ESI Entertainment Systems Inc announces fiscal 2010 third quarter financial
results
BURNABY, BC,
Financial highlights for the period ending
- Consolidated revenues decreased by 7% to $2,618,546 from $2,808,153
during the same period last year.
- Citadel revenues increased by 87% to $786,088 from $420,435 during
the same period last year.
- Operating expenses decreased by 43% to $2,427,999 from $4,263,841
during the same period last year.
- Net loss decreased by 60% to $525,232 from a net loss of $1,583,032
during the same period last year.
Our financial results were mainly driven by efforts being made during the third quarter to reduce direct and operating expenses while at the same time working to expand the business base of ESI Integrity and rebuild the business of Citadel Commerce.
During the third quarter of fiscal 2010, Citadel continued to see a steady growth in revenues while holding its costs to a minimum. ESI Integrity has decreased its resource levels due to lower than expected third quarter revenues however it continues to be profitable and has built a strong funnel of business for 2010.
The Company is building its 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. Many have accepted additional workloads to accommodate the growing business while holding down our costs.
Financial Review
Total revenue decreased by 30% 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 nine month periods ended
The decrease in all expense categories and Net Loss is due to the Company's ongoing efforts to minimize its operating expenses.
Citadel processing accounts as at
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ESI Entertainment Systems Inc.
Consolidated Balance Sheets
(expressed in Canadian dollars)
November 30, February 28,
2009 2009
(unaudited) (audited)
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Assets
Cash and cash equivalents $ 105,544 $ 909,785
Accounts receivable 390,207 1,100,023
Prepaids 236,783 106,513
------------ ------------
732,534 2,116,321
Citadel processing accounts 8,239,214 2,958,565
Property and equipment 124,996 280,725
Deferred contract costs 595,823 696,234
------------ ------------
$ 9,692,567 $ 6,051,845
------------ ------------
------------ ------------
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Liabilities
Accounts payable and accrued liabilities $ 1,562,290 $ 1,049,700
Loan Payable 2,161,636 2,564,704
Capital lease obligations - 30,684
Deferred revenue 672,487 535,667
------------ ------------
4,396,413 4,180,755
Citadel processing liabilities 8,239,214 2,958,565
Deferred revenue 1,051,839 1,324,392
------------ ------------
13,687,466 8,463,712
------------ ------------
Shareholders' Equity (Deficit)
Capital stock 9,957,959 9,957,959
Contributed surplus 4,328,885 4,328,885
(Deficit) (18,281,743) (16,698,711)
------------ ------------
(3,994,899) (2,411,867)
------------ ------------
$ 9,692,567 $ 6,051,845
------------ ------------
------------ ------------
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On behalf of the Board
"Tony Greening" Director "Michael Meeks" Director
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Tony Greening Michael Meeks
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ESI Entertainment Systems Inc.
Consolidated Statements of Operations and Comprehensive Loss and Deficit
(expressed in Canadian dollars)
Three Months Ended Nine Months Ended
November 30, November 30,
(unaudited) 2009 2008 2009 2008
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Revenues $ 832,284 $ 1,196,471 $ 2,618,546 $ 2,808,153
Direct costs 633,693 576,837 1,905,219 2,086,399
------------ ------------ ------------ ------------
Gross profit 198,591 619,634 713,327 721,754
------------ ------------ ------------ ------------
Operating
expenses
Product
development 56,794 59,986 179,682 267,764
Sales,
marketing and
customer
service 39,423 181,946 117,702 658,789
General and
administrative 699,865 985,757 1,970,403 2,957,975
Amortization of
property and
equipment 28,710 85,186 160,212 379,313
------------ ------------ ------------ ------------
824,792 1,312,875 2,427,999 4,263,841
------------ ------------ ------------ ------------
Earnings before
under noted
items (626,201) (693,241) (1,714,672) (3,542,087)
Other expenses
(income)
Foreign exchange
loss (gain) (143,733) 369,369 (240,407) 375,252
Interest income (640) (6,574) (20,840) (34,779)
Interest expense 43,404 43,619 129,607 74,485
------------ ------------ ------------ ------------
Earnings before
income taxes
and non-
controlling
interest (525,232) (1,099,655) (1,583,032) (3,957,045)
------------ ------------ ------------ ------------
Provision for
income taxes
Current - 6,822 - 8,529
------------ ------------ ------------ ------------
- 6,822 - 8,529
------------ ------------ ------------ ------------
Net loss and
comprehensive
loss $ (525,232) $ (1,106,477) $ (1,583,032) $ (3,965,574)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings (Loss)
per share
Basic $ (0.04) $ (0.07) $ (0.11) $ (0.28)
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Deficit, beginning
of period $(17,756,511) $(14,489,282) $(16,698,711) $(11,630,185)
Net loss (525,232) (1,106,477) (1,583,032) (3,965,574)
------------ ------------ ------------ ------------
Deficit, end of
period $(18,281,743) $(15,595,759) $(18,281,743) $(15,595,759)
------------ ------------ ------------ ------------
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ESI Entertainment Systems Inc.
Consolidated Statements of Cash Flows
(expressed in Canadian dollars)
Three Months Ended Nine Months Ended
November 30, November 30,
(unaudited) 2009 2008 2009 2008
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Cash flows provided
by (used in)
Operating activities
Net earnings $ (525,232) $ (1,106,477) $ (1,583,032) $ (3,965,574)
Items not
affecting cash:
Amortization
of property
and
equipment 28,710 85,186 160,212 379,313
Impairment of
intangible
assets - - - (34,746)
Future income
taxes - 6,822 - 8,529
Net changes in
non-cash
operating
items:
Accounts
receivable 146,013 (207,148) 709,816 88,206
Prepaids (64,990) 254,104 (130,270) 25,269
Allowance for
bad debts - - - (310,608)
Accounts
payable
and
accrued
liabilities 483,128 463,896 512,590 (32,599)
Deferred
revenue (72,334) (495,627) (135,733) (463,095)
Deferred
contract
costs 36,967 (63,691) 100,411 (124,487)
------------ ------------ ------------ ------------
32,262 (1,062,935) (366,006) (4,429,792)
------------ ------------ ------------ ------------
Investing activities
Acquisition of
property and
equipment (9,685) - (4,483) -
------------ ------------ ------------ ------------
(9,685) - (4,483) -
------------ ------------ ------------ ------------
Financing activities
Loan payable (47,472) - (403,068) 2,461,868
Capital lease
payments (4,515) (38,330) (30,684) (187,261)
------------ ------------ ------------ ------------
(51,987) (38,330) (433,752) 2,274,607
------------ ------------ ------------ ------------
Decrease in cash
and cash
equivalents (29,410) (1,101,265) (804,241) (2,155,185)
Cash and cash
equivalents,
beginning of
period 134,954 1,988,543 909,785 3,042,463
------------ ------------ ------------ ------------
Cash and cash
equivalents,
end of
period $ 105,544 $ 887,278 $ 105,544 $ 887,278
------------ ------------ ------------ ------------
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Supplemental
information
Interest
received $ 640 $ 6,574 $ 20,840 $ 34,779
Interest paid 43,404 43,619 129,607 74,485
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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