Vancouver, British Columbia CANADA, October 01, 2012 /FSC/ - VendTek Systems Inc. (VSI - TSX Venture), a developer and licensor of software for the global prepaid and financial services markets, today reported its financial results for its fiscal third quarter ended July 31, 2012.
Selected Third Quarter Operational Highlights
* The Company's announced an agreement between its Brazilian subsidiary Now Prepay Servicos de Informatica Ltda. ("NPSI"), and Petrobras, the largest gas station network in Brazil to deploy its distribution technology into Petrobras' network of over 6,000 retail outlets over an eighteen month period;
* NPSI entered into an agreement with Speed Card, a large distributor of hard (prepaid) cards to convert them to the Company's SaaS deployment model in their 3,400 locations;
* The Company announced that it has entered into a license agreement for its e-Fresh software with Roshan, Afghanistan's leading communications provider and the network of choice for over six million Afghans. The e-Fresh system will provide Roshan's customers a secure and reliable electronic distribution system, eventually replacing the scratch card top-up method that is currently predominant in Afghanistan.
* The Company entered into a distribution agreement with Paysafecard, one of Europe's leading prepaid transaction processors in over 29 countries. Under the agreement, Canadian consumers will be able to make online purchases easily and securely and without a credit card by purchasing prepaid cards that are similar to cash from over 15,000 Canadian merchants;
* The Company announced its plans to conduct a private placement of up to 27,272,727 million units (the "Units") at a price of $0.11 per Unit to raise gross proceeds of up to $3.0 million (the "Private Placement"). Each Unit will consist of one common share in the capital of the Company (a "Common Share") and one-half warrant (a "Warrant"). Each full Warrant will be exercisable to acquire one additional Common Share for 18 months from the closing of the Private Placement at a price of $0.20 per Common Share.
Selected Financial Information for the Three Months ended July 31, 2012
* Revenues for the three months ended July 31, 2012 decreased $4.0 million to $24.4 million from $28.4 million for the corresponding period in 2011;
* Gross margin increased to 5.5% for the three months ended July 31, 2012, from 4.7% for the corresponding period in 2011;
* Operating expenses were reduced 21% to $1.9 million from $2.4 million;
* Adjusted EBITDA(1)improved to a loss of $534,000 for the third quarter of fiscal 2012 compared to a loss of $1.0 million for the third quarter of fiscal 2011;
* Net loss for the third quarter of fiscal 2012 was $890,043, compared to a net loss of $1.4 million for the third quarter of fiscal 2011;
* Cash provided by operations was ($1.4 million) for the third quarter of fiscal 2012, compared to $7,700 in the corresponding period in 2011.
(1) Management defines Adjusted EBITDA as net income adjusted for financing, taxes, depreciation, amortization expenses, foreign exchange differences and stock based compensation expense. Please see the Management Discussion and Analysis for more details.
"With the announcements of our distribution agreements in Brazil, Canada and Internationally, we are building our customer and revenue base for the long term," said Doug Buchanan, President and Chief Executive Officer of VendTek. "While we expected the decline in prepaid wireless revenue our North American markets to continue this fiscal year, we believe our expansion into these larger international markets affords us organic growth opportunities not otherwise available domestically. In particular, our agreement with Petrobras, the largest oil and gas company in Brazil provides us a stepping stone from which to build our network in a country with over 180 million prepaid users compared to 5 million prepaid users in Canada," added Mr. Buchanan.
"The Company's third quarter yielded some important positive results", commented Irwin Studen, Interim Chief Financial Officer of VendTek. The Company continued to show improved Adjusted EBITDA on a year-over-year basis largely resulting from reductions in operating expenses and improved gross margins resulting from its higher margin software-as-a-service (SaaS) initiatives and a higher mix of revenue accounted for on a net revenue basis." From a liquidity standpoint, while the Company reported a lower cash position and operating cash flow at the end of Q3 FY2012 compared to Q2 FY2012, much of this decline is the result of the disconnect between the Company's regular weekly EFT cash collection and disbursement cycles and the days upon which the Company's quarter end balance sheets are measured. For Q2 and Q3 2012, if cash balances were measured on the Sundays following the respective quarter end, the cash balance at the end of Q3 2012 would have been $2.7M, or only $0.2M less than that of the Q2 ending cash amount", added Mr. Studen.
* On August 7, 2012, the Company announced that it closed the first tranche of its previously announced non-brokered private placement, wherein 5,630,000 units (the "Units") were sold at a price of $0.11 per Unit to raise gross proceeds of $619,300 (the "Private Placement"). Each Unit consists of one common share in the capital of the Company (a "Common Share") and one-half warrant (a "Warrant"). Each full Warrant is exercisable to acquire one additional Common Share for 18 months from the closing of the Private Placement at a price of $0.20 per Common Share. An additional 182,000 units were sold for a total of 5,812,000 units or $639,320 total for the first tranche. On September 10, 2012, the Company closed this first tranche of the Private Placement.
* On September 11, 2012, the Company announced its plan to conduct a non-brokered private placement of 860 debenture units (the "Debenture Units"), with each Debenture Unit consisting of one 6% unsecured convertible debenture of the Company having a principal amount of $1,000 (the "Debentures"), and 1,000 warrants (each, a "Warrant") to purchase one common share of the Company (the "Private Placement"). The Debentures will each mature on the date that is two years from the closing of the Private Placement and entitle the holder thereof to acquire one common share of the Company at a price of $0.11 per common share on conversion. Each Warrant is exercisable for two years from the closing of the Private Placement to acquire one common share of the Company at a price of $0.15 per common share. Privinvest Offshore SAL (Holding), the Company's largest shareholder, is intended to be the sole subscriber of these Debenture Units for gross invested proceeds of $860,000.
* On September 12, 2012, the Company announced that it has retained NATIONAL Public Relations to conduct an investor relations program on behalf of the Company.
VendTek's MD&A and complete financial statements and notes are available at http://www.sedar.com and the Company's website http://www.vendteksystems.com.
For more information or to receive the complete statements please contact Samantha White at 604-805-4653 or 1-800-806-4958 or firstname.lastname@example.org.
VendTek management will host a conference call on Monday October 1, 2012 at 4:00 PM EDT (1:00 PM PDT) to discuss its financial results and operational highlights for the third quarter of fiscal 2012.
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 37088496.
A live audio webcast of the conference call will be available at http://www.newswire.ca/en/webcast/detail/1044613/1135017 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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Source: VendTek Systems Inc. (TSX-V VSI) www.vendteksys.com
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