Espial Reports 2009 First Quarter Results



    OTTAWA, May 7 /CNW Telbec/ - Espial(R) Group Inc. ("Espial" or the
"Company"), (TSX:ESP), a leader in the delivery of TV software, today
announced its first quarter financial results for the three month period ended
March 31, 2009.

    
    HIGHLIGHTS:

    - First quarter revenue of $3.1 million, an increase of 142% from last
      year
    - EBITDA loss of $809 thousand compare to a loss of $2.0 million last
      year
    - Demonstrated Espial solutions at CCBN in Beijing, China, IPTV World
      Forum in London, UK.

    For the three-month period ended March 31, 2009, the Company reported
revenues of $3.1 million compared to revenues of $1.3 million for the three
months ended March 31, 2008. Earnings before interest, foreign exchange,
taxes, stock compensation, depreciation and amortization (EBITDA) for the
first quarter of fiscal 2009 was a loss of $0.8 million compared to a loss of
$2.0 million in the first quarter of fiscal 2008. Net loss for the quarter was
$1.2 million or $0.08 per share, compared to a net loss of $1.8 million last
year, or $0.19 per share.
    "We are pleased with the start of the new fiscal year", said Jaison
Dolvane, President and CEO. "The economic impact of the global slowdown has
impacted how people spend their time and income. We believe that consumers
will continue to spend their entertainment dollars on their TV and VOD
services during these difficult times. While our industry is still in the
early stages of growth, and as such in the short-term we may experience
significant fluctuations in amount, size and timing of orders, we are very
excited by increasing interest for IPTV & VOD by telcos and cable."

    Q1 Financial Results

    First quarter revenues were $3,083,121 compared with revenues of
$1,274,286 in the same period a year ago. First quarter software license and
royalty revenues were $2,079,464 compared to software license and royalty
revenues of $519,649 in the first quarter of fiscal 2008. Professional
services for the first quarters of 2009 and 2008 were $233,098 and $404,366
respectively. Maintenance and support revenues for the first quarter were
$770,559 compared to $350,271 last year.
    Gross margins for the first quarter of fiscal 2009 were 79% compared with
48% in the first quarter of fiscal 2008.
    Operating expenses in the first quarter of fiscal 2009 were $3,650,480
compared to $2,707,957 in the first quarter of fiscal 2008.
    Earnings before interest, foreign exchange, taxes, stock compensation,
depreciation and amortization (EBITDA) for the first quarter of fiscal 2009
was a loss of $809,264 compared to a loss of $1,986,742 in fiscal 2008.
    Net loss in the first quarter was $1,182,302 compared to a loss of
$1,802,803 last year.
    Cash and cash equivalents at March 31, 2009 was $8,360,213.

    The Company will be hosting a conference call to discuss the fourth
quarter financial results on Thursday, May 7th, 2009 at 5:30 PM Eastern
Standard Time (EST). The phone number to join the results discussion is:

    - Toll line - 416-646-3095
    - Toll free line - 800-814-4853

    The playback for the call will be available until midnight on Sunday, June
7th, 2009, at the following numbers and passcode:

    - Toll line: 416-640-1917 - passcode: 21305546#
    - Toll free line: 877-289-8525 - passcode: 21305546#

    About Espial (www.espial.com)

    Espial provides intelligent and open TV software to service providers in
the cable, telecommunications and hospitality industries. It's middleware and
video-on-demand solutions provide superior service delivery, advanced service
innovation tools and the ability to serve a wide range of market segments -
including over-the-top, IPTV, hybrid IP, multi-dwelling unit and enterprise.
With over 2.5 million licenses of its patented software technology in use,
Espial is a leading supplier of TV software. Espial is headquartered in
Ottawa, Canada. 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:

                                                   March 31         March 31
                                                       2009             2008
                                          -----------------------------------
                                                  (3 months)       (3 months)
                                                 (Unaudited)      (Unaudited)

    Net loss and Comprehensive loss             ($1,182,302)     ($1,986,742)
    Add
      Stock compensation                             53,000           44,000
      Depreciation of property and
       equipment                                     65,060           63,900
    Amortization of intangibles                     283,441                -
    -------------------------------------------------------------------------
                                                   (780,801)      (1,694,813)
    -------------------------------------------------------------------------
    Less (add)
    Interest income                                  32,065          148,523
    Foreign exchange gain (loss)                     (3,602)         143,406
                                          -----------------------------------
    Earnings before interest, foreign
     exchange, taxes, stock compensation,
     depreciation and amortization                ($809,264)     ($1,986,742)
                                          -----------------------------------
                                          -----------------------------------


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

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                   March 31,     December 31,
                                                       2009             2008
                                                 (unaudited)      (unaudited)
    -------------------------------------------------------------------------

    CURRENT ASSETS
      Cash and cash equivalents                $  8,360,213     $ 10,476,443
      Short-term investments                        122,246          122,246
      Accounts receivable                         3,052,267        2,269,251
      Investment tax credits receivable             438,424          363,424
      Prepaid expenses                              260,256          209,974
    -------------------------------------------------------------------------
                                                 12,233,406       13,441,338

    Property & equipment                            839,921          899,734
    Intangible assets                             5,229,373        4,338,814
    Goodwill                                      3,340,808        4,489,077
    -------------------------------------------------------------------------

                                               $ 21,643,508     $ 23,168,963
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CURRENT LIABILITIES

      Accounts payable and accrued
       liabilities                             $  1,630,499     $  2,229,241
      Deferred revenue                            1,472,996        1,270,407
    -------------------------------------------------------------------------

                                                  3,103,495        3,499,648
    -------------------------------------------------------------------------
    COMMITMENTS

    SHAREHOLDERS' EQUITY
      Share capital                              74,859,576       74,859,576
      Warrants                                      164,435          164,435
      Contributed surplus                        10,302,143       10,249,143
      Deficit                                   (66,786,141)     (65,603,839)
    -------------------------------------------------------------------------

                                                 18,540,013       19,669,315
    -------------------------------------------------------------------------

                                               $ 21,643,508     $ 23,168,963
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                                                       Three Months Ended
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                   March 31,        March 31,
                                                       2009             2008
                                                 (unaudited)      (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Revenue                                    $  3,083,121     $  1,274,286
    Cost of revenue                                 643,406          661,061
    -------------------------------------------------------------------------
    Gross margin                                  2,439,715          613,225
    -------------------------------------------------------------------------
    Expenses
      Sales and marketing                         1,142,263        1,210,381
      General and administrative                    543,736          476,647
      Research and development                    1,562,980          912,939
      Stock compensation expense                     53,000           44,000
      Depreciation of property and
       equipment                                     65,060           63,990
      Amortization of intangible assets             283,441                -
    -------------------------------------------------------------------------
                                                  3,650,480        2,707,957
    -------------------------------------------------------------------------
    Loss before other income (expense)           (1,210,765)      (2,094,732)
    -------------------------------------------------------------------------
    Other income (expense)
      Interest income                                32,065          148,523
      Foreign exchange gain (loss)                   (3,602)         143,406
    -------------------------------------------------------------------------
                                                     28,463          291,929
    -------------------------------------------------------------------------
    NET LOSS AND COMPREHENSIVE LOSS            $ (1,182,302)    $ (1,802,803)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per common share - basic
     and diluted                               $      (0.08)    $      (0.19)
    Weighted average number of common
     shares outstanding - basic and
     diluted                                     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., (613) 230-4770,
csmith@espial.com; Kirk Edwardson, Director, Marketing, Espial Group Inc.,
(613) 230-4770 x1145, kedwardson@espial.com

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