy to report that this focus coupled with the Safety, Simplicity and Speed of our unified solution continues to drive the company forward. We expect to build upon these recent successes through planned growth of the DATATRAK ONE solution by increasing marketing initiatives, further expanding into international markets and a fall release of the latest version of our eClinical software.”

Business Highlights:

• Second consecutive quarterly profit
• The June 30, 2010 cash balance of $924,000 was an increase over the March 31, 2010 cash balance of $811,000 - the Company’s first positive cash flow from operations since 2006, allowing us to continue to invest in the growth of the company
• Both the 2010 second quarter revenue of $1.9 million and the gross profit margin of 85% are increases over the previous quarter as well as the same quarter in 2009
• Continued increase in backlog
  • Backlog increased from $9.5 million at December 31, 2009 to $10.9 million at June 30, 2010
  • Represented the fourth consecutive quarter-over-quarter increase in backlog
• Expanded strategic partnership in Japan with NTT DATA
  • DATATRAK and NTT DATA entered an agreement to allow NTT DATA to sell Enterprise Transfer services within the Japanese market
  • NTT DATA entered into its first third-party multi-year Enterprise Transfer agreement producing additional revenue streams for both NTT DATA and DATATRAK
• Sales pipeline expansion
  • 2010 second quarter new contracts of $1.832 million represented a 250% increase over new contracts of $524,000 in the same period of 2009
  • Signed first Portuguese client CRO Keypoint Scientific Consultancy
• Debt free Balance Sheet
• Continued marketing efforts
  • Exhibited at the 2010 ASCO Annual Meeting, including the introduction of the DATATRAK oncology offering
  • Exhibited at the DIA 26th Annual Meeting, including the premiere of the DATATRAK Safety Case Manager
  • Presented at the 2010 OneMedForum in New York
• Recognized as 2010 Crain’s Leading Edge Award Winner
• Continued product enhancements
  • Provided seamless experience for DATATRAK eClinical on the Apple® iPad through cross-browser compatibility
  • Expanded offering to include Safety Export
  • Further enhanced the standards in DATATRAK’s growing library, which now includes the HL7 import of ECGs and CDISC SDTM data export, XML export to E2B in the Safety Export, use of CDISC and CDASH field naming and exports using the CDISC Study Data Tabulation Model (SDTM)

Financial Highlights:

Revenue for the second quarter of 2010 increased to $1,881,000 compared to $1,831,000 in the same period of 2009. Gross profit margin improved to 85% for the three months ended June 30, 2010 compared to 75% for the three months ended June 30, 2009. The improvement in the Company’s gross margin reflects a 39% reduction in direct costs.

For the three months ended June 30, 2010, DATATRAK’s income from operations was $27,000 compared to a loss from operations of $(36,000) in the second quarter of the prior year. The prior year second quarter loss from operations of $(36,000) reflects the reversal of $154,000 of severance expense as a result of a negotiated settlement with a former executive officer of the Company. Selling, general and administrative expenses increased slightly by $108,000 in the second quarter of 2010 compared to the second quarter of 2009, mainly due to the Company’s focus on its marketing efforts. Net income for the second quarter of 2010 was $25,000, or $0.00 per share on both a basic and diluted basis compared to a net loss of $(39,000) in the second quarter of 2009, or $(0.00) per share on both a basic and diluted basis.

For the six months ended June 30, 2010, DATATRAK’s revenue decreased $359,000, or 9%, to $3,558,000, from $3,917,000 in the first half of 2009. Net income for the first half of 2010 was $34,000, or $0.00 per share on a basic and diluted basis, compared to a net loss of $(827,000), or $(0.06) per share on a basic and diluted basis, reported for the same period of 2009. Despite the decline in revenue, gross profit margin improved to 84% in the first six months of 2010 compared to 76% in the same period of last year. Compared to the prior year first half, combined direct cost and SG&A expenses decreased approximately $395,000, or 10%, in the first half of 2010.

About DATATRAK International, Inc.

DATATRAK International is a worldwide technology and services company delivering eClinical solutions and related services for the clinical trials industry. DATATRAK built its multi-component, comprehensive solution on a single, unified platform and expanded this concept to include services delivery in DATATRAK ONE, the seamless delivery of product and services. The Company delivers a complete portfolio of software products designed to accelerate the reporting of clinical research data from sites to sponsors and ultimately regulatory authorities, faster and more efficiently than loosely integrated technologies. The DATATRAK eClinical software solution, deployed worldwide through an ASP or Enterprise Transfer offering, has successfully supported hundreds of international clinical trials involving thousands of clinical research sites and encompassing tens of thousands of patients in 59 countries. DATATRAK has offices located in the United States and Europe. For more information, visit http://www.datatrak.net.

Except for the historical information contained in this press release, the statements made in this release are forward-looking statements. These forward-looking statements are made based on management’s expectations, assumptions, estimates and current beliefs concerning the operations, future results and prospects of the Company and are subject to uncertainties and factors which are difficult to predict and, in many instances, are beyond the control of the Company, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. For a list of certain of the factors that may cause actual results to differ materially for those contemplated in these forward looking statements please see the Company’s press release filed March 31, 2010 announcing its fourth quarter and full year results for 2009. The Company undertakes no obligation to update publicly or revise any forward-looking statement whether as a result of new information, future events or otherwise.