VENDTEK SYSTEMS REPORTS THIRD QUARTER 2010 RESULTS
TSX Venture Exchange: VSI
VANCOUVER, Sept. 27 /CNW/ - VendTek Systems Inc. (VSI - TSX Venture) (the "Company"), a developer and licensor of software for the global prepaid and financial services markets, today reported its financial results for the third quarter ended July 31, 2010.
For the three months ended July 31, 2010, revenues were $31.5 million, a decrease of 5% from $33 million for the corresponding quarter in 2009. Software license revenues increased by $185,000 or 62% in the third quarter of 2010 compared to the same period in 2009. Adjusted EBITDA decreased 97% from $82,000 in 2009 to $3,000 in 2010.(1) The net loss for the quarter was $122,000 compared to a loss of $92,000 in Q3 2009.
Achievements in Q3 2010:
- Implementation of a new bill payment module for e-Fresh(TM) which
allows for processing of utility insurance and other bill payments
- Implementation of a new lottery module for e-Fresh(TM) which provides
secure real-time processing of lottery gaming transactions
- Virtual prepaid revenues in the U.S. grew 53% from $700,000 in Q3
2009 to $1.1 million in Q3 2010
- Gross margin improved from 4.7% for the third quarter of 2009 to 5.1%
for the third quarter of 2010
"We made some significant progress to our e-Fresh(TM) platform during the quarter," said Doug Buchanan, President and Chief Executive Officer of Vendtek Systems. "While the majority of the transactions processed by our system continue to be telecommunications related, we believe the ability to process bill payment and lottery transactions will assist in our U.S. and international sales efforts."
Nurez Khimji, Chief Financial Officer of the Company, said, "Our previous investments in the MENA region have resulted in significant growth in our software license revenues. During the third quarter we continued to invest in our growth plan. For example, for our operations in Brazil, we hired staff, leased office space, and are in discussions with mobile telecommunications operators to secure supply contracts. These costs impacted our recent quarter; however, we believe that these investments will yield long-term benefits."
VendTek's MD&A and complete statements are available at www.sedar.com and the Company's website www.vendteksystems.com.
Conference Call
VendTek management will host a conference call on Monday September 27, 2010 at 4:00 p.m. EDT (1:00 p.m. PDT) to discuss its financial results and operational highlights for the third quarter of fiscal 2010.
To access the conference call by telephone, dial 1-647-427-7450 or 1-888-231-8191 and reference the company name, VendTek Systems Inc., or the conference code 12248595.
A live audio webcast of the conference call will be available at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3229820 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.
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(xx) Continue to next page for Consolidated Balance Sheets, Consolidated
Statements of Operations, Comprehensive Loss and Accumulated Deficit
and Consolidated Statement of Cash Flows.
(1) Adjusted EBITDA is defined as operating income adjusted for
amortization, stock based compensation expenses, interest, foreign
exchange differences and taxes. See Management Discussion and
Analysis dated September 24, 2010, for more information.
VENDTEK SYSTEMS INC.
Consolidated Balance Sheets
(Expressed in Canadian dollars)
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July 31, October 31,
2010 2009
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(Unaudited) (Audited)
Assets
Current assets:
Cash $ 2,792,996 $ 2,676,158
Accounts receivable 3,147,185 3,544,251
Income tax recoverable 618,373 618,373
Inventories (note 2) 2,406,334 2,418,738
Prepaid expenses and deposits 109,596 85,437
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9,074,484 9,342,957
Equipment 527,819 613,094
Intangible assets 263,357 310,184
Goodwill 907,342 907,342
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$10,773,002 $11,173,577
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 7,830,709 $ 8,222,939
Current portion of capital lease obligation 4,892 13,145
Deferred revenue 193,158 -
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8,028,759 8,236,084
Capital lease obligation 3,887 8,503
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8,032,646 8,244,587
Shareholders' equity:
Share capital (note 3(a)) 8,728,012 8,460,132
Contributed surplus (note 3(b)) 2,115,717 2,204,518
Accumulated deficit (8,103,373) (7,735,660)
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2,740,356 2,928,990
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$10,773,002 $11,173,577
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See accompanying notes to consolidated financial statements.
VENDTEK SYSTEMS INC.
Consolidated Statements of Operations, Comprehensive Loss and Accumulated
Deficit
(Expressed in Canadian dollars)
(Unaudited)
-------------------------------------------------------------------------
Three months ended July 31, Nine months ended July 31,
--------------------------- --------------------------
2010 2009 2010 2009
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Revenues:
Prepaid
telecommunica-
tion $30,972,641 $32,649,186 $90,952,606 $92,392,911
Hardware and
equipment 8,245 11,909 60,719 52,384
Software license
and services 482,618 297,859 1,174,160 1,045,115
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31,463,504 32,958,954 92,187,485 93,490,410
Cost of revenues:
Prepaid
telecommunica-
tion 29,850,153 31,407,793 87,589,104 88,914,407
Hardware and
equipment - - 4,246 879
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29,850,153 31,407,793 87,593,350 88,915,286
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1,613,351 1,551,161 4,594,135 4,575,124
Operating expenses:
General and
administrative 1,233,479 878,586 3,220,892 2,914,813
Selling and
marketing 197,743 168,620 675,560 533,169
Research and
development 211,941 194,680 597,869 590,578
Restatement costs - 244,744 189,867 510,314
Amortization 100,556 103,689 288,373 306,832
Interest expense 1,286 1,883 3,616 7,454
Loss (gain) on
disposal of assets 280 - (5,442) -
Foreign exchange
(gain) loss (9,663) 50,875 (8,887) 57,386
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1,735,622 1,643,077 4,961,848 4,920,546
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Net loss and
comprehensive loss (122,271) (91,916) (367,713) (345,422)
Accumulated deficit,
beginning of
period (7,981,102) (6,880,200) (7,735,660) (6,626,694)
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Accumulated deficit,
end of period $(8,103,373) $(6,972,116) $(8,103,373) $(6,972,116)
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Basic and diluted
loss per share $ (0.00) $ (0.00) $ (0.01) $ (0.01)
Weighted average
shares outstanding:
Basic 46,088,051 45,243,629 46,003,787 45,243,629
Diluted 46,088,051 45,243,629 46,003,787 45,243,629
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See accompanying notes to consolidated financial statements.
VENDTEK SYSTEMS INC.
Consolidated Statement of Cash Flows
(Expressed in Canadian dollars)
(Unaudited)
-------------------------------------------------------------------------
Three months ended July 31, Nine months ended July 31,
--------------------------- --------------------------
2010 2009 2010 2009
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Cash provided by
(used in):
Operations:
Net loss and
comprehensive
loss $ (122,271) $ (91,916) $ (367,713) $ (345,422)
Items not
involving cash:
Amortization 100,556 103,689 288,373 306,832
Stock-based
compensation 32,875 17,952 34,279 91,931
Loss (gain) on
disposal of
assets 280 - (5,442) -
Changes in
non-cash
operating
working capital
items 1,590,949 292,249 186,239 382,129
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1,602,389 321,974 135,736 435,470
Financing:
Proceeds from
options exercised 80,000 - 144,800 -
Repayment of
capital lease
obligations (785) (8,016) (12,869) (24,970)
-----------------------------------------------------------------------
79,215 (8,016) 131,931 (24,970)
Investments:
Purchase of
equipment (32,046) (17,598) (129,982) (67,848)
Proceeds on
disposition of
assets 1,027 - 20,405 -
Purchase of
intangibles (36,386) - (41,252) -
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(67,405) (17,598) (150,829) (67,848)
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Increase in cash 1,614,199 296,360 116,838 342,652
Cash, beginning of
period 1,178,797 2,148,958 2,676,158 2,102,666
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Cash, end of
period $ 2,792,996 $ 2,445,318 $ 2,792,996 $ 2,445,318
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Supplemental
information:
Interest paid $ 1,286 $ 1,883 $ 3,616 $ 7,454
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See accompanying notes to consolidated financial statements.
About VendTek
VendTek develops and licenses automated transaction system software and supporting technologies that improve the efficiency of product delivery, reduce costs to clients and offer superior safety measures. VendTek's customers, subsidiaries and its Now Prepay division use e-Fresh(TM) software to build electronic, prepaid services networks that enable consumers to purchase prepaid products and services via POS and self-serve terminals connected to a central e-Fresh(TM) server. This system creates significant value through improved efficiencies compared to a traditional distribution model. e-Fresh(TM) reduces shrinkage and inventory requirements for vendors while improving consumer access to prepaid products and services by completely eliminating physical cards and vouchers. VendTek has deployed its software around the world including Canada, United States, Asia, the Middle East and Africa. For further information please visit the Company's websites www.vendteksystems.com and www.nowprepay.com.
Forward-Looking Information
This news release contains statements which are not current statements or historical facts and are "forward-looking information" within the meaning of applicable Canadian securities laws. All statements, other than statements of historical fact, contained in this news release constitute forward-looking information. Wherever possible, words such as "plans", "expects" or "does not expect", "budget", "forecasts", "projections", "anticipate" or "does not anticipate", "believe", "intent", "potential", "strategy", "schedule", "estimates" and similar expressions or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved and other similar expressions have been used to identify forward-looking information. These forward-looking statements relate to, among other things the Company's expectations regarding future growth, results of operations (including, without limitation, future production and sales, and operating and capital expenditures), performance (both operational and financial), business and political environment and business prospects (including the timing and development of new deposits and the success of exploration activities) and opportunities.
Although the forward-looking information in this news release reflects the Company's current beliefs on the date of this news release based upon information currently available to management and based upon what management believes to be reasonable assumptions, the Company cannot be certain that actual results, performance, achievements, prospects and opportunities, either expressed or implied, will be consistent with such forward-looking information. By its very nature, forward-looking information necessarily involves significant known and unknown risks, assumptions, uncertainties and contingencies that may cause the Company's actual results, assumptions, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking information. These risks and uncertainties include, among other things, revenue growth, operating results, the market demand for our products, product development, and litigation as well other factors described in the Risks Related to Our Business Section in our 2009 annual Management Discussion and Analysis. There may be other factors that cause results, assumptions, performance, achievements, prospects or opportunities in future periods not to be as anticipated, estimated or intended.
There can be no assurances that forward-looking information and statements will prove to be accurate, as many factors and future events, both known and unknown could cause actual results, performance or achievements to vary or differ materially, from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements contained in this news release. Accordingly, all such factors should be considered carefully when making decisions with respect to the Company, and prospective investors should not place undue reliance on forward-looking information. The Company assumes no obligation to update or revise forward-looking information to reflect changes in assumptions, changes in circumstances or any other events affecting such forward-looking information, except as required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information: or to receive the complete statements please contact Samantha White at 604-805-4653 or 1-800-806-4958 or [email protected]
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