2020 technologies annual report 2009

2009 ANNUAL REPORT
THE POWER
VISUALIZE

Products used in this 20-20 Fusion rendering are available through Saint Gobain Building Distribution UK

Table of Contents

1 Financial Highlights 8 20-20’s Evolution and Future

2 Letter from the Executive Chairman 9 A New Era: 20-20’s Open Business
& Chief of Strategic Direction Software Platform

4 Message from the Chief Executive Officer 11 Management’s Discussion and Analysis

6 Understanding the Market 31 Consolidated Financial Statements

7 Showing the Way

FINANCIAL HIGHLIGHTS
(In thousands of U.S. dollars, except number of shares and per share data)

Fiscal years ended October 31, 2009 2008 2007 2006 2005

Operating Results

Revenues 63,107 78,602 67,627 60,461 40,475

Gross margin 47,004 56,992 49,188 45,607 32,483

% of revenues 74.5% 72.5% 72.7% 75.4% 80.3%

EBITDA (1) 9,349 4,326 12,734 11,832 9,374

% of revenues 14.8% 5.5% 18.8% 19.6% 23.2%

Operating income (loss) 5,616 (2,690) (7,493) 6,295 5,937

Net earnings (loss) 2,581 (2,297) (5,249) 5,869 4,262

Per Share

Earnings (loss)

Basic $0.14 $(0.12) $(0.28) $0.31 $0.24

Diluted $0.14 $(0.12) $(0.28) $0.31 $0.24

Book Value $3.53 $2.99 $4.01 $3.62 $3.13

Financial Position

Working capital 12,617 4,947 37,150 27,600 33,568

Total assets 117,236 103,060 104,063 96,105 78,964

Shareholders’ equity 66,903 56,667 75,635 68,088 58,729

Total common shares outstanding 18,926,692 18,947,792 18,850,302 18,805,037 18,749,102

(1) EBITDA is a Non-GAAP measure defined as operating income before restructuring and non-recuring charges plus amortization and depreciation expenses.

Revenues (millions of $) Net earnings (millions of $) EBITDA (millions of $)

12.7
78.6 11.8
67.6
60.5 63.1 5.9 9.4 9.4

4.3
40.5

2.6 4.3

2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009

(2.3)

(5.3)

1

Osnabruck São Paulo Grand Rapids, MI Ashford Shanghai Cary, NC
Germany Brasil U.S.A UK China U.S.A

LETTER FROM THE EXECUTIVE CHAIRMAN
& CHIEF OF STRATEGIC DIRECTION
When 20-20 Technologies first introduced its solutions to the which addresses the clearly identified needs of the whole industry,
interior design industry almost a quarter century ago, I intensely ensuring that we remain the indisputable standard for all players in the
felt the motivation of the entrepreneur, the optimism of the builder, industry.
and the passion of the founder. These many years later, it delights
me to say that the excitement about the future of 20-20 is as strong The interior design industry will change dramatically over the next few
as it ever was. years, to adjust to business and technology trends, and 20-20 will
be at the centre of that change. To meet this challenge, we intend to
While 20-20 enters a new phase that demands a bold extension leverage all the complementary players in the world, rather than attempt to
of its strategy and a makeover of its character, my enthusiasm “do everything by ourselves”, in a more open business model.
for breaking fresh trails is undiminished. Now that I have moved Accordingly, we will work with our partners to integrate their applications
from the CEO’s chair to the positions of Executive Chairman and on our platform in order to capture all industry revenues with them while
Chief of Strategic Direction, the crucial issues of the Company’s sharing risks, efforts and expenses.
future have become my main focus – and nothing could more
effectively inspire me. This major shift in our strategy is meant to attract talented people and
organizations to work with us, and thus to minimize the duplication of
The strategic plan discussed here represents both transformation efforts and bring together the otherwise disconnected parties serving our
in the sense of gearing 20-20’s approach to the latest trends in the industry, while enabling all of us to move faster toward our shared goals.
industry and technology; and continuity in the sense of providing
our clients with the best possible tools to advance their businesses. As our mastery of product data has long distinguished us, our platform
will both require and ensure that product and project data are built on a
The Single “Industry Standard” Platform: Consumers are common foundation. The cost efficiency afforded by such data
increasingly demanding personalized furniture, as well as the convergence and exploitation promises to be transformational.
ability to visualize, configure and order entire interior design
projects over the Web. To meet these challenges, all the industry’s The single software platform and open business model will serve as
participants must collaborate, leveraging mass customization 20-20’s signature destination over the next few years. The fact that
solutions, while sharing product and project data that is built and we have conceptualized the journey – and that we are the player best
managed on the same foundation. positioned to undertake it – is a measure of how far we have already
come. By taking such leaps, we are communicating our determination to
20-20 has developed and accumulated, in the course of mak- maintain our pre-eminence in the industry.
ing seventeen acquisitions, the knowledge, market position and
applications to achieve a seamless end-to-end solution. To maxi- Knowledge and relationships are the key drivers: If the history of
mize our solution’s ongoing growth and implementation, a further 20-20’s success could be distilled into a single component, the result-
evolution in strategy is required to coalesce all industry participants. ing rare element would doubtless be our market knowledge and deep
Up to now, 20-20 has succeeded and benefitted from establishing customer relationships. We have absorbed through acquisitions the
a single platform as the “industry standard” Point of Sales Design wisdom of entrepreneurs who built successful companies by serving
application in North America. diverse sectors of the same industry. Today, our insight into every facet
of interior design sales and manufacturing powers up our strategy and
20-20 has acquired the knowledge and reached the market ensures our influence.
position to create and leverage an industry standard platform,

2

“Consumers are increasingly demanding personalized
furniture, as well as the ability to visualize, configure
and order entire interior design projects over the Web.”
Jean Mignault
Executive Chairman
& Chief of Strategic Direction

Creating the platform while continuously delivering current value:
Concurrently with the development of the open platform, we envisage
continuous and systematic delivery of new value to our
CORPORATE GOVERNANCE
customers within our existing products, and hence greater value AT 20-20 TECHNOLOGIES
to our shareholders.
20-20 Technologies does more than invent, market and support
As an example, one of the current global trends is that everything is highly sophisticated information technology. We also effectively
going green. In the interior design and furniture industry, the
act as high-level advisors to our clients. Accordingly it is important
increased cost of energy translates into higher transportation costs
to ship materials and furniture over long distances. We feel that our that our Company be regarded as an exemplar of sound corporate
collaborative software platform can, for instance, empower multibrand/ governance.
multiplant organizations to manufacture their products in plants
closer to the end consumer, which saves energy and decreases The transition in 2009, at the highest levels of Company
pollution. management, has not altered the strength of our good governance
procedures – except in the sense of reinforcing them. My appoint-
I want to take this opportunity to congratulate Jean-François
Grou on his promotion to the position of Chief Executive Officer. ment as Executive Chairman of the Board and Chief of Strategic
Jean-François has demonstrated uncommon commitment and Direction has had the effect of involving 20-20’s Board even more
leadership skills through ten years of service, as our President and closely with the Company’s strategic mandate.
Chief Operating Officer. With the world class team of executives we
have assembled, 20-20’s future rests in supremely capable hands. The Board, working with Jocelyn Proteau, the company’s Lead
I also want to express sincere gratitude to our employees, whose
Director, has made the accountability of 20-20’s Directors to share-
dedication distinguished 20-20’s passage through a year of recession,
and to our shareholders for their unrelenting confidence and support. holders, the transparency of our reporting, and our determination to
protect our investors, the essential means to maintain shareholder
confidence and assure the achievement of our corporate objectives.

Jean Mignault
Executive Chairman &
Chief of Strategic Direction

3

“During difficult times, the success of a company
cannot depend on the behavior of the economy,
but rather on how high the company reaches to
offset its challenges.“
Jean-François Grou
Chief Executive Officer

MESSAGE FROM THE CHIEF EXECUTIVE OFFICER
Throughout 2009, severely impacted by the recession, the interior them on what to expect, while presenting the tools they require to master
design business remained in a fragile state. 20-20 Technologies, the next generation of demand.
entrenched as a key supplier to the industry in all major markets,
maintained profitability by consolidating its operation, reducing Revenue Performance: 20-20’s financial results in 2009 far exceeded
overhead and aligning costs to revenues. If such a humdrum report 2008 results as the Company’s EBITDA exceeded $2 million in every
told the whole story of 20-20’s year, however, I would not be writing quarter. Furthermore, we improved our results in net earnings over the
this message with an equal degree of satisfaction. previous year. This achievement in the face of abiding recession largely
reflected the benefits of our cost reduction initiatives and strict control over
In fact the year produced cause for candid optimism. Our proactive expenses. Thus 20-20’s cost structure grew more manageable and entails
measures in 2009 planted the seeds for substantial progress for great promise for our future financial performance.
years to come. During difficult times, the success of a company
cannot depend on the behavior of the economy, but rather on how Consolidation of Operations: At the beginning of 2009, the personnel
high the company reaches to offset its challenges. of 20-20 worldwide totaled approximately 600. At the end of the year,
we were some 500. However, we were surgical in our cuts. We did what
We addressed the demanding year by doing much more than was required at a difficult time, while keeping our eye fixed on a healthier
endure. We reached higher. While keeping 20-20’s bottom line future. In regions, where we did not anticipate achieving short- to mid-
healthy we created derivative versions of some of our products term significant gains, we closed offices. Where we could merge some
– applications for smaller projects such as bath and closet – that operations with our distributors and thereby gain greater flexibility, we did
required less significant investments on the part of our customers. so. While growing lean in structure, we preserved all our abilities to act.
Our value proposition increasingly involved specific solutions We have maintained the same geographic presence and the same lines
that addressed particular circumstances. We continued to invest, of business.
targeting new growth opportunities.
We took particular care, in the reconfiguration of the Company, to protect
Within 20-20, we also intelligently and selectively downsized. Our the means by which 20-20 addresses the market. After consolidating
reconfiguration of the executive team included a smooth transition operations in both North America and Europe, we feel that we have
to the new CEO. Most tellingly, in regard to our long-term outlook, enhanced 20-20’s ability to translate opportunity into revenues. The
we started work during the second quarter on a new strategic plan. nucleus of 20-20, fully preserved, has gained sharper focus. Moreover,
Its chief feature, the development by 20-20 of a single and open the compact efficiency we have established positions us to benefit
business software platform that places 20-20’s evolution squarely significantly as the market recuperates. Incremental volumes will not
within the frame of industry leadership and is set to be the industry require our current cost structure to increase commensurate to rising
standard, is outlined earlier in this Report in the letter from Jean revenues - our margins will benefit.
Mignault.
Looking Ahead: We expect market conditions to remain challenging
We accelerated our new strategy, even as we steered the through 2010, with the pace of recovery likely to be slow. Still, as we
Company through a difficult period, because 20-20’s role is to help develop our open business platform for the long-term and position it as
determine industry trends rather than follow them. Consumers will the industry standard, 20-20 is not waiting for the short-term market to
make new demands once the recovery takes hold, particularly with improve – and neither are most of our clients.
regard to the ever-growing strength, convenience and ubiquity
of the Web. Our strategy speaks to the most critical rule in the Our sense is that the difference between the year ahead and the year
supplier/customer relationship: stay close, but become indispensable past will be characterized by a general readying for the recovery. Accord-
by stepping ahead of your customers. Accordingly, we are educating ingly, our clients have signaled that they are poised to make targeted

4

investments. For example, dealers who must forgo additional In 2009, the founder of 20-20 Technologies, Jean Mignault, took the
expensive licenses for the time being may instead purchase lower- step of bowing out of the office of CEO and embracing the posts of
priced derivative products to enter new niches of the business or Executive Chairman and Chief of Strategic Direction. At the same time, I was
add-on products to improve their sales and better manage their honoured by my promotion to Jean’s former office.
business.
It is with humility that I sign this message above my new title. I succeed
Similarly, manufacturers who cannot invest at the moment in whole- the man who has been 20-20’s leading light since the Company’s birth and
factory solutions will instead enter or enhance ancillary channels of who has traced a path of relentless innovation which helped revolutionize
production with 20-20’s help. These are the types of events which will an industry. Jean has been my mentor and will remain so as he continues
make a difference in 2010. All industry players will be seeking to be to guide our expansion strategy for many years to come.
positioned for the upturn.
I join Jean in saluting our employees for their sacrifice and devotion, and
Meanwhile pent-up demand is building. As we go to press, our manu- our shareholders for their steady support.
facturing solutions have been selected by several manufacturers in
North America. Each of these manufacturers are awaiting an in-house
green light to close the contract. I mention this circumstance not only
because it typifies a number of similar potential sales, but because
it illustrates a notable change that is progressively taking place in
the market. Previously the manufacturers would not have taken the
contract process this far, since they knew funds for the purchase could
not be approved. Now such expenditures are becoming viable again. Jean-François Grou
Chief Executive Officer
We entered 2010 with confidence that the gates to business expan-
sion are re-opening, and that our Company is uniquely positioned to
benefit from a resumption of growth in our industry.

5

UNDERSTANDING THE MARKET
In 2009, the interior design business faced a number of challenges made more pressing by the recession,
and 20-20 Technologies was uniquely positioned to help its customers meet them. 20-20 brings to market best
business practices that are well supported and often embedded in our applications. Our experience, together
with our presence throughout the interior design industry, allows us to generate greater value than any other
software company in the retailing and manufacturing sectors. This key differentiator raises the bar for new
entrants and helps 20-20 maintain dominance in the market.

Challenges:
1 Identify New Opportunities in the Industry
Interior design retailers, in a recovering economy, require products that involve limited investment on their part and which in turn will
attract budget-conscious consumers to less costly remodelling options.

2 Migrate to the Web
Consumers are increasingly browsing and shopping online for products and even for whole interior design projects, and they will
naturally take their business to vendors who can provide them with the best Web experience. The equation is simple for dealers:
join the movement to the Web, or forfeit their share of ever-increasing online trade.

3 Simplify the Business Process
Considerable cost efficiencies can be gained in automating both sales and manufacturing processes by our customers once they adopt
cutting edge technology into their daily routines.

4 Help Dealers Increase their Closing Ratio
There is a trend towards one stop shopping for all products in a project. Furthermore, enabling consumers to finance their projects
literally “on the spot” at the point-of-sale constitutes a dramatic enhancement of the in-store sales process.

5 Reduce Barriers to Client Entry
In a difficult economic environment many small players cannot afford to pay for an outright purchase of a license; they require
versatile programs to help them optimize their resources.

Throughout the difficult period of the recession, in addition to being a technology and solution provider to its
clients, 20-20 carefully preserved its ability to also act as their advisor. The consultative dynamic has added to
the Company’s role as a true partner to its customers.

6

SHOWING THE WAY
20-20’s investment in research and development in 2009 was rigorously aimed to generate best value for
research dollars invested. We sought and implemented targeted improvements to meet current customer
requirements and deliver additional value. We developed means to sell existing products into new markets and
complementary products to existing customers. Our portfolio also evolved to make client innovations viable – we
adapted existing solutions to support diversification into adjacent markets of many of our customers at both the
point-of-sale and in manufacturing.

20-20 Solutions:
1 Applications for Complementary Projects
20-20 expanded its product portfolio by tapping into the bathroom, closet and countertop markets to become the interior design
industry’s prime source of solutions for these projects.

2 Web Tools and Expertise
We are helping our clients achieve a state-of-the-art Web presence. On their corporate websites in 2009 many retailers began the
roll-out of capabilities provided by 20-20 Virtual Planner, our 3D Web visualization space planning software. Our ability to integrate
Virtual Planner into their own e-commerce platform has generated wide industry interest. As our technology goes through its paces
in many showcase environments, we have every confidence that it will become the preferred choice of leading companies for their online
Web solution.

3 Unrivalled Product Line to Meet All Client Needs
20-20 launched the ShopWare suite of products to improve the business processes of cabinet makers, and rolled out for its office
furniture clients updated versions of 20-20 CAP Studio, 20-20 Worksheet, 20-20 Giza, and 20-20 Office Sales. This aggressive product
release program further highlighted 20-20’s matchless breadth of product and its reputation as a single supplier.

4 Complementary Financing
20-20 improved its product offering with a web-based Home Improvement Project Financing Application for the dealer market
which enables consumers to obtain finance approval on the spot.

5 New Business Models to Lower Cost of Purchase
To make our software affordable to buyers in untapped markets, 20-20 crafted new programs that had the effect of facilitating the
acquisition of our technology while creating more revenues and improved gross margins for 20-20.

These initiatives in 2009 all represented incremental investment to gain access to high-potential markets, and
they served to further cement 20-20’s position as the leading software and service provider to the global interior
design industry.

7

20-20’S EVOLUTION AND FUTURE
20-20 Technologies has long been the world’s leading provider of design and computer-aided selling software
for the interior design and furniture manufacturing industries. The following provides an outline of the path we
took to reach this position, as well as the strategy we are now pursuing to extend, strengthen and perpetuate
our leadership.

Design and Sales Tools:
20-20, armed with extensive market knowledge of the interior design industry and driven to address its specific needs, introduced
design and sales tools for the point-of-sale which enabled consumers, with the support and guidance of professional designers, to
configure and visualize furniture and rooms. The perennial market leadership of the Company’s flagship design software products, 20-20
Design, Fusion and 20-20 Cap Studio, has been supported by the fact that 20-20 has always offered the greatest number of manufacturers’
catalogs.

Electronic Catalogs:
20-20 created catalogs for manufacturers that solved the complexity of how to present products at the point-of-sale with photo-realism for
the consumer, while equipping the dealer with all the information (specifications, pricing and manufacturer’s validation) required to close
the sale.

Order Entry and Factory Management:
20-20, demonstrating a strong ability to design innovative products, developed software to perform product configuration for the factory,
bringing a unique level of sophistication, speed and automation to the interface between dealer and manufacturer, and to the flow in the
plant of all parts to be created and assembled.

Administrative Systems:
20-20, acting with the knowledge and experience gained as a result of many years of close contact with its customers, provided dealers
with digital tools designed to manage each project and each customer in a manner distinctively tailored to the interior design business.

Web Resources:
20-20 enabled dealers and manufacturers to present to the prospective online consumer the full range and richness of their products, as
well as customized pricing.

End-To-End Enhancement:
20-20 accelerated the error-free pre-validated reception of orders on the factory floor and the handling of the entire business flow between
the point-of-sale and the manufacturer.

8

A NEW ERA: 20-20’S OPEN BUSINESS SOFTWARE PLATFORM
20-20’s business and product strategy will continue to lead the penetration of Web and mobile applications
and services, recognizing that all parties in the interior design industry must achieve a high level of
collaboration to satisfy a marketplace in historic transformation. 20-20 will therefore open its foundational
platform and render it a collaborative environment. Application developers, particularly smaller and niche
players, will be able to scale their skills, excel in what they do best, and reap their share of revenues. The common
infrastructure promises to allow for lower financial risk for all involved. We believe the open platform will
become a space for extraordinary innovation and a means for easier access to market, as dealers and
manufacturers increasingly regard it as the place to acquire answers to their needs.

9

2020 technologies annual report 2009

MD&A – Year ended October 31, 2009

’
(Year ended October 31, 2009)

1. Introduction
The following report, dated January 21, 2010, is a discussion Readers are cautioned that the Company’s actual future
relating to the financial results and position of 20-20 operating results and economic performance are subject to a
Technologies Inc. (―20-20‖ or the ―Company‖) for the year ended number of risks and uncertainties, including general economic,
October 31, 2009. The discussion should be read in conjunction market and business conditions, and could differ materially from
with the selected consolidated financial information shown in what is currently expected.
this report, and our audited consolidated financial statements
For more exhaustive information on these risks and
and the accompanying notes. These financial statements have
uncertainties, please refer to our most recently filed Annual
been prepared in accordance with Canadian generally accepted
Information Form, which is available at www.sedar.com.
accounting principles (Canadian GAAP) and are presented in
Forward-looking information contained in this report is based on
US dollars as a significant proportion of the Company’s
management’s current estimates, expectations and projections,
revenues are recorded in US dollars. The Company’s financial
which management believes are reasonable as of the current
statements have been translated from the measurement
date. The reader should not place undue reliance on forward-
currency, the Canadian dollar, to the US dollar using the current
looking statements and should not rely upon this information as
rate method. Additional information relating to 20-20, including
of any other date. While the Company may elect to, it is under
the Company’s Annual Information Form, Annual Report and the
no obligation and does not undertake to update this information
audited financial statements for the year ended October 31,
at any particular time, unless required by applicable securities
2009, can be obtained from SEDAR at www.sedar.com as well
law. In addition to presenting an analysis of results for the fourth
as from the Company’s web site at www.2020technologies.com
quarter and years ended October 31, 2009 and 2008, this report
in the Investors section. Information contained in this report is
also discusses certain important events that occurred between
qualified by reference to the discussion concerning forward-
the fiscal year-end and January 21, 2010.
looking statements detailed below.
Forward-looking Statements Non- Canadian GAAP Measures
Certain statements contained in this report constitute forward-
EBITDA
looking information within the meaning of securities laws.
EBITDA is a non-Canadian GAAP measure related to cash
Implicit in this information, particularly in respect of the earnings and is defined for these purposes as operating income,
Company’s future operating results and economic performance adjusted for non-recurring items plus amortization expenses.
are assumptions regarding projected revenues and expenses.
These assumptions, although considered reasonable by the
Company at the time of preparation, may prove to be incorrect.

Unless otherwise noted or the context otherwise indicates, ―20-20‖, the ―Company‖, ―we‖, ―us‖ and ―our‖ refers to 20-20 Technologies Inc.
and its direct and indirect subsidiaries. Unless otherwise indicated, all dollar amounts in this report refer to US dollars. References to ―$‖ or
―US‖ are to US dollars and references to ―C$‖ are to Canadian dollars. Disclosure of information in this report has been limited to that
which management has determined to be ―material‖, on the basis that omitting or misstating such information would influence or change a
reasonable investor’s decision to purchase, hold or dispose of securities in the Company

11


2. Financial Highlights
Net earnings at
EBITDA(1) rose to 9.3 million
Revenues down by 19.7% $2.6 million (4.1%)
or 14.8% of revenues
or $0.14 per share

Revenues EBITDA (1) Net earnings (Loss)
25,000 3,000 1,500
20,000 2,500 1,000
2,000 500
15,000
0
10,000 1,500
(500 )
1,000 (1,000 )
5,000
500 (1,500 )
0 (2,000 )
0
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09

Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
For the year ended October 31, 2009, reve- Considering the economic turmoil and Despite the economic conditions and
nues declined by $15.5 million (19.7 %), uncertainty, the Company introduced differ- unfavorable exchange rates the Compa-
due to unfavorable economic conditions in ent measures designed to align cost with ny’s net earnings rose to $2.6 million or
all regions as well as unfavorable exchange revenues. In this challenging economy the 4.1% during the year ended October 31,
rates that reduced revenues by $4.3 million Company’s EBITDA for the year ended 2009 compared to a net loss of $2.3 mil-
(5.5%). October 31, 2009 rose from $4.3 million or lion or (2.9 %) for the year ended October
5.5% in 2008 to $9.3 million or 14.8% in 31, 2008.
2009.

(1) EBITDA is a non-GAAP measure for which we provide reconciliation on page 18 and 25.

Selected Consolidated Financial Information
The selected consolidated financial information set out below for The following information should be read in conjunction with our
the three months and years ended October 31, 2009 and 2008 audited financial statements and accompanying notes for the
has been derived from our audited annual consolidated financial year ended October 31, 2009.
statements.
(In thousands of dollars, except for share and per-share data)
Three months ended October 31, Years ended October 31,
(Unaudited) (Audited)
2009 2008 2009 2008
Revenues 16,181 19,556 63,107 78,602
Profitability
Gross margin 12,149 14,435 47,004 56,992
Gross margin (%) 75.1% 73.8% 74.5% 72.5%
EBITDA1 2,426 2,021 9,349 4,326
EBITDA (%) 15.0% 10.3% 14.8% 5.5%
Net earnings (loss) 735 (1,272) 2,581 (2,297)
Net earnings (loss) (%) 4.5% (6.5)% 4.1% (2.9)%
Earnings per share2
Basic earnings (loss) per share 0.04 (0.07) 0.14 (0.12)
Diluted earnings per share 0.04 - 0.14 -
Balance sheet
Total assets 117,236 103,060 117,236 103,060
Total long-term liabilities 18,878 15,977 18,878 15,977

(1) EBITDA is a non-GAAP measures for which we provide reconciliations on page 18 and 25.
(2) Please refer to Note 7 to the annual audited consolidated financial statements for further details relating to the calculation of earnings (loss) per share.

12


3. Corporate overview
Our mission success, giving the Company an edge over its competitors.
Making our customers more productive and competitive by Their understanding of the global industry and customer needs
providing software and services to integrate the entire sales, puts 20-20 Technologies in a unique position to address each
supply and manufacturing processes of the interior design and one.
furniture industries.
Competitive Environment
Our Company The Company currently faces competition from software
Interior design dealers and furniture manufacturers have made providers in both the CAD and the ERP markets. The interior
20-20 Technologies the world’s leading provider of computer- design software industry is highly fragmented and comprised
aided design, sales and manufacturing software for the interior generally of point solution (as opposed to end-to-end solution)
design industry. 20-20 Technologies is offering an integrated software providers that address specific aspects of design
software platform for industry-wide use from showroom to software or software providers that have limited geographic
factory floor that is tailored specifically to the interior design coverage. Accordingly, none of the Company’s competitors
business and employed across all environments, desktop and competes in all of its products and markets. Generally,
web. It not only represents a significant competitive advantage, competitors can be described as follows:
but is a critical element to the Company’s success.
CAD Software: Competitors include almost exclusively
20-20 products and services are marketed and sold worldwide smaller, privately-owned companies whose products
through a sales and marketing team in various locations are principally focused on specific aspects of design
complemented by a network of consultants and distributors. software, and compete generally in some of our
20-20 has operations throughout North America and Europe as markets but not all.
well as in Asian and Latin American markets.
ERP Software: As the Company increases the
Markets Served penetration of its ERP solution, it also faces
20-20 Technologies serves a variety of interior design-related competition from ERP software vendors which
professions that include architects, commercial furniture dealers generally offer less targeted design, specification,
and retailers, facility managers, residential furniture dealers and photo-realistic rendering or 3-D visualization
retailers, manufacturers, interior designers, homebuilders and capabilities.
remodelers. Each can choose the software that best suits their
needs and addresses their professional concerns and those of Large software providers typically find it more beneficial to form
their customers. While our focus has traditionally been on the alliances with specialized software providers that provide a
dealer channels and their respective furniture manufacturers, focused solution, like us, than to devote resources to developing
mostly for kitchen, office, we are actively increasing our sales and marketing their own specialized products.
and services activities for adjacent market such as remodelers, Our leading market position, global presence and single tech-
homebuilders, furniture retailers expanding our solutions nology platform, end-to-end solution, as well as the breadth and
coverage for product categories such as bathrooms, closets and size of the electronic catalog library that we have developed for
home furniture. our customers, are all significant competitive advantages that
The Company also believes in nurturing promising design talent. distinguish us from our existing competitors and would make it
This is why 20-20 Technologies offers an educational version of difficult for new entrants to compete with us effectively.
its 20-20 Design software to accredited design academic
institutions.
4. Corporate strategy
Market conditions
20-20 software is available in 23 languages, sold in more than
90 countries. Each is adapted for the specific measurement In our fourth quarter, market conditions in North America where
very similar to the ones experienced in our previous quarter i.e.
units and currency of the geographical area where the software
stable with no improvement or deterioration. Most existing and
is used. 20-20 solutions include applications for business-to-
client (design and sales) business-to-business (order new customers are seeking new market segments and even a
diversification of their offering where they anticipate that their
processing and e-procurement) and manufacturing facilities:
enterprise resource planning (ERP) systems as well as customers will eventually have demand which is mostly smaller
interior design projects requiring lower level of investment with
computer-aided engineering (CAE) and manufacturing (CAM)
little or no financing. In the residential sector, dealers continue
software.
to acquire our design solutions as well as complementary
Leadership Team solutions responding to our adapted sales programs. In general,
Hailing from various countries around the world, 20-20 our business in the Commercial sector is still down significantly
Technologies’ global reach is reflected in its leadership team. with recurring revenue holding, as they are in the residential
The Company’s executive team members’ know-how in the sector. Even though the mood in the industry is trending
interior design and software industries combined with their towards a more positive outlook, everyone remains prudent in
diversity of business and computer science education their investment decisions.
backgrounds have significantly contributed to 20-20’s continued

13


In European markets conditions are very similar in general to times, thereby delivering some incremental results as indicated
North America, unchanged from our previous quarter. Foreign by our slight improvement in revenues.
exchange variations continue to create some fluctuations in our
Cost reduction
overall revenue. As in North America, it is too early to report any
Our cost reduction measures are still in line with global
signs of recovery. Our International business continues to show
economic conditions as they are key to protecting a reasonable
signs of improvements, mostly in Brazil and China as their
profitability on lower overall revenue. We also continue to
respective economies have recovered sooner than in North
restrict operating expenses in areas such as trade shows, travel
America or Europe while our distributors’ business in other
and other non-essential expenses.
smaller markets worldwide is still severely impacted by the
global downturn.
5. Financial Review
Strategic objectives
We managed to achieve our strategic objectives indicated in our Foreign exchange rates
last quarter’s report during this period of economic turmoil and As 20-20 operates in a global environment, foreign exchange
uncertainty by successfully protecting our EBITDA, cash rate assumptions and sensitivity analyses are particularly
position and our core human capital. We have also protected significant due to their potential impact on our results. In fact,
our recurring revenue and market share in all our key markets. all of our main currencies, the $US, $C, the Euro and the Pound
We continue to deliver on our selected strategic investment Sterling have fluctuated significantly in 2009 and are continuing
initiatives at the pace we can afford to improve our execution to do so.
capabilities preparing for the recovery.
Although the European currencies affect earnings to a lesser
Existing business and growth strategy extent as the exposure to fluctuations is limited to earnings in
We maintain our efforts on selected short term strategic the European currency, variations in the Canadian dollar versus
investment initiatives, each carefully validated with our the US dollar can have a significant impact on net earnings as
customers to ensure that we meet their current needs and revenues in North America are essentially in US dollars while a
expectations as soon as they begin to reinvest again. Also we significant component of expenses are in Canadian dollars.. The
continue to aggressively pursue all opportunities adjusting our Company uses forward exchange contracts to sell US dollars
sales programs, making it easier for our customers and forward on quarterly basis in order to partially offset this impact
prospects to acquire our technologies even in these difficult on earnings.

C$ - US$ Exchange Rates
Titre du graphique
1.05
1.02
0.99
0.96
Exchange Rates

0.93
0.90
0.87
0.84
0.81
0.78
0.75
Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09
Average Rate 1.0093 0.9941 0.9908 0.9185 0.808 0.8033 0.8784 0.93
Closing Rate 0.9978 0.9906 0.9749 0.822 0.8088 0.8375 0.9268 0.9282

14


The following tables show the variations of the closing and Revenues
weighted average exchange rates for our primary operating Revenues from license sales are predominantly derived from
currencies against the US Dollar. licensing of the Company’s desktop and enterprise software.
Each software license, for which users pay a one-time fee, is
typically perpetual in nature. Each license is typically intended
Change for use by a single user and is non-transferable.
Closing rates 2009 2008 2009/2008 Revenues from maintenance and other recurring revenues are
C$ 0.9282 0.8220 12.9% generated by customer support, software and electronic catalog
Euro 1.4754 1.2681 16.3% updates, Web services and annual software usage fees. Typical
Sterling Pounds 1.6478 1.6156 2.0% maintenance and other recurring service agreements have a
twelve-month term and are renewable at the option of the
We used these closing foreign exchange rates to value our customer.
assets and liabilities in U.S. Dollars as at October 31.
Finally, revenues from professional services include revenues
derived from training, electronic catalog creation and mainten-
Change ance, and integration services such as consulting, application
Average rates 2009 2008 2009/2008 integration and hardware resale.
C$ 0.8570 0.8859 - 3.3%
Euro 1.2427 1.4967 - 17.0%
Sterling Pounds 1.5523 1.9743 - 21.4%

We used these weighted average foreign exchange rates to
value our revenues and expenses in U.S. Dollars for the two
years ended October 31.

Revenue Distribution
The following charts provide information regarding our revenue composition for the year ended October 31, 2009:

33,300 40,000 34,752 32,189
35,000 35,000
35,000
30,000 30,000
30,000 26,328
25,000 25,000 19,119
25,000 20,000
20,000 17,341
20,000 15,000 11,799
15,000 12,466
15,000 10,000
10,000 10,000
2,027 5,000
5,000 5,000 0
0 0

Type Geography Sectors
Licenses 27.5 % North America 55.1 % Residential 51.0 %
Maintenance and recurring 52.8 % Europe 41.7 % Commercial 18.7 %
Professional services 19.7 % International 3.2 % Manufacturing 30.3 %

15


Revenue Analysis
The following table provides a summary of our revenue variances due to foreign currency exchange rate variations between 2009 and
2008.

Years ended October 31
(in thousands of dollars except percentages) Change
2009 2008 2009/2008

Revenues 63,107 78,602 (19.7 %)
Organic variance prior to foreign currency impact (17.4 %)
Acquisition 3.2%
Constant currency variance (14.2 %)
FX impact (5.5 %)
Variation over previous year (19.7%)

World economic difficulties affected our revenues throughout For the year ended October 31, 2009 revenues were $63 million
fiscal 2009. In North America revenues were mostly affected in a decrease of 19.7% or $15.5 million compared to the same
the first quarter and we saw slight increases in the last two period in 2008. On a constant currency basis, organic revenue
quarters of the year. In Europe the impact of the unfavorable decreased by 14.2% year over year. A decline of $4.3 million
currency rate and the economic conditions affected our (5.5%) was attributable to European currencies versus US dollar.
revenues until the end of the second quarter. In North America, most revenues, except for a portion of
maintenance and support revenues, are recorded in US dollars
During Fiscal 2009, some clients adopted a cautious approach,
so the Canadian dollar’s depreciation versus the US dollar had
conserving cash and reviewing their investment plans with a
almost no effect on revenues realized in North America.
focus on addressing near term profitability and cash flow
Acquisitions however, contributed to a 3.2% increase in
pressure resulting in the suspension of their projects, the
revenues overall. Organic revenues declined by $18.0 million
deferral of new projects or the re-evaluation of their operating
(22.9%) for year ended October 31, 2009, compared with the
budgets. These reactions have resulted in a reduction in our
same period in 2008. License sales accounted for 37.9% of this
short term revenues of license and professional services. Our
decline, with a decrease of $10.0 million. Organic recurring
maintenance and recurring revenue were also affected by this
revenues were less affected with 8.9% reduction or $3.2 million
downturn because many clients have reduced their personnel
and professional services decreased by 28.8% or $4.8 million.
resulting in fewer active licenses; hence lowering the number of
licenses they have under support and maintenance contracts.
The following tables provide a summary of variations in our revenue type and by sector showing the impact of foreign currency exchange
rates between 2009 and 2008 periods

Revenue Type

(in thousands of dollars except percentages) Years ended October 31
2009 2008 Changes
License revenue prior to FX impact 18,722 26,392 (29.1 %)
FX impact (1,381) -
License revenue 17,341 26,392 (34.3 %)

Maintenance and other recurring revenue prior to FX impact 35,229 35,368 (0.4%)
FX impact (1,929) -
Maintenance and other recurring revenue 33,300 35,368 (5.8%)

Professional services revenue prior to FX impact 13,498 16,842 (19.9%)
FX impact (1,032) -
Professional services revenue 12,466 16,842 (26.0%)

Total revenues 63,107 78,602 (19.7 %)

16


Economic conditions have mostly affected negatively the sales respectively, while the manufacturing sector declined by $1.6
of new licenses and revenues from professional services million (20.2%), all excluding currency variation.
compared to 2008. Also, many clients have reduced their
personnel resulting in fewer active licenses. Revenues by Geography
Our revenues from license sales in all regions, prior to the effect
of foreign exchange, declined by 29.1% or $7.7 million for the 50,000
year ended October 31, 2009, compared with the same period 43,340
45,000
last year. Excluding the effect of currency variations, license 40,000
sales from North America declined by $5.9 million (42.2 %), 34,752 33,023
35,000
while Europe and the rest of the world declined by $1.7 million
30,000 26,328
(14.1%). License sales, excluding foreign exchange variations,
declined in the manufacturing sector by 25.0%, in the residential 25,000
sector by 34.7% and in the commercial sector by 46.9% during 20,000
Fiscal 2009 compared with the same period in 2008. 15,000
10,000
For the year ended October 31, 2009, maintenance and other 2,027 2,239
5,000
recurring revenues decreased by $2.1 million (5.8%), mostly
due to unfavorable foreign exchange rates amounting to $1.9 0
million (5.5%). On a constant currency basis, in North America, North America Europe International
recurring revenues declined by $0.7 million (3.5%), while in
Europe acquisitions made in 2008 contributed to a growth of 2009 2008
$0.6 million (4.6%). The residential sector saw a slight decrease,
prior to foreign exchange, in recurring revenues of $0.4 million
(2.0%) compared to year 2008. In the commercial and
manufacturing sectors we had a slight growth of $0.1 million During Fiscal 2009, there were no important variations in the
(1.1%) and $0.2 million (1.8%) respectively, mostly due to the distribution of revenues by geography. The variations shown are
license revenue in those sectors during the past year. before currency effect.
For the year ended October 31, 2009, revenues from North
Decreases in license sales had a direct impact on revenues America were $34.8 million, down $8.6 million or 19.8% when
from professional services that declined from $16.8 million in compared to the same period in 2008. In Europe revenues,
2008 to $12.5 million in Fiscal 2009. On a constant currency before exchange rate impact, ($30.7 million) decreased by $2.4
basis, revenues decreased by $3.3 million (19.9%). Europe and million compared to 2008. The exchange negative effect
North America had reduction prior to foreign exchange impact of amounted to $4.3 million leaving a total decrease of $6.7 million
respectively $1.4 million and $1.9 million, in their professional in European revenue for 2009 compared to Fiscal year 2008.
services revenues in the year ended October 31, 2009 We have seen cautious behavior from North American and
compared to the last year. During Fiscal 2009, the residential European clients as they have deferred new projects. Globally,
and commercial sector revenues from professional services, the decrease in revenues is primarily attributable to challenging
declined by $1.4 million (21.0%) and $0.3 million (15.3%) economic conditions.

Revenues by Sector

(in thousands of dollars except percentages) Years ended October 31
2009 2008 Changes
Residential sector revenues prior to FX impact 34,913 41,301 (15.5 %)
FX impact (2,724) -
Residential sector revenues 32,189 41,301 (22.1 %)

Commercial sector revenues prior to FX impact 11,799 14,047 (16.0%)
FX impact - -
Commercial sector revenues 11,799 14,047 (16.0%)

Manufacturing sector revenues prior to FX impact 20,737 23,255 (10.8%)
FX impact (1,618) -
Manufacturing sector revenues 19,119 23,255 (17.8 %)
Total revenues 63,107 78,602 (19.7 %)

17


For the year ended October 31, 2009, residential sector reve- license and professional services revenues in the residential
nues decreased to $32.2 million down $9.1 million or 22.1%, and commercial sectors. During the same period, on a constant
compared to the same period last year. On a constant currency currency basis, the manufacturing sector decreased by 10.8%
basis, revenues from the residential sector were down by $6.4 or $2.5 million. Manufacturing projects need more financial
million or 15.5%. Again, on a constant currency basis, commer- resources and more time for the implementation of our software
cial sector revenues decreased by $2.2 million (16.0%) com- solutions, so the adoption of a cautious approach by our clients
pared with the year ended October 31, 2008. Reductions in by suspending or deferring the kick-off of new projects.
personnel for our clients contributed largely to the reduction in

Gross Margin
(in thousands of dollars except percentages) Years ended October 31,
2009 2008 Change
Licenses gross margin prior to FX impact 87.1% 89.2% (2.1 %)
FX impact 0.4%
Gross margin variation from previous year 87.5% 89.2% (1.7 %)

Maintenance and other recurring services and professional
services gross margin prior to FX impact 67.0% 64.1% 2.9%
FX impact 2.6%
Gross margin variation from previous year 69.6% 64.1% 5.5%

Overall Gross margin prior to FX impact 72.6% 72.5% 0.1%
FX impact 1.9%
Overall gross margin variation from previous year 74.5% 72.5% 2.0%

The growth in the overall gross margin prior to the foreign Various direct personnel costs have been reduced since the
exchange impact in Fiscal 2009 was 2.0 percentage points restructuring plan was put in place in the third quarter of 2008.
compared to the same period in 2008. The Company proactively In addition, the fluctuation of foreign exchange rates compared
managed its cost structure in response to prevailing economic with the year ended October 31, 2008 reduced the cost of
conditions, particularly with respect to costs relating to revenues for a total amount of $2.4 million.
professional service. For the year ended October 31, 2009, the
EBITDA
gross margin, prior to foreign exchange impact, on recurring and
(In thousands of dollars except percentages)
professional services revenue increased by 5.5 percentage
points whereas the gross margin on license sales slightly
decline by 1.7 points. The restructuring plan and the cost Years ended October 31
realignment program are mainly responsible for the growth in 2009 2008
the overall gross margin excluding the foreign exchange effect.
Operating income (loss) (GAAP) 5,616 (2,690)
Cost of Revenues Restructuring charge (228) 2,329
Cost of revenues from license sales primarily consists of:
Amortization of property and
Cost of actual software products, including duplication, equipment 1,389 1,733
manuals and inserts, as well as packaging Amortization of intangible assets 2,572 2,954
Resale costs of third party software
EBITDA 9,349 4,326
Royalties’ payable on certain license sales to third
parties whose technology is used by 20-20 software Margin (%) 14.8% 5.5%

Cost of revenues from maintenance and services primarily The Restructuring plan, with its various cost reduction and cost
consists of: realignment measures and favorable exchange rates with
Personnel costs and other related costs incurred for respect to costs are largely responsible for the growth in the
client support EBITDA. The restructuring plan consolidated Company’s
Costs of personnel assigned to electronic catalog worldwide operations into a leaner and better integrated
creation, update and maintenance organization. It also aims to restore profitability to acceptable
Costs of personnel assigned to Web services, training, levels, align the Company’s cost structure to the realities of
integration services and hardware current market conditions in North America and elsewhere in the
world, and benefit from cost synergies related to recent
acquisitions.

18


For the year ended October 31, 2009, EBITDA grew from 5.5% purchases under the Employee Share Purchase Plan
to 14.8% compared with the same period in 2008. The ESPP), the cost of stock-based awards to employees
exchange rate variations generated an increase in the EBITDA expensed over the options’ vesting period, and the
of approximately $2.9 million compared with the year ended cost associated with the deferred share units issued
October 31, 2008. quarterly to the Company’s directors.
Operating Expenses
Restructuring Plans and Other Cost Reduction Measures
Operating expenses include:
In order to respond to the downturn in the economic conditions
Sales and marketing expenses, which primarily during 2008 and 2009, management implemented cost
consist of personnel costs relating to sales, marketing reduction plans combined with various restructuring plans,
and product management activities, commissions paid including both permanent and temporary measures aimed at
to our sales force, fees paid to our industry aligning our cost structure with declining revenues resulting from
consultants, fees related to shipping, advertising, current unfavorable economic conditions. For the year ended
telemarketing, trade shows and promotional items; October 31, 2009 these measures generated cost reductions
and savings amounted to $7.8 million in salaries and $2.7
Research and development costs primarily relate to million on other expenses.
personnel and subcontractors for new product
development, existing product enhancement, quality Effect of Foreign Exchange Rate Changes on Expenses
assurance and documentation activities and software The Company’s currency of measurement is the Canadian
development tools and equipment. Research and dollar while the presentation currency is the US dollar. The US
development costs are shown net of applicable tax dollar’s weighted average exchange rate of $0.8859 in Fiscal
credits; 2008 compared with a weighted average rate of $0.8570 for
Fiscal 2009. This variation (3.3%) in the exchange rate generat-
General and administrative expenses primarily consist ed a reduction in expenses denominated in Canadian dollars of
of costs relating to information technology, legal $3.2 million for Fiscal 2009. The strength of the US dollar in
services, financial functions, human resources, legal 2009 compared with European currencies, Euro (17.0%) and
and professional fees, insurance and other indirect British Pounds (21.4%) resulted in a reduction of $7.9 million in
corporate overhead; and expenses for Fiscal 2009 compared with the same period in
Stock-based compensation expense consists of the 2008.
Company contribution to the employee share

Effect of Foreign Exchange Rate Changes on Operating Expenses
(In thousands of dollars except percentages)
Years ended October 31,
Operating expenses 2009 2008 Change
Sales & marketing expenses prior to FX impact 18,748 26,015 (28.0%)
FX impact (2,161)
Sales & marketing expenses variation from previous year 16,587 26,015 (36.2%)

Research and development expenses prior to FX impact 13,095 16,945 (22.7%)
FX impact (1,080)
Research and development expenses variation from previous year 12,015 16,945 (29.1%)

General and administrative expenses prior to FX impact 14,700 14,420 1.9 %
FX impact (1,936)
General and administrative expenses variation from previous year 12,764 14,420 (11.5 %)

Stock-based compensation expenses prior to FX impact 293 (27)
FX impact (43)
Stock-based compensation expenses variation from previous year 250 (27)

Restructuring cost expenses prior to FX impact (228) 2,329
FX impact -
Restructuring cost expenses variation from previous year (228) 2,329
Operating expenses variation from previous year 41,388 59,682 (30.7 %)

19


Sales and Marketing Expenses administrative expenses. They represent payments for
Sales and marketing expenses decreased by $9.4 million employees in Sales and marketing ($0.5 million), in research
(36.2%) for the year ended October 31, 2009, compared to the and development ($0.3 million), in direct cost of revenues
same period in 2008. As indicated above, exchange rates had a ($0.1 million) and in general and administrative expense
positive effect of $2.2 million on Sales and Marketing expenses ($0.1 million).
compared to Fiscal 2008. The restructuring plan resulted in a
Stock-Based Compensation Expenses
$3.4 million benefit on salaries and $0.8 million on traveling. The
Stock-based compensation expenses amounted to $250,000
cost reduction plan resulted in savings of $1.4 million on show
and ($27,000) respectively for the year ended October 31, 2009
and event expenses and consultant fees. Declining revenues
and 2008 representing an increase of $277,000. The Company
had a direct effect on variable compensation, reducing the
suspended its contributions to the Employees Share Purchase
expense by $1.6 million. Acquisitions completed in 2008 brought
Plan at the beginning of the second quarter as a part of the cost
$1.0 million of additional expense in 2009 compared to the fiscal
reduction plan bringing savings of $70,000.
year 2008. In 2008 the Company sold its Benelux operations
and closed its Japanese office, saving $0.4 million, for the year
ended October 31, 2009. Finally consultant and other expenses (In thousands of dollars)
were reduced by $0.6 million in fiscal 2009 compared to the 2009 2008
same period in 2008. Stock option expenses 19 56
Research and Development (R&D) Expenses Deferred share unit plan
For the year ended October 31, 2009, research and Expense for the period 79 100
development expenses were down from $16.9 million in 2008 to Re-evaluation of units (1) 135 (270)
$12.0 million or by 29.1%. Acquisitions made earlier in 2008 233 (114)
increased expenses by $0.5 million compared to Fiscal 2008 Employee Share Purchase
while cost reduction initiatives brought savings of $2.6 million in Plan (ESPP) 17 87
2009. In addition foreign exchange accounted for a decrease of Stock-based compensation 250 (27)
$1.1 million compared to the same period in 2008. Amortization (1) The re-evaluation represents the impact of the market share price variation or
of software costs acquired (excluding the amortization included the deferred share unit’s obligation payable to directors which is based on the
in acquisitions) decreased by $0.2 million compared to 2008. share price.
Resources normally assigned to research and development
In the year ended October 31, 2009, stock options were issued
activities were assigned to systems integration work in cost of
for a total amount of $19,000 compared with a charge for stock
revenues, thereby accounting for lower R&D cost of $0.8 million
options of $56,000 in the same period of 2008. The DSU’s
in Fiscal year 2009 compared to the year ended October 31,
expense issued under the plan represented the most significant
2008. Expenses reallocated to other departments and lower
expense $79,000 for Fiscal 2009 compared to $100,000 for the
consultants fees represented a decrease of $0.5 million for the
same period in 2008. The largest variance came from the
year ended October 31, 2009 compared to 2008.
reevaluation of the DSU’s in Fiscal 2009. The increase of 30%
in the share market value brought a reevaluation increase of
Tax credits earned during year ended October 31 2009
$135,000 compared to a decrease of $270,000 in the same
increased by $0.2 million compared to last year.
period of 2008.
(In thousands of dollars) Years ended October 31, Human Resources
2009 2008 As at October 31, 2009, the Company had 505 active
Gross expenses 12,401 17,084 employees on a full-time and part-time basis in the following
Tax credits (1,731) (1,551) countries and regions, including employees of acquired
Software amortization 1,345 1,412 companies:
Expenses 12,015 16,945
As at
October 31, 2009 2008
General and Administrative Expenses Number of Number of
For the year ended October 31, 2009 general and administrative employees % employees %
expenses declined by $1.7 million or 11.5% compared to Fiscal Canada 178 35.2 206 34.3
2008. Favorable foreign exchange rates reduced these United States 84 16.6 113 18.9
expenses by $1.9 million and cost reduction measures added United Kingdom 65 12.9 74 12.3
savings of $0.5 million. Amortization and depreciation were Germany 53 10.5 57 9.5
lower versus the same period in 2008 by $0.5 million and the France 52 10.3 61 10.2
closing of Benelux and Japanese office resulted in savings of Rest of Europe 14 2.8 27 4.5
$0.4 million. Acquisition expenses represented additional cost of Rest of the
$0.5 million in 2009. All restructuring payments amounting to world 59 11.7 62 10.3
$1.0 million were accounted for as a reduction of general and 505 100 600 100

20


Financial Expenses Liquidity
For the year ended October 31, 2009, financial expenses The Company’s cash and investments were essentially held in
amounted to $1.8 million compared to $1.0 million in 2008. In AAA and R1 rated instruments issued by major Canadian
2009, interest revenue decreased by $0.6 million compared to chartered banks and federal and provincial governments. The
fiscal 2008 due to cash used to make acquisitions in January Company has no exposure to asset-backed instruments.
2008. Unfavorable exchange rate fluctuations increased the
As at October 31, 2009, cash and cash equivalents totaled
exchange loss by $0.2 million for the year ended October 31,
$23.2 million compared with $13.5 million as at the same date in
2009, compared to the same period in 2008.
2008. The table below shows the changes over the years ended
October 31, 2009 and 2008.

(In thousands of dollars) Years ended October 31,
2009 2008 Changes
Cash flows from operating activities 4,600 4,617 (17)
Cash flows from investing activities 1,148 (26,784) 27,932
Cash flows from financing activities 2,147 14,635 (12,488)
Effect of changes in exchange rates on cash and cash
equivalents 1,839 (4,261) 6,100
Net increase (decrease) in cash and cash equivalents 9,734 (11,793) 21,527

Cash Flows from Operating Activities $40.8 million were in part financed by short term investments of
For the year ended October 31, 2009, cash flows from operating $15.2 million.
activities totaled $4.6 million, same as per year ended October
Cash Flows from Financing Activities
31, 2008. Net earnings of $2.6 million realized during the year
Cash flows from financing activities decreased by $12.5 million
2009 compared to a net loss of $2.3 million in 2008 combined
over the same period last year. In 2009, the Company
with a decrease in the future income tax expense of $1.4 million
contracted new borrowing facilities for $7 million compare to
and the reduction in the amortization of $0.7 million had positive
$15.0 million obtained in the prior year to finance the business
effect on the cash flows. Those variances were offset by a $4.7
acquisitions. During the year ended October 31, 2009, financing
million variance in the unrealized gain on long term debt
activities consumed $4.8 million consisting in the partial
exchange due to significant variation in foreign exchange rates
repayment of the long-term debt. Those repayments were made
between October 31, 2009 and October 31, 2008 as described
in part after the Company did not meet its obligations under this
in the section below Balance Sheet and Financial Situation. The
credit facility during the first quarter of the year 2009.
negative fluctuation of the working capital items (decrease of
$29,000) relates mainly to the decrease in creditors of $2 million, Capital Resources
of which $1.4 million is due to foreign exchange rate variations. Consolidated Balance Sheet Data
Decrease of debtors for $1.4 million, of which $2.2 million is due
to foreign exchange rate variation and finally an increase of (In thousands of dollars)
deferred revenues for $0.5 million partially offset the creditors Years ended October 31
decrease.
2009 2008
Cash flows provided by the operating activities were $4.6 million Cash and cash equivalents 23,221 13,487
or 7.3% of revenues for the twelve months ended October 31, Short-term investments - 1,644
2009, compared to $4.6 million or 5.9% of revenues for the Working capital (including
same period a year ago. deferred revenue) 12,617 4,947
Total assets 117,236 103,060
Cash Flows from Investing Activities
Deferred revenue 14,665 12,481
During the year ended October 31, 2009, contingent
Long-term debt (including
considerations were paid to previous shareholders of 20-20
current portion) 17,669 15,629
Icovia Inc. as per initial purchase agreements for $40,000.
Total shareholders’ equity 66,903 56,667
Furthermore, a slight adjustment to the initial purchase price for
the acquisition of Planit* Fusion of $9,000 reduced the overall As at October 31, 2009, our working capital was at $12.6 million,
cost of this acquisition. Cash flows from investing activities compared with $4.9 million at the end of fiscal 2008, mainly due
totaled $1.1 million for the year ended October 31, 2009 and to the following:
amounted to $26.8 million in 2008.
For the year ended October 31, 2009, cash flows from investing
activities increased by $27.9 million compared to the same
period in 2008. In 2008 the business acquisitions representing

21


To ensure continuity in the face of ongoing unfavorable
- Increase of $9.7 million in the cash and cash
economic conditions, the Company approved a restructuring
equivalent due to conservative liquidity management
phase on October 15, 2008. The total estimated restructuring
and new finance facilities.
costs (primarily related to employee severance) for the
- Net increase in debtors for $0.8 million related to the
operational restructuring plan was $1,360,392.
renewal of important support contracts and decrease
in creditors for $1.4 million as a result of the cost
In 2008, following numerous acquisitions, including their related
reduction plan effective since 2008.
offices, personnel and additional products, the Company
- Deferred revenue increased by $2.2 million.
announced that it had approved and initiated a restructuring
- Decrease in short term investments of $1.6 million.
plan to consolidate its worldwide operations into a leaner and
We believe that our cash, investments and anticipated cash better integrated organization. The restructuring plan also aims
flows from operating activities will be sufficient to meet our to restore profitability to acceptable levels, align the Company’s
working capital, contractual obligation, capital expenditure and cost structure to the realities of current market conditions in
corporate development program requirements for the North America and elsewhere in the world, and benefit from cost
foreseeable future. Furthermore, the Company has at its synergies related to recent acquisitions. The total estimated
disposal authorized but unused bank credit facilities of $4.7 restructuring costs (primarily related to employee severance) for
million for our current operational needs, subject to compliance the Operational restructuring plan were $968,442 and are
with certain financial tests. accounted for as restructuring costs in the consolidated
statement of earnings for the quarter ended July 31, 2008.
Balance Sheet and Financial Situation
The changes in the balance sheet amounts as at October 31,
Restructuring Plan
2009, compared with those as at October 31, 2008, resulted (In thousands of dollars)
principally from the fluctuation of the $US exchange rate. As at October 31,
Accumulated other comprehensive income included in 2009 2008
shareholders’ equity increased by $7.5 million, mainly due to the Beginning balance 1,624 -
increase in the value of net assets denominated in Canadian Operational restructuring plan
dollars after translation into US dollars for presentation Severance 245 2,202
purposes. The exchange rate used to translate balance sheet Outplacement fees - 47
items from the currency of measurement, the Canadian dollar, Other 102 80
to the presentation currency, the US dollar, was $0.9282 as at
October 31, 2009, compared with $0.8220 as at October 31, Total cost of restructuring plan 347 2,329
2008. The main items comprising this increase are the Restructuring payments (989) (705)
translation of: i) goodwill of $6.7 million; ii) debtors of $2.2 Adjustments (575) -
million; iii) cash and cash equivalents and short-term
investments totaling $2.6 million; and iv) impact on tangible and Balance payable 407 1,624
intangible assets of $1.3 million. These increases were partly These restructuring plans enabled the Company to reduce its
offset by decreases in i) deferred revenue of $1.7 million ; ii ) annual operating expenses for personnel by $9.1 million,
accounts payable and income tax payable for an amount of $1.5 resulting in the elimination, upon plan completion, of
million; and iii) long-term debt of $2.0 million. approximately 135 positions since the end of the second quarter
Off Balance Sheet Arrangements of 2008. We will also continue to monitor our non-personnel
The Company's off balance sheet arrangements comprise related expenses, such as travel and marketing costs, to control
operating lease agreements which are deemed to have been our total spending. While these actions have immediately and
entered into in the normal course of business. The Company gradually contributed to improving our profitability, we managed
has no other off balance sheet arrangements and do not expect our cost structure throughout 2009 to ensure it remains
to enter into any arrangement other than in the normal course of relatively stable, thereby achieving our target profitability level.
business. Share Capital Information
The Company is authorized to issue an unlimited number of
Operational Restructuring Plan common shares without par value and an unlimited number of
On October 14, 2009, the Company approved a restructuring preferred shares without par value. The common shares are
plan in order to further adjust its cost structure due to slow mar- voting and participating. The preferred shares may be issued in
ket improvement. The total estimated restructuring charge re- one or more series with specific terms, privileges and
lated to employee severance, associated to the Operational restrictions to be determined for each class by the Board of
Restructuring Plan is $244,999. During 2009, additional restruc- Directors of the Company at the time such class is created.
turing charges for $102,041 in relation with other costs due to
initial restructuration along with the adjustment mentioned above
were recorded as restructuring costs line item within the Com-
pany’s consolidated statement of earnings.

22


Issued and outstanding as at Related Party Transactions
October 31, January 21, During the year ended October 31, 2009, consultant fees were
2009 2010 paid to a director of the Company for a total amount of $80,500.
These transactions were made in the normal course of business,
Common Shares 18,926,692 18,926,692 at a fair exchange value accepted by the related parties.
Stock options 825,497 825,497
Warrants 102,459 102,459 6. Comparative Quarterly Financial Data
On April 26, 2007, the Company announced its intention to The following quarterly information is presented on the same
purchase for cancellation purposes, by way of a normal course basis as the audited consolidated financial statements, and all
issuer bid (the ―Bid‖), some of its common shares, beginning on necessary adjustments have been included in the amounts
May 2, 2007 and ending on May 1, 2008. On May 16, 2008, the stated below to present fairly the unaudited quarterly results
Company announced its intention to continue this bid from May when read in conjunction with our audited consolidated financial
21, 2008 to May 20, 2009. This program was renewed on statements and the notes thereto. Quarterly operating results
December 14, 2009 and ending December 13, 2010. The should not be relied upon as any indication of results for any
Company may repurchase for cancellation up to 946,000 future period.
common shares over a maximum period of 12 months, which
amounts to 5% of its 18,926,692 issued and outstanding shares There are factors causing quarterly variances which may not be
as at December 14, 2009. The consideration payable by the reflective of the Company’s future performance.
Company for these common shares under the Bid is their First, there as seasonality, and the quarterly performance of
market price at the time of repurchase. During the year ended these operations is impacted by occurrences such as vacations,
October 31, 2009, 20,600 shares were repurchased and major trade shows and the number of statutory holidays in any
cancelled. given quarter.
The Company Employee Share Purchase Plan (ESPP) came Second, the workflow from some clients may fluctuate from
into effect on May 23, 2007. The purpose of this plan is to quarter to quarter based on their business cycle and the
provide the participants with an incentive to become seasonality of their own operations.
shareholders of the Company. Under the ESPP, employees
may contribute every year up to the lesser of 10% of their Third, foreign exchange rate fluctuations also contribute to
admissible compensation and C$10,000. The Company’s quarterly variances, and these variances are likely to increase
contribution amounts to one-third of each employee’s as the percentage of revenues and monetary assets held in
contribution. All contributions are then remitted to the foreign currencies increases.
Administrative Agent who will purchase common shares on the In general, cash flows from operating activities could vary
open market every month, on behalf of the employees. The significantly from quarter to quarter depending on the timing of
Company also assumes all transaction fees related with share monthly payments received from large clients, cash
purchases. As part of the cost reductions put in place, the requirements associated with large acquisitions and outsourcing
Company suspended its contribution indefinitely. contracts, and the timing of reimbursements for various tax
During the twelve months ended October 31, 2009, $16,923 credits.
($ 87,497 in 2008) was charged as stock-based compensation
expense in relation with the ESPP.
Financial Analysis for the Fourth Quarter of 2009

(1)
EBITDA rose to 2.4 million Net earnings at $0.7 million
Revenues down by 17.3%
or 15.0% of revenues (4.5%) or $0.04 per share

For the fourth quarter ended October 31, The Company’s EBITDA for the fourth Company’s net earnings rose to $0.7 mil-
2009, revenues declined by $3.4 million quarter ended October 31, 2009 rose from lion or 4.5% during the fourth quarter ended
(17.3%), due to unfavorable economic $2.0 million or 10.3% in 2008 to $2.4 mil- October 31, 2009 compared to a net loss of
conditions in all regions. lion or 15.0% in 2009. $1.3 million or (6.5%) for the same period
in 2008.

(1) EBITDA is a non-GAAP measures for which we provide reconciliation on page 25.

23


In the fourth quarter of fiscal 2009, the Company continued to proactively rationalize its cost structure by cost reduction and by putting in
place more measure to enhance productivity in order to improve its margins prospectively.
Comparative Quarterly Financial Data
(In thousands of dollars, except per-share amounts)
(Unaudited) 2009 2008

Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Revenues 16,181 16,148 15,158 15,620 19,556 20,407 21,870 16,769
Profitability
Gross Margin 12,149 11,969 11,343 11,543 14,435 15,067 15,741 11,749
Gross margin (%) 75.1% 74.1% 74.8% 73.9% 73.8% 73.8% 72.0% 70.0%
EBITDA1,2 2,426 2,050 2,318 2,555 2,021 906 1,133 266
EBITDA (%) 15.0% 12.7% 15.3% 16.4% 10.3% 4.4% 5.2% 1.6%
Net income (loss) 735 1,045 621 180 (1,272) (1,586) 37 524
Net income (loss) (%) 4.5% 6.5% 4.1% 1.1% (6.5 %) (7.8%) 0.2% 3.1%
Income (loss) per share3
Basic income (loss) per share $0.04 $0.06 $0.03 $0.01 $(0.07) $(0.08) $0.00 $0.03
Diluted income per share $0.04 $0.06 $0.03 $0.01 - - $0.00 $0.03
Balance sheet
Total assets 117,236 109,395 101,464 99,897 103,060 117,998 123,065 148,942
Total long-term liabilities 18,878 15,046 14,870 14,737 15,977 20,389 20,451 5,083
(1) EBITDA is a non-GAAP measures for which we provide reconciliation on page 25.
(2) For the year ended October 31, 2009 a reclassification of the adjustments to the restructuring provision, which were initially recorded in General and administrative
expenses, was made, thereby removing them from the calculation of quarterly EBITDA.
(3) Please refer to Note 7 to the annual audited consolidated financial statements for further details on the calculation of basic and diluted earnings (loss) per share.

Revenues
The following table provides a summary of our revenues variation showing the impact of foreign currency exchange rate variations
between the fourth quarter ended October 2009 and 2008.
Fourth Quarter ended October 31,
(in thousands of dollars except percentages)
Change
2009 2008 2009/2008

Revenues 16,181 19,556 (17.3 %)
Organic variation prior to FX impact (16.1 %)
FX impact (1.2 %)
Variation over previous period (17.3%)

For the fourth quarter ended October 31, 2009, revenues were year. Revenues from license sales in the commercial and the
$16.2 million, representing a 17.3% decrease compared to the manufacturing sectors were more affected in the fourth quarter
same period in 2008. The impact of currency was (1.2%) of 2009 as they declined respectively by 57.7% and 35.4%
primarily due to unfavorable fluctuations for the Sterling pound. compared to the last quarter of 2008.
Revenues from maintenance and other recurring services
Revenues from license sales were $4.4 million for the fourth
increased by 2.0%, or $0.2 million to $9.0 million for the fourth
quarter ended October 31, 2009. This represents a decrease of
quarter ended October 31, 2009. North America recorded the
$2.2 million or 33.2% against the comparable quarter of 2008.
most significant change in revenues with a growth of 7.6% from
International license sales grew by 15.9% from $0.6 million in
the fourth quarter of 2008 while Europe experienced a decrease
the fourth quarter of 2008 to $0.7 million in 2009 this fluctuation
of 6.5%. International maintenance and other recurring
is attributable to the growth in the Chinese market. North
revenues remained almost the same with a growth of 0.5%. In
America was the most affected during the fourth quarter of 2009,
the fourth quarter of 2009 compared to 2008 the revenues from
with a decrease of 44.1% in license sales while Europe
maintenance and other recurring services in the residential
accounted for a decline of 28.8% compared to the fourth quarter
sector rose by 13.6% reflecting the increasing volumes of Virtual
of 2008.
Planner recurring annual license sales. The Commercial and the
On a constant currency basis license sales in the residential manufacturing sectors decreased respectively by $0.1 million
sector declined by 22.9% in the fourth quarter compared to last (3.9%) and $0.4 million (15.8%) compared to the fourth quarter
of 2008.

24


Revenues from professional services recorded a decrease of all sectors declined; residential and commercial by 32.5% and
$1.4 million (32.6%) for the fourth quarter of 2009, a total of the manufacturing sector by 31.8%. A decline in license reve-
$2.8 million compared with $4.2 million in the same period of nues is the main reason for those fluctuations.
2008. In the fourth quarter of 2009 on a constant currency basis,
Revenues by Geography
Fourth Quarter -Quarter - 2009
Fourth 2009 Fourth Quarter- - 2008
Fourth Quarter 2009
5.4% 3.9%

North America North America
38.9% Europe 39.6% Europe
55.7% 56.5%
Int'l Int'l

Lower revenues from North America and Europe combined with million, a fluctuation of $2.0 million or 18.4% compared to the
a growth of 13.8% in the International revenue are responsible fourth quarter of 2008. In Europe we had almost the same
for the change in the distribution of revenues by geography. unfavorable economic conditions and revenues declined by
International revenues were up to $0.9 million during the fourth 18.7% or $1.4 million in the fourth quarter of 2009 compared to
quarter of 2009 compared to $0.8 million in 2008. In North the same period in 2008.
America revenue declined to $9.0 million compared to $11.0

Gross margin

Fourth quarter ended October 31,
2009 2008 Change
Licenses gross margin prior to FX impact 86.8% 90.1% (3.3 %)
FX impact (1.1%)
Gross margin variation from previous year 85.7% 90.1% (4.4 %)

Maintenance and other recurring services and professional
services gross margin prior to FX impact 74.8% 65.6% 9.2%
FX impact (3.7%)
Gross margin variation from previous year 71.1% 65.6% 5.5%

Overall Gross margin prior to FX impact 78.1% 73.8% 4.3%
FX impact (3.0%)
Overall gross margin variation from previous year 75.1% 73.8% 1.3%

For the three-month period ended October 31, 2009, the gross
margin, prior to foreign exchange impact, on recurring and
EBITDA Fourth Quarter ended
professional services revenues increased by 9.2 percentage
(In thousands of dollars) October 31,
points whereas the gross margin on license sales slightly
2009 2008
decline by 3.3 points. The restructuring plan and the cost
realignment program are for the most part responsible for the Operating income (loss) (GAAP) 1,076 (507)
growth of 4.3 percentage points in the overall gross margin Restructuring costs 199 1,361
excluding the foreign exchange effect. Amortization of property and
equipment 421 333
For the fourth quarter ended October 31, 2009, EBITDA grew Amortization of intangible assets 730 834
from 10.3% to 15.0% compared with the same period in 2008. EBITDA 2,426 2,021
Again all cost reduction measures implemented since the third Margin (%) 15.0% 10.3%
quarter of 2008 have made possible the achievement of the
Company objectives.

25


The Audit Committee is appointed by the Board of Directors and
Operating expenses
is comprised entirely of independent and financially literate
Operating expenses in the fourth quarter of 2009 decreased by
directors. The Audit Committee meets periodically with
$3.9 million from the fourth quarter of 2008. The decrease in
Management, as well as with the external auditors, to review the
expenses is mainly explained by the following:
audited Consolidated Financial Statements, the MD&A, auditing
Restructuring plan and cost reduction measures reduced the matters and financial reporting issues, to discuss internal
operating expenses by $1.8 million in salaries and by $0.3 controls over the financial reporting process, and to satisfy it
million in other expenses. that each party is properly discharging its responsibilities. In
addition, the Audit Committee has the duty to review the
Declining revenues had a direct effect on variable compensation appropriateness of the accounting policies and significant
and in bad debt, reducing these expenses by $0.7 million. estimates and judgments underlying the audited Consolidated
The overall reduction in business volumes and other cost Financial Statements as presented by Management and to
reduction efforts resulted in a reduction in sales and marketing review and make recommendations to the Board of Directors
expenses of $0.4 million, in research and development with respect to the fees of the external auditors. The Audit
expenses of $0.3 million and in general and administrative Committee reports its findings to the Board of Directors for its
expense of $0.2 million compared to the fourth quarter of 2008. consideration when it approves the Consolidated Financial
Statements and MD&A for issuance to shareholders.
Stock options granted in the fourth quarter increased the stock-
based compensation expense by $0.2 million compared to the Raymond Chabot Grant Thornton LLP, external auditors
same period in 2008. approved by the shareholders, meets regularly with the Audit
Committee to discuss audit activities, financial reporting matters
7. Responsibilities, Controls and and other related subjects.
Accounting Policies This report and our audited consolidated financial statements
were reviewed by the Company’s Audit Committee on January
Management’s Responsibility for Financial Reporting 21, 2010 and approved by 20-20’s Board of Directors on
The consolidated financial statements and Management January 27, 2010.
Discussion and Analysis (―MD&A‖) of 20-20 Technologies Inc.
(the ―Company‖ or ―20-20‖) and all other information in this Disclosure Controls
annual MD&A are the responsibility of management and have The CEO and CFO are responsible for establishing and
been reviewed and approved by its Board of Directors. maintaining disclosure controls and procedures for the
The consolidated financial statements have been prepared by Company. Disclosure controls and procedures have been
management in accordance with Canadian generally accepted conducted under the supervision of the CEO and the CFO to
accounting principles. The MD&A has been prepared in provide reasonable assurance that material information related
accordance with the requirements of securities regulators. The to the Company has been made known to management over
consolidated financial statements and MD&A include amounts the period covered by the annual filings. The CEO and CFO
that are based on best estimates and judgments of the expected determined, according to their evaluation, that the disclosure
effects of current events and transactions. Management has controls and procedures of the Company are effective at the
determined such amounts on a reasonable basis in order to financial year end.
ensure that the financial statements and MD&A are presented Internal Control over Financial Reporting
fairly in all material respects. Management is responsible for establishing and maintaining
The Company’s Chief Executive Officer (CEO) and Chief adequate internal control over financial reporting to provide
Financial Officer (CFO) have designed disclosure controls and reasonable assurance regarding the reliability of financial
procedures, or have caused them to be designed under their reporting and the preparation of financial statements for external
supervision, to provide reasonable assurance that material purposes in accordance with GAAP. The CEO and CFO have
information related to the Company has been made known to evaluated whether the Company has made changes to internal
them and has been properly disclosed in the audited control over financial reporting during the year ended October
consolidated financial statements and MD&A. In compliance 31, 2009 that have materially affected, or are reasonably likely
with Multilateral Instrument 52-109, the Company’s CEO and to materially affect, internal control over financial reporting.
CFO have provided to the Canadian Securities Administrators a In March 2009 the Company became aware of two weaknesses
certification related to the Company’s annual disclosure associated with the accounting for foreign exchange contracts
documents, including the audited consolidated financial and the foreign currency translation of a balance sheet item.
statements and MD&A. The internal control weaknesses are as follows:
The Board of Directors is responsible for ensuring that Inadequate design of review controls regarding the
management fulfills its responsibilities for financial reporting and recording of foreign exchange contracts; and
is ultimately responsible for reviewing and approving the audited Inadequate design of review controls over the conversion
consolidated financial statements and MD&A. The Board of of balance sheet items of foreign subsidiary during the
Directors carries out this responsibility principally through its consolidation process.
Audit Committee.

26


These weaknesses could result in material misstatements in Company adopted the amendment of 3862 in October 2009 and
amounts reported for foreign exchange gain/losses. They have the impact of the adoption of this standard is not significant.
been addressed and management has modified some
In addition, on January 20, 2009, the CICA issued Emerging
processes and added controls to correct these weaknesses.
Issues Committee Abstract 173, ―Credit Risk and the Fair Value
The Company’s internal control over financial reporting includes of Financial Assets and Financial Liabilities‖ (―EIC 173‖), to be
policies and procedures that: applied retroactively without restatement of prior periods to all
Pertain to the maintenance of records that, in reasonable financial assets and liabilities measured at fair value in interim
detail, accurately and fairly reflect transactions and dispo- and annual consolidated financial statements. EIC 173 requires
sitions of the assets of the Company; the Company to consider its own credit risk and the credit risk of
Provide reasonable assurance that transactions are the counterparty in determining the fair value of financial assets
recorded as necessary to permit preparation of and financials liabilities, including derivative instruments. The
consolidated financial statements in accordance with Company adopted EIC 173 in February 2009. The adoption of
accounting principles generally accepted in Canada, and this standard has no impact on the Company’s consolidated
that receipts and expenditures are being made only in financial statements.
accordance with authorizations of management and the Future Accounting Changes
directors of the Company; and, The CICA has issued the following new Handbook sections
Provide reasonable assurance regarding prevention or which have not yet been implemented by the Company;
timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a a) Section 1582, Business combination, which replaces
material effect on the Company’s consolidated financial 1581, Business Combinations which is effective for
statements. period beginning on or after January 1, 2011. The
section establishes standards for the accounting for a
As of the end of the Company’s 2009 fiscal year, management business combination. It provides the Canadian
conducted an assessment of the effectiveness of the Compa- equivalent to the IFRS Standard, IFRS 3, Business
ny’s internal control over financial reporting based on the Combinations. The Company will apply this section
framework established in Internal Control — Integrated Frame- prospectively to business combinations for which the
work issued by the Committee of Sponsoring Organizations of acquisition date is on or after November 1, 2011. Ear-
the Treadway Commission. Based on this assessment, the ly adoption is permitted. The Company is evaluating
CEO and CFO have determined that the Company’s internal the impact of the adoption of this new Section on the
control over financial reporting as at October 31, 2009, was consolidated financial statements.
effective.
b) Section 1601 Consolidated financial statements, and
Section 1602 Non-Controlling Interests, which togeth-
Changes in accounting policies er replace Section 1600, Consolidated Financial
In November 2009 the Company adopted two new Handbook Statements are effective for periods beginning on or
sections issued by the Canadian Institute of Chartered after January 1, 2011. Section 1601 established stan-
Accountants (CICA). dards for the preparation of consolidated financial
statements. Section 1602 establishes standards for
i) Section 3064, Goodwill and Intangibles Assets which is accounting for a non-controlling interest in a subsidi-
effective for periods beginning on or after October 1, 2008 ary in the consolidated financial statements subse-
replaces Section 3062, Goodwill and Other Intangibles quent to a business combination. It is equivalent to the
Assets and Section 3450, Research and Development corresponding provisions of IFRS standard, IAS 27,
Costs and establishes standards for the recognition, mea- Consolidated and Separate Financial Statements. The
surement and disclosure of goodwill and intangibles as- Company will apply these sections to interim and an-
sets. The impact of the adoption of this standard is not nual consolidated financial statements relating to fis-
significant. cal years beginning in November 1, 2011. Earlier
ii) Section 1400, General Standards of Financial Statement adoption is permitted. The Company is evaluating the
Presentation which is effective for periods on or after impact of the adoption of these new Sections on the
January 1, 2008 requires management to assess the consolidated financial statements.
Company’s ability to continue as a going concern. The Additionally, in February 2008 the Canadian Accounting Stan-
adoption of this new section has no impact on the dards Board (AcSB) confirmed that the use of IFRS would be
Company’s consolidated financial statements. required for Canadian publicly accountable enterprises for years
In June 2009, the CICA amended 3862, Financial instrument- beginning on or after January 1, 2011 and the Company will
Disclosure. This section has been amended to introduce new implement it as at November 1, 2011. The AcSB also stated that,
financial disclosure requirements, particularly with respect to fair during the transition period, enterprises will be required to pro-
value measurement of financial instrument and entity exposure vide comparative figures established in accordance with IFRS.
to liquidity risk. The amendments to this section apply to annual The IFRS will require additional financial statement disclosures
statements for year ending after September 2009. The and, while the organization’s conceptual framework is similar to

27


Canadian GAAP, enterprises will have to take account of differ- with the objective of minimizing the impact of adverse foreign
ences in accounting principles. exchange movements. However, we do not entirely hedge the
exposure related to foreign currencies. In addition, the use of
IFRS conversion
forward contracts to hedge our foreign exchange exposure
The Company has established its transition plan and has for-
carries risk and could limit our gains, or result in a loss.
mally established a project team. The project team consists of
members from Finance and IT department and is being over- In addition to the exposure identified above which affects
seen by the Company’s Chief Financial Officer. Reporting is operating income due to variations in operating expenses and
done to the Company’s Chief Financial Officer and to the Audit cost of sales denominated in Canadian dollars, the Company is
Committee of the Company’s Board of Directors, on a regular exposed to unrealized exchange gains and losses with respect
basis. The Company uses an external advisor to assist in the to the translation of monetary assets and liabilities held in
conversion project. currencies other than the Canadian dollar. For the Canadian
dollar, which is our currency of measurement, the largest
The Company is currently evaluating the impact of adopting
exposure is with respect to the US dollar.
IFRS on the consolidated financial statements. The Company is
actually in the first phase of its transition program, which Capacity to attract and retain personnel – To ensure success for
included scoping to identify the significant accounting policy the Company, management and key technical personnel must
differences and their related areas of impact in terms of systems, have sound knowledge of products, the industry, customers and
procedures and financial statements. The Company also is in the market. Against the current economic background, the
the assessment of the design and work plan to measure the Company must be able to retain its key personnel and attract
differences between IFRS and Canadian GAAP, and the impact new employees in order to continue growing. The personnel are
on its financial statements, disclosures and operations. The currently spread across the world according to the products and
Company will address the design, planning, solution markets. With such decentralization of human capital, the
development and implementation of the conversion in 2010. Company can better manage its growth and reduce the risk of
exposure to a single market. The IT labor market is highly
8. Risks and Uncertainties competitive and we may not be able to hire and retain the
employees we need and as a result, the Company may have to
The Company must take into account the risks and uncertainties
resort to subcontractors, which would have an impact on our
described below, which could have an impact on its capacity to
operating margins.
achieve its growth objectives. The following factors should be
taken into consideration when evaluating the Company’s future International activities – We currently conduct operations in
prospects as an investment. Management is confident about the Canada, the United States, Europe, Latin America and Asia. We
Company’s long-term prospects. intend to continue to expand our international operations and to
increase the proportion of our revenues from outside North
Economic Risks
America. These operations require significant management
Current economic conditions – An economic slowdown could
attention and financial resources while additionally subjecting us
cause demand for our products to decline. Growth in our
to risks inherent in doing business internationally. Our failure to
customers’ businesses is affected by the economic environment
properly comply or address any of the above factors could
and could therefore have an impact on the Company’s operating
greatly mitigate the success of our international operations and
results. We can neither predict the impact current economic
have a material adverse effect on our operating performance
conditions will have on our future results, nor predict when the
and financial condition.
economy will show meaningful improvement. During the current
period of recession, our current and potential customers might Risk related to transfer pricing – We conduct business
reduce or delay purchases or projects or defer contracts operations through subsidiaries in various jurisdictions. Certain
currently underway. This situation could also lead to greater of these subsidiaries provide products and services to, and may
delays and defaults in payments or debt collection, resulting in from time to time undertake certain significant transactions with,
lower operating results. Because of lower sales and contracts other of our subsidiaries in different jurisdictions. Our method for
during an economic slowdown, competition increases and determining transfer pricing is well documented and supported.
prices might be reduced by certain competitors to maintain or Our future income and cash may be adversely affected if any of
expand their market share. Our pricing and profitability could be the taxation authorities in these various jurisdictions were
adversely affected as a result of such factors. successful in challenging our documentation and transfer pricing
policies.
Foreign exchange risk – A substantial portion of our revenues is
earned in US dollars while a substantial portion of our operating Tax credits of the Carrefour de la nouvelle économie – The
expenses is incurred in Canadian dollars. Fluctuations in the Carrefour de la nouvelle économie (―CNE‖) program offers tax
exchange rate between the US dollar and other currencies, incentives to companies that conduct their business activities in
such as the Canadian dollar, may have a material adverse CNE-designated buildings in Québec. As a result of the June 12,
effect on our business, financial position and operating results. 2003 Québec budget, the credit would be eliminated in the
With respect to other currencies such as the Euro and the event of an acquisition of control of the Company. There can be
Sterling pound, however, we have a natural hedge since most no guarantee that we will continue to meet the eligibility criteria
revenues and expenses are incurred in the same currency. Our
policy is to hedge a portion of our foreign exchange exposure

28


or that the CNE program will not be amended or cancelled in the focused solution, like us, than to devote resources to developing
future. and marketing their own specialized products.
Other tax issues – Although we are of the view that all expenses As our software solutions expand, potential competitors may
and tax credits claimed by the Company, including research and have significantly greater resources than we do, and therefore,
development expenses and tax credits, are reasonable and we may be at a disadvantage when competing against them.
deductible and have been correctly determined, there can be no As a result, they may be able to adapt more quickly to new or
assurance that the Canadian taxation authorities will agree. If emerging technologies and changes in customer requirements
the Canadian taxation authorities successfully challenge the or to devote greater resources to the development, promotion
deductibility of our expenses or the correctness of income tax and sale of their products than we can. Any of these factors
credits claimed, our operating results could be adversely could materially impair our ability to compete and have a
affected. We may, directly or indirectly, through our subsidiaries, material adverse effect on our operating performance and
be subject to taxes with respect to our operations in foreign financial position.
jurisdictions. Although we are of the view that the liability with
Capacity to adapt our business model – Customer behaviour
respect to such foreign taxes has been provided for in our books
reacting to market conditions and/or to industry and technology
and financial statements, our future income and cash may be
trends might change their buying and contractual habits like
adversely affected if taxation authorities were successful in
renting software as opposed to buying. Any such change could
challenging our liabilities for such foreign taxes.
impact our business model and practices which could have a
Business Risks material adverse effect on our operating performance and finan-
Sales and implementation cycle duration – Typically, the larger cial position.
the potential sale, the more time, money and other resources
Capacity to integrate new technologies following acquisitions –
will be invested. As a result, it may take an extended period of
The different acquisitions made in the past three fiscal years
time after our first contact with a customer before a sale can
enabled us to add new technologies that must be integrated into
actually be completed. We may invest significant sales and
our current software platforms and to market new solutions.
other resources in a potential customer that may not generate
Management has to implement processes and systems to
revenues for a substantial period of time, if at all. During these
evaluate technologies in all business units in order to prioritize
lengthening sales and implementation cycles, events may occur
the development of certain integrated software solutions. The
that affect the size or timing of the order or even cause it to be
integration of new businesses may cause unexpected
cancelled. If these events were to occur, sales of certain of our
operational problems and expenditures. In addition, as
new enterprise solutions or services may be adversely affected,
management is obliged to devote much time, attention and
which would reduce our operating revenue.
resources to the integration of these operations, we might not
Competitive environment – The Company currently faces be able to maintain our usual quality of products offered to
competition from software providers in both the computer-aided established customers and as a result, our revenues and
design (CAD) and enterprise resource planning (ERP) markets. operating results could be adversely affected.
The interior design software industry is highly fragmented and
Capacity to capitalize on new software solutions – The addition
comprises generally of point-of-solution (as opposed to
of new software solutions also gives rise to risks. There may be
complete solutions) software providers that address specific
little demand for our new solutions, and they may not be broadly
aspects of design software or software providers that have
accepted by the market. If we do not derive any benefit as a
limited geographic coverage. Accordingly, none of the
result of our efforts to market our new solutions, our operating
Company’s competitors competes in all of its product and
results could be adversely affected.
geographic markets. Generally, competitors can be described
as follows: Capacity to improve our software offering – We do our best to
remain the leader in our industry. To do so, we have to
CAD Software: Competitors include smaller, mostly privately-
successfully develop new products or enhance and improve our
owned, companies whose products generally have limited
existing software platforms, and position and price our products
functionality when compared with those of the Company, which
to meet market demand. We have to continually invest in
are principally focused on specific aspects of design software,
accelerating product introductions and shortening product life
and compete generally in some of our geographic markets but
cycles, which requires ongoing expenditures for research and
not all.
development. Furthermore, any new products we develop could
ERP Software: As the Company increases the penetration of its require long development and testing periods and may not be
ERP solution, it also faces competition from ERP software introduced in a timely manner or may not achieve the broad
vendors, such as SAP, Lawson and Oracle, which generally market acceptance necessary to generate significant revenues.
offer less targeted design, specification, photo-realistic Our competitors are alert and if we are unable to continue
rendering or 3-D visualization capabilities. In addition, 20-20 product development and marketing, our operating revenue and
also faces competition from ERP software vendors targeting the margins could be affected.
windows and doors and cabinet maker markets.
Large software providers typically find it more beneficial to form
alliances with specialized software providers that provide a

29


Capacity to protect our intellectual property - We rely on various Capacity to identify and complete strategic acquisitions that will
intellectual property protections, including contractual provisions, contribute to future growth – We may be unable to: (i) identify
copyright, trademark and trade secret laws, to preserve our suitable acquisition targets available for sale at reasonable
intellectual property rights. To protect our intellectual property, prices; (ii) properly evaluate the fair value of the target
we may become involved in litigation, which could result in businesses or; (iii) complete any acquisition in a given
substantial expenses, divert the attention of our management, timeframe. In addition, if we proceed with acquisitions, available
cause significant delays, materially disrupt the conduct of our cash may be used to complete such transactions, diminishing
business or adversely affect our revenues, financial position and our liquidity and capital resources or shares may be issued
results of operations. which could cause significant dilution to existing shareholders.
Furthermore, identifying acquisitions and the completion of
We cannot determine with certainty whether any existing third-
acquisitions per se, could divert management's attention and
party trademarks or patents or the issuance of any third-party
financial resources which may negatively affect our operating
trademarks or patents would require us to alter our names or
results.
our technology, obtain licenses or cease certain activities. We
may become subject to claims by third parties that we infringe Capacity to maintain rights to use third party software – We
their property rights due to the growth of software products in license certain technologies used in our products from third
our target markets, the overlap in functionality of these products parties, generally on a non-exclusive basis. The termination of
and the prevalence of software products. Litigation may be any of these licenses, or the failure of the licensors to adequate-
necessary to determine the scope, enforceability and validity of ly maintain or update their products, could delay our ability to
such third-party proprietary rights or to establish our proprietary ship our products while we seek to implement alternative tech-
rights. Regardless of their merit, any such claims could result in nology offered by other sources and require significant un-
substantial expenses, divert the attention of our management, planned investments on our part. In addition, alternative tech-
cause significant delays, materially disrupt the conduct of our nology may not be available on commercially reasonable terms.
business or adversely affect our revenues, financial position and
results of operations.
Bugs in our products could result in significant costs and hurt
sales - Our products are complex and, accordingly, they may
contain errors, or "bugs", that could be detected at any point in
their product life cycle. Errors in our products could materially
and adversely affect our reputation, result in significant costs to
us, delay planned release dates and impair our ability to sell our
products in the future.
Risk of legal proceedings – In the normal course of business,
the Company might be subject to lawsuits, claims and litigation
for amounts not covered by our liability insurance. Some of
these proceedings could result in significant costs. Although the
outcome of such proceedings is not predictable with assurance,
the Company has no reason to believe that the disposition of
such matters could have a significant impact on its financial
position, operating results or ability to carry on its business
activities. As at October 31, 2009, no material claims or litigation
have been brought against the Company, Other than a counter-
claim in response to a claim initiated by the Company against
the former owners of Planit* Fusion relating to certain claims
concerning the acquisition which will likely be offset by the
greater amount claimed by the Company.
Capacity to manage strategic alliances, partnerships and
distributor relationships that will contribute to future growth – We
may be unable to: (i) retain distributor relationships under
acceptable business terms; (ii) partner with parties that are not
suitable for driving future growth or; (iii) complete required
agreements on a timely basis. Furthermore, identifying alliances
and partnerships and concluding such agreements, could divert
management's attention and financial resources which may
negatively affect our operating results.

30

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The Consolidated Financial Statements and Management Discussion and Analysis (“MD&A”) of 20-20 Technologies Inc. (the “Company”
or “20-20”) and all other information in this Annual Report are the responsibility of Management. The Consolidated Financial Statements
and the Management Discussion and Analysis have been reviewed and approved by its Board of Directors.

The Consolidated Financial Statements have been prepared by Management in accordance with Canadian generally accepted accounting
principles. The MD&A has been prepared in accordance with the requirements of securities regulations. The Financial Statements and
MD&A include items that are based on best estimates and judgments of the expected effects of current events and transactions.
Management has determined such items on a reasonable basis in order to ensure that the Financial Statements and MD&A are presented
fairly in all material respects. Financial information presented elsewhere in the Annual Report is consistent with that in the Consolidated
Financial Statements.

The Company’s Chief Executive Officer and Chief Financial Officer have designed disclosure controls and procedures, or have caused
them to be designed under their supervision, to provide reasonable assurance that material information related to the Corporation has
been made known to them and has been properly disclosed in the Consolidated Financial Statements and MD&A. The Company’s Chief
Executive Officer and Chief Financial Officer have also evaluated the effectiveness of such disclosure controls and procedures as of the
end of fiscal year 2009. As at year end, Management believes that the disclosure controls and procedures effectively provide reasonable
assurance that material information related to the Company has been disclosed in the Consolidated Financial Statements and MD&A. In
compliance with Multilateral Instrument 52-109, the Company’s Chief Executive Officer and Chief Financial Officer have provided to the
Canadian Securities Administrators a certification related to the Company’s annual disclosure documents, including the Consolidated
Financial Statements and MD&A.

The Board of Directors is responsible for ensuring that Management fulfills its responsibilities for financial reporting and is ultimately
responsible for reviewing and approving the Consolidated Financial Statements and MD&A. The Board of Directors carries out this
responsibility principally through its Audit Committee.

The Audit Committee is appointed by the Board of Directors and is comprised entirely of independent and financially literate directors. The
Audit Committee meets periodically with Management, as well as with the external auditors, to review the Consolidated Financial
Statements, the MD&A, auditing matters and financial reporting issues, to discuss internal controls over the financial reporting process,
and to satisfy it that each party is properly discharging its responsibilities. In addition, the Audit Committee has the duty to review the
appropriateness of the accounting policies and significant estimates and judgments underlying the Consolidated Financial Statements as
presented by Management, and to review and make recommendations to the Board of Directors with respect to the fees of the external
auditors. The Audit Committee reports its findings to the Board of Directors for its consideration when it approves the Consolidated
Financial Statements and MD&A for issuance to shareholders.

Raymond Chabot Grant Thornton LLP, external auditors approved by the shareholders, meets regularly with the Audit Committee to
discuss audit activities, financial reporting matters and other related subjects.

This report and our audited consolidated financial statements were reviewed by the Company’s Audit Committee on January 21, 2010 and
approved by 20-20’s Board of Directors on January 27, 2010.

/s/ Jean Mignault /s/ Jean-François Grou /s/ Steve Perrone, C.A.
Executive chairman Chief Executive Officer Chief Financial Officer

Laval, Canada
December 23, 2009

31

Auditors' Report Raymond Chabot Grant Thornton LLP
Suite 2000
National Bank Tower
600 De La Gauchetière Street West
Montréal, Québec H3B 4L8

To the Shareholders of Telephone: 514-878-2691
Fax: 514-878-2127
20-20 Technologies Inc. www.rcgt.com

We have audited the consolidated balance sheets of 20-20 Technologies Inc. as at October 31, 2009 and 2008 and the
Auditors' consolidated statements of earnings, shareholders’ equity and cash flows for the years then ended. These financial
Report
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
To the Shareholders of
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that
20-20 Technologies Inc. and perform an audit to obtain reasonable assurance whether the financial statements are free of material
we plan
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the
Company as at October 31, 2009 and 2008 and the results of its operations and its cash flows for the years then ended in
accordance with Canadian generally accepted accounting principles.

1

Montréal, Canada
December 23, 2009

1
Chartered accountant auditor permit no. 19007

Chartered Accountants
Member of Grant Thornton International Ltd

32

20-20 Technologies Inc.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of U.S. dollars)

October 31,
2009 2008
$ $
ASSETS
Current assets
Cash and cash equivalents (Note 10) 23,221 13,487
Short-term investments (Note 11) - 1,644
Accounts receivable (Note 12) 18,910 17,538
Income taxes receivable 24 585
Contracts in progress 253 267
Prepaid expenses 1,243 1,244
Future income taxes (Note 6) 421 598
44,072 35,363
Property and equipment (Note 13) 2,322 2,894
Intangibles (Note 14) 9,099 10,417
Goodwill (Note 15) 58,161 52,367
Future income taxes (Note 6) 3,131 1,500
Other assets 451 519
117,236 103,060
LIABILITIES
Current liabilities
Bank loan (Note 16) 149 -
Accounts payable 11,040 12,665
Income taxes payable 1,674 1,465
Deferred revenue 14,665 12,481
Installment on long-term debt (Note 17) 3,024 3,805
Future income taxes (Note 6) 903 -
31,455 30,416
Long-term debt (Note 17) 14,645 11,824
Leasehold inducements 343 364
Non-controlling interest 37 33
Future income taxes (Note 6) 3,853 3,756
50,333 46,393
SHAREHOLDERS’ EQUITY
Capital stock (Note 19) 58,582 58,647
Common stock options and warrants 1,279 1,145
Contributed surplus 1,015 961

Deficit (4,268) (6,883)
Accumulated other comprehensive income 10,295 2,797
6,027 (4,086)
66,903 56,667
117,236 103,060

The accompanying notes are an integral part of the consolidated financial statements.

On behalf of the Board,

/s/ Jean Mignault /s/ Benoit La Salle
Director Director

33

CONSOLIDATED EARNINGS
(Amounts in thousands of U.S. dollars, except per-share data)

2009 2008
$ $
Revenues
License sales 17,341 26,392
Maintenance and other recurring revenues 33,300 35,368
Professional services 12,466 16,842
63,107 78,602
Cost of revenues
License sales 2,169 2,854
Maintenance and services 13,934 18,756
16,103 21,610
Gross margin 47,004 56,992
Operating expenses
Sales and marketing 16,587 26,015
Research and development (Note 4) 12,015 16,945
General and administrative 12,764 14,420
Stock-based compensation (Note 18) 250 (27)
Restructuring costs (Note 5) (228) 2,329
41,388 59,682
Operating Income (loss) 5,616 (2,690)

Financial expenses 1,836 971
Earnings (loss) before income taxes 3,776 (3,689)
Income taxes (Note 6)
Current 1,894 735
Future (699) (2,127)
1,195 (1,392)
Net earnings (loss) 2,581 (2,297)

Earnings (loss) per share (Note 7)
Basic and diluted 0.14 (0.12)

The accompanying notes are an integral part of the consolidated financial statements and Note 3 provides additional information on consolidated earnings.

34

CONSOLIDATED SHAREHOLDERS’ EQUITY
(Amounts in thousands of U.S. dollars, except share data)

Accumulated
Common other Retained
Common Shares stock options Contributed comprehensive earnings
Number Amount and warrants surplus income (deficit) Total
$ $ $ $ $ $
Balance as at October 31, 2007 18,850,302 58,183 1,600 963 19,363 (4,474) 75,635
Net loss - - - - - (2,297) (2,297)
Translation adjustment - - - - (16,566) - (16,566)

Comprehensive loss - - - - (16,566) (2,297) (18,863)

Options exercised 150,790 712 (511) - - - 201
Promissory note receivable from a
- (82) - - - - (82)
director (Note 8)
Options granted - - 56 - - - 56
Common shares buyback for cash
(53,800) (166) - (2) - (112) (280)
consideration
Balance as at October 31, 2008 18,947,292 58,647 1,145 961 2,797 (6,883) 56,667

Net earnings - - - - - 2,581 2,581
Translation adjustment - - - - 7,498 - 7,498

Comprehensive income - - - - 7,498 2,581 10,079

Options granted - - 19 - - - 19
Warrants issued - - 169 169
Options forfeited - - (54) 54 - - -
Common shares buyback for cash
(20,600) (65) - - - 34 (31)
consideration
Balance as at October 31, 2009 18,926,692 58,582 1,279 1,015 10,295 (4,268) 66,903


35

CONSOLIDATED CASH FLOWS
(Amounts in thousands of U.S. dollars)

2009 2008
$ $
OPERATING ACTIVITIES
Non-cash items
Amortization 3,961 4,687
Leasehold inducements (63) 53
Stock-based compensation 233 (115)
Capitalized interest on long-term debt 29 27
Future income taxes (699) (2,127)
Unrealized loss (gain) on foreign exchange (1,497) 3,215
Unrealized loss (gain) on forward exchange contracts and
currency options 80 461
Changes in working capital items (Note 8) (29) 685
Cash flows from operating activities 4,600 4,617

INVESTING ACTIVITIES
Business acquisitions (Note 9) (31) (40,765)
Short-term investments (1,719) (24,790)
Short-term investments dispositions 3,421 39,998
Property and equipment (520) (1,103)
Other assets (3) (124)
Cash flows from investing activities 1,148 (26,784)

FINANCING ACTIVITIES
Long-term debt 6,985 15,000
Repayment of long-term debt (4,807) (203)
Options exercised - 118
Common shares buyback (31) (280)
Cash flows from financing activities 2,147 14,635

Effect of changes in exchange rate on cash held in foreign
currencies 1,839 (4,261)
Net increase (decrease) in cash and cash equivalents 9,734 (11,793)
Cash and cash equivalents, beginning of year 13,487 25,280
Cash and cash equivalents, end of year 23,221 13,487


36

Notes to Consolidated Financial Statements
(Amounts in U.S. dollars, tabular amounts in thousands, except share and per-share data)

1- GOVERNING STATUTES AND NATURE OF OPERATIONS
The Company, incorporated under Part 1A of the Companies Act (Québec), is a developer and provider of computer-aided design, sales
and manufacturing software tailored for the interior design industry, including a suite of proprietary e-commerce solutions and related
services.

2- ACCOUNTING POLICIES
Basis of presentation
The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles
(Canadian GAAP) and are presented in United States of America dollars (U.S. dollars).
Changes in accounting policies
On November 1, 2008 in accordance with the applicable transitional provisions, the Company adopted two new Handbook sections issued
by the Canadian Institute of Chartered Accountants (CICA);

i) Section 3064, Goodwill and Intangibles Assets which is effective for periods beginning on or after October 1, 2008 replaces
Section 3062, Goodwill and Other Intangibles Assets and Section 3450, Research and Development Costs and establishes
standards for the recognition, measurement and disclosure of goodwill and intangibles assets. The impact of the adoption of
this standard is not significant.

ii) Section 1400, General Standards of Financial Statement Presentation which is effective for periods on or after January 1,
2008 requires management to assess the Company’s ability to continue as a going concern. The adoption of this new
section has no impact on the Company’s consolidated financial statements.
In June 2009, the CICA amended 3862, Financial instrument- Disclosure. This section has been amended to introduce new financial
disclosure requirements, particularly with respect to fair value measurement of financial instruments and entity exposure to liquidity risk.
The amendments to this section apply to annual statements for years ending after September 2009. The Company adopted the
amendment of 3862 in October 2009 and the impact of the adoption of this standard is not significant.
In addition, on January 20, 2009, the CICA issued Emerging Issues Committee Abstract 173, “Credit Risk and the Fair Value of Financial
Assets and Financial Liabilities” (“EIC 173”), to be applied retroactively without restatement of prior period to all financial assets and
liabilities measured at fair value in interim and annual consolidated financial statements. EIC 173 requires the Company to consider its own
credit risk and the credit risk of the counterparty in determining the fair value of financial assets and financials liabilities, including derivative
instruments. The Company adopted EIC 173 in February 2009. The adoption of this standard has no impact on the Company’s
consolidated financial statements.
Use of estimates
The consolidated financial statements have been prepared in conformity with Canadian GAAP, which requires management to make
estimates and assumptions that affect the reported amounts of revenues and expenses, the reported amounts of assets and liabilities, and
the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from these estimates.
Significant estimates in these consolidated financial statements include the valuation of accounts receivable, intangibles and goodwill, tax
credits, restructuring costs, income taxes and the determination of the amount and timing of revenue to be recognized. In its determination
of the valuation of accounts receivable, including the allowance for doubtful accounts, management relies on current customer information
and its planned course of action as well as assumptions about business and economic conditions in the future period over which the
receivables are collectible. Management has estimated the useful life of its intangibles based upon rapidly changing industry trends and
changes in its customers' businesses.
Management is required to make assumptions for the research and development tax credits and those are subject to review and approval
by tax authorities. In its determination of the amount and timing of revenue to be recognized, management relies on assumptions
supporting its revenue recognition policy. Estimates of the percentage of completion for contracts are based upon current actual and
forecasted information and contractual terms.

37


2- ACCOUNTING POLICIES (Continued)
Principles of consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries:

October 31,
2009 2008
% owned % owned
Twenty-Twenty Europe B.V. 100 100
Twenty-Twenty UK Ltd. 100 100
Interior Design Software Ltda. 100 100
20-20 Technologies (Asia), Co., Ltd. 100 100
20-20 Technologies SAS and its subsidiary 100 100
Power Computing Technologies Ltd. 100 100
20-20 Technologies Commercial Corp. 100 100
20-20 Technologies International Inc. 100 100
20-20 Technologies Bangladesh Ltd. 100 100
20-20 Technologies GmbH and its subsidiary 100 100
20-20 Technologies China 100 100
20-20 Fusion Limited 100 100
20-20 Icovia Inc. 51 51
Reporting currency and translation of foreign currencies
The Company uses the U.S. dollar as its reporting currency since a significant proportion of the Company's revenues are recorded in U.S.
dollars.

The Company's financial statements have been translated from the functional currency, the Canadian dollar (C$), into the reporting
currency using the current rate method as follows: assets and liabilities are translated using the exchange rate in effect at year-end and
revenues and expenses are translated using the average rate for the period. The cumulative translation gains or losses have been
included as a separate component of shareholders' equity, under “Accumulated other comprehensive income”.

Transactions concluded in currencies other than the functional currency have been translated as follows:
– Monetary assets and liabilities in foreign currencies of Canadian companies and of integrated foreign operations have been translated
at the exchange rates in effect at the balance sheet dates, whereas other assets and liabilities have been translated at the rate in
effect at transaction dates;
– Revenues and expenses have been translated at the weighted average exchange rates for the fiscal years, except for amortization,
which is translated at the historical rate.
Exchange gains and losses arising from such transactions have been included in earnings.
Revenue recognition
The Company's revenues are derived from license, maintenance and other service fees. The Company licenses its desktop and enterprise
software solutions under single-user license agreements that are non-transferable. Each software license, for which the user pays a one-
time fee, is typically perpetual in nature. The Company also provides maintenance and other recurring services, including customer
support, software and electronic catalog updates and web services, which are renewable at the option of the client. Finally, the Company
provides professional services that include training, electronic catalog creation and maintenance and integration services. The Company
recognizes revenue in accordance with provisions of Section 3400, Revenue, Emerging Issues Committee Abstracts No. 141 (EIC-141),
Revenue Recognition, and No. 142 (EIC-142), Revenue Arrangements with Multiple Deliverables of the CICA Handbook.
The Company recognizes license revenue when it has persuasive evidence that an agreement exists, the software product has been
delivered, the amount to be paid by the customer is fixed and determinable, and collection is deemed probable.

38


Revenue from maintenance and other recurring services is recognized over the term of the agreement, which typically is 12 months. If it is
not considered probable that the revenue is collectible, then it is only recognized when the fee is collected.
Revenue from professional services is recognized when the services are provided.
For contracts with multiple deliverables (e.g., licenses, maintenance and other services), the Company allocates revenue to each element
of the contract based on the relative fair value of each of the elements. The fair value of an element must be based on evidence that is
specific to the vendor. The Company limits its assessment of vendor-specific objective evidence (VSOE) of fair value for each element to
the price charged when the same element is sold separately. If VSOE of all undelivered elements exists but evidence does not exist for
one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the fair value of the
undelivered elements is deferred, and the remaining portion of the agreement fee related to the delivered elements is recognized as
revenue, provided that all other revenue recognition criteria are met. If evidence of fair value of one or more undelivered elements cannot
be established, revenue is deferred and recognized ratably over the last undelivered element.
The Company also enters into various contracts with its clients for services such as electronic catalog creation and updates, training and
integration services. Contract revenue is recorded under the percentage-of-completion method. Under this method, contract revenue and
profits are recognized proportionately with the percentage of completion of work.
The Company uses the efforts expended method to calculate the percentage of completion of work based on direct labour cost incurred at
the date of the financial statements compared to estimated total direct labour costs. Contracts in progress are valued considering labour,
including estimated profits. Contracts in progress represent contracts for which services have been rendered and which have not yet been
invoiced. Losses are recorded when total cost estimates indicate a loss.
Deferred revenue is comprised of revenue from services invoiced that have not met recognition criteria.
Research and development costs and related tax credits
Research and development costs, net of tax credits, are charged to the consolidated earnings in the period in which they are incurred
unless the criteria for capitalization for development costs under Canadian GAAP are met, in which case they are deferred and amortized.
The Company is entitled to certain Canadian tax credits for qualifying research and development activities performed in Canada and
credits pursuant to the Carrefour de la Nouvelle Économie program.

Tax credits are recognized once the Company has reasonable assurance that they will be realized. The tax credits recorded by the
Company are subject to review and approval by tax authorities and it is possible that these amounts will be different from the amounts
accounted for. Tax credits are accounted for as a reduction of the related expenditures for
items expensed in the consolidated earnings and a reduction of the related asset cost for items capitalized on the consolidated balance
sheets.
Income taxes
The Company uses the liability method of accounting for income taxes. Under this method, future income tax assets and liabilities are
determined according to differences between the carrying amounts and tax bases of assets and liabilities. They are measured by applying
enacted or substantively enacted tax rates and laws at the date of the financial statements for the years in which the temporary differences
are expected to reverse. The Company records a valuation allowance against any future income tax asset if, according to management, it
is more likely than not that the asset will not be realized.

39


Stock-based compensation and other stock-based payments
The Company has stock-based compensation plans as described in Note 18. The Company uses the fair value method to account for
stock options granted to employees, using the Black-Scholes option pricing model. Compensation expense is recognized over the
applicable vesting period with a corresponding increase in Shareholders’ Equity under Common stock options. When stock options are
exercised, the exercise price and the related portion previously recorded in Common stock options are credited to Common shares.
Deferred Share Units ("DSUs")
The Company granted deferred share units to directors as described in Note 18. The number of DSUs issued is calculated by dividing the
compensation by the fair market value of the Company’s shares on the date of grant. The DSUs outstanding are reevaluated monthly at
the share market price and all changes are recorded as stock-based compensation.
Employee Share Purchase Plan (ESPP)
The Company implemented a purchase plan of the Company’s shares available to employees as described in Note 18. Compensation
costs are included in the statement of earnings as stock-based compensation.
Earnings (loss) per share
Earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average number of common shares outstanding
during the year. Diluted earnings (loss) per share are calculated taking into account the dilution that would occur if the securities or other
agreement for the issuance of common shares were exercised or converted into common shares at the later of the beginning of the period
or the issuance date. The treasury stock method is used to determine the dilutive effect of the stock options. This method assumes that
proceeds of exercise of the stock options during the year are used to redeem common shares at their average price during the period.
Cash and cash equivalents
Cash and cash equivalents which include cash and short-term investments with original maturities of three months or less are presented at
their fair value.
Short-term investments
Short-term investments consist of debt instruments of companies meeting investment guidelines approved by the Board of Directors.
Short-term investments are recorded at fair value.
Depreciation and amortization
Property and equipment and intangible assets are accounted for at cost and are amortized over their estimated useful lives according to
the straight-line method and the following periods:

Property and equipment (Note 13)
Office furniture 5 years
Computer equipment 3 years
Leasehold improvements Lease term equivalent to 10 years
Automotive equipment 6 years

Intangible assets (Note 14)
Client lists 3 or 7 years
Software 3 or 4 years
Trade name 3 or 5 years
Non-compete agreement 10 or 15 years
Distributor relationships 7 or 10 years

40


Impairment of long-lived assets
The Company reviews the carrying values of its property and equipment and intangible assets for impairment on a regular basis or
whenever events or circumstances indicate that the carrying amount may not be recoverable. If the carrying value exceeds the amount
recoverable, based on undiscounted estimated future cash flows, a write-down to their fair value is charged to the consolidated statement
of earnings. The fair value is calculated based on evaluation of discounted cash flows.
Goodwill
Goodwill is assessed for impairment through an estimation of the fair value of the reporting unit, using the discounted cash flow method,
annually or more frequently when an event or circumstance occurs that more likely than not reduces the fair value of a reporting unit below
its carrying amounts. In the event that the carrying amount exceeds fair value, a second step must be performed whereby the fair value of
the reporting unit's goodwill must be estimated to determine if it is less than its carrying amount. An impairment charge is recorded when
the goodwill carrying amount of the reporting unit exceeds its fair value. As at October 31, 2009 and 2008, the Company determined that it
had one reporting unit.
Leasehold inducements
Leasehold inducements received in connection with the leasing of premises are amortized on a straight-line basis over the lease term.
Financial instruments
All financial assets are classified as held for trading or loans and receivables categories. Also, all financial liabilities are classified as other
financial liabilities. On initial recognition, financial instruments are measured and recorded on the consolidated balance sheet at fair value.
After initial recognition, the financial instruments are measured at amortized cost except for those held for trading category which should
be measured at fair value. The effective interest related to the financial liabilities and the gain or loss arising from a change in the fair value
of a financial asset or financial liability classified as held for trading are included in net earnings for the period in which it arises.
The Company has classified its cash and cash equivalents, short-term investments and forward exchange contracts as held for trading.
The trade accounts receivable, rental deposits, balance receivable on asset disposal, loan receivable, promissory note receivable and
balance of sale receivable were classified as loans and receivables, and the accounts payable and the long-term debt were classified as
other financial liabilities. Gains and losses on cash and cash equivalents and short-term investment are presented in financial expenses in
the consolidated earnings.
Transactions costs
Transactions costs, related to financial assets and liabilities, are accounted for in the financial expenses.
Forward exchange contracts
The Company enters into forward exchange contracts to manage portions of its currency risk exposure. The Company does not account
for these forward contracts using hedge accounting and forward exchange contracts are recorded at fair value. Gains or losses resulting
from changes in fair values are included in the financial expenses, in consolidated earnings.
Embedded derivatives
An embedded derivative is a component of a hybrid instrument that also includes a non-derivative host contract, with the effect that some
of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. If certain conditions are met, an embedded
derivative is separated from the host contract and accounted for as a derivative in the balance sheet, at his fair value. The Company
recognizes embedded derivatives in its consolidated balance sheet, if applicable.

41


Future accounting changes
The CICA has issued the following new Handbook sections which have not yet been implemented by the Company;

a) Section 1582, Business combination, which replaces 1581, Business Combinations which is effective for periods beginning on or
after January 1, 2011 establishes standards for the accounting for a business combination. It provides the Canadian equivalent
to the IFRS Standard, IFRS 3, Business Combinations. The Company will apply this section prospectively to business
combinations for which the acquisition date is on or after November 1, 2011. Earlier application is permitted. The Company is
evaluating the impact of the adoption of this new Section on the consolidated financial statements.

b) Section 1601 Consolidated financial statement, and Section 1602 Non-Controling Interests, which together replace Section
1600, Consolidated Financial Statements are effective for periods beginning on or after January 1, 2011. Section 1601
established standards for the preparation of consolidated financial statements. Section 1602 establishes standards for
accounting for a non-controlling interest in a subsidiary in the consolidated financial statements subsequent to a business
combination. It is equivalent to the corresponding provisions of IFRS standard, IAS 27, Consolidated and Separate Financial
Statements. The Company will apply these sections to interim and annual consolidated financial statements relating to fiscal
years beginning in November 1, 2011. Earlier adoption is permitted. The Company is evaluating the impact of the adoption of
these new Sections on the consolidated financial statements.
Additionally, in February 2008 the Canadian Accounting Standards Board (AcSB) confirmed that the use of IFRS would be required for
Canadian publicly accountable enterprises for years beginning on or after January 1, 2011 and the Company will implement it as at
November 1, 2011. The AcSB also stated that, during the transition period, enterprises will be required to provide comparative figures
established in accordance with IFRS. The IFRS will require additional financial statement disclosures and, while the organization’s
conceptual framework is similar to Canadian GAAP, enterprises will have to take account of differences in accounting principles.
The Company has established its transition plan and has formally established a project team. The project team consists of members from
Finance department and is being overseen by the Company’s Chief Financial Officer. Reporting is done to the Company’s Chief Financial
Officer and to the Audit Committee of the Company’s Board of Directors, on a regular basis. The Company uses an external advisor to
assist in the conversion project.
The Company is currently evaluating the impact of adopting IFRS on the consolidated financial statements. The Company is actually in the
first phase of its transition program, which included scoping to identify the significant accounting policy differences and their related areas
of impact in terms of systems, procedures and financial statements. The Company also is in the assessment of the design and work plan
to measure the differences between IFRS and Canadian GAAP, and the impact on its financial statements, disclosures and operations.
The Company will address the design, planning, solution development and implementation of the conversion in 2010.
3- ADDITIONAL INFORMATION RELATED TO THE CONSOLIDATED STATEMENTS OF EARNINGS
2009 2008
$ $
Amortization of property and equipment 1,389 1,733
Amortization of intangible assets 2,572 2,954
Gain on asset disposal - 175
Interest on long-term debt 712 589
Other interest 187 4
Bank charges 438 701
Exchange gain (loss) (586) 393
Gain on cash and cash equivalent and short-term investments 87 716
Tax credits 2,141 1,954

42


4- RESEARCH AND DEVELOPMENT EXPENSES
The research and development expenses and the related tax credits included in the consolidated statement of earnings are as follows:

2009 2008
$ $
Research and development expenses 12,401 17,084
Less: Tax credits – research and development (1,731) (1,551)
Plus : Amortization of software 1,345 1,412
12,015 16,945

5 – RESTRUCTURING COSTS
Operational Restructuring Plan
On October 14, 2009, the Company approved a restructuring plan in order to further adjust its cost structure due to slow market
improvement. The total estimated restructuring charge related to employee severance, associated to the Operational Restructuring Plan is
$244,999. During 2009, additional restructuring charges for $102,041 in relation with other costs due to initial restructuration along with the
adjustment mentioned above were recorded as restructuring costs line item within the Company’s consolidated statement of earnings.
On October 15, 2008, the Company approved a restructuring plan in order to further adjust its cost structure due to continuing weaker
market conditions. The total estimated restructuring charge related to employee severance, associated to the Operational Restructuring
Plan was $1,360,392 and was recorded as restructuring costs line item within the Company’s consolidated statement of earnings.
On June 11, 2008, the Company approved a restructuring plan in order to restore profitability and align its cost structure to the realities of
current market conditions in North America as well as benefit from cost synergies related to its recent acquisitions. The total estimated
restructuring charge (primarily related to employee severance) associated with the Operational Restructuring Plan was $968,442 and was
recorded as restructuring costs line item within the Company’s consolidated statement of earnings.
Any changes to the estimates of executing the Operational Restructuring Plan will be reflected in the future results of operations. The
Company expects to complete all payments under these plans by October 2010.

Accounts Accounts
Initial payable as payable as
at Restructuring Cash at
estimated Adjustment
expense payments
cost October 31, October 31,
2008 2009
Operational
Restructuring Plan
Severance 2,202 1,558 245 (932) (575) 296
Outplacement fees 47 - - - - -
Other 80 66 102 (57) - 111
Total 2,329 1,624 347 (989) (575) 407

The adjustments made to the operational restructuring provision are mainly due to the following reasons:
- The actual amounts paid for restructuring costs included in the provision were less than the initial estimate done.
- Due to a new government employment program implemented in Germany to respond to economic conditions, the Company modified
its initial restructuring plan conditions for certain employees. The modification allowed those people to continue their employment with the
Company on a part-time basis and as a result, the Company revised the initial provision.

43


6- INCOME TAXES
2009 2008
% %

Combined statutory income tax rate in Canada (a) 30.9 31.1
Foreign income taxed at different rates (0.3) 5.0
Non deductible items 5.7 (15.5)
Change in valuation allowance (3.9) (13.2)
Impact of reduction in income tax rates on future income taxes 1.9 (2.6)
Uncertainties allowance reversal - 19.2
Other differences (2.6) 14.0

Effective income tax rate 31.7 38.0

(a) The Company’s combined statutory income tax rate in Canada includes the appropriate provincial income tax
rates.

The income tax effects of temporary differences that give rise to significant future income tax assets and liabilities are
as follows:

October 31,
2009 2008
$ $

Future income tax assets
Property and equipment 223 218
Intangible assets and goodwill 1,723 862
Financing costs - 170
Restructuring costs 90 390
Leasehold inducement 92 105
Net operating loss carry-forwards 1,642 753
Capital losses 286 487
Other 304 208
4,360 3,193

Future income tax liabilities
Tax credits (1,089) (608)
Property and equipment - (6)
Intangible assets and goodwill (3,963) (3,727)
Other (226) (23)
Total future income tax liabilities (5,278) (4,364)
(918) (1,171)
Valuation allowance (286) (487)
Total future income tax (liabilities) assets (1,204) (1,658)

44


6- INCOME TAXES (Continued)
Amounts recognized in the consolidated balance sheet consist of :
October 31,
2009 2008
$ $
Future income tax assets – current 421 598
Future income tax assets – non-current 3,131 1,500
Future income tax liabilities – current (903) -
Future income tax liabilities – non-current (3,853) (3,756)
Net future income tax liabilities (1,204) (1,658)

As at October 31, 2009, the Company had operating losses carried forward of $4,431,123 for which a tax benefit was not recorded. These
operating losses, in the amounts indicated, are available indefinitely in the following countries:
2009
$
Austria 2,264
France 2,167
Total 4,431

7- EARNINGS (LOSS) PER SHARE
The following table presents a reconciliation of earnings per share and diluted earnings per share:

2009 2008
$ $
Basic

Weighted average number of common shares outstanding 18,929,769 18,852,189
Basic earnings (loss) per share 0.14 (0.12)

Diluted

Weighted average number of common shares outstanding 18,929,769 18,852,189
Effect of dilutive stock options 3,146 -

Adjusted weighted average number of common
shares outstanding 18,932,915 18,852,189
Diluted earnings (loss) per share 0.14 (0.12)

In 2009, the options and warrants not included in the computation of the diluted earnings per share because their exercise prices were
greater than the average market price of the common shares are as follows:
Year ended October 31,
2009

Options 825,497
Warrants 102,459

In 2008, all of the options are not included in the computation of the diluted loss per share since the Company incurred losses and
therefore the options would be anti-dilutive.

45


8- ADDITIONAL INFORMATION RELATED TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
The changes in working capital items are detailed as follows:

2009 2008
$ $
Accounts receivable 858 (3,058)
Income taxes receivable 584 (695)
Contracts in progress 44 33
Prepaid expenses 37 665
Accounts payable (3,014) 2,908
Income taxes payable 937 1,412
Deferred revenues 525 (580)
(29) 685

Cash flows relating to interest and income taxes on operating activities are detailed as follows:
2009 2008
$ $
Interest paid 858 407
Income taxes paid 632 (194)

As of October 31, 2009, the accounts payable included $27,018 ($10,328 in 2008) in relation with the acquisition of property and
equipment.

In October 2008, the Company made a loan to a director who is an officer, for an amount of $82,463 to permit him to exercise outstanding
stock options. The promissory note is payable upon demand, is recorded against Capital Stock and bears interest at the rate published
quarterly by Canada Revenue Agency (1% as at October 31, 2009; 3% as at October 31, 2008).
9- BUSINESS ACQUISITIONS
In 2008, the Company completed business acquisitions that were recorded using the purchase method. Results from these acquisitions
have been included in the statement of earnings from the date of acquisition.
Year ended October 31, 2009
During the year ended October 31, 2009 there were no business or asset acquisitions but the Company modified the purchase price
allocation due to contingent considerations paid and an adjustment made to the estimated income taxes payable recorded at acquisition.
These adjustments relating to certain business acquisitions resulted in a net decrease in goodwill of $888,000.
20-20 Icovia Inc. (formerly Hookumu Inc.)
The Company modified the purchase price allocation due to a contingent consideration paid as part of the original agreement resulting in
an increase of goodwill for $40,000 and cash consideration paid, accordingly.
Planit* Fusion
The Company modified the purchase price allocation due to an adjustment made to the income taxes payable initially recorded at
acquisition, resulting in a decrease of income tax payable and of the goodwill for $928,000 (£ 561,000).
* - Planit is a Trademark used under License from Planit Holdings Limited

46


9- BUSINESS ACQUISITIONS (Continued)
Conceptor Sarl
On May 5, 2008, a wholly-owned subsidiary of the Company acquired a portion of the assets, such as employees and accounts receivable,
of Conceptor Sarl, a software distribution company that sold Planit* Fusion products, based in France, for a consideration of $400,972
(€ 257,083) excluding transaction costs. The unallocated balance of the purchase price was allocated to goodwill.

The values attributed to the assets acquired as of May 5, 2008 were : $
Accounts receivable 48
Goodwill, not deductible for tax purposes 368
Total consideration paid in cash, including transaction costs of $ 16 416
20-20 Icovia Inc. (formerly Hookumu Inc.)
On January 31, 2008 the Company concluded an agreement to acquire 51% of the outstanding shares of Hookumu Inc., based in New
Hampshire, USA, for a cash consideration of $1,625,000 excluding transaction costs, with management of Icovia holding the remaining
49%. Should certain revenue objectives be attained by December 31, 2010, an additional amount of $150,000 will become payable. Icovia
provides interactive, online space planning solutions for the home furnishings, real estate and interior design industry. As part of the
agreement, the Company has an option to acquire the remaining 49% from January 1, 2010 to September 1, 2010 based on a pre-
determined formula. The unallocated balance of the purchase price was allocated to goodwill. The name of the company has been
changed for 20-20 Icovia Inc. (Icovia).
The values attributed to the assets acquired and liabilities assumed as of January 31, 2008
$
were:
Cash 51
Accounts receivable 280
Prepaid expenses 15
Property and equipment 42
Software 259
Client list 168
Accounts payable (296)
Deferred revenue (70)
Future income taxes (154)
Non-controlling interest (11)
Goodwill, not deductible for tax purposes 1,505
Total consideration, including transaction costs of $164 1,789

Consideration payable: $
In cash 1,789
Less : Cash acquired (51)
Net cash consideration paid 1,738

Planit* Fusion
On January 29, 2008 the Company concluded an agreement to acquire the Planit* Fusion business from Planit Holdings Limited for a cash
consideration of $37.7 million (£19 million) excluding transaction costs. The acquisition consists of the worldwide kitchen and bath
software business including 2 subsidiaries Planit International Limited (U.K.), Planit S.A. (France) and all of their US assets related to that
business.

47


Planit* Fusion is the retail design business of the United Kingdom-based Planit Holdings Limited and offers interior design programs that
combine innovative design features with essential sales management tools to provide total support for businesses, including kitchens, baths
and bedrooms. The allocation of the purchase price is subject to change as the Company completes its evaluation of the assets.
Furthermore the Company initiated litigation against the seller that could have an effect on the purchase price. The unallocated balance of
the purchase price was allocated to goodwill.

The values attributed to the assets acquired and liabilities assumed as of January 29, 2008
$
were:
Cash 669
Accounts receivable 2,330
Prepaid expenses 320
Software 2,402
Distributor relationships 2,939
Client list 3,971
Trade name 298
Non-compete agreement 179
Other assets 56
Accounts payable (2,874)
Deferred revenue (1,067)
Long-term debt (302)
Future income taxes (3,337)
Goodwill, not deductible for tax purposes 33,522
Total consideration, including transaction costs of $2,062 39,643

In cash 39,643
Less : Cash acquired (669)
Purchase price balance payable (154)
Net cash consideration paid ( $239 paid in 2007) 38,820

* - Planit is a Trademark used under License from Planit Holdings Limited
Shanghai Rena and DesignTec Co. Ltd
As at November 1, 2007, a subsidiary of the Company concluded an agreement to acquire all of the assets of Shanghai Rena and
DesignTec Co. Ltd for a total consideration of $398,565 in the form of a settlement of an amounts receivable from the vendor. Shanghai
Rena and DesignTec Co. Ltd are related companies with a common shareholder and they have been distributors for the Company in
China and Taiwan respectively, since March 2002. The unallocated balance of the purchase price was allocated to goodwill.

The values attributed to the assets acquired and liabilities assumed as of November 1, 2007
$
were:
Cash 11
Client list 126
Accounts payable (12)
Future income taxes (42)
Goodwill, not deductible for tax purposes 356
Total consideration, including transaction costs of $41 440

48


In cash 440
Less : Application of amounts receivable from the vendor 399
Cash acquired 11
Net cash consideration paid 30

10- CASH AND CASH EQUIVALENTS
2009 2008
$ $
Cash 21,014 8,392
Cash equivalents
Term deposits matured between November 2008 and January 2009,
interest rate 2.42% to 3.35% - 2,894
Banker’s acceptance, matured in December 2008, interest rate 1.85% - 2,201
Commercial high interest corporate bank accounts, with no maturity date
and interest rate of 0.65% to 0.95% 2,207 -
23,221 13,487

11 – SHORT-TERM INVESTMENTS
2009 2008
$ $
Bankers acceptance, bearing interest at 3.14% matured in November
2008 - 1,644
- 1,644

12 – ACCOUNTS RECEIVABLE
October 31,
2009 2008
$ $
Trade accounts 13,588 13,795
Balance receivable on asset disposal 177 279
Fair value of forward exchange contracts - 63
Interest on investments - 19
Balance of sale receivable on demand without interest 50 50
Loan receivable on demand without interest 185 100
Tax credits receivable 4,585 2,627
Other 325 605
18,910 17,538

49


13 – PROPERTY AND EQUIPMENT
October 31, 2009
Accumulated
Cost amortization Net
$ $ $
Office furniture 1,782 1,392 390
Computer equipment 4,353 3,564 789
Leasehold improvements 2,619 1,607 1,012
Automotive equipment 390 259 131
9,144 6,822 2,322

October 31, 2008
Accumulated
$ $ $
Office furniture 1,799 1,304 495
Computer equipment 4,298 3,087 1,211
Leasehold improvements 2,229 1,219 1,010
Automotive equipment 361 183 178
8,687 5,793 2,894

14- INTANGIBLE ASSETS
October 31, 2009
Accumulated
$ $ $
Client lists 8,788 4,269 4,519
Software 6,108 4,282 1,826
Trade names 496 381 115
Non-compete agreement 509 115 394
Distributor relationships 2,721 476 2,245
18,622 9,523 9,099

October 31, 2008
Accumulated
$ $ $
Client lists 7,783 2,736 5,047
Software 5,303 2,729 2,574
Trade names 439 256 183
Non-compete agreement 451 67 384
Distributor relationships 2,410 181 2,229
16,386 5,969 10,417

During the year ended October 31, 2009, $121,000 was reallocated from prepaid expense to software. During the year ended October 31,
2009, no intangible assets were acquired ($10.3 million in 2008).

50


15 – GOODWILL
October 31,
2009 2008
$ $
Balance, beginning of year 52,367 29,407
Business acquisitions (Note 9) - 35,751
Change in purchase price allocation (Note 9) (888) -
Effect of foreign currency exchange rate changes 6,682 (12,791)
Balance, end of year 58,161 52,367

16 – AUTHORIZED BANK LINE OF CREDIT
a) The Company obtained in January 2008 a credit facility of up to C$25 million in the form of a secured and committed revolving credit
line in place with two Canadian banks. On January 31, 2009, the Company did not meet a covenant under this credit facility and
obtained a waiver from the lender with respect to the obligation. Consequently, the Company was obliged to reimburse the sum of $1
million and the facility was amended in July 2009. The modified terms are as follow: a credit facility of up to $15 million, a three-year
term but payable at the discretion of the Company at any time and the option to draw loans based on Cnd prime rate, U.S. base rate,
Libor or banker’s acceptances. The interest rate charged is the sum of the base rate applicable according to the type of loan (Libor,
US Prime, CND Prime) and a premium which is based on certain financial test results achieved on a quarterly basis. The maximum
interest rate premium is either 2.5% on U.S. base rate and on Cnd prime rate or 4% on Libor (2.375% on U.S. base rate in 2009 and
1.875% on Libor in 2008). As of October 31, 2009, the interest rate applicable to this facility is 6.125% (4.68% in 2008). The facility is
secured by a moveable hypothec of C$37.5 million on the Company’s and two of its subsidiaries’ assets. The amount that can be
borrowed under this facility is subject to the maintenance of certain financial covenants which include a leverage ratio and an interest
and rent coverage ratio. As of October 31, 2009, the unused portion of the facility amounted to $4.7 million. At October 31, 2009, the
Company meets its obligations under this credit facility.

b) A 51% owned subsidiary of the Company has a demand credit facility of $300,000 in the form of a secured revolving line of credit
renewal with a United States bank. The facility is renewable annually, bears interest at 0.5% plus a premium based on the US Prime
rate and is secured by the subsidiary’s assets. This loan contains a covenant that requires the subsidiary to maintain a financial ratio.
As of October 31, 2009, the unused portion of the facility amounted to $150,716. At October 31, 2009, the subsidiary did not meet its
obligations under this credit facility but the facility was renewed after year end.
17 – LONG-TERM DEBT
As at October 31,
Current
portion 2009 2008
$ $ $
Payable in Canadian dollars
Government loan, without interest, maturing in 2009 - - 16
Government loan (a) 2,345 2,345 -
Government loan (b) 128 4,473 -
Payable in U.S. dollars
Revolving credit line (Note 16) - 10,300 15,000
Balance of purchase price (c) 494 494 464
Other loans - - 4
Payable in Pounds Sterling
Other loans 57 57 145
3,024 17,669 15,629
Installments due within one year 3,024 3,805
14,645 11,824

51


17 – LONG-TERM DEBT (Continued)
a) Government loan, maximum authorized amount of C$4,800,000 to finance 2008, 2009 and 2010 research and development tax
credits. As of October 31, 2009, C$2,526,000 was drawn to finance 2008 and part of 2009 tax credits. The amount outstanding as of
October 31, 2009 is payable in installments of C$700,000 upon reception of the 2008 research and development tax credits or at the
latest April, 30, 2010; C$1,826,000 upon reception of the 2009 research and development tax credits or at the latest April, 30, 2011;
bearing interest at Investissement Québec’s weekly variable rate plus 2% (4% as of October 31, 2009). The facility is secured by a
moveable hypothec of C$5,760,000 on the Company’s tax credits receivable. Except for 2008, 2009 and 2010 research and
development tax credits, the hypothec is subordinated in favor of the lender of the credit facility of the Company described in Note
16. This loan contains covenants that require the Company to maintain certain financial ratios. At October 31, 2009, the Company
met its obligations under this credit facility.

b) Government loan, maximum authorized amount of C$5,000,000, payable commencing 12 months after initial disbursement in eighty
four monthly installments of C$59,523 plus an additional amount based on the Company’s net income up to a maximum of
C$350,000 per year, bearing interest at Investissement Québec’s preferred rate plus 2% (4.25% as of October 31, 2009), maturing
on September 14, 2017. The loan is secured by a moveable hypothec of C$6,000,000 on the Company’s assets. The hypothec is
subordinated in favor of the lender of the credit facility of the Company described in Note 16. This loan contains covenants that
require the Company to maintain certain financial ratios. At October 31, 2009, the Company met its obligations under this credit
facility.

In addition, the lender was granted 102,459 warrants for no additional consideration. The fair value of the warrants was determined
upon issuance using the Black-Scholes option pricing model and amounted to an aggregate of C$182,203 and was credited to
Common stock options and warrants in the Shareholders’ Equity. The nominal value of the loan (C$5,000,000) was reduced by the
fair value of the warrants for C$182,203. The interest expense on the loan is determined by applying an effective interest rate of
5.33% to the outstanding liability component. The difference between the actual interest payment and the interest expense is
accreted to the loan up to its face value.

c) Balance of purchase price of $500,000, without interest, effective rate of 4.5%, payable by installments of $500 for each copy of the
Build-Rite software sold by the Company. The remaining balance is payable in July 2010 (Note 20)

The installments on long-term debt for the next five years assume that the maximum payment is made yearly in relation with loan
Government loan b). The payments are as follows:

2010 : 3,006 2013 : 988
2011 : 11,288 2014 : 988
2012 : 988 2015 and thereafter : 579

18- STOCK-BASED COMPENSATION
Stock option plans
Under a stock option plan adopted in 1999, the Company could grant a maximum of 720,000 options to its officers and key employees, all
of which have been granted. Since its inception, 214,360 shares have been issued following the exercise of options. The options granted
to officers could be exercised as of the grant date or on another basis as determined by the Board. Unless determined otherwise by the
Board, options granted to other employees could be exercised at the rate of 20% per year beginning on the grant date anniversary. These
options expire 6 to 12 years after being granted. When an employee leaves the Company, options held must be exercised within 90 days.
In connection with the acquisition of 20-20 Giza Inc. in 2001, 172,860 common share stock options were issued outside of the stock option
plan. These options can be exercised for $0.71 each and expire in 2010. An employee who leaves the Company has 90 days during which
to exercise the options.

52


18- STOCK-BASED COMPENSATION (Continued)
For the year ended October 31, 2009 there were no changes in the number of options outstanding, related to the 20-20 Giza options.

Giza Options
Number
Balance as at October 31, 2007 9,800
Options exercised in 2008 (4,200)
Options exercised in 2009 -

On May 27, 2004, the Board of Directors approved the termination of the above plans, and such resolution was effective following the
completion of the initial public offering. Such terminations did not affect options previously granted under these plans which were not
exercised or expired.

In conjunction with its initial public offering, the Company established a new share option plan (the “Share Option Plan”). Under the Share
Option Plan, options to acquire Common Shares may be granted to officers, consultants and full-time employees of the Company and its
subsidiaries. The terms, exercise price and number of Common Shares covered by each option as well as the vesting periods of such
options is determined by the Board of Directors at the time the options are granted but cannot be more favorable than those permitted
under applicable securities legislation. The total number of Common Shares that is reserved for issuance under the Share Option Plan
and the previous stock option plans cannot exceed, in the aggregate, 10% of the issued and outstanding Common Shares.

Since its inception, 532,277 options have been granted under the Share Option Plan. Options granted vest 33.3% each anniversary date
of the grant and expire 10 years after being granted.

During the year ended October 31, 2009, the Company granted 317,277 options under the Share Option Plan having an exercise price
and expiration date as listed below.
The following table presents the changes in the number of options outstanding for the previous stock option plan and the Share Option
Plan (excluding 20-20 Giza options):

October 31, 2009 October 31, 2008
Weighted Weighted
Average Average
Number Exercise Price Number Exercise Price
C$ C$

Balance, beginning of year 548,220 6.80 694,840 5.69
Options exercised - (146,590) 1.55
Options granted 317,277 2.94 - -
Options forfeited (40,000) 4.65 (30) 1.55
Balance, end of year 825,497 5.42 548,220 6.80
Options exercisable, end of year 508,220 6.97 508,220 6.68

53


The following table summarizes information about options outstanding and exercisable:

October 31, 2009
Weighted Average Remaining
Contractual Life in Years
Exercise Outstanding Exercisable Outstanding Exercisable
Price Expiration date Number Number
C$
2.44 September 2019 120,000 - 10.0 -
3.24 October 2019 197,277 - 10.0 -
4.65 October 2013 120,000 120,000 4.0 4.0
6.01 November 2013 103,220 103,220 4.0 4.0
6.50 November 2014 15,000 15,000 5.1 5.1
8.03 November 2013 100,000 100,000 4.0 4.0
8.26 January 2016 120,000 120,000 6.2 6.2
9.41 April 2015 50,000 50,000 5.4 5.4
825,497 508,220 6.7 4.7
The fair value of the stock options and warrants granted was estimated at the grant date using the Black-Scholes option-pricing model on
the basis of the following weighted average assumptions for the stock options and warrants granted during the year:
Stock option
Warrants
plan

Risk-free interest rate 3.40% 2.86%
Expected dividend rate 0% 0%
Weighted average expected life of the options (years) 10 8
Expected volatility 75% 75%
The estimated fair value of the options is expensed over the options’ vesting period. The weighted average fair value per option granted in
2009 is C$2.33 for the stock option plan and C$1.78 for the warrants.
Warrants
On September 14, 2009, the Company according to the condition of a loan agreement with Investissement Québec (Note 17), issued
102,459 warrants. Each warrant permits the acquisition of one common share at an exercise price of C$2.44 and will expire 2 years after
the full reimbursement of the loan or at the on latest August 27, 2018.
Deferred share unit plan
On November 29, 2004, the Board of Directors of the Company approved a deferred share unit ("DSU") plan for the benefit of the directors
under which they will receive 100% or less of their annual retainer or total compensation in the form of DSUs. Under the terms of the DSU
plan, at the end of each quarter, a number of DSUs equal to the number of common shares that could be purchased on the open market
for a dollar amount equal to the elected deferral amount is credited to an account the Company will maintain for each director. At such time
as any director leaves the Board of Directors, such director will receive lump sum cash payment equal to his credit balance under the DSU
plan.

During the year ended October 31, 2009, 59,920 DSUs (22,723 in 2008) were issued under the plan and an amount of $78,699 ($99,640 in
2008) was charged to stock-based compensation expense. As of October 31, 2009, the Company had recorded an amount payable of
$386,249 ($151,809 in 2008) which will be paid to directors if they leave the Board of Directors. An amount of $134,778 in 2009
(($270,030) in 2008) was accounted for in stock-based compensation expense and resulted from a reevaluation of the liability based on the
Company’s share market value.

54


Employee Share Purchase Plan (ESPP)
The Company Employee Share Purchase Plan (ESPP) came into effect on May 23, 2007. The purpose of this plan is to provide the
participants with an incentive to become Shareholders of the Company. The ESPP allows employees to contribute up to the lesser of 10%
of their eligible compensation and C$10,000 annually. The Company contributes one-third of each employee’s contribution. All
contributions are then remitted to the Administrative Agent who purchases monthly, on behalf of the employees, Common shares on the
open market. The Company also assumes all transaction fees related to the purchases of shares.
During the year ended October 31, 2009, an amount of $16,923 ($87,497 in 2008) related to the Company’s contribution, was charged to
stock-based compensation expense.
19- CAPITAL STOCK
Authorized:
• Unlimited number of Common shares, voting and participating
• Unlimited number of preferred shares whose privileges, terms and conditions are to be established when they are issued.
October 31,
2009 2008
Issued:
Common Shares 18,926,692 18,947,292
Normal Course Issuer Bid
On April 26, 2007, the Company announced its intention to purchase for cancellation purposes, by way of a normal course issuer bid (the
“Bid”), some of its common shares, beginning on May 2, 2007 and ending May 1, 2008. On May 16, 2008, the Company announced its
intention to continue this program beginning on May 21, 2008 and ending on May 20, 2009. This program was renewed on December 14,
2009 and expires on December 13, 2010.
The Company may repurchase for cancellation, up to 946,000 common shares over a maximum period of 12 months representing
approximately 5% of its 18,926,692 issued and outstanding shares as of December 14, 2009. The consideration to be paid by the
Company for any common shares it will repurchase under the Bid will be the market price of such common shares at the time of
acquisition.
Shareholder rights plan
The Company’s shareholder rights plan requires anyone who seeks to acquire 20% or more of the Company’s voting shares to make a bid
complying with specific provisions.
20 – FINANCIAL INSTRUMENTS
The Company is exposed to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for
growth and shareholder returns. The principal financial risks to which the Company is exposed are described below.
Credit Risk
The Company’s maximum exposure to credit risk consists in the carrying value of its cash and cash equivalents, short-term investments
and accounts receivable.
The Company’s exposure to credit risk associated with its accounts receivable is the risk that a client will be unable to pay amounts due to
the Company. Allowances are provided for potential losses that have been incurred at the balance sheet date. The amounts disclosed in
the balance sheet are net of these allowances for bad debts. Accounts receivable are considered for impairment on a case-by-case basis
when they are past due or when objective evidence is received that a customer will default. The Company takes into consideration the
customer’s payment history, his credit worthiness and the then current economic environment in which the customer operates to assess
impairment. The Company accounts for a specific bad debt provision when management considers that the expected recovery is less than
the actual account receivable. All bad debt write-offs are charged to sales and marketing expenses.

55


20 – FINANCIAL INSTRUMENTS (Continued)
The Company believes that the credit risk of accounts receivable is affected by the following:
i. A broad client base dispersed across various geographic locations. However, the client base is somewhat concentrated in the interior
design and furniture manufacturing sectors and may be affected by any downturns due to prevailing economic conditions in any given
geography.
ii. Approximately 70.3% (81.8% in 2008) of trade receivables are outstanding for less than 90 days. The Company does not require
collateral or other security from clients for trade receivables; however credit is extended to clients following an evaluation of
creditworthiness. In addition, the Company performs periodic credit reviews of its clients.
iii. The Company’s three largest customers do not account for 10% of total revenues.
iv. The Company’s management considers that all the financial assets that are not impaired or past due for each of the reporting dates
under review are of good quality.

All of the Company’s accounts receivable has been reviewed for indicators of impairment. Certain accounts receivable were found to be
impaired and a provision of $2.4 million ($1.4 in 2008) has been recorded accordingly. The impaired accounts receivable are mostly due
from customers that are experiencing financial difficulties.

As at October 31, 2009, the aging of accounts receivable is as follows:
October 31,
2009 2008
Current: 4,315 5,838
Past due 1-30 days 2,683 2,506
Past due 31-90 days 2,559 2,948
Past due over 90 days 6,434 3,908
Trade accounts receivable 15,991 15,200
Less allowance for doubtful accounts (2,403) (1,405)
13,588 13,795

The following table provides the change in allowance for doubtful accounts for trade accounts receivable:
October 31,
2009 2008
Balance as at October 31, 2008 1,405 1,523
Acquisitions - 404
1,405 1,927
Accounts written off (373) (702)
Allowance for doubtful accounts 1,190 458
Effect of foreign currency exchange rate changes 181 (278)
Balance as at October 31, 2009 2,403 1,405
The credit risk on cash and cash equivalents, short-term investments and forward exchange contracts is limited because the
counterparties are banks with high credit ratings assigned by international credit-rating agencies. This credit risk is generally diversified
since the Company deals with many different establishments.

56


Fair value of derivative financial instruments
The Company enters into forward exchange contracts to sell amounts of currency in the future at predetermined exchange rates. These
forward exchange contracts serve to protect against the risk exposure to future exchange rate fluctuations. As at October 31, 2009, the fair
value of such derivative financial instruments is determined based on prices obtained from the Company's financial institution for identical
or similar financial instruments. The following table summarizes the amounts of committed currency sales, the average rate and the
favorable (unfavorable) fair value at the specified date of the forward contracts according to their remaining terms:

October 31, 2009
Remaining term Contract amount Average rate Fair value
$ C$ $
Less than three months
Forward contracts 1,000 1.0635 (17)
The fair value of forward exchange contracts has been accounted for as an unrealized foreign exchange loss, presented in financial
expenses in the consolidated earnings, and in accounts payable for $17,000 ($63,000 in accounts receivable in 2008). The realized loss on
forward exchange contracts amounted to $5,600 ($162,600 of gain in 2008) for the year ended October 31, 2009 and is accounted for as a
foreign exchange loss, presented in financial expenses in the consolidated earnings.
Foreign exchange risk
The Company operates internationally and is exposed to risk resulting from changes in foreign currency rates. The functional currency
used by the Company is the Canadian dollar; however, the Company’s financial statements are presented in U.S. dollars. Therefore, only
earnings resulting from transactions in currencies other than the Canadian dollar expose the Company to fluctuations in currency rates.
With respect to Canadian operations, the great majority of revenues are billed and recognized in U.S. dollars while the majority of
expenses are incurred in Canadian dollars. The Company uses forward exchange contracts to sell U.S. dollars in order to meet future
Canadian dollar expense requirements thereby reducing, but not eliminating, the impact of changes in exchange rates.
The Company is exposed to financial risk arising from fluctuations in foreign exchange rates and their degree of volatility. As of October
31, 2009 and 2008, financial assets totaling $37,397,000 ($30,360,000 in 2008) and financial liabilities totaling $28,860,000 ($28,294,000
in 2008) include these amounts expressed in foreign currencies and the equivalent total in U.S. dollars:

As at October 31, 2009 Total $ $ € £ BDT RMB BRL
Financial assets
Cash and cash equivalents 10,749 2,615 1,455 3,098 1,853 5,479 91
Short-term investments - - - - - - -
Accounts receivable 13,958 6,882 3,359 1,050 - 1,752 232
24,707 9,497 4,814 4,148 1,853 7,231 323
Financial liabilities
Bank loan 149 149 - - - - -
Accounts payable 6,765 2,658 2,160 403 180 1,049 172
Long-term debt 10,852 10,794 - 35 - - -
17,766 13,601 2,160 438 180 1,049 172

57



As at October 31, 2008 Total $ $ € £ BDT RMB BRL
Financial assets
Cash and cash equivalents 10,082 5,868 1,321 1,329 2,230 2,329 37
Short-term investments - - - - - - -
Accounts receivable 14,441 8,271 3,175 1,195 - 628 257
24,523 14,139 4,496 2,524 2,230 2,957 294
Financial liabilities
Bank loan - - - - - - -
Accounts payable 7,372 3,737 2,071 526 321 619 136
Long-term debt 15,613 15,468 - 90 - - -
22,985 19,205 2,071 616 321 619 136

Currencies Legend:

$ - U.S. Dollar RMB - Chinese Renminbi
€ - European Euro BRL - Brazilian Real
£ - U.K. Pound Sterling BDT - Bangladesh taka

The Company is mainly exposed to fluctuations in the U.S. dollar, Euro and on the U.K Pound Sterling. The following table details the
Company’s sensitivity to a 10% variation of the U.S. dollar, the Euro and the U.K. Pound Sterling on net earnings and comprehensive
income against the Canadian dollar. The sensitivity analysis includes foreign currency denominated monetary items and adjusts their
translation at period end for a 10% change in foreign currency rates. A weaker U.S. dollar or a stronger Euro and U.K. Pound Sterling with
respect to the Canadian dollar will result in a positive impact while the reverse would result from a stronger U.S. dollar or a weaker Euro
and U.K. Pound Sterling.
UK Pound
U.S. dollar impact Euro impact
impact
Exchange rate as at October 31, 2009 1.0774 1.5896 1.7753
On net earnings C$426,000 C$422,000 C$371,000
On comprehensive income - increase 6,1 million N/A N/A
- decrease (7,4 million) N/A N/A
Interest rate risk
The Company does not enter into derivative financial instruments for speculative purposes. It is exposed to interest rate risk on a portion of
its long-term debt and does not currently hold any financial instruments that mitigate this risk. A 1% variation in interest rates would have
an impact of approximately $118,000 on the net earnings, on an annual basis.
Fair value of other than derivative financial instruments
Trade accounts receivable, balance receivable on asset disposal, loan receivable, promissory note receivable and balance of sale
receivable as well as accounts payable are short-term financial instruments whose fair value is equivalent to their carrying value given that
they will mature shortly.
The fair value of rental deposits is equal to its carrying value of $ 451,000. For the rental deposits consisting in term deposits, the fair value
was established using the market value with an interest rate of 6.125%. For the other rental deposits, the present value of future cash
flows at the current market rate (6.125%) the Company could have obtained at the balance sheet date for bankers acceptances was used.
The fair value of the Build-Rite balance of purchase price was calculated with the present value of future payments using interest rates
which the Company could have obtained, as of October 31, 2009, for a loan with similar terms, conditions and maturity dates. The fair
value was approximated to the carrying value.

58


The fair value of the revolving credit line is equal to its carrying value of $10,300,000.
The fair value of the government loan assorted with warrant upon disbursement is C$4,825,000 compared to a carrying value of
C$4,819,000. The fair value was established using the cost of borrowing that the Company could have obtained as of October 31, 2009
(5.332%) for a loan with similar terms, conditions and maturity dates.
The fair value of the other government loan and other loans approximates the carrying value at the balance sheet date because of their
shorter term maturities.
Liquidity risk
Liquidity risk is the risk that the Company is not able to meet its financial obligations as they become due or can do so only at excessive
cost. The Company’s growth is financed through a combination of the cash flows from operations, borrowing under the existing credit
facilities and the issuance of equity. One of management’s primary goals is to maintain an optimal level of liquidity through the active
management of the assets and liabilities as well as the cash flows. Even if the Company did not meet the covenant at the beginning of the
2009 fiscal year from its main lender that resulted in an amendment of the terms of the original agreement, the credit facility covenants
were respected for the rest of the year and as of October 31, 2009. Given the Company’s available liquid resources as compared to the
timing of the payments of liabilities, management assesses the Company’s liquidity risk to be low.
The Company’s liabilities have contractual maturities which are summarized below:
Current within Non-Current later than
12 months 1-5 years 5 years
$ $ $
Bank loan 149 - -
Accounts payable 11,040 - -
Long-term debt 3,006 14,252 579
14,195 14,252 579

21 – CAPITAL RISK MANAGEMENT
The Company’s objective when managing its capital is to safeguard the Company’s assets and its ability to continue as a going concern
while at the same time maximizing the growth of its business and the returns to its shareholders. The Company’s capital consists of
shareholders equity, excluding accumulated other comprehensive income. In its capital structure, the Company considers its share
repurchase program (Normal Course Issuer Bid) as a means to achieve its objectives.
This objective is achieved by prudently managing the capital generated through internal growth, optimizing the use of lower cost capital
and raising share capital when required to fund growth initiatives as well as a conservative approach to safeguarding its balance sheet.
Consistent with others in the industry, the Company monitors capital on the basis of the ratio of return on capital (net earnings, excluding
non-recurring items divided by the average book value of shareholders’ equity, excluding accumulated other comprehensive income). The
Company also monitors capital on the basis of the ratio of interest bearing debt to capital which the Company expects to maintain in the
range of 0.2 to 0.5 to 1.0. The Company set this range following its acquisition of the Planit* Fusion business described in Note 9.

59


21 – CAPITAL RISK MANAGEMENT (Continued)
The Company monitors these ratios and reports them to its Board of directors on a quarterly basis. The Company’s objectives for capital
for the 2009 fiscal year include:

Objectives As of October 31,
2009 2008
not to exceed
i - Long term debt to Capital ratio 0.3 to 1.0 0.28 to 1.0
0.3 to 1.0
ii - Current Assets to Current Liabilities a minimum of
ratio 1.25 to 1.0 1.40 to 1.0 1.16 to 1.0

not to exceed
iii – Interest bearing debt to EBITDA(1) 1.84 to 1.0 3.50 to 1.0
2.5 to 1.0
1) EBITDA is a non-Canadian GAAP measure that the Company defines as earnings from operations excluding non-recurring items plus depreciation and amortization.

The Company’s intends to maintain a flexible capital structure consistent with the objectives stated above and to respond to changes in
economic conditions and the risk characteristics of underlying assets. In order to maintain or adjust its capital structure, the Company may
purchase shares for cancellation pursuant to normal course issuer bids, issue new shares, raise debt (secured, unsecured, convertible
and/or other types of available debt instruments) or refinance existing debt with different characteristics. Due to an externally imposed
capital requirement related to its credit facility, the Company also monitors the long term debt to net worth ratio to ensure that it does not
exceed 1.0. The Company was in compliance with the above requirement during the year ended October 31, 2009.
22 - COMMITMENTS
The Company has entered into various leases expiring on different dates until September 30, 2017, which call for lease payments of
$11,134,218 for the rental of buildings and other operating leases. The minimum lease payments for the coming years are:
Years ending October 31,
$

2010 3,059
2011 2,389
2012 2,085
2013 1,895
2014 889
Subsequent years 817

The Company received a certificate of eligibility for the Carrefour de la Nouvelle Économie (CNE) program, which enables it to receive
refundable tax credits on eligible salaries until October 2012.

60


23- SEGMENTED INFORMATION
The Company operates in a single reportable operating segment. The single reportable operating segment derives its revenue from the
sale of software solutions and related services.

The following information provides the required enterprise-wide disclosures:

2009 2008
$ $
Revenue by geographic location
Canada 17,709 23,638
United States 17,638 20,596
Germany 7,113 8,713
France 7,323 8,863
United Kingdom 10,013 11,911
Europe – others 1,880 3,537
Other countries 1,431 1,344
63,107 78,602

Revenue is attributed to geographic locations based on the selling point of origin. Most of the revenues originating from Canada are
destined to customers in the United States.
October 31,
2009 2008
$ $
Property and equipment by geographic location
Canada 1,190 1,622
United States 240 354
Germany 158 184
France 295 319
United Kingdom 366 352
Europe – others 8 13
Other countries 65 50
2,322 2,894

Goodwill by geographic location
Canada 990 878
United States 19,333 17,083
Germany 3,681 3,260
France 5,650 5,004
United Kingdom 26,770 24,605
Europe – others 1,336 1,183
Other countries 401 354
58,161 52,367

61

DIRECTORS AND MANAGEMENT
BOARD OF DIRECTORS

Jean Mignault (3) Jocelyn Proteau (2) Jean-François Grou (3) Yves Archambault (1)
Executive Chairman of the Board Vice Chairman of the Board Chief Executive Officer Corporate Director
and Chief of Strategic Direction and Lead Director 20-20 Technologies Inc.
20-20 Technologies Inc. 20-20 Technologies Inc.

Philippe Frenière (1) Me Pierre L. Lambert (2) Benoit La Salle (1) Richard Lord (1)
Vice President Partner President and Chief President and Chief
Investments Montreal Partners Dunton Rainville Executive Officer Executive Officer
& Bourgie Financial Corporation S.E.N.C.R.L. Semafo Inc. Richelieu Hardware Ltd.

Jacques Malo (2) (3) Ghislain St-Pierre (2) (3) (1) Member of the Audit Committee
(2) Member of the Human Resources and Governance Committee
Corporate Director Consultant (3) Member of the Strategic Direction Committee

MANAGEMENT

Jean Mignault Jean-François Grou Steve Perrone Me Yannick Godeau
Executive Chairman of the Board Chief Executive Officer Chief Financial Officer General Counsel
and Chief of Strategic Direction

Jörg Witthus Craig Yamauchi Jean-Michel Brière André Chartier
Executive Vice President Executive Vice President Vice President Vice President R&D
Sales and Services Sales and Services Marketing Point-of-sale Solutions
for Europe Manufacturing & Residential
for North America

Christian Dubuc Klaus Gueniker Christine Labelle Thierry Racinais
Vice President Vice President R&D Vice President Vice President
Product Innovation Manufacturing Solutions Human Resources Sales & Services
Point-of-Sale Solutions for Southern Europe

Craig Rothwell Steve Compton Jean Soucy
Vice President Director Director
Sales & Services Sales and Services Sales & Services
for Northern Europe Commercial Solutions International

CORPORATE INFORMATION

Banking Institution Auditors External Legal Counsel Transfer Agent
TD Toronto Dominion Bank Raymond Chabot Grant Stikeman Elliott LLP Computershare Trust
Thornton LLP Company of Canada
Chartered Accountants

Head Office Stock Listing Investors Relations
20-20 Technologies Inc. Toronto Stock Exchange (TSX) For further information about the company, copies of this
400 Armand-Frappier Blvd. Ticker symbol: TWT report and any other financial information, Please contact us:
Suite 2020 Mr. Steve Perrone
Laval, Quebec Chief Financial Officer
CANADA H7V 4B4 Tel.: (514) 332-4110
Tel.: (514) 332-4110 steve.perrone@2020.net

2020 technologies annual report 2009

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