Espial Group Inc. Reports Second Quarter 2009 Results



    OTTAWA, Aug. 6 /CNW Telbec/ - Espial(R) Group Inc. ("Espial" or the
"Company"), (TSX:ESP), a leader in the delivery of TV software, today
announced its second quarter financial results for the three-month period
ended June 30, 2009.

    
    Q2 HIGHLIGHTS:

    -   Strong expansion orders from current customers increasing live
        subscriber and set-top box deployments

    -   Announced that Buffalo Inc. has licensed Evo Client middleware as
        their set-top box (STB) middleware for their recently launched hybrid
        set-top box providing digital TV and on-demand services.

    -   Announced the release of the Espial MediaBase version 9.0 Video-On-
        Demand (VOD) platform that provides a 400% performance increase with
        up to 37.5 Gbps streaming from a single next-generation HP or IBM
        server and extends support for cable operators.

    -   Major Espial customer recently launched their commercial service and
        will be announced shortly.
    

    For the three-month period ended June 30, 2009, the Company reported
revenues of $3.1 million compared to revenues of $1.8 million for the three
months ended June 30, 2008. Earnings before interest, foreign exchange, taxes,
stock compensation, depreciation and amortization (EBITDA) for the second
quarter of fiscal 2009 was a loss of $0.5 million compared to a loss of $1.4
million in the second quarter of fiscal 2008. Net loss for the quarter was
$1.1 million or $0.08 per share, compared to a net loss of $1.4 million last
year, or $0.15 per share.
    "We are pleased with our second quarter results" noted Jaison Dolvane,
President and CEO of Espial. "In Q2, we saw solid expansion orders from our
current customers, as they increased their number of deployed subscribers and
set-top boxes. We also released version 9.0 of our Espial MediaBase VOD server
product. Espial MediaBase enables our customers to add a variety of on-demand
services like VOD, Network PVR, RS-DVR, Start-over TV, Look-back TV and Pause
live TV from a single, low cost infrastructure. Further, with this latest
version, we've increased our already industry leading product performance,
while further reducing power and rack space requirements."

    Q2 Financial Results

    Second quarter revenues were $3,110,403 compared with revenues of
$1,827,475 in the same period a year ago. Second quarter software license and
royalty revenues were $1,780,734 compared to software license and royalty
revenues of $1,243,644 in the second quarter of fiscal 2008. Professional
services for the second quarters of 2009 and 2008 were $488,662 and $240,702
respectively. Maintenance and support revenues for the second quarter were
$841,007 compared to $343,129 last year.
    Gross margins for the second quarter of fiscal 2009 were 75% compared
with 71% in the second quarter of fiscal 2008.
    Operating expenses in the second quarter of fiscal 2009 were $3,229,577
compared to $2,736,182 in the second quarter of fiscal 2008.
    Earnings before interest, foreign exchange, taxes, stock compensation,
depreciation and amortization (EBITDA) for the second quarter of fiscal 2009
was a loss of $478,998 compared to a loss of $1,412,930 in fiscal 2008.
    Net loss in the second quarter was $1,103,872 compared to a loss of
$1,365,135 last year.
    Cash and cash equivalents at June 30, 2009 was $8,769,446
    The Company will be hosting a conference call to discuss the second
quarter financial results on August 6, 2009 at 5:00 PM Eastern Standard Time
(EST). The phone number to join the results discussion is:

    
    -   Toll line - 416 644 3421
    -   Toll free line - 800-732-0232

    The playback for the call will be available until Tuesday, September 8,
2009 at the following numbers and passcode:

    -   Toll line: 416-640-1917 - passcode: 21312644 followed by the number
        sign
    -   Toll free line: 877-289-8525 - passcode: 21312644 followed by the
        number sign

    About Espial (www.espial.com)
    

    Espial provides scalable and open digital TV software to service
providers in the cable, telecommunications and hospitality industries. Its
middleware, video-on-demand and browser solutions provide superior service
delivery, advanced service innovation tools and the ability to implement
flexible business models. Espial serves a range of market segments including,
IPTV, Cable, hybrid IP, over-the-top, multi-dwelling unit and enterprise. With
over 7 million subscribers using Espial's patented solutions, Espial is a
leading supplier of TV software. Espial is headquartered in Ottawa, Canada
with offices around the world in USA, Europe and Asia. For more information
please visit the Espial website @ www.espial.com

    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 theses terms or other similar expressions
concerning matters that are not historical facts. In particular, statements
about the benefits and synergies of the Kasenna acquisition transaction,
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 integrate Kasenna
operations and 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, 2008 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-GAAP Financial Measures

    Earnings before interest, foreign exchange, taxes, stock compensation,
depreciation and amortization (EBITDA) is a non-GAAP financial measure that
does not have any prescribed meaning by GAAP and is therefore unlikely to be
comparable to similar measures presented by other issuers. Management believes
that this non-GAAP financial measure, when taken together with the
corresponding consolidated GAAP 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:

    
                                                       June 30,      June 30,
                                                          2009          2008
                                                    -------------------------
                                                     (3 months)    (3 months)
                                                    (Unaudited)   (Unaudited)


    Net loss and Comprehensive loss                $(1,103,872)  $(1,365,135)

    Add

      Stock compensation                                50,000       (46,500)

      Depreciation of property and equipment            74,782        65,247

      Amortization of intangibles                      283,443             -
    -------------------------------------------------------------------------
                                                      (695,647)   (1,346,388)
    -------------------------------------------------------------------------
    Less (add)

    Interest income                                     18,569        98,435

    Foreign exchange gain (loss)                      (235,518)      (31,893)
                                                     ------------------------
    Earnings before interest, foreign
     exchange, taxes, stock compensation,
     depreciation and amortization                   $(478,698)  $(1,412,930)
                                                     ------------------------
                                                     ------------------------



    ESPIAL GROUP INC.
    Consolidated Balance Sheet
    (in Canadian dollars)
    -------------------------------------------------------------------------
                                                       June 30,  December 31,
                                                          2009          2008
                                                    (unaudited)   (unaudited)
    -------------------------------------------------------------------------

    CURRENT ASSETS
      Cash and cash equivalents                   $  8,769,446  $ 10,476,443

      Short-term investments                           122,246       122,246
      Accounts receivable                            1,698,883     2,269,251
      Investment tax credits receivable                400,000       363,424
      Prepaid expenses                                 294,336       209,974
    -------------------------------------------------------------------------
                                                    11,284,911    13,441,338

    Property & equipment                               821,565       899,734
    Intangible assets                                4,945,930     4,338,814
    Goodwill                                         3,340,808     4,489,077
    -------------------------------------------------------------------------
                                                  $ 20,393,214  $ 23,168,963
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CURRENT LIABILITIES
      Accounts payable and accrued liabilities    $  1,291,703  $  2,229,241
      Deferred revenue                               1,615,370     1,270,407
    -------------------------------------------------------------------------
                                                     2,907,073     3,499,648
    -------------------------------------------------------------------------
    COMMITMENTS

    SHAREHOLDERS' EQUITY
      Share capital                                 74,859,576    74,859,576
      Warrants                                         164,435       164,435
      Contributed surplus                           10,352,143    10,249,143
      Deficit                                      (67,890,013)  (65,603,839)
    -------------------------------------------------------------------------
                                                    17,486,141    19,669,315
    -------------------------------------------------------------------------
                                                  $ 20,393,214  $ 23,168,963
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                              Three Months Ended            Six Months Ended
                           June 30,      June 30,      June 30,      June 30,
                              2009          2008          2009          2008
                        (unaudited)   (unaudited)   (unaudited)   (unaudited)
    -------------------------------------------------------------------------

    Revenue              3,110,403  $  1,827,475     6,193,524  $  3,101,761

    Cost of revenue        767,749       522,970     1,411,155     1,184,031
    -------------------------------------------------------------------------

    Gross margin         2,342,654     1,304,505     4,782,369     1,917,730
    -------------------------------------------------------------------------

    Expenses

      Sales and marketing  973,355     1,251,181     2,115,619     2,461,563

      General and
       administrative      511,967       492,688     1,055,704       969,336

      Research and
       development       1,336,330       973,566     2,899,310     1,886,507

      Stock compensation
       expense              50,000       (46,500)      103,000        (2,500)

      Depreciation of
       property and
       equipment            74,482        65,247       139,541       129,236

      Amortization of
       intangible
       assets              283,443             -       566,884             -
    -------------------------------------------------------------------------
                         3,229,577     2,736,182     6,880,058     5,444,142
    -------------------------------------------------------------------------
    Loss before other
     income (expense)     (886,923)   (1,431,677)   (2,097,689)   (3,526,412)
    -------------------------------------------------------------------------
    Other income
     (expenses)
      Interest income       18,569        98,435        50,635       246,958
      Foreign exchange
       gain (loss)        (235,518)      (31,893)     (239,120)      111,513
    -------------------------------------------------------------------------
                          (216,949)       66,542      (188,485)      358,471
    -------------------------------------------------------------------------
    Net loss and
     comprehensive
     loss               (1,103,872)   (1,365,135)   (2,286,174)   (3,167,941)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per
     common share -
     basic and
     diluted          $      (0.08) $      (0.15) $      (0.16) $      (0.34)
    Weighted average
     number of common
     shares- basic
     and diluted        14,101,829     9,329,605    14,101,829     9,329,605
    

    %SEDAR: 00025301E




For further information:

For further information: Inquiries from financial press or analysts:
Carl Smith, Chief Financial Officer, Espial Group Inc., Email:
csmith@espial.com, Phone: (613) 566-3427; Kirk Edwardson, Director, Marketing,
Espial Group Inc., Email: kedwardson@espial.com, Phone: (613) 230-4770 x1145

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