Guest-Tek announces results for the three months ended September 30, 2007



    CALGARY, Nov. 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 for
the three and six months ended September 30, 2007, the Company's second
quarter of fiscal 2008 ("Q2, 2008"). The Company's performance for Q2, 2008
was hampered by a significant appreciation of the Canadian dollar relative to
the US dollar. During Q2, 2008, the Company received 87% of its revenue from
US based hotels, while an estimated 46% of its cost of revenue is incurred in
US dollars. Despite the appreciation, the Company saw a significant
improvement in gross margin compared to the three months ended September 30,
2006 ("Q2, 2007"), while revenue decreased slightly. Revenue for Q2, 2008 was
$9.06 million, ($18.06 million for the six months ended September 30, 2007)
compared to $9.17 million for Q2, 2007 ($16.72 million for the six months
ended September 30, 2006). Gross margin as a percentage of sales increased to
44.0% in Q2, Fiscal 2008 (41.2% for the six months ended September 30, 2007)
compared to 39.8% in Q2, Fiscal 2007 (32.1% for the six months ended
September 30, 2006). Operating expenses included a large foreign currency loss
of $982 thousand for Q2, 2008 ($1.05 million for the six months ended
September 30, 2007) compared to a gain of $47 thousand in Q2, 2007 (loss of
$150 thousand for the six months ended September 30, 2006). Net loss
increased, due to the increase in operating expenses to $1.60 million in Q2,
2006 from $634 thousand in Q2, 2007. However, net loss of $2.14 million for
the six months ended September 30, 2007 decreased from $2.68 million for the
six months ended September 30, 2006. Adjusted EBITDA(1) also showed a
significant decrease to negative $775 thousand in Q2, 2008 from positive $437
in Q2, 2007. Highlights for the quarter include:

    
    -   42 installations completed under an agreement to provide OneView
        Internet to all corporately owned Hyatt Place locations;

    -   Completion of a significant project at Hyatt Regency Chicago under
        our network upgrade program;

    -   Installation of wireless HSIA at Center Parcs UK - Sherwood Forest -
        the first of a total of four, 400 acre UK Villages;

    -   Significant new OneView Media contracts signed with Fairmont Plaza
        New York City, and with Connexion Technologies Inc. for the Meridian
        Las Vegas;

    -   Installation of OneView Internet in 18,821 rooms, with a total
        supported base of 507,490 rooms;

    -   Installation of 1,125 OneView Media rooms, with a total service base
        of 3,498 rooms.

    The unaudited financial statements and related management's discussion and
analysis can be viewed on SEDAR at www.sedar.com.
    Arnon Levy commented, "We are pleased with the progress we have made in
improving the gross margin profitability of Guest-Tek. However we are becoming
increasingly concerned about the impact of the appreciation of the Canadian
dollar, and its impact on our net income. We are actively pursuing programs
that will allow us to increase prices, as well as increase our proportion of
US dollar denominated expenditures. We are pleased with the traction we are
seeing in our OneView Media VOD product."

    ----------------------------------
    (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.
    


    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
3,066 properties and over 507,000 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)

    September 30, 2007 and March 31, 2007
    -------------------------------------------------------------------------
                                                  September 30,     March 31,
                                                          2007          2007
    -------------------------------------------------------------------------
    Assets

    Current assets:
      Cash and cash equivalents                   $  1,479,344  $  1,977,327
      Accounts receivable                            6,400,667     8,637,068
      Installations in progress                        854,829       380,749
      Inventory                                      1,399,008     1,840,810
      Prepaid expenses and deposits                    421,837       603,158
      -----------------------------------------------------------------------
                                                    10,555,685    13,439,112

    Property and equipment                           4,744,377     5,197,564
    Deferred costs                                   3,592,387     3,003,785
    Intangible assets                                6,106,234     6,580,193
    Goodwill                                        11,768,224    11,768,224

    -------------------------------------------------------------------------
                                                  $ 36,766,907  $ 39,988,878
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Operating credit facility                   $    284,743  $    926,028
      Accounts payable and accrued liabilities       4,598,135     5,303,520
      Customer deposits                              2,421,411     1,720,163
      Deferred revenue                                 355,868       281,288
      Current portion of notes payable                 137,563       167,027
      Current portion of capital lease obligations      17,908        49,729
      -----------------------------------------------------------------------
                                                     7,815,628     8,447,755

    Capital lease obligations                                -        12,505
    Deferred leasehold inducement                      182,742       243,641
    Notes payable                                       98,079       150,325
    Deferred revenue                                 1,847,167     1,803,822
    Future income tax liability                      1,253,337     1,716,270

    Shareholders' equity:
      Share capital                                 53,761,606    53,761,394
      Contributed surplus                            2,813,912     2,714,892
      Deficit                                      (31,005,564)  (28,861,726)
      -----------------------------------------------------------------------
                                                    25,569,954    27,614,560

    -------------------------------------------------------------------------
                                                  $ 36,766,907  $ 39,988,878

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                           Three months ended           Six months ended
                              September 30                September 30
                       --------------------------  --------------------------
                              2007          2006          2007          2006

    -------------------------------------------------------------------------

    Revenue (Note 3)     9,055,917     9,170,443    18,064,569    16,724,990
    Cost of revenue      5,073,592     5,517,204    10,614,009    11,359,126
    -------------------------------------------------------------------------
    Gross margin         3,982,325     3,653,239     7,450,560     5,365,864

    Operating expenses:
      Selling, general
       and
       administrative    3,444,829     2,950,479     6,442,227     6,540,543
      Research and
       development         330,895       485,640       715,109       833,576
      Amortization of
       property and
       equipment           483,804       479,119       983,774       881,282
      Amortization of
       intangible assets   300,291       530,680       583,683       789,236
      Amortization of
       deferred
       compensation              -       114,085             -       228,170
      Amortization of
       internally
       developed
       software             78,221        74,443       147,207       138,680
      Stock based
       compensation         52,713       149,851        99,021       269,115
      Interest expense      14,938        13,214        17,428        15,981
      Research and
       development tax
       credits                   -      (173,153)            -      (346,306)
      Foreign currency
       (gain) loss         981,524       (46,502)    1,054,821       149,864
      -----------------------------------------------------------------------
                         5,687,215     4,577,856    10,043,270     9,500,141

    -------------------------------------------------------------------------
    Loss from
     operations         (1,704,890)     (924,617)   (2,592,710)   (4,134,277)

    Interest income          4,716         7,327        12,522        19,593
    -------------------------------------------------------------------------
    Loss before income
     taxes              (1,700,174)     (917,290)   (2,580,188)   (4,114,684)

    Income tax
     recovery              (97,206)     (283,752)     (436,350)   (1,433,284)
    -------------------------------------------------------------------------
    Net loss and
     comprehensive loss (1,602,968)     (633,538)   (2,143,838)   (2,681,400)

    Deficit, beginning
     of period         (29,402,596)  (17,007,685)  (28,861,726)  (14,959,823)
    -------------------------------------------------------------------------

    Deficit, end of
     period           $(31,005,564) $(17,641,223) $(31,005,564) $(17,641,223)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per share:
      Basic           $      (0.10) $      (0.04) $      (0.14) $      (0.17)
      Diluted         $      (0.10) $      (0.04) $      (0.14) $      (0.17)

    Weighted average
     number of shares:
      Basic             15,823,493    15,805,248     15,823,493   15,811,217
      Diluted           15,825,282    15,853,406     15,825,282   15,881,184
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %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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