Magor Announces Fiscal Q2 2014 Results
-Record Revenues in November-
OTTAWA, Dec. 27, 2013 /CNW/ - Magor Corporation (TSX-V:MCC), a global leader in visual collaboration solutions, today announced its second quarter (Q2) financial results for the three and six-month period ended October 31, 2013.
Financial and Operational Highlights
- Revenue of $343,263 for Q2 2014, compared to $408,401 in Q2 2013.
- Order backlog of $401,955 as at October 31, 2013, compared to $242,305 as at July 31, 2013, an increase of 65.9% over the previous quarter.
- Customer interest continues to grow for our Aerus cloud-based services. We have initiated several trials with select carriers and solution integrators who are interested in offering Aerus to their enterprise and government customers.
- During the quarter, the Company announced that it closed its brokered private placement for the aggregate gross proceeds of $1,452,325 through the issuance of 5,809,300 units at a price of $0.25 per unit. Each unit consists of one common share and one-half common share purchase warrant, exercisable at a price of $0.40 for a period of three years following the closing date.
- Subsequent to the quarter, the Company announced that it closed the first tranche of a brokered private placement of subordinated secured debentures in the aggregate amount of $1,200,000 through issuance of 1,200 units. Each unit was issued at $1,000 and consisted of a $1,000 par value senior secured debenture and 1,000 common share purchase warrants. The debentures mature four years from the date of issuance and bear interest at an annual rate of 12% of par value, payable semi-annually in cash. The warrants are exercisable at a price of $0.40 per share for a period of four years from date of issuance.
"We continued to see a delay in timing of some of our larger contract wins, resulting in revenues that could not be recognized during the second quarter. However, we are very encouraged by our order book for the upcoming third quarter" said Mike Pascoe, the President and CEO of Magor Corporation. "We had the largest monthly start to any quarter in the history of our company during the month of November with revenues exceeding the full quarter of most previous quarters. We brought in a number of very high profile clients, and new orders continue to grow strongly. We are also encouraged by the positive feedback we have been receiving from a number of service providers with whom we are currently in service trials. Contracts with service providers will give us access to their enterprise clients, and will also transition us into a recurring revenue model with greater cash flow predictability."
Total revenue was $343,263 and $539,799, for the three-month and six-month periods ended October 31, 2013, compared to $408,401 and $802,595 for the corresponding periods in 2012.
Revenue from hardware was $171,473 and $275,317, for the three-month and six-month periods ended October 31, 2013, compared to $214,730 and $423,384 for the corresponding periods in 2012.
Revenue from software was $109,318 and $129,326, for the three-month and six-month periods ended October 31, 2013, compared to $135,146 and $222,450 for the corresponding periods in 2012.
Revenue from support and other services was $62,472 and $135,156, for the three-month and six-month periods ended October 31, 2013, compared to $58,525 and $156,761 for the corresponding periods in 2012.
The decrease in hardware and software revenues for the quarter and the six-month period were primarily due to reduction in the number of systems sold and delivered in the current fiscal quarter and fiscal year over the prior year, as well as timing in the fulfillment of an order that was delayed.
Gross Profit and Gross Profit Margin
Gross profit was $174,222 and $226,505, for the three-month and six-month periods ended October 31, 2013, compared to $209,299 and $417,189 for the corresponding periods in 2012.
Gross profit margin was 50.8% and 42% for the three-month and six-month periods ended October 31, 2013, compared to 51% and 51.3% for the corresponding periods in 2012.
The decrease in gross profit margin for the quarter and six-month period was primarily due to reduction in revenues, particularly in software, and the amount of fixed overhead expenses included in cost of sales.
Operating expenses were $1,602,744 and $3,246,893 for the three-month and six-month periods ended October 31, 2013, compared to $1,335,778 and $2,490,609 for the corresponding periods in 2012.
Sales and Marketing
Sales and marketing expenses were $765,425 and $1,496,692, for the three-month and six-month periods ended October 31, 2013, compared to $672,886 and $1,216,847 for the corresponding periods in 2012.
The increase in Sales and Marketing for the quarter and the six-month period was largely attributed to higher staffing and consulting expenses with the recruitment of additional sales professionals in Canada, United States and Europe. The Company also incurred additional costs on promotional presentations and website materials relating to the launch of Aerus cloud-based services.
General and Administrative
General and administrative expenses were $355,032 and $705,393, for the three-month and six-month periods ended October 31, 2013, compared to $292,723 and $548,091 for the corresponding periods in 2012.
The increase in general and administrative expenses during the quarter and the six-month period was largely attributable to the additional costs incurred by the Company as a result of becoming a publicly listed company and additional staff costs relating to the recruitment of a Chief Financial Officer.
Research and Development
Research and development expenses were $288,712 and $652,566, for the three-month and six-month periods ended October 31, 2013, compared to $288,314 and $559,525 for the corresponding periods in 2012.
The research and development expenses remained unchanged for the quarter over the comparable period in the prior year. During the quarter, the Company recorded tax incentives of $86,971 as a reduction in reduction of research and development expenses compared to $72,000 in the comparable period in the prior year. Offsetting the increase in tax incentives was an increase in staffing costs over the prior year.
The increase in research and development expenses for the six-month period was due to reduction in investment tax credits recorded in the current year over the prior year in the amount of $57,029 and higher staffing costs resulting from an increase in headcount in the current year.
Net loss and total comprehensive loss was $1,486,958 or $0.03 per share and $3,155,505 or $0.07 per share, for the three-month and six-month periods ended October 31, 2013, compared to $1,585,063 or $0.09 per share and $2,886,589 or $0.16 per share for the corresponding periods in 2012.
Cash and Working Capital
As at October 31, 2013, the Company had cash on hand of $1,482,224 compared to $2,792,075 as at April 30, 2013.
As at October 31, 2013, the Company's working capital was $1,359,645 compared to a working capital of $3,154,028 as at April 30, 2012.
About Magor Corporation:
Magor enables people to engage in high-quality visual conversations while simultaneously sharing, viewing and editing relevant collaborative material on desktops, laptops, tablets, smartphone applications, whiteboards and other devices. Magor fits any workflow so that users have the freedom to work together naturally anytime, regardless of location, network or device. To find out more about Magor Corporation (TSX-V: MCC), visit our website at http://www.magorcorp.com.
This news release may contain "forward-looking information" within the meaning of applicable Canadian securities legislation. Statements made in this news release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective", "hope", and "continue" (or the negative thereof), and words and expressions of similar import are intended to identify forward-looking statements. Certain material factors or assumptions are implied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Factors that could cause results to vary include those identified in the Corporation's filings with Canadian securities regulatory authorities, as well as the applicability of patents and proprietary technology; the outcome of pending corporate transactions; possible patent ligation; regulatory approval of products in development; changes in government regulation or regulatory approval processes; government and third party reimbursement; dependence on strategic partnerships; intensifying competition; rapid technological change in the industry; anticipated future losses; the ability to access capital; and the ability to attract and retain key personnel. All forward-looking information presented herein should be considered in conjunction with such filings. Except as required by Canadian securities laws, the Corporation does not undertake to update any forward-looking statements; such statements speak only as of the date made.
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