ESI Entertainment Systems Inc announces fiscal 2010 second quarter financial
results
BURNABY, BC,
Consolidated financial highlights for the quarter include:
- Revenues increased by 14% to $952,000 from $834,000 during the last
quarter.
- Gross profit margin increased to 37% from 19% during the prior three
month period.
- Operating expenses decreased by $100,000 from the last quarter.
- Net loss before income taxes decreased by 65% to $535,000 from a net
loss before income tax of $1.5 million during the same period in
fiscal 2009.
Our financial results were mainly driven by efforts being made during the Second Quarter to reduce direct and operating expenses whilst at the same time working to expand the business base of ESI Integrity and rebuild the business of Citadel Commerce.
During the second quarter of fiscal 2010 we maintained a steady growth while holding our costs to a minimum and building our customer base to allow us to work for future accelerated growth. Our team of employees and our Board continued to work well together with skill and dedication and many have accepted additional workloads to accommodate the growing business while holding down our costs.
Our second quarter occurs during the off-peak summer season and we traditionally can experience a slowing of revenues. However both subsidiaries have improved their performance over the previous year and both have invested in future opportunities that we will work to fulfill during the coming months.
Financial Review
Total revenue increased by 28% to
Product development expenses were
Sales, marketing and customer service expenses were
General and administrative expenses were
Amortization expenses were
Net loss for the three and six month periods ended
Citadel processing accounts as at
Consolidated Balance Sheets
(expressed in Canadian dollars)
(unaudited) August 31, February 28,
2009 2009
(unaudited) (audited)
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Assets
Cash and cash equivalents $ 134,954 $ 909,785
Accounts receivable 536,220 1,100,023
Prepaids 171,793 106,513
------------- -------------
842,967 2,116,321
Citadel processing accounts (Note 3) 5,596,527 2,958,565
Property and equipment (Note 4) 144,021 280,725
Deferred contract costs 632,790 696,234
------------- -------------
$ 7,216,305 $ 6,051,845
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Liabilities
Accounts payable and accrued liabilities
(Note 8) $ 1,079,162 $ 1,049,700
Loan Payable (Note 9) 2,209,108 2,564,704
Capital lease obligations 4,515 30,684
Deferred revenue 700,697 535,667
------------- -------------
3,993,482 4,180,755
Citadel processing liabilities (Note 3) 5,596,527 2,958,565
Deferred revenue 1,095,963 1,324,392
------------- -------------
10,685,972 8,463,712
------------- -------------
Shareholders' Equity
Capital stock (Note 5) 9,957,959 9,957,959
Contributed surplus 4,328,885 4,328,885
Deficit (17,756,511) (16,698,711)
------------- -------------
(3,469,667) (2,411,867)
------------- -------------
$ 7,216,305 $ 6,051,845
------------- -------------
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Consolidated Statements of Operations and Comprehensive Income (Deficit)
and Retained Earnings
(expressed in Canadian dollars)
Three Months Ended Six Months Ended
August 31, August 31,
(unaudited) 2009 2008 2009 2008
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Revenues (Note 4) $ 952,271 $ 742,294 $ 1,786,262 $ 1,611,682
Direct costs 597,289 801,870 1,271,526 1,509,562
------------- ------------- ------------- -------------
Gross profit 354,982 (59,576) 514,736 102,120
------------- ------------- ------------- -------------
Operating expenses
Product
development 59,580 91,129 122,888 207,778
Sales, marketing
and customer
service 37,954 211,243 78,279 476,843
General and
administrative 594,803 1,047,170 1,270,538 1,972,218
Amortization of
property and
equipment 59,276 124,742 131,502 294,127
------------- ------------- ------------- -------------
751,613 1,474,284 1,603,207 2,950,966
------------- ------------- ------------- -------------
(Loss) Earnings
before under
noted items (396,631) (1,533,860) (1,088,471) (2,848,846)
Other expenses
(income)
Foreign exchange
loss (gain) 118,671 123 (96,674) 5,883
Interest income (19,510) (13,254) (20,200) (28,205)
Interest expense 39,885 24,301 86,203 30,866
------------- ------------- ------------- -------------
(Loss) Earnings
before income
taxes and
non-controlling
interest (535,677) (1,545,030) (1,057,800) (2,857,390)
------------- ------------- ------------- -------------
Provision for
income taxes
Current - 1,707 - 1,707
------------- ------------- ------------- -------------
- 1,707 - 1,707
------------- ------------- ------------- -------------
Net (Loss)
Earnings and
comprehensive
(Loss) Earnings $ (535,677) $ (1,546,737) $ (1,057,800) $ (2,859,097)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
(Loss) Earnings
per share
(Note 7)
Basic $ (0.04) $ (0.08) $ (0.07) $ (0.15)
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Retained earnings
(deficit),
beginning of
period $(17,220,834) $(12,942,545) $(16,698,711) $(11,630,185)
Net (Loss)
Earnings (535,677) (1,546,737) (1,057,800) (2,859,097)
------------- ------------- ------------- -------------
Retained earnings
(deficit), end
of period $(17,756,511) $(14,489,282) $(17,756,511) $(14,489,282)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Consolidated Statements of Cash Flows
(expressed in Canadian dollars)
Three Months Ended Six Months Ended
August 31, August 31,
(unaudited) 2009 2008 2009 2008
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Cash flows
provided by
(used in)
Operating
activities
Net (Loss)
Earnings $ (535,677) $ (1,546,737) $ (1,057,800) $ (2,859,098)
Items not
affecting
cash:
Amortization
of property
and
equipment 59,276 124,742 131,502 294,127
Impairment of
intangibles
and other
assets - (34,746) - (34,746)
Future income
taxes - 1,707 - 1,707
Net changes in
non-cash
operating
items:
Accounts
receivable 852,300 72,514 563,803 294,462
Prepaids (89,828) (96,219) (65,280) (228,835)
Allowance for
bad debts - - - (310,608)
Accounts
payable
and accrued
liabilities (194,807) (38,730) 29,462 (103,107)
Deferred
revenue (80,058) (12,430) (63,399) 33,425
Deferred
contract
costs 55,636 34,775 63,444 (60,796)
------------- ------------- ------------- -------------
66,842 (1,495,124) (398,268) (2,973,469)
------------- ------------- ------------- -------------
Investing
activities
Acquisition of
property and
equipment 12,854 - 5,202 -
------------- ------------- ------------- -------------
12,854 - 5,202 -
------------- ------------- ------------- -------------
Financing
activities
Loan payable (24,992) 2,068,480 (355,596) 2,068,480
Capital lease
payments (13,279) (55,044) (26,169) (148,931)
------------- ------------- ------------- -------------
(38,271) 2,013,436 (381,765) 1,919,549
------------- ------------- ------------- -------------
Increase
(decrease) in
cash and cash
equivalents 41,425 518,311 (774,831) (1,053,920)
Cash and cash
equivalents,
beginning of
period 93,529 1,470,232 909,785 3,042,463
------------- ------------- ------------- -------------
Cash and cash
equivalents,
end of period $ 134,954 $ 1,988,543 $ 134,954 $ 1,988,543
------------- ------------- ------------- -------------
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Supplemental
information
Interest
received $ 19,510 $ 13,254 $ 20,200 $ 28,204
Interest paid 39,885 24,301 86,203 30,515
About ESI Entertainment Systems Inc.
ESI Entertainment Systems Inc (CNSX: ESY) is an idea generation and software development company. We develop concepts, create prototypes, establish partnerships and validate potential markets. When we have proven a product and its opportunities we create subsidiaries with a dedicated team, infrastructure, and resources to allow it to focus on building and selling the product to its market niche. Our team of experienced and dedicated people have led us to be revolutionary market leaders in many industries, including e-commerce payment technologies, hardware based input devices, real time auditing systems, transaction processing systems, graphical 3D displays, e-commerce web services, and payment fraud and risk mitigation. Since formation in 1999 ESI Entertainment Systems Inc has created three independently operated and controlled subsidiaries based on validated and proven products: Citadel Commerce Corp., ESI Integrity Inc., and PlayLine Inc. PlayLine Inc. is presently dormant.
Forward looking Statements
This news release may contain forward-looking statements concerning ESI Entertainment Systems Inc, which statements can be identified by the use of forward-looking terminology such as "expect", "proposed", "may", "plan", "intend", "will", "would" or the negative thereof or any other variations thereon or comparable terminology referring to future events or results. Forward-looking statements are statements about the future and are inherently uncertain, and the actual events or results could be materially different than those anticipated in those forward-looking statements as a result of numerous factors discussed more fully in the Company's Final Prospectus dated
The Canadian National Stock Exchange does not accept responsibility for
this press release.
For further information: ESI Entertainment Systems Inc., Tony Greening, Chief Executive Officer, Telephone: (604) 299-6922, email: [email protected], Web: www.esi.ca
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