VendTek Systems loses $3.77-million in fiscal 2012 2013-02-12 09:42 AT - News Release
Mr. Doug Buchanan reports
VENDTEK SYSTEMS ANNOUNCES FISCAL 2012 FINANCIAL RESULTS
VendTek Systems Inc. has released its financial results for its fiscal year ended Oct. 31, 2012.
Summary of Fiscal Year Operational Highlights
* The Company announced an agreement between its Brazilian subsidiary Now Prepay Servicos de Informatica Ltda. ("NPSI"), and Petrobras, the largest gas station network in Brazil to deploy its distribution technology into Petrobras' network of over 6,000 retail outlets over an eighteen month period;
* NPSI entered into an agreement with Speed Card, a large distributor of hard (prepaid) cards to convert them to the Company's electronic deployment model in their 3,400 locations throughout Brazil;
* The Company announced that it entered into a license agreement for its e-Fresh(tm) software with Telecom Development Company ("Roshan"), Afghanistan's leading communications provider and the network of choice for over six million Afghans. The e-Fresh(tm) system will provide Roshan's customers a secure and reliable electronic distribution system, eventually replacing the scratch card top-up method that is currently predominant in Afghanistan for mobile phone prepayment;
* NPSI announced an agreement with Level-up! Games to provide electronic PINs to game users. Level Up! is an innovative company born with the mission of providing the market with a new experience in digital entertainment. Founded in Asia in 2002, the company has branches in the Philippines, the USA and Brazil, where it has been operating since 2004;
* The Company entered into a distribution agreement with Paysafecard, one of Europe's leading prepaid transaction processors in over 29 countries. Under the agreement, Canadian consumers will be able to make online purchases easily and securely and without a credit card by purchasing prepaid cards that are similar to cash from over 15,000 Canadian merchants;
* The Company announced it closed an $860,000 non-brokered private placement of 860 debenture units with each debenture unit consisting of one 6.0% unsecured convertible debenture of the Company having a principal amount of $1,000 (the "Debentures"), and one warrant for each share issuable upon conversion of the Debentures (each, a "Warrant") to purchase one common share of the Company. The Debentures will each mature on the date that is two years from the closing of the private placement and entitles the holder to acquire one common share of the Company at a price of $0.11 per common share on conversion. Each Warrant is exercisable for two years from the closing of the private placement at a price of $0.15 per common share. Privinvest Offshore SAL (Holding), the Company's largest shareholder was the sole subscriber of the Debenture Units;
* The Company announced that it closed a $639,320 private placement of units (the "Units) at a price of $0.11 per Unit. Each Unit consists of one common share in the capital of the Company and one-half warrant (a "Warrant"). Each full warrant is exercisable to acquire one additional common share of the Company for eighteen months from the closing of the private placement at a price of $0.20 per common share.
Selected Financial Information
* Revenues for the year ended October 31, 2012 decreased $12.6 million to $95.8 million from $108.4 million for the corresponding period in 2011; * Gross profit for fiscal 2012 decreased $0.1 million from $5.5 million to $5.4 million, while gross margin increased from 5.1% to 5.6%, respectively, compared to fiscal 2011. * Operating expenses were reduced 5.5% to $8.5 million from $9.0 million; * Adjusted EBITDA(1)improved to a loss of $2.6 million for fiscal 2012 compared to a loss of $2.9 million for fiscal 2011; * Net loss for fiscal 2012 was $3.8 million, compared to a net loss of $3.9 million for the fiscal 2011; * Cash provided by operations was ($0.4 million) for fiscal 2012, compared to ($5.4 million) in the corresponding period in fiscal 2011.
"With the announcements of our distribution agreements in Brazil, Canada and Internationally, we are building our customer and revenue base for the long term," said Doug Buchanan, President and Chief Executive Officer of VendTek. "While we expected the decline in prepaid wireless revenue from our North American markets in fiscal 2012, we believe our expansion into the larger international markets affords us organic growth opportunities not otherwise available domestically. In particular, our agreement with Petrobras, the largest oil and gas company in Brazil provides us a stepping stone from which to build our network in a country with over 180 million prepaid users compared to less than 5 million prepaid users in Canada," added Mr. Buchanan.
"The Company's fiscal 2012 results yielded some important positive results", commented Irwin Studen, Interim Chief Financial Officer of VendTek. "The Company continued to show improved Adjusted EBITDA on a year-over-year basis largely resulting from reductions in administrative expenses and improved gross margins resulting from its higher margin software-as-a-service (SaaS) initiatives and a higher mix of revenue accounted for on a net revenue basis, despite the falloff in Canadian-based revenue. From a liquidity standpoint, the Company reported a slightly higher cash position and improved operating cash flow for fiscal 2012 compared to fiscal 2011. This improvement is in part attributable to the financial statement measurement date in relation to the timing of the Company's cash collection and disbursement cycles". Added Mr. Studen, "As discussed in our MD&A, we continue to explore financing options for the Company to ensure the viability of its ongoing operations and the growth of our Brazil operations in particular."
Subsequent Events
* On December 19, 2012, the Company announced it signed an agreement with Koodo to provide top-up pins to Koodo's prepaid customers enabling them to conveniently reload their prepaid phones at any one of VendTek's 15,000 locations across Canada.
VendTek's MD&A and complete financial statements and notes are available at www.sedar.com and the Company's website www.vendteksystems.com.
For more information or to receive the complete statements please contact Samantha White at 604-805-4653 or 1-800-806-4958 or investment@vendteksystems.com.
(1)Management defines Adjusted EBITDA as net income adjusted for financing, taxes, depreciation, amortization expenses, foreign exchange differences and stock based compensation expense. Please see the Management Discussion and Analysis for more details.
Conference Call
VendTek management will host a conference call on Monday February 12, 2012 at 4:00 PM EDT (1:00 PM PDT) to discuss its financial results and operational highlights for its fourth quarter and fiscal year ended October 31, 2012.
To access the conference call by telephone, dial 1-416-764-8688 or 1-888-390-0546 and reference the company name, VendTek Systems Inc., or the conference code 80749206 .
A live audio webcast of the conference call will be available at https://www.newswire.ca/en/webcast/detail/1112023/1212037. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.
-------------------------------------------------------------------------VENDTEK SYSTEMS INC.Consolidated Statements of Operations and Comprehensive Loss-------------------------------------------------------------------------Years ended October 31, 2012 and 2011----------------------------------------------------------------------- Note 2012 2011----------------------------------------------------------------------- (note 22)Revenue:Products and service revenue 11 $95,827,867 $108,424,058Cost of product and service revenues 90,417,087 102,902,757----------------------------------------------------------------------Gross margin 5,410,780 5,521,301Operating expenses: 12General and administrative 4,537,687 5,013,012Selling and marketing 2,990,760 3,095,749Research and development 943,582 844,034---------------------------------------------------------------------Total operating expenses 8,472,029 8,952,795---------------------------------------------------------------------Loss before financing costs, loss (gain) on disposal of assets and foreign expense gain (3,061,249) (3,431,494)Finance costs 13 817,319 789,776Loss (gain) on disposal of assets (17,198) 9,556Foreign exchange gain (25,963) 26,816)---------------------------------------------------------------------Net loss before taxes (3,835,407) (4,204,010)Income tax recovery 56,045 318,335---------------------------------------------------------------------Net loss (3,779,362) (3,885,675)Other comprehensive loss:Foreign currency translation difference (124,772) (128,910)---------------------------------------------------------------------Comprehensive loss $(3,904,134) $(4,014,585)---------------------------------------------------------------------Net loss per common share:Basic and diluted $(0.07) $(0.08)