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CWORKS ANNOUNCEMENTS
General Announcement
Reference No MM-070420-57474
Submitting Merchant Bank : MIMB INVESTMENT BANK BERHAD
Company Name : CWORKS SYSTEMS BERHAD (MESDAQ Market)
Stock Name : CWORKS
Date Announced : 20/04/2007


Type : Announcement
Subject : CWORKS SYSTEMS BERHAD ("CWORKS" OR THE "COMPANY")

PROPOSED EXTENSION OF TIME TO FULLY UTILISE PROCEEDS FROM THE LISTING EXERCISE OF CWORKS ON THE MESDAQ MARKET OF BURSA MALAYSIA SECURITIES BERHAD ("LISTING EXERCISE")

("PROPOSED EXTENSION")

Contents :

1. INTRODUCTION
      On behalf of the Board of Directors of Cworks ("Board"), MIMB Investment Bank Berhad (formerly known as Malaysian International Merchant Bankers Berhad) wishes to announce that the Company proposes to seek an extension of time for twelve (12) months until 8 May 2008, for the utilisation of the remaining RM2.101 million proceeds raised pursuant to the Listing Exercise.

      The application for the Proposed Extension has been submitted to the Securities Commission ("SC").


2. DETAILS OF THE PROPOSED EXTENSION

2.1 Status of Utilisation of Listing Proceeds

      From the Listing Exercise, Cworks raised a total of RM8.656 million ("Listing Proceeds"), which was expected to be fully utilised by 9 May 2007 (being two (2) years from the Company's listing date). Todate, the Company has yet to fully utilise the Listing Proceeds. The actual utilisation as at 31 March 2007 is set out in the table below:-
Purpose
Amount approved
RM '000
Utilisation as at 31 March 2007
RM '000
Balance to be utilised
RM '000
Research & development ("R&D") expenditure
2,600
(1,362)
1,239
Working capital
2,500
(2,500)
-
Capital expenditure
1,100
(237)
863
Marketing, advertising & promotion
1,000
(1,000)
-
Listing expenses
1,456
(1,456)
-
Total
8,656
(6,555)
2,101

2.2 Rationale for the Proposed Extension
          The Company had earlier planned to utilise the proceeds allocated for R&D expenditure for enhancement of its existing computerised maintenance management systems ("CMMS"), specifically for the purchase of development tools such as computer hardware and software, salaries and training for R&D staff. The said R&D activities are to be supported by capital expenditure of RM1.1 million to be utilised for acquisition of servers in its customer support centres.
          Although the Company had the option to pursue the expansion plans by fully utilising its listing proceeds, the Board decided to exercise some caution in view of the challenging market conditions in the CMMS industry. Thus, the planned R&D expenditure was scaled down. Moreover, the Board was also prudent in ensuring that no unnecessary cost is to be expended on software and additional personnel just for the sake of fully utilising its listing proceeds.


3. APPROVALS REQUIRED

Other than the approval of the SC, the Proposed Extension is not subject to any other approvals.

This announcement is dated 20 April 2007.
 
 
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