VendTek Systems Announces Fiscal 2012 Financial Results
Vancouver, British Columbia CANADA, February 12, 2013 /FSC/ - VendTek Systems Inc. (VSI - TSX Venture), a developer and licensor of software for the global prepaid and financial services markets, today reported its financial results for its fiscal year ended October 31, 2012 ("Fiscal 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 http://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 Statement of Financial Position
-------------------------------------------------------------------------
October 31, 2012 and 2011
-------------------------------------------------------------------------
October 31, October 31, November 1,
Note 2012 2011 2010
(note 22) (note 22)
-------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $3,792,619 $3,529,284 $4,832,659
Restricted cash 5 224,637 378,396 -
Accounts receivable 6 4,101,325 5,309,941 4,132,963
Inventories 1,935,531 1,932,905 1,993,818
Prepaid expenses and deposits 583,515 508,025 141,086
-------------------------------------------------------------------------
10,637,627 11,658,551 11,100,526
Non-current assets:
Property, plant and
equipment, net 7 985,457 1,165,281 558,716
Intangible assets 8 1,009,426 774,184 262,214
Goodwill 907,342 907,342 907,342
-------------------------------------------------------------------------
$13,539,852 $14,505,358 $12,828,798
Liabilities and Shareholders' Equity (Deficiency)
Current liabilities:
Bank indebtedness 9 $45,301 $ - $ -
Accounts payable and
accrued liabilities 9,921,976 9,015,991 10,204,295
Current portion finance
lease obligations 9 167,645 125,081 7,587
Deferred revenue 295,072 306,989 52,030
-------------------------------------------------------------------------
10,429,994 9,448,061 10,263,912
Non-current liabilities:
Long term portion of finance
lease obligations 9 252,638 307,265 -
Convertible debenture 9 3,332,066 2,133,301 -
Shareholders' equity (deficiency):
Share capital 10 12,188,130 11,693,629 9,053,612
Contributed surplus 10 3,813,238 3,495,182 2,068,769
Deficit (16,222,532) (12,443,170) (8,557,495)
Accumulated other comprehensive
income (loss) (253,682) (128,910) -
-------------------------------------------------------------------------
(474,846) 2,616,731 2,564,886
-------------------------------------------------------------------------
$13,539,852 $14,505,358 $12,828,798
-------------------------------------------------------------------------
-****-
See accompanying notes to the consolidated financial statements filed on SEDAR.
-***-
-------------------------------------------------------------------------
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 $108,424,058
Cost of product and
service revenues 90,417,087 102,902,757
----------------------------------------------------------------------
Gross margin 5,410,780 5,521,301
Operating expenses: 12
General and administrative 4,537,687 5,013,012
Selling and marketing 2,990,760 3,095,749
Research 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 13 817,319 789,776
Loss (gain) on disposal of assets (17,198) 9,556
Foreign 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)
Weighted average shares outstanding:
Basic and diluted 53,886,167 48,751,587
---------------------------------------------------------------------
-****-
See accompanying notes to the consolidated financial statements filed on SEDAR.
-***-
-------------------------------------------------------------------------
VENDTEK SYSTEMS INC.
Consolidated Statements of Changes in Equity
Years ended October 31, 2012 and 2011
-------------------------------------------------------------------------
Accumulated other
Share capital Contributed comprehensive
Number Value surplus income (loss)
-------------------------------------------------------------------------
Balance, November 1,
2010 (note 22) 47,324,461 $9,053,612 $2,068,769 $ -
Stock based
compensation - - 147,742 -
Stock options
exercised 192,858 128,428 (52,000) -
Issuance of shares
(note 10) 5,028,333 2,511,589 395,225 -
Equity component of convertible debentures
and warrants (note 9) - - 935,446 -
Currency translation
adjustment - - - (128,910)
Net loss for year - - - -
-------------------------------------------------------------------------
Balance, October 31,
2011 52,545,652 11,693,629 3,495,182 (128,910)
Stock based compensation - - 52,055 -
Issuance of shares
(note 10) 5,812,000 494,501 101,310 -
Equity component of convertible debentures
and warrants (note 9) - - 164,691 -
Currency translation
adjustment - - - (124,772)
Net loss for year - - - -
-------------------------------------------------------------------------
Balance October
31, 2012 58,357,652 $12,188,130 $3,813,238 $(253,682)
-------------------------------------------------------------------------
Total Shareholders'
equity
Deficit (deficiency)
-------------------------------------------------------------------------
Balance, November 1, 2010 (note 22) $(8,557,495) $2,564,886
Stock based compensation - 147,742
Stock options exercised - 76,428
Issuance of shares (note 10) - 2,906,814
Equity component of convertible debentures
and warrants (note 9) - 935,446
Currency translation adjustment - (128,910)
Net loss for year (3,885,675) (3,885,675)
-------------------------------------------------------------------------
Balance, October 31, 2011 (12,443,170) 2,616,731
Stock based compensation - 52,055
Issuance of shares (note 10) - 595,811
Equity component of convertible debentures
and warrants (note 9) - 164,691
Currency translation adjustment - (124,772)
Net loss for year (3,779,362) (3,779,362)
-------------------------------------------------------------------------
Balance October 31, 2012 $(16,222,532) $(474,846)
-------------------------------------------------------------------------
-****-
See accompanying notes to the consolidated financial statements filed on SEDAR.
-***-
-------------------------------------------------------------------------
VENDTEK SYSTEMS INC.
Consolidated Statements of Cash Flows
Years ended October 31, 2012 and 2011
------------------------------------------------------------------------
Note 2012 2011
------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Net loss for the year $(3,779,362) $(3,885,675)
Items not involving cash:
Depreciation and amortization 12 369,649 364,815
Accretion on convertible debentures 9 236,227 159,585
Mark to market loss on derivatives 9 330,735 440,587
Foreign exchange losses (gains) (25,963) (26,816)
Loss on disposal of assets (17,198) 9,556
Stock-based compensation expense 10 52,055 147,742
Income tax recovery (56,045) (318,335)
Change in non-cash
operating working capital 21 2,148,350 (2,466,412)
Interest expense on long-term debt 250,357 189,604
-----------------------------------------------------------------------
(491,195) (5,385,349)
Financing activities:
Proceeds on issue of convertible debentures
and warrants 9 852,538 2,786,912
Proceeds on issue of
shares and warrants 10 595,812 2,906,813
Interest paid on long-term debt (245,409) (217,934)
Proceeds from options exercised - 76,428
Repayment of capital lease obligations (125,081) (7,587)
-----------------------------------------------------------------------
1,077,860 5,544,632
Investing activities:
Purchases of equipment (64,550) (428,412)
Decrease (increase) in restricted cash 109,271 (386,516)
Proceeds on disposition of equipment 17,147 -
Payments to develop intangible assets (315,819) (647,154)
-----------------------------------------------------------------------
(253,951) (1,462,082)
Foreign exchange effect on
cash and cash equivalents (69,379) (576)
Increase (decrease) in cash
and cash equivalents 263,335 (1,303,375)
Cash and cash equivalents, beginning of year 3,529,284 4,832,659
-----------------------------------------------------------------------
Cash and cash equivalents, end of year $3,792,619 $3,529,284
-----------------------------------------------------------------------
-****-
See accompanying notes to the consolidated financial statements filed on SEDAR.
This press release is available in PDF. Please click on the following link to view the PDF file:
http://www.usetdas.com/pr/vendtek02122013.pdf
Source: VendTek Systems Inc. (TSX-V VSI) www.vendteksys.com
Maximum News Dissemination by FSCwire. http://www.fscwire.com