Espial Reports 2012 First Quarter Results

OTTAWA, May 10, 2012 /CNW/ - Espial^® Group Inc. ("Espial" or the "Company"), (TSX: ESP), a leader in the delivery of on-demand TV software and services, today announced its first quarter financial results for the three-month period ended March 31, 2012.

HIGHLIGHTS:

• Q1 2012 revenue of $3.7 million with EBITDA of $0.1 million.
• Fourth consecutive quarter of positive EBITDA.
• Sharp and Toshiba started shipping Espial TV Browser-enabled Smart TVs.
• KDDI, a major Japanese operator, has started deploying set-top boxes powered by Espial's TV Browser to power its HTML5- based user experience.
• New Product Releases for Espial Media Service Platform and Espial MediaBase VOD Products announced at IP & TV World Forum in London.

For the three-month period ended March 31, 2012, the Company reported revenues of $3.7 million compared with revenues of $3.0 million for the three months ended March 31, 2011. Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) for the first quarter of fiscal 2012 was $0.1 million gain compared with a loss of $0.6 million in the first quarter of fiscal 2011. Net loss for the quarter was $0.4 million or $0.03 per share, compared with a net loss of $1.1 million last year, or $0.08 per share.

"We had a good start to the fiscal year with a fourth consecutive quarter of positive EBITDA," said Jaison Dolvane, President and CEO. "We continued to see strong activity from pay-TV-service providers looking for solutions to enable IP video, multi-screen and OTT services. We released new versions of our Espial Media Service Platform and Espial MediaBase VOD products to provide advanced capabilities to help service providers deliver a rich multi-screen TV experience. These proven products have already been deployed by major service providers worldwide, positioning us to capitalize on the growing market opportunity. On the Smart TV front, we are starting shipping of our browser products with 2 major global TV brands establishing ourselves as a leading player in the SmartTV market."

Q1 Financial Results

Revenue for the first quarter of fiscal 2012 was $3,650,536 compared with revenues of $3,009,572 in the same period a year ago. First quarter software license and royalty revenues were $1,908,236 compared with software license and royalty revenues of $1,904,859 in the first quarter of fiscal 2011 Professional services for the first quarters of 2012 and 2011 were $962,025 and $382,821 respectively. Maintenance and support revenues for the first quarter were $780,275 compared with $721,892 last year.

Gross margin for the first quarter of fiscal 2012 was 77 percent compared with 75 percent in the first quarter of fiscal 2011.

Operating expenses for the first quarter of fiscal 2012 were $3,045,360 compared with $3,312,189 in the first quarter of fiscal 2011.

Earnings for first quarter of fiscal 2012 before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) was $112,759 compared with a loss of $569,090 in fiscal 2011.

Net loss in the first quarter was $358,603 compared with a loss of $1,113,171 last year.

Cash and cash equivalents on March 31, 2012, was $10,537,566.

The Company will be hosting a conference call to discuss the first quarter  2012 results on May 11, 2012 at 10:00 a.m. Eastern Standard Time (EST). The phone number to join the results discussion is:

• Toll free line  (Canada/US) -  [phone]
• Toll line (international/local) - [phone]

The playback for the call will be available until 11:59pm EST on June 8, 2012, at the following numbers and passcode:

• Toll line: [phone], Passcode:  72892960
• Toll-free line: [phone], Passcode: 72892960

About Espial (www.espial.com)

Espial is a leading supplier of digital TV and IPTV software and solutions to cable MSOs and telecommunications operators as well as consumer electronics manufacturers. Espial's middleware, video-on-demand, and browser products power a diverse range of pay-TV and Internet TV business models. Over 10 million licenses of its patented software are in use across the world. Espial is headquartered in Ottawa, Canada and has offices in the United States, Europe, and Asia. Visit www.espial.com or contact us via phone at [phone].

Forward Looking Statement

This press release contains information that is forward looking information with respect to Espial within the meaning of Section 138.4(9) of the Ontario Securities Act (forward looking statements) and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements about anticipated benefits of new customer and partner relationships, future opportunities for the company and products and any other statements regarding Espial's future expectations, beliefs, goals or prospects are or involve forward-looking information.

Forward-looking information is based on certain factors and assumptions.  While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves risks and uncertainties, including Espial's ability to effectively develop its distribution channels, and generate increased demand for its products.  Additional risks and uncertainties affecting Espial can be found in Espial's Annual Report for the fiscal year ended December 31, 2011 and in its most recent quarterly report filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein.  Espial assumes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

Non-IFRS Financial Measures

Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) is a non-IFRS financial measure that does not have any prescribed meaning by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers.  Management believes that this non-IFRS financial measure, when taken together with the corresponding consolidated IFRS measures, increases the transparency of the Company's current results and enables investors to more fully understand trends in its current and future performance. A reconciliation of net loss to earnings before interest, foreign exchange, taxes, stock compensation, dividends on redeemable preferred shares, depreciation and amortization is as follows:

		March 31 2012	March 31 2011
		(3 months)	(3 months)
		(unaudited)	(unaudited)
Net loss and Comprehensive loss		(358,603)	($1,113,171)
Add
	Stock compensation	21,457	155,727
	Depreciation of property and equipment	43,055	43,971
Amortization of intangibles		285,467	286,122
		(8,624)	(627,351)
Less (add)
Interest income (expense)		(120,345)	(116,790)
Foreign exchange gain (loss)		(1,038)	58,529
Earnings before interest, foreign exchange, taxes, stock compensation,  depreciation and amortization		$112,759	($569,090)

ESPIAL GROUP INC.
Consolidated Balance Sheet
(in Canadian dollars)

		March 31, 2012 (unaudited)		December 31, 2011 (unaudited)
CURRENT ASSETS
	Cash and cash equivalents	$	10,537,566	$	10,559,262
	Short-term investments (Note 3)		110,000		110,000
	Accounts receivable (Note 12)		2,323,431		3,420,583
	Investment tax credits receivable		375,000		300,000
	Prepaid expenses and other assets		182,349		192,873
			13,528,346		14,582,718
Property and equipment			592,934		605,623
Intangible assets			1,862,132		2,147,598
Goodwill			3,340,808		3,340,808
		$	19,324,220	$	20,676,747
CURRENT LIABILITIES
	Operating line (Note 9)	$	1,500,329	$	1,500,493
	Accounts payable and accrued liabilities		1,168,813		2,146,162
	Deferred revenue		2,282,577		2,361,014
			4,951,719		6,007,669
Long term debt (Note 8)			3,134,897		3,094,328
Total Liabilities			8,086,616		9,101,997
COMMITMENTS (Note 7)
SHAREHOLDERS' EQUITY
	Share capital (Note 4)		74,861,877		74,861,877
	Warrants (Note 4)		732,382		732,382
	Contributed surplus		11,861,080		11,839,623
	Deficit		(76,217,735)		(75,859,132)
			11,237,604		11,574,750
		$	19,324,220	$	20,676,747

ESPIAL GROUP INC.
Consolidated Statements of Loss and Comprehensive Loss
(in Canadian dollars except share data)

		Three Months Ended
		March 31,2012 (unaudited)		March 31, 2011 (unaudited)
Revenue		$	3,650,536	$	3,009,572
Cost of revenue			842,397		752,293
Gross margin			2,808,139		2,257,279
Expenses
	Sales and marketing		1,051,167		1,150,803
	General and administrative		452,094		433,468
	Research and development		1,192,119		1,242,098
	Stock compensation expense		21,457		155,727
	Depreciation of property and equipment		43,055		43,971
	Amortization of intangible assets		285,467		286,122
			3,045,359		3,312,189
Loss before other income (expense)			(237,220)		(1,054,910)
Other income (expense)
	Interest income (expense)		(120,345)		(116,790)
	Foreign exchange gain (loss)		(1,038)		58,529
			(121,383)		(58,261)
NET LOSS AND COMPREHENSIVE LOSS		$	(358,603)	$	(1,113,171)
Net loss per common share - basic and diluted		$	(0.03)	$	(0.08)
Weighted average number of common shares outstanding - basic and diluted			14,106,829		14,101,829

 

 

 

For inquiries from the financial press or analysts, contact:

Carl Smith
Chief Financial Officer
Espial Group Inc.
Email: [email protected]
Phone: [phone]

Kirk Edwardson
Director, Marketing
Espial Group Inc.
Email: [email protected]
Phone: [phone] x1145