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Guest-Tek announces results for the three months ended September 30, 2008
(Canada Newswire English Via Acquire Media NewsEdge) Attention Business/Financial Editors
CALGARY, Nov. 14 /CNW/ - Guest-Tek Interactive Entertainment Ltd., ("Guest-Tek" or the "Company") (TSX:GTK), a leader in providing broadband technology solutions to the global hospitality industry, announced results today for the three and six months ended September 30, 2008, the Company's second quarter of fiscal 2009 ("second quarter, Fiscal 2009", "Q2, 2009 or "Q2, Fiscal 2009"). The Company has recorded its third consecutive quarter of positive adjusted EBITDA(1) and adjusted EBITDA growth. Adjusted EBITDA improved to $160 thousand in Q2, 2009 from negative $746 thousand in Q2, 2008. The Company's interim consolidated financial statements for Q2, Fiscal 2009, along with the related notes and Management's Discussion and Analysis can be found on www.sedar.com.
Arnon Levy commented, "I am very pleased to report our third consecutive quarter of positive adjusted EBITDA, which is a reflection of our ongoing management of cost of revenue and operating costs. The completion of the installation at the Renaissance Montgomery of HSIA, VOD, VoIP, and IPTV is a great example of what our products can add to the hospitality industry."
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(1) Adjusted EBITDA is earnings before interest, taxes, depreciation,
amortization, gain or loss on sale of assets and stock based
compensation expense and is provided to assist investors in assessing
the Company's performance. Adjusted EBITDA has no standardized
definition in Canadian GAAP and therefore may not be comparable to
similar measures presented by other companies. Management believes
that Adjusted EBITDA, in addition to net income, is a useful
indication of performance and the Company's ability to generate cash
from operations. Please see the reconciliation of Adjusted EBITDA to
net income included in the Company's MD&A for the period ended
September 30, 2008.
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The Company's performance for the second quarter showed significant improvement over the three months ended September 30, 2007 ("second quarter, Fiscal 2008," "Q2, 2008" or "Q2, Fiscal 2008"). Revenue for Q2, 2009 was $9.14 million compared to $9.00 million for Q2, 2008. While the Company saw a decrease in gross margin in Q2, 2009 compared to Q2, 2008,. Gross margin as a percentage of sales decreased to 33.7% in Q2, Fiscal 2009 compared to 41.5% in Q2, Fiscal 2008. Operating expenses reduced to $4.08 million in Q2, Fiscal 2009 compared to $5.41 million in Q2, 2008. Net loss decreased significantly, to $1.14 million for Q2, 2009 compared to $1.57 million for Q2, 2008.
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Significant events for the quarter include:
- Installation of OneView Media VOD at three properties within the Real
Hotels and Resorts Group (Real Intercontinental Costa Rica, Real
Intercontinental San Salvador and Real Intercontinental Guatemala);
- Completion of a major installation of HSIA, VOD, VoIP, and IPTV at
Renaissance Montgomery, operated by PCH resorts;
- Installation of OneView Internet in 18,369 rooms, with a total
supported base of 511,618 rooms;
- Installation of 495 OneView Media rooms, with a total service base of
6,096 rooms;
- Revenue totaling $9.14 million during the quarter;
- Net loss of $1.14 million; and
- Adjusted EBITDA of $160 thousand.
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Revenue
Overall, revenue increased 1.6% to $9.14 million for Q2, Fiscal 2009 (5.9% to $19.04 million for six months ended September 30, 2008) from $9.00 million for Q2, 2008 ($17.98 million for six months ended September 30, 2007). Revenue decreased 7.6% from $9.89 million recorded in Q1, 2008. The increase in revenue compared to the same quarter a year ago is due to an increase in VOD revenue. The decrease in revenue compared to Q1, 2008 is due to a decrease in HSIA installation revenue. The increase in revenue compared to the same 6 months a year ago is due to an increase in HSIA installation and VOD revenue.
Gross Margin
Gross margin as a percentage of revenue decreased to 33.7% in Q2, Fiscal 2009 (decreased to 38.0% in six months ended September 30, 2008) from 41.5% in Q2, Fiscal 2008 (40.6% in six months ended September 30, 2007), and decreased from 42.0% in Q1, Fiscal 2009. The decrease in gross margin as a percentage of revenue year over year and compared to Q1, 2009 is attributable to an increase in cost of recurring revenue.
Operating Expenses
Total operating expenses decreased 24.6% to $4.08 million for Q2, Fiscal 2009, (decreased 12.9% to $8.74 million for six months ended September 30, 2008) compared to $5.41 million for Q2, Fiscal 2008, ($10.04 million for six months ended September 30, 2007) and decreased 12.4% from $4.66 million for Q1, 2009. The significant decrease in operating expenses is due to a decrease in most components of operating expenses, most notably selling, general and administrative expense and foreign currency loss. This cost management will continue as the effects from global economic slowdown is unknown in our market at present.
About Guest-Tek
Guest-Tek is the world's largest provider of IP based technology solutions for the hospitality industry. Guest-Tek's OneView platform provides hotels with converged data, video and telephony services. Guest-Tek is a preferred vendor to major hotel brands, providing services including network design, procurement, implementation, and post sales customer support to 2,879 properties and 511,618 rooms. Guest-Tek's common shares trade on The Toronto Stock Exchange under the trading symbol "GTK". The company's head offices are in Calgary, Alberta, and it has major support facilities in Irvine, California, and Warsaw, Poland as well as Sales offices located throughout North America and Europe. For more information about Guest-Tek, go to www.guest-tek.com.
The above disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Guest-Tek's control, including: the impact of general economic conditions, industry conditions, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to the announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Guest-Tek's actual results, performance or achievement could differ materially from those expressed in, or implied by these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that Guest-Tek will derive therefrom.
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GUEST-TEK INTERACTIVE ENTERTAINMENT LTD.
Consolidated Balance Sheets
(Unaudited)
September 30, 2008 and March 31, 2008
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September 30, March 31,
2008 2008
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Assets
Current assets:
Cash and cash equivalents $ 867,242 $ 2,956,869
Accounts receivable 7,678,659 8,665,885
Installations in progress 2,152,722 1,801,107
Inventory 1,702,794 1,257,983
Prepaid expenses and deposits 962,102 1,495,486
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13,363,519 16,177,330
Property and equipment 3,602,018 4,412,159
Deferred costs 5,179,141 4,566,026
Intangible assets 4,122,360 4,371,999
Goodwill 11,768,224 11,768,224
-------------------------------------------------------------------------
$ 38,035,262 $ 41,295,738
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 4,881,261 $ 6,527,165
Customer deposits 6,165,068 6,085,687
Deferred revenue 825,036 592,800
Current portion of notes payable 104,235 128,895
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11,975,600 13,334,547
Deferred leasehold inducement 60,943 121,843
Notes payable 1,698,948 1,743,276
Deferred revenue 2,123,097 2,496,438
Future income tax liability 1,050,781 1,049,660
Shareholders' equity:
Share capital 53,779,555 53,779,555
Contributed surplus 3,016,381 2,912,440
Deficit (35,670,043) (34,142,021)
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21,125,893 27,961,191
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$ 38,035,262 $ 41,295,738
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GUEST-TEK INTERACTIVE ENTERTAINMENT LTD.
Consolidated Statements of Operations, Comprehensive loss and Deficit
(Unaudited)
-------------------------------------------------------------------------
Three months ended Six months ended
September 30 September 30
--------------------------- ---------------------------
2008 2007 2008 2007
-------------------------------------------------------------------------
Revenue 9,144,090 9,001,389 19,037,344 17,980,418
Cost of revenue 6,060,029 5,270,027 11,795,887 10,680,444
-------------------------------------------------------------------------
Gross margin 3,084,061 3,731,362 7,241,457 7,299,974
Operating expenses:
Selling, general
and
administrative 2,558,521 3,444,829 6,297,605 6,442,228
Research and
development 247,345 330,895 448,500 715,109
Amortization of
property and
equipment 300,100 483,804 605,053 983,774
Amortization of
intangible assets 169,185 300,291 339,471 583,683
Amortization of
internally
developed software 85,471 78,221 160,798 147,207
Loss on disposal
of assets 504,614 - 504,614 -
Stock based
compensation 46,451 52,713 103,941 99,021
Interest expense 47,061 14,938 92,585 17,428
Foreign currency
loss 118,214 701,524 188,911 1,054,821
-----------------------------------------------------------------------
4,076,962 5,407,215 8,741,478 10,043,271
-------------------------------------------------------------------------
Loss from
operations (992,901) (1,675,853) (1,500,021) (2,743,297)
Interest income 1,835 4,716 4,399 12,523
-------------------------------------------------------------------------
Loss before income
taxes (991,066) (1,671,137) (1,495,622) (2,730,774)
Income tax expense
(recovery) 148,309 (97,206) 32,400 (436,350)
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Net loss and
comprehensive loss (1,139,375) (1,573,931) (1,528,022) (2,294,424)
Deficit, beginning
of period (34,530,668) (29,582,219) (34,142,021) (28,861,726)
-------------------------------------------------------------------------
Deficit, end of
period $(35,670,043) $(31,156,150) $(35,670,043) $(31,156,150)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net loss per
share:
Basic $ (0.07) $ (0.10) $ (0.10) $ (0.15)
Diluted $ (0.07) $ (0.10) $ (0.10) $ (0.15)
Weighted average
number of shares:
Basic 15,825,852 15,823,493 15,825,852 15,823,493
Diluted 15,825,852 15,825,282 15,825,852 15,825,282
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Arnon Levy, President & CEO, Guest-Tek, (403) 444-8488, arnon.levy@guest-tek.com; David Simpson, Interim CFO, Guest-Tek, (403) 444-8486, david.simpson@guest-tek.com
Copyright ? 2008 Canada Newswire Ltd. All Rights Reserved.
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