Guest-Tek announces results for the three months ended December 31, 2008



    CALGARY, Feb. 12 /CNW/ - Guest-Tek Interactive Entertainment Ltd.,
("Guest-Tek" or the "Company") (TSX:GTK), a leader in providing broadband
technology solutions to the global hospitality industry, announced results
today for the three and nine months ended December 31, 2008, the Company's
third quarter of fiscal 2009 ("third quarter, Fiscal 2009", "Q3, 2009" or "Q3,
Fiscal 2009"). The Company has recorded its fourth consecutive quarter of
positive adjusted EBITDA(1) and adjusted EBITDA growth. Adjusted EBITDA
improved to $424 thousand in Q3, 2009 from negative $495 thousand in Q3, 2008.
The Company's interim consolidated financial statements for Q3, Fiscal 2009,
along with the related notes and Management's Discussion and Analysis can be
found on www.sedar.com.
    Arnon Levy commented, "I am very pleased to report our fourth consecutive
quarter of positive adjusted EBITDA, which is a reflection of our ongoing
management of cost of revenue and operating costs."
    The Company's performance for the third quarter showed significant
improvement over the three months ended December 31, 2008 ("third quarter,
Fiscal 2008," "Q3, 2008" or "Q3, Fiscal 2008"). Revenue for Q3, 2009 was
$10.89 million compared to $9.07 million for Q3, 2008. The Company's gross
margin increased to $3.82 million in Q3, 2009 from $3.02 million in Q3, 2008.
Gross margin as a percentage of sales increased to 35.1% in Q3, Fiscal 2009
compared to 33.3% in Q3, Fiscal 2008. Operating expenses reduced to $4.01
million in Q3, Fiscal 2009 compared to $4.30 million in Q3, 2008. Net loss
decreased significantly, to $0.18 million for Q3, 2009 compared to $1.12
million for Q3, 2008. Adjusted EBITDA improved to $424 thousand in Q3, 2009
from negative $495 thousand in Q3, 2008.

    
    Significant events for the quarter include:

    -   Installation of OneView Media VOD at two properties within the Real
        Hotels and Resorts Group (Real Intercontinental Managua, and the Real
        Intercontinental San Pedro Sula;

    -   Installation of OneView Media VOD at the Loden Hotel in Vancouver,
        the first Canadian VOD installaton;

    -   Installation of OneView Internet in 16,410 rooms, with a total
        supported base of 508,181 rooms;

    -   Installation of 1,678 OneView Media rooms, with a total service base
        of 7,774 rooms;

    -   Revenue totaling $10.89 million during the quarter;

    -   Net loss of $0.18 million; and

    -   Adjusted EBITDA of $424 thousand.
    

    Revenue

    Overall, revenue increased 20.1% to $10.89 million for Q3, Fiscal 2009
(10.7% to $29.93 million for nine months ended December 31, 2008) from $9.07
million for Q3, 2008 ($27.05 million for nine months ended December 31, 2008).
Revenue increased 19.1% from $9.14 million recorded in Q2, 2009. The increase
in revenue compared to the same quarter a year ago is due to an increase in
VOD revenue and an increase in the average Canadian to US dollar exchange rate
of 23.4%, offset by a decrease in HSIA installation revenue in its base
currency. The increase in revenue compared to Q2, 2009 is due to an increase
in the average Canadian to US dollar exchange rate of 16.2% and an increase in
the HSIA installation revenue over the previous quarter.

    Gross Margin

    Gross margin as a percentage of revenue increased to 35.1% in Q3, Fiscal
2009 (decreased to 37.0% in nine months ended December 31, 2008) from 33.3% in
Q3, Fiscal 2008 (38.2% in nine months ended December 31, 2007), and increased
from 33.7% in Q2, Fiscal 2009. The increase in gross margin as a percentage of
revenue year over year and compared to Q2, 2009 is attributable to an increase
in the revenue because of change in the foreign exchange rate and a reduction
in the cost of revenue.

    Operating Expenses

    Total operating expenses decreased 6.7% to $4.01 million for Q3, Fiscal
2009, (decreased 11.1% to $12.75 million for nine months ended December 31,
2008) compared to $4.30 million for Q3, Fiscal 2008, ($14.34 million for nine
months ended December 31, 2007) and decreased 2.0% from $4.08 million for Q2,
2009. The decrease in operating expenses compared to Q3, 2008 is due to a
decrease in most components of operating expenses, most notably amortization
expense and foreign currency loss. Our cost management efforts will continue
as the effects from global economic slowdown are felt in our market.

    About Guest-Tek

    Guest-Tek is the world's largest provider of IP based technology
solutions for the hospitality industry. Guest-Tek's OneView platform provides
hotels with converged data, video and telephony services. Guest-Tek is a
preferred vendor to major hotel brands, providing services including network
design, procurement, implementation, and post sales customer support to 2,734
properties and 508,181 rooms. Guest-Tek's common shares trade on The Toronto
Stock Exchange under the trading symbol "GTK". The company's head offices are
in Calgary, Alberta, and it has major support facilities in Irvine,
California, and Warsaw, Poland as well as Sales offices located throughout
North America and Europe. For more information about Guest-Tek, go to
www.guest-tek.com.

    The above disclosure contains certain forward-looking statements that
involve substantial known and unknown risks and uncertainties. These
forward-looking statements are subject to numerous risks and uncertainties,
certain of which are beyond Guest-Tek's control, including: the impact of
general economic conditions, industry conditions, increased competition, the
lack of availability of qualified personnel or management, fluctuations in
foreign exchange or interest rates, stock market volatility and market
valuations of companies with respect to the announced transactions and the
final valuations thereof, and obtaining required approvals of regulatory
authorities. Guest-Tek's actual results, performance or achievement could
differ materially from those expressed in, or implied by these forward-looking
statements and, accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or occur, or if
any of them do so, what benefits, including the amount of proceeds, that
Guest-Tek will derive therefrom.

    
    GUEST-TEK INTERACTIVE ENTERTAINMENT LTD.
    Consolidated Balance Sheets (Unaudited)

    December 31, 2008 and March 31, 2008
    -------------------------------------------------------------------------
                                                   December 31,     March 31,
                                                          2008          2008
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                   $    890,002  $  2,956,869
      Accounts receivable                            6,737,432     8,665,885
      Installations in progress                      2,549,978     1,801,107
      Inventory                                      2,041,913     1,257,983
      Prepaid expenses and deposits                  1,209,540     1,495,486
      -----------------------------------------------------------------------
                                                    13,428,865    16,177,330

    Property and equipment                           3,368,062     4,412,159
    Deferred costs                                   5,785,551     4,566,026
    Intangible assets                                3,961,280     4,371,999
    Goodwill                                        11,768,224    11,768,224

    -------------------------------------------------------------------------
                                                  $ 38,311,982  $ 41,295,738
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities    $  6,304,962  $  6,527,165
      Customer deposits                              3,250,971     6,085,687
      Deferred revenue                               1,500,012       592,800
      Current portion of notes payable                  45,752       128,895
      -----------------------------------------------------------------------
                                                    11,101,697    13,334,547

    Deferred leasehold inducement                       30,494       121,843
    Notes payable                                    1,764,555     1,743,276
    Deferred revenue                                 3,413,433     2,496,438
    Future income tax liability                      1,027,505     1,049,660

    Shareholders' equity:
      Share capital                                 53,779,555    53,779,555
      Contributed surplus                            3,049,720     2,912,440
      Deficit                                      (35,854,977)  (34,142,021)
      -----------------------------------------------------------------------
                                                    20,974,298    22,549,974

    -------------------------------------------------------------------------
                                                  $ 38,311,982  $ 41,295,738
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    GUEST-TEK INTERACTIVE ENTERTAINMENT LTD.
    Consolidated Statements of Operations, Comprehensive loss and Deficit
    (Unaudited)

    -------------------------------------------------------------------------
                           Three months ended          Nine months ended
                              December 31                 December 31
                      --------------------------- ---------------------------
                              2008          2007          2008          2007
    -------------------------------------------------------------------------

    Revenue
     (Note 6)         $ 10,891,248  $  9,065,913  $ 29,928,592  $ 27,046,331
    Cost of revenue      7,070,337     6,044,653    18,866,224    16,725,097
    -------------------------------------------------------------------------

    Gross margin         3,820,911     3,021,260    11,062,368    10,321,234

    Operating expenses:
      Selling, general
       and
       administrative    3,129,463     2,984,987     9,427,067     9,427,216
      Research and
       development         207,677       300,494       656,177     1,015,603
      Amortization of
       property and
       equipment           283,887       332,545       888,940     1,316,318
      Amortization of
       intangible assets   155,680       298,284       495,151       881,967
      Amortization of
       internally
       developed software   96,183        85,842       256,981       233,049
      Loss on disposal
       of assets                 -             -       504,614             -
      Stock based
       compensation         33,340        62,990       137,280       162,011
      Interest expense      45,752         3,246       138,337        20,674
      Foreign currency
       loss                 60,478       230,642       249,390     1,285,464
      -----------------------------------------------------------------------
                         4,012,460     4,299,030    12,753,937    14,342,302

    -------------------------------------------------------------------------
    Loss from
     operations           (191,549)   (1,277,770)   (1,691,569)   (4,021,068)

    Interest income          1,001         6,229         5,399        18,752
    -------------------------------------------------------------------------
    Loss before income
     taxes                (190,548)   (1,271,541)   (1,686,170)   (4,002,316)

    Income tax expense
     (recovery)             (5,614)     (155,573)       26,786      (591,923)
    -------------------------------------------------------------------------
    Net loss and
     comprehensive loss   (184,934)   (1,115,968)   (1,712,956)   (3,410,393)

    Deficit, beginning
     of period         (35,670,043)  (31,156,150)  (34,142,021)  (28,861,726)
    -------------------------------------------------------------------------

    Deficit, end of
     period           $(35,854,977) $(32,272,118) $(35,854,977) $(32,272,119)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per
     share:
      Basic           $      (0.01) $      (0.07) $      (0.11) $      (0.22)
      Diluted         $      (0.01) $      (0.07) $      (0.11) $      (0.22)

    Weighted average
     number of shares:
      Basic             15,824,410    15,823,886    15,824,410    15,824,410
      Diluted           15,847,484    15,825,968    15,847,484    15,847,484
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Adjusted EBITDA is earnings before interest, taxes, depreciation,
        amortization, gain or loss on sale of assets and stock based
        compensation expense and is provided to assist investors in assessing
        the Company's performance. Adjusted EBITDA has no standardized
        definition in Canadian GAAP and therefore may not be comparable to
        similar measures presented by other companies. Management believes
        that Adjusted EBITDA, in addition to net income, is a useful
        indication of performance and the Company's ability to generate cash
        from operations. Please see the reconciliation of Adjusted EBITDA to
        net income included in the Company's MD&A for the period ended
        December 31, 2008.
    

    %SEDAR: 00020221E




For further information:

For further information: Arnon Levy, President & CEO, Guest-Tek, (403)
444-8488, arnon.levy@guest-tek.com; David Simpson, Interim CFO, Guest-Tek,
(403) 444-8486, david.simpson@guest-tek.com

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GUEST-TEK INTERACTIVE ENTERTAINMENT LTD.

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