Guest-Tek announces results for the three months ended June 30, 2008



    CALGARY, Aug. 8 /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 today that
in the three months ended June 30, 2008, the Company has recorded its lowest
net loss since the three months ended June 30, 2005. In addition, the Company
has achieved the second consecutive quarter of positive adjusted EBITDA(1) and
adjusted EBITDA growth. The Company's interim consolidated financial
statements for the three months ended June 30, 2008 ("first quarter, Fiscal
2009," "Q1, 2009" or "Q1, Fiscal 2009"), along with the related notes and
Management's Discussion and Analysis can be found on www.sedar.com.
    Arnon Levy commented, "Our core OneView Internet product continues to
bring new revenue to the business and the growth of the OneView Media platform
is setting the stage for longer term growth. I am very pleased to report our
second consecutive quarter of positive adjusted EBITDA, which is a reflection
of the growth of the OneView platform customer base and our ongoing management
of cost of revenue and operating costs."
    The Company's performance for the three months ended June 30, 2008 showed
significant improvement over the three months ended June 30, 2007 ("first
quarter, Fiscal 2008," "Q1, 2008" or "Q1, Fiscal 2008"). Revenue for Q1, 2009
was $9.89 million compared to $8.98 million for Q1, 2008. The Company also saw
an improvement in gross margin in Q1, 2009 compared to Q1, 2008. Gross margin
as a percentage of sales increased to 42.0% in Q1, Fiscal 2009 compared to
39.7% in Q1, Fiscal 2008. Operating expenses remained consistent at
$4.67 million in Q1, Fiscal 2009 compared to $4.64 million in Q1, 2008. Net
loss decreased significantly, to $389 thousand for Q1, 2009 compared to
$720 thousand for Q1, 2008. Adjusted EBITDA improved to $146 thousand in
Q1, 2009 from negative $166 thousand in Q1, 2008.

    
    -----------------------------------
    (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 June 30, 2008.


    Significant events for the quarter include:

    -   86 OneView Internet ("high-speed Internet access" or "HSIA")
        properties upgraded under an agreement with Tharaldson Property
        Management Inc. to upgrade networks and install OneView Internet at
        371 properties;

    -   Installed OneView Internet at Centre Parcs Elveden Forest in the UK,
        and signed an agreement to install OneView Internet at a third Centre
        Parcs, Longleat;

    -   Installed OneView Internet at The Lodge at Pebble Beach, The Inn at
        Spanish Bay, and Casa Palmero at Pebble Beach in California;

    -   Completion of OneView Media video-on-demand ("VOD") and Internet
        protocol television ("IPTV") at the The Water Club, A Signature Hotel
        by Borgata in Atlantic City, New Jersey;

    -   Commencement of help desk capability based in Guatemala, in an effort
        to reduce cost and align working hours with busy times at the
        majority of Guest-Tek's room base;

    -   Installation of OneView Internet in 13,976 rooms, with a total
        supported base of 505,571 rooms; and

    -   Installation of 365 OneView Media rooms, with a total service base of
        5,601 rooms.
    

    Revenue

    Overall, revenue increased 10.2% to $9.89 million for Q1, Fiscal 2009
from $8.98 million for Q1, 2008. Revenue decreased 10.8% from $11.09 million
recorded in Q4, 2008. The increase in revenue compared to the same quarter a
year ago is due to an increase in the demand for both HSIA installations and
VOD. The decrease in revenue compared to Q4, 2008 is due to an unusually large
HSIA installation in that quarter.

    Gross Margin

    Gross margin as a percentage of revenue increased to 42.0% in Q1, Fiscal
2009 from 39.7% in Q1, Fiscal 2008, and increased from 32.8% in Q4, Fiscal
2008. The increases in gross margin as a percentage of revenue are
attributable to a reduction in cost of revenue.

    Operating Expenses

    Total operating expenses increased 0.6% to $4.66 million for Q1, Fiscal
2009, compared to $4.64 million for Q1, Fiscal 2008, and decreased 15.8% from
$5.54 million for Q4, 2008. The significant decrease in operating expenses
compared to Q4, 2008 is due to a decrease in intangible asset write-downs
($1.19 million in Q4, 2008 compared to $nil in Q1, 2009). Operating expenses
as a percentage of revenue were 47.1% for Q1, Fiscal 2009 compared to 51.6%
for Q1, Fiscal 2008 and compared to 50.0% for Q4, 2008.

    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
2,879 properties and over 505,000 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)

    June 30, 2008 and March 31, 2008
    -------------------------------------------------------------------------
                                              June 30, 2008   March 31, 2008
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents               $   1,897,085    $   2,956,869
      Accounts receivable                         8,327,070        8,665,885
      Installations in progress                   1,687,867        1,801,107
      Inventory                                   1,959,220        1,257,983
      Prepaid expenses and deposits               1,225,235        1,495,486
      -----------------------------------------------------------------------
                                                 15,096,477       16,177,330

    Property and equipment                        4,253,220        4,412,159
    Deferred costs                                5,107,191        4,566,026
    Intangible assets                             4,264,587        4,371,999
    Goodwill                                     11,768,224       11,768,224
    -------------------------------------------------------------------------
                                              $  40,489,699    $  41,295,738
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued
       liabilities                            $   6,074,524    $   6,527,165
      Customer deposits                           5,673,717        6,085,687
      Deferred revenue                              680,796          592,800
      Current portion of notes payable               86,406          128,895
      -----------------------------------------------------------------------
                                                 12,515,443       13,334,547


    Deferred revenue                              2,962,292        2,496,438
    Deferred leasehold inducement                    91,393          121,843
    Notes payable                                 1,778,733        1,743,276
    Future tax liability                            923,021        1,049,660

    Shareholders' equity:
      Share capital                              53,779,555       53,779,555
      Contributed surplus                         2,969,930        2,912,440
      Deficit                                   (34,530,668)     (34,142,021)
      -----------------------------------------------------------------------
                                                 22,218,817       22,549,974

    -------------------------------------------------------------------------
                                              $  40,489,699    $  41,295,738
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    Three months ended June 30, 2008 and 2007
    -------------------------------------------------------------------------
                                                       2008             2007
    -------------------------------------------------------------------------

    Revenue (note 6)                          $   9,893,255    $   8,979,029

    Cost of revenue                               5,735,858        5,410,417
    -------------------------------------------------------------------------

    Gross margin                                  4,157,397        3,568,612

    Operating expenses:
      Selling, general and administrative         3,739,086        2,997,398
      Research and development                      201,155          384,214
      Amortization of property and equipment        304,953          499,970
      Amortization of intangible assets             170,285          283,392
      Amortization of internally
       developed software                            75,327           68,986
      Foreign currency loss                          70,697          353,298
      Stock based compensation                       57,490           46,308
      Interest expense                               45,524            2,490
      -----------------------------------------------------------------------
                                                  4,664,517        4,636,056

    -------------------------------------------------------------------------
    Loss before interest income and
     income taxes                                  (507,120)      (1,067,444)

    Interest income                                   2,565            7,807

    -------------------------------------------------------------------------
    Loss before income taxes                       (504,555)      (1,059,637)

    Income tax recovery                            (115,908)        (339,144)

    -------------------------------------------------------------------------
    Net loss and comprehensive loss                (388,647)        (720,493)

    Deficit, beginning of period                (34,142,021)     (28,861,726)

    -------------------------------------------------------------------------
    Deficit, end of period                    $ (34,530,668)   $ (29,582,219)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss income per share:
      Basic                                   $       (0.02)   $       (0.03)
      Diluted                                         (0.02)           (0.03)

    Weighted average number of shares:
      Basic                                      15,825,852       15,823,493
      Diluted                                    15,840,265       15,825,136
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00020221E




For further information:

For further information: Arnon Levy, President & CEO, Guest-Tek, (403)
444-8488, arnon.levy@guest-tek.com; Geoff Clark, CFO, Guest-Tek, (403)
444-8427, geoff.clark@guest-tek.com

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