VendTek Systems Loses $859,954 in Q3 Fiscal 2013 2013-09-30 17:24 AT - News Release
Mr. Doug Buchanan reports
VENDTEK SYSTEMS ANNOUNCES Q3 FISCAL 2013 FINANCIAL RESULTS
VendTek Systems Inc. has released its financial results for its fiscal third quarter ended July 31, 2013.
Selected Financial Information
* Revenues for the quarter ended July 31, 2013 decreased $3.2 million to $21.2 million, or 13.1% from $24.4 million in the prior comparable period of fiscal 2012;
* Gross profit for Q3 FY2013 was $1.4 million compared to $1.3 million in the prior comparable period, while gross margin increased from 5.5% to 6.5%, respectively, compared to the prior comparable period;
* Operating expenses were $2.1 million compared to $1.9 million in the prior comparable period;
* Adjusted EBITDA1 loss of $555,000 for the third-quarter compared to a loss of $533,000 for the prior comparable period;
* Net loss was $860,000 compared to $755,000 in the prior comparable period;
* Cash provided by operations was $1.7 million for Q3 FY2013, compared to $116,000 cash provided by operations in the prior comparable period;
* Cash and cash equivalents was $3.4 million at July 31, 2013 compared to $1.8 million in the prior comparable period.
"We announced several new and renewed customer contracts in Canada and abroad during Q3", said Doug Buchanan, President and Chief Executive Officer of VendTek. "We continue to focus our efforts on increasing our overall gross profit and improving our business prospects in Brazil", commented Mr. Buchanan.
In June our Now Prepay Canadian operation announced a multi-year agreement with Ontario based Hasty Market Corporation ("Hasty Market") to provide our full suite of prepaid products: wireless, long distance, gift cards and financial products. Hasty Market's customers will be able to purchase all of these products from any of the more than 200 locations throughout Ontario. Now Prepay's telecom products include prepaid wireless for all of the major carriers and a selection of regional carriers. Now Prepay will also provide gift cards, financial gift cards, and other prepaid financial products that can be activated on site. Gift Cards and Financial Gift Cards are some of the fastest growing prepaid categories, as consumers no longer have to shop in multiple stores for the perfect gift.
In July we announced a new contract with Specsavers Optical Group Limited, a UK headquartered company doing business throughout Europe. Specsavers sells prepaid eyecare vouchers to companies who distribute them to their employees as part of their benefit program. This agreement will enable Specsavers to use VendTek's eFresh TM technology to replace its physical vouchers with an electronic distribution system. eFresh TM will be used by Specsavers to manage all selling, delivering, servicing, and settlement activities via the Internet and other electronic delivery mechanisms.
Also in July we announced a multi-year agreement with Kitchen Food Fair of Ontario to provide our Now Prepay full suite of products: wireless, long distance, gift cards and financial products. Kitchen Food Fair is one of the fastest growing franchise companies in Canada and has 69 stores throughout the Greater Toronto Area and other parts of Ontario.
Shortly after the close of Q3, we announced the renewal of our distribution agreement with Imperial Oil, a partnership of Imperial Oil Limited and McColl-Frontenac Petroleum Inc. The two organizations started working together in 2003 and have been expanding their cooperation ever since. Under the new agreement, VendTek will use the e-Fresh(tm) software to provide Esso branded locations with a wide range of prepaid products and services that will be sold to Esso customers. The e-Fresh(tm) system reduces shrinkage and inventory requirements for Esso retail outlets while improving consumer access to prepaid products and services by completely eliminating physical cards and vouchers," added Mr. Buchanan.
In Brazil we are pleased that our operations are continuining to grow in both registered and transacting point-of-sale terminals. During the third quarter we increased our registered terminals by about 1,000 units to over 3,900 and our transacting terminals by about 500 units to almost 2,500. The corresponding quarterly merchant revenue increased by approximately $1.5 million to $6.5 million, added Mr. Buchanan.
"As noted, the Company's Q3 financial results yielded some important results", commented Irwin Studen, Interim Chief Financial Officer of VendTek. "VendTek continued to show consistent year-over-year gross profit resulting mainly from its higher margin Brazil operation despite the falloff in Canadian-based revenue resulting from the maturation of the Canadian prepaid wireless market. During the quarter VendTek also implemented a $0.5 million letter of credit backed by a Canadian export development agency to support its growth with one of its key Brazilian wireless product suppliers.
From a liquidity standpoint, the Company reported a higher cash position and stronger operating cash flow for Q3 FY2013 compared to the prior comparable period. This was primarily due to the current quarter ending on the Company's highest cash day of its weekly collection cycle (Wednesday) compared to the lowest cash day in the prior period (Tuesday). As discussed in our MD&A, we continue to explore financing and other strategic options for the Company due to its weakened working capital position to ensure the viability of its ongoing operations," added Mr. Studen.
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.
Conference Call
VendTek management will host a conference call on September 30, 2013 at 4:30PM EDT (1:30PM PDT) to discuss its financial results and operational highlights for its fiscal third quarter ended July 31, 2013.
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 this conference ID 60446472.
A live audio webcast of the conference call will be available at https://www.newswire.ca/en/webcast/detail/1230727/1355699. 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. Unaudited Consolidated Interim Statements of Operations and Comprehensive Loss (All amounts expressed in Canadian dollars) Three and nine months ended July 31, 2013 and 2012 ---------------------------------------------------------------------------- Three months ended July 31, ------------------------------ 2013 2012 -----------------------------------------------------------------------------
Revenue: Products and service revenue (note 10) $ 21,196,580 $ 24,383,492 Cost of product and service revenues (19,820,641) (23,052,558) -----------------------------------------------------------------------------
----------------------------------------------------------------------------- Gross profit 1,375,939 1,330,934
Operating expenses: General and administrative 1,390,568 1,377,168 Selling and marketing 464,877 304,222 Research and development 201,862 255,653 Impairment of non-financial assets (note 13) - - ----------------------------------------------------------------------------- Total operating expenses (note 11) 2,057,307 1,937,043
Loss before finance cost, loss (gain) on disposal of assets, and foreign exchange loss (681,368) (606,109)
Finance cost (note 12) (179,238) (186,859) Loss (gain) on disposal of assets (12,605) 11,658 Foreign exchange loss 13,257 26,631 -----------------------------------------------------------------------------
Net loss for period (859,954) (754,679)
Other comprehensive loss: Foreign currency translation difference (70,633) (149,341)
----------------------------------------------------------------------------- Comprehensive loss $ (930,587) $ (904,020) -----------------------------------------------------------------------------
Net loss per common share (note 15): Basic and diluted $ (0.02) $ (0.02)
Weighted average shares outstanding: Basic and diluted 58,357,652 52,645,652 -----------------------------------------------------------------------------
----------------------------------------------------------------------------- Nine months ended July 31, ------------------------------ 2013 2012 -----------------------------------------------------------------------------
Revenue: Products and service revenue (note 10) $ 62,201,250 $ 72,504,832 Cost of product and service revenues (58,128,565) (68,428,880) -----------------------------------------------------------------------------
----------------------------------------------------------------------------- Gross profit 4,072,685 4,075,952
Operating expenses: General and administrative 4,306,187 4,241,687 Selling and marketing 1,298,368 1,230,784 Research and development 678,348 715,600 Impairment of non-financial assets (note 13) 671,942 - ----------------------------------------------------------------------------- Total operating expenses (note 11) 6,954,845 6,188,071
Loss before finance cost, loss (gain) on disposal of assets, and foreign exchange loss (2,882,160) (2,112,119)
Finance cost (note 12) (525,552) (566,922) Loss (gain) on disposal of assets (28,048) 18,827 Foreign exchange loss 12,091 76,434 -----------------------------------------------------------------------------
Net loss for period (3,423,669) (2,583,780)
Other comprehensive loss: Foreign currency translation difference (48,828) (573,098)
----------------------------------------------------------------------------- Comprehensive loss $ (3,472,497) $ (3,156,878) -----------------------------------------------------------------------------
Net loss per common share (note 15): Basic and diluted $ (0.06) $ (0.06)
Weighted average shares outstanding: Basic and diluted 58,357,652 52,645,652 -----------------------------------------------------------------------------
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