Dexit Announces 2006 Annual Results



    TORONTO, March 30 /CNW/ - Dexit Inc. (TSX: DXT), the creator and operator
of the Dexit(R) electronic payment facilitation service for small
transactions, today announced its financial results for the fiscal year and
three-month period ending December 31, 2006.
    Revenue was $1,010,287 for the year ended December 31, 2006, down from
$4,777,813 for the previous year. While Dexit was successful in renegotiating
a revised agreement with its Canadian merchant licencee, the Company did not
recognize any licence fee or exclusivity fee revenue from its Canadian
merchant licencee beyond the first quarter of 2006. Licence and exclusivity
fees paid under the Company's merchant licence agreement with its Canadian
merchant licencee, as well as hardware sales to that licencee, accounted for
the majority of its revenue for 2005.
    Operating expenses for the year ended December 31, 2006 declined to
$9,247,666 from $9,883,669 reported in the previous year. This decrease in
operating expenses was a result of reduced overhead costs in the period, but
was partially offset by one-time personnel costs related to various cost
reduction initiatives. In consultation with key business partners, the Company
implemented a multi-faceted initiative throughout 2006 to position the Company
for success in 2007 by improving operational efficiency, strengthening the
Company's ability to perform on key contracts and operating with increased
fiscal discipline.
    Net loss for the year ended December 31, 2006 was $7,867,798, or $0.76
per share for the year ended December 31, 2006, up from $6,698,335, or $0.67
per share for the previous year.
    As at December 31, 2006, Dexit had cash, cash equivalents and short term
investments of $3.0 million. The number of shares outstanding as at
December 31, 2006 was 12,048,856.

    Business Highlights:

    The main highlight of 2006 is that Dexit completed a transaction at the
end of November whereby Paul Howell, an experienced retail systems industry
veteran became President, Chief Executive Officer and a Director of the
Company and was the lead investor in a $1.14 million financing. Mr. Howell
brings extensive industry expertise and insight gained through managing retail
system relationships with thousands of merchants for over seventeen years. The
Company immediately began operating under the name Dexit Hosted Data Solutions
which reflects a new focus on enhanced integration efforts with retail store
systems and a broadened product offering for the Company. This focus leverages
the investment made in Dexit's payment platform to offer a range of hosted
data solutions and business intelligence tools for merchants. Significant
operational enhancements have been added to the Dexit payment system in order
to bolster merchant market acceptance, flexibility and reliability, and add
product differentiators that will allow for a more premium product price
strategy.
    Prior to the completion of that transaction, the Company put in place an
optimization plan under which it refocused resources to improve operational
efficiency, strengthen the Company's ability to perform on key contracts and
operate with increased fiscal discipline. The optimization plan included steps
such as: (i) realigning product development deliverables to meet partner
requirements, (ii) reducing staff from 55 to under 30, (iii) reducing rent and
other overhead costs, and (iv) reducing resources in non-core areas. Prior to
Mr. Howell's arrival, additional overhead reduction efforts included scaling
back the number of locations at which the Dexit(R) Service is available in
downtown Toronto and the surrounding area. After the completion of the
transaction with Howell, additional measures were also taken to extend a
number of these initiatives.
    Management has now focused its financial resources on key opportunities,
with a focus on private branded prepaid solutions, as well as other
payments-related real time hosted data solutions for merchants, such as
loyalty and remote monitoring applications.
    Dexit will be pursuing opportunities directly, as well as through partner
arrangements, as Bell Canada and Dexit successfully renegotiated the Merchant
License Agreement. Under that agreement, Bell Canada had the exclusive rights
to market the Dexit Service to merchants in Canada. The new agreement resulted
in no material revenue to Dexit in 2006, but does provide for a mutually
satisfactory framework for Bell and Dexit to continue to work closely together
in the pursuit of key target customers on a non-exclusive basis.
    Additional information on Dexit's 2006 financial results will be
available in the financial reports filed by the Company with Sedar at
www.sedar.com and posted to the Investor Relations section of Dexit's website.
To find out more about Dexit Inc. (TSX: DXT) visit our website at
www.dexit.com.

    Forward-Looking Statements

    This discussion includes certain forward-looking statements that are
based upon current expectations, which involve risks and uncertainties
associated with our business and the environment in which the business
operates. Any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking, including those
identified by the expressions "anticipate", "believe", "plan", "estimate",
"expect", "intend", and similar expressions to the extent they relate to the
Company or its management. The forward-looking statements are not historical
facts, but reflect Dexit's current expectations regarding future results or
events. These forward-looking statements are subject to a number of risks and
uncertainties that could cause actual results or events to differ materially
from current expectations, including the matters discussed under "Risks and
Uncertainties" in the Annual Information Form filed on March 23, 2006 with the
regulatory authorities. Dexit assumes no obligation to update the
forward-looking statements, or to update the reasons why actual results could
differ from those reflected in the forward-looking statements.

    (R) Registered trade-mark of Dexit Inc.



    
    DEXIT INC.
    Balance Sheets
    December 31, 2006 and 2005
    -------------------------------------------------------------------------

                                                      2006           2005
                                                -------------- --------------
                                                     (audited)      (audited)

    ASSETS

    CURRENT
      Cash and cash equivalents                  $  3,041,017   $    950,735
      Short term investments (market value
       December 31, 2005 - $8,070,874)                      -      7,961,335
      Restricted cash                                 253,049        366,896
      Accounts receivable                             101,975      1,218,228
      Miscellaneous receivables                        53,740        272,071
      Inventory                                        57,099        391,587
      Prepaid expenses and other assets               137,417        241,954
    -------------------------------------------------------------------------
                                                    3,644,297     11,402,806

    EQUIPMENT                                         159,579        789,611
    -------------------------------------------------------------------------
                                                 $  3,803,876   $ 12,192,417
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Accounts payable and accrued charges       $  1,441,081   $  1,160,997
      Customer liabilities                            227,503        288,876
      Current portion of obligation under
       capital leases                                   5,593          5,288
      Current portion of technology support
       repayment obligation                             7,699        448,702
      Current portion of note payable                       -        296,802
      Lease inducement                                234,171         68,720
      Deferred revenue                                    409        836,335
    -------------------------------------------------------------------------
                                                    1,916,456      3,105,720

    OBLIGATION UNDER CAPITAL LEASE                          -          5,593

    TECHNOLOGY SUPPORT
      REPAYMENT OBLIGATION                                  -        373,665

    NOTE PAYABLE                                            -        396,549
    -------------------------------------------------------------------------
                                                    1,916,456      3,881,527
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY

    SHARE CAPITAL                                  32,840,413     32,121,749

    CONTRIBUTED SURPLUS                             3,251,993      1,573,691

    WARRANTS                                          238,403      1,191,041

    DEFICIT                                       (34,443,389)   (26,575,591)
    -------------------------------------------------------------------------
                                                    1,887,420      8,310,890
    -------------------------------------------------------------------------
                                                 $  3,803,876   $ 12,192,417
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DEXIT INC.
    Statements of Operations and Deficit
    Years ended December 31, 2006 and 2005
    --------------------------------------

                                    Three months               Twelve months
                               ended December 31,          ended December 31,
                              2006          2005          2006          2005
                      --------------------------- ---------------------------
                        (unaudited)   (unaudited)     (audited)     (audited)

    REVENUE           $      6,221  $    842,680  $  1,010,287  $  4,777,813

    COST OF SALES          137,793       528,394       363,181     2,156,728
    -------------------------------------------------------------------------
    GROSS MARGIN          (131,572)      314,286       647,106     2,621,085
    -------------------------------------------------------------------------

    OPERATING EXPENSES
      Technology           480,827       334,381     2,063,523     1,131,141
      Operations and
       support             261,846       821,580     2,241,879     3,239,869
      Sales and
       marketing            94,138       283,719     1,051,698     2,219,573
      General and
       administrative      715,027       714,796     3,294,546     2,802,866
      Stock-based
       compensation        175,272       142,445       596,020       490,220
    -------------------------------------------------------------------------
                         1,727,110     2,296,921     9,247,666     9,883,669
    -------------------------------------------------------------------------

    LOSS BEFORE THE
     UNDERNOTED         (1,858,682)   (1,982,635)   (8,600,560)   (7,262,584)
    -------------------------------------------------------------------------

    OTHER EXPENSES
     (INCOME)
      Interest and
       exchange loss           429        72,312        93,661       313,121
      Interest income      (18,403)      (91,076)     (200,334)     (326,379)
      Adjustment to
       fair value of
       the technology
       support
       repayment
       obligation                -             -      (678,332)   (1,023,118)
      Adjustment to
       fair value of
       the note payable          -             -      (578,251)      (61,306)
      Amortization          88,081        93,507       377,285       359,327
      Write-down of
       equipment           253,209       174,106       253,209       174,106
    -------------------------------------------------------------------------
                           323,316       248,849      (732,762)     (564,249)
    -------------------------------------------------------------------------

    NET LOSS            (2,181,998)   (2,231,484)   (7,867,798)   (6,698,335)

    DEFICIT, BEGINNING
     OF YEAR           (32,261,391)  (24,344,107)  (26,575,591)  (19,877,256)
    -------------------------------------------------------------------------
    DEFICIT, END
     OF YEAR          $(34,443,389) $(26,575,591) $(34,443,389) $(26,575,591)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LOSS PER SHARE    $      (0.20) $      (0.22) $      (0.76) $      (0.67)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    WEIGHTED AVERAGE
     NUMBER OF COMMON
     SHARES (in 000's)      11,058        10,070        10,364        10,057
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DEXIT INC.
    Statements of Cash Flows
    --------------------------------------------- ---------------------------
                                    Three months               Twelve months
                               ended December 31,          ended December 31,
                              2006          2005          2006          2005
                      --------------------------- ---------------------------
                        (unaudited)   (unaudited)     (audited)     (audited)

    NET INFLOW
     (OUTFLOW) OF
     CASH RELATED TO
     THE FOLLOWING
     ACTIVITIES

    OPERATING
      Net loss        $ (2,181,998) $ (2,231,484) $ (7,867,798) $ (6,698,335)
      Items not
       affecting cash            -             -
        Amortization        88,081        93,507       377,285       359,327
        Stock-based
         compensation
         expense           175,272       142,445       596,020       490,220
        Share purchase
         plan
         compensation
         expense                (0)          737         3,077         1,524
        (Gain) loss on
         disposal of
         equipment          (1,766)            -        (2,004)          320
        Accretion of
         interest on
         the technology
         support
         repayment
         obligation            280        27,179        34,002       200,996
        Accretion of
         interest on
         the note
         payable                 0        19,825        58,601        85,581
        Adjustment to
         fair value of
         the technology
         support
         repayment
         obligation              -             -      (678,332)   (1,023,118)
        Adjustment to
         fair value of
         the note
         payable                 -             -      (578,251)      (61,306)
        Write-down of
         inventory to
         fair value        134,240       437,608       327,266       437,608
        Write-down of
         prepaid
         expenses and
         other assets
         to fair value           -       144,409        46,798       144,409
        Write-down of
         equipment to
         fair value
         (Note 7)          253,209       174,106       253,209       174,106
    -------------------------------------------------------------------------
                        (1,532,682)   (1,191,668)   (7,430,127)   (5,888,668)
      Changes in non-
       cash operating
       items (Note 13)     154,272      (868,907)    1,061,628    (2,186,908)
    -------------------------------------------------------------------------
                        (1,378,410)   (2,060,575)   (6,368,499)   (8,075,576)
    -------------------------------------------------------------------------

    FINANCING
      Proceeds from
       issuance of
       common shares       955,848        13,123       998,572        22,646
      Proceeds from
       issuance of
       warrants            184,168             -       184,168             -
      Issuance costs of
       common shares
       and warrants       (337,509)            -      (337,509)            -
      Repayment of
       obligation under
       capital lease        (1,350)       (1,277)       (5,288)       (4,997)
      Repayment of
       technology
       support
       repayment
       obligation           (1,743)     (209,768)     (170,338)     (320,122)
      Repayment of
       note payable       (120,001)      (17,901)     (173,701)      (71,601)
    -------------------------------------------------------------------------
                           679,413      (215,823)      495,904      (374,074)
    -------------------------------------------------------------------------

    INVESTING
      Maturity of short
       term investments          -     2,949,016     7,961,335     7,792,769
      Disposal
       (acquisition) of
       equipment             3,236       (27,701)        1,542      (326,542)
    -------------------------------------------------------------------------
                             3,236     2,921,315     7,962,877     7,466,227
    -------------------------------------------------------------------------

    NET CASH INFLOW
     (OUTFLOW)            (695,761)      644,917     2,090,282      (983,423)

    CASH AND CASH
     EQUIVALENTS,
     BEGINNING OF YEAR   3,736,778       305,818       950,735     1,934,158
    -------------------------------------------------------------------------
    CASH AND CASH
     EQUIVALENTS,
     END OF YEAR      $  3,041,017  $    950,735  $  3,041,017  $    950,735
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    FOR THE PURPOSE OF
     THIS STATEMENT,
     CASH AND CASH
     EQUIVALENTS
     COMPRISE THE
     FOLLOWING
      Cash            $    185,764  $    334,063  $    185,764  $    334,063
      Cash equivalents
       (investments
       less than
       3 months)      $  2,855,253  $    616,672     2,855,253       616,672
    -------------------------------------------------------------------------
                      $  3,041,017  $    950,735  $  3,041,017  $    950,735
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    SUPPLEMENTAL CASH
     FLOW INFORMATION
      Interest paid   $         92  $         50  $        590  $        878
      Interest
       received       $     36,840  $     51,335  $    308,370  $    223,451
    





For further information:

For further information: Paul Howell, President & Chief Executive
Officer, Dexit Hosted Data Solutions, paul.howell@dexit.com, (416) 703-6462,
x.263; David Campbell, Chief Financial Officer, Dexit Hosted Data Solutions,
david.campbell@dexit.com, (416) 703-6462 ext. 271

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HOSTED DATA TRANSACTION SOLUTIONS INC.

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