Guest-tek(TM) announces results for the three months ended September 30, 2009
CALGARY, Nov. 12, 2009 (Canada NewsWire via COMTEX) --
Company: Guest-Tek Interactive Entertainment Ltd (GTK)
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 months ended September 30, 2009, the Company's second quarter of fiscal 2010 ("second quarter, Fiscal 2010", "Q2, 2010" or "Q2, Fiscal 2010"). The Company has recorded a net loss of $541 thousand and recorded a negative adjusted EBITDA(1). Adjusted EBITDA decreased to $(321) thousand in Q1, 2010 from $160 thousand in Q2, 2009. The Company's interim consolidated financial statements for Q2, Fiscal 2010, along with the related notes and Management's Discussion and Analysis can be found on www.sedar.com.
Arnon Levy commented, "I am very disappointed that we have had our first negative EBITDA quarter in seven quarters, the Company is working hard to rectify this in the next quarter."
The Company's performance for the three months ended September 30, 2009 ("second quarter, Fiscal 2010," "Q2, 2010" or "Q2, Fiscal 2010") showed significant improvement over the three months ended September 30, 2008 ("second quarter, Fiscal 2009," "Q2, 2009" or "Q2, Fiscal 2009"). Revenue for Q2, 2010 was $9.12 million compared to $9.14 million for Q2, 2009. In spite of slightly lower revenue, the Company saw an increase in gross margin in Q2, 2010 compared to Q2, 2009 due to a reduced cost of revenue. Operating expenses increased in Q2, 2010 compared to Q2, 2009. Gross margin as a percentage of sales increased to 41.94% in Q2, Fiscal 2010 compared to 32.2% in Q2, Fiscal 2009. Operating expenses increased to $4.66 million in Q2, Fiscal 2010 compared to $3.43 million in Q2, 2009. Net loss decreased to $541 thousand for Q2, 2010 compared to a net loss of $1.14 million for Q2, 2009. Adjusted EBITDA decreased to $(321) thousand in Q2, 2010 from $160 thousand in Q2, 2009. Significant events for the quarter include:
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- Installation of OneView Media and OneView Internet at the Marriott
Bogota;
- New contracts signed to provide OneView Media and Internet to the
Planet Hollywood Towers by Westgate Resorts and the Viceroy Snowmass;
- New contract signed to provide OneView Media to the Northern Quest
Resort and Casino;
- New contracts signed to provide the TownePlace Suites Charlotte
Mooresville, Aava Whistler Hotel, and Courtyard by Marriott and
Fairfield Inn Phoenix Chandler a high definition in-room
entertainment system over coax lines;
- Addition of OneView Internet in 4,839 rooms, with a total supported
base of 427,889 rooms;
- Addition of 1,279 OneView Media rooms, with a total service base of
9,585 rooms;
- Revenue totaling $9.12 million during the quarter;
- Net loss of $541 thousand; and
- Adjusted EBITDA of $(321) thousand.
(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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Revenue
Overall, revenue decreased 0.3% to $9.12 million for Q2, Fiscal 2010 from $9.14 million for Q2, 2009. Revenue decreased 10.1% from $10.14 million recorded in Q1, 2009. The decrease in revenue compared to the same quarter a year ago is due to a decrease in HSIA installations revenue, partly offset by increases in HSIA recurring revenue and VOD revenue. The decrease in revenue compared to Q1, 2009 is due to decreases in HSIA installation revenue, HSIA recurring revenue, and VOD revenue.
Gross Margin
Gross margin increased 30.0% to $3.82 million in Q2, Fiscal 2010 compared with $2.94 million in Q2, Fiscal 2009, due to a decrease in cost of revenue as a percentage of revenue. Gross margin decreased 3.80% from $3.97 million in Q1, 2010, due to decreased revenue. Key components of cost of revenue include hardware costs, personnel costs for the professional installations team and call centre costs such as personnel and telecommunications.
Operating expenses
Total operating expenses increased 18.4% to $4.66 million for Q2, Fiscal 2010, compared to $3.94 million for Q2, Fiscal 2009, and increased 22.6% from $3.80 million for Q1, 2010. The increase in operating expenses compared to Q2, 2009 is due to a provision for contingency accrued by Management for legal costs defending a potential patent lawsuit, partially set off by a loss on disposal of capital assets in Q2, 2009 of $505 thousand. Net of these 2 amounts, operating expense for Q2, 2010 would be $3.66 million, representing an increase of 2.4% over Q2, 2009 of $3.43 million. The increase in foreign exchange loss from Q2, 2009 to Q2, 2010 was $304 thousand. The increase in operating costs compared to Q1, 2010, was due to the contingency accrual of $1 million. Operating expenses as a percentage of revenue were 51.1% for Q2, Fiscal 2010 compared to 43.0% for Q2, Fiscal 2009 and compared to 37.5% for Q1, 2010. Net of the provision for contingency, operating expenses as a percentage of revenue were 40.1%.
About Guest-tek(TM)
Guest-tek(TM) is the world's largest provider of IP based technology solutions for the hospitality industry. Guest-tek's(TM) OneView(TM) platform provides hotels with converged data, video and telephony services. Guest-tek(TM) is a preferred vendor to major hotel brands, providing services including network design, procurement, implementation, and post sales customer support to 2,668 properties and over 450,000 rooms. Guest-tek's(TM) 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(TM), go to www.guest-tek.com.
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GUEST-TEK INTERACTIVE ENTERTAINMENT LTD.
Consolidated Balance Sheets (Unaudited)
September 30, 2009 and March 31, 2009
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September 30, March 31,
2009 2009
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Assets
Current assets:
Cash and cash equivalents $ 3,914,413 $ 2,155,523
Accounts receivable 5,172,561 7,763,457
Installations in progress 1,960,300 1,526,987
Inventory 1,245,691 1,005,453
Prepaid expenses and deposits 737,906 1,024,083
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13,030,871 13,475,503
Property and equipment 3,035,276 3,461,605
Deferred costs 7,002,256 6,686,554
Intangible assets 3,663,947 3,807,750
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$ 26,732,350 $ 27,431,412
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 5,057,482 $ 5,125,927
Customer deposits 2,520,513 2,474,822
Deferred revenue 2,306,238 2,121,226
Current portion of notes payable 1,485,822 1,771,644
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11,370,055 11,493,619
Deferred leasehold inducement 29,128 5,932
Deferred revenue 5,341,734 5,391,314
Future income tax liability 795,119 1,066,815
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6,165,981 6,464,061
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17,536,036 17,957,680
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Shareholders' equity:
Share capital 53,779,555 53,779,555
Contributed surplus 3,172,508 3,081,968
Deficit (47,755,749) (47,387,791)
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9,196,314 9,473,732
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$ 26,732,350 $ 27,431,412
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GUEST-TEK INTERACTIVE ENTERTAINMENT LTD.
Consolidated Statements of Operations, Comprehensive loss and Deficit
(Unaudited)
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Three months ended Six months ended
September 30 September 30
---------------------------- ----------------------------
2009 2008 2009 2008
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Revenue (Note 6) 9,116,930 9,144,090 19,256,695 19,037,344
Cost of revenue 5,293,099 6,201,984 11,458,043 12,076,851
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Gross margin 3,823,831 2,942,106 7,798,652 6,960,493
Operating expenses:
Selling, general
and
administrative 2,665,308 2,558,519 5,437,711 6,297,605
Provision for
contingency
(Note 7) 1,000,000 - 1,000,000 -
Research and
development 162,474 247,345 409,950 448,500
Amortization of
property and
equipment 101,869 158,145 277,783 324,089
Amortization of
intangible
assets 131,512 169,185 275,443 339,471
Amortization of
internally
developed
software 89,334 85,471 182,737 160,798
Loss on disposal
of assets - 504,614 - 504,614
Stock based
compensation 45,270 46,451 90,540 103,941
Interest expense 39,085 47,061 76,794 92,585
Foreign currency
loss 422,342 118,214 704,643 188,911
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4,657,194 3,935,005 8,455,601 8,460,514
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Loss from
operations (833,363) (992,899) (655,949) (1,500,021)
Interest income 169 1,835 633 4,399
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Loss before income
taxes (833,194) (991,064) (656,316) (1,495,622)
Income tax expense
(recovery) (292,672) 148,309 (288,357) 32,400
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Net loss and
comprehensive
loss (540,522) (1,139,373) (367,959) (1,528,022)
Deficit, beginning
of period (47,215,227) (34,530,668) (47,387,790) (34,142,021)
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Deficit, end of
period $(47,755,749) $(35,670,041) $(47,755,749) $(35,670,043)
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Net loss per
share:
Basic $ (0.03) $ (0.07) $ (0.02) $ (0.10)
Diluted $ (0.03) $ (0.07) $ (0.02) $ (0.10)
Weighted average
number of
shares:
Basic 15,825,852 15,825,852 15,825,852 15,825,852
Diluted 15,825,852 15,825,852 15,825,852 15,825,852
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SOURCE: Guest-Tek Interactive Entertainment Ltd.
Mr. Arnon Levy, President & Chief Executive Officer, Guest-tek(TM), Telephone: (403) 444-8488, email: arnon.levy@guest-tek.com
Copyright (C) 2009 CNW Group. All rights reserved
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Company: Guest-Tek Interactive Entertainment Ltd (GTK)
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