Guest-Tek announces results for the year ended March 31, 2009



    CALGARY, June 11 /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
the Company will file its financial statements for the year ended March 31,
2009 ("Fiscal 2009") with SEDAR on June 12th, 2009. Once filed, the financial
statements, related management's discussion and analysis, and annual
information form can be viewed on SEDAR at www.sedar.com.
    Arnon Levy commented, "We are pleased to announce that the Company has
had a positive adjusted EBITDA(1) year of $1.58 million, with 5 quarters in a
row of increasing positive adjusted EBITDA(1). This is a result of the
continuing strong interest in our OneView Internet product offering with both
new installations, such as with Center Parcs, and upgrades of previously
installed equipment such as with Tharaldson Property Management Inc. We have
also completed significant new installations of OneView Media (digital
video-on-demand ("VOD") and free-to-guest TV) and expect more traction in
Fiscal 2010. We have also continued to improve gross margin as a percentage of
revenue, and to reduce operating expenses (before goodwill write off)."
    The year ended March 31, 2009 ("Fiscal 2009") was a year of continued
improvement for Guest-Tek. Revenue increased 7.4% to $40.95 million for Fiscal
2009, compared to $38.14 million for the fiscal year ended March 31, 2008
("Fiscal 2008"). HSIA recurring revenue and VOD revenue increased over Fiscal
2008, while HSIA installation revenue showed a small decrease.
    The 8.0% increase in HSIA recurring revenue (to $24.60 million in Fiscal
2009 compared to $22.77 million in Fiscal 2008) was due to the depreciation of
the Canadian dollar against the US dollar. The average exchange rate for the
fiscal year 2009 changed by 9.22% from that of fiscal year 2008. The increase
in HSIA recurring revenue by the increased exchange rate was offset by a
management group discontinuing the support of a number of hotels during the
year. The Company also saw an increase of 97.6% in its VOD revenue from $1.03
million in Fiscal 2008 to $2.04 million in Fiscal 2009. The increase comes as
a result of the increase in the number of VOD customers installed during the
year and the cumulative effect of the deferred revenue from previous
installations. The decline in the HSIA installation revenue from $14.34
million in fiscal year 2008 to $14.31 million in fiscal year 2009 is due to
the revenue recognised for a major installation at the Renaissance Montgomery
in fiscal year 2008, offset by the depreciation of the Canadian dollar against
the US dollar.
    Revenue for the year ended March 31, 2007 ("Fiscal 2007") was $35.28
million. The increase in revenue from Fiscal 2007 to Fiscal 2009, was
primarily due to an increase in HSIA installation and recurring revenue. HSIA
installation revenue increased to $14.31 million in Fiscal 2009 compared to
$11.17 million in Fiscal 2007 as installed hotels increased. HSIA recurring
increased from $22.23 million in Fiscal 2007 to $24.60 million in fiscal year
2009, as the Company was able to increase HSIA maintenance and support pricing
where possible. In addition VOD revenue increased from $682 thousand in 2007
to $2.04 million in Fiscal 2009 as the cumulative effect of the deferred
revenue projects from fiscal year 2007 to 2009. Offsetting these increases was
the VoIP product revenue that did not record any sales in 2009, compared to
$1.19 million in fiscal 2007 as the Company has not invested in the VoIP
product.
    Net loss for Fiscal 2009 was $13.25 million compared to $5.28 million for
Fiscal 2008. The increase in the net loss was due to the write down of the
goodwill in the company of $11.77 million. This was caused by the sale of
40.6% of the shares Company in April 2009 at a price of $0.23 per common
share. Using this share value to value the whole company suggested an
impairment in the value of the goodwill to the extent that it was all written
off. Deducting the write off of goodwill from net loss in 2009 would make the
loss $1.48 million which is a significant improvement from the previous year,
that if adjusted for write off of intangibles would have been $4.09 million.
This decrease in net loss was due to several factors. The gross margin
increased to $14.68 million in Fiscal 2009 from $13.47 million in Fiscal 2008.
The increase is due to the increase in revenue and a decrease in cost of
revenue as a percentage of revenue. Cost of revenue as a percentage of revenue
was 64.2% in Fiscal 2009 compared to 64.7% in Fiscal 2008. The decrease is due
to lower call centre costs and the depreciation of the Canadian dollar
relative to the US dollar. Offsetting the decreases is a change in tax
expense, from a recovery of $605 thousand in 2008 to an expense of $12
thousand in 2009; this is a result of the future tax effect of the reduction
in intangibles in the two years. The net loss before income tax was $5.89
million in Fiscal 2008 compared to $13.23 million in Fiscal 2009. Operating
expenses, excluding the write-down of intangible assets and goodwill decreased
to $16.16 million in Fiscal 2009 compared to $18.20 million in Fiscal 2008.
The decrease in operating expenses included a foreign currency loss of $184
thousand compared to a loss of $995 thousand and was achieved despite a loss
on disposal of assets of $505 thousand in Fiscal 2009.
    Net loss for Fiscal 2009 also decreased from the $13.90 million net loss
recorded in Fiscal 2007. After adjusting for the write offs for goodwill and
intangibles the net loss would have decreased from $10.85 million in 2007 to
$1.48 million in 2009. This was due to an increase in gross margin and a
decrease in other operating expenses. Gross margin increased from $10.53
million in Fiscal 2007 to $14.68 million in Fiscal 2009. The increase is a
result of increased revenue resulting from an increase in the HSIA recurring
and installation revenue as a result of larger value installations and the
increase in VOD revenue as new properties add to the existing deferred revenue
base the company is recognising. Operating expenses increased from $21.54
million in Fiscal 2007 to $27.9 million in Fiscal 2009, resulting from the
write-down of goodwill. Offsetting these amounts is a reduction in the
amortization of long term assets of $2.52 million and a reduction in the
research and development and selling, general and administrative costs of
$1.19 million as the company has implemented cost reductions.
    Adjusted EBITDA(1) was positive $1.58 million for Fiscal 2009, an
improvement over the negative $1.32 million recorded in Fiscal 2008, and the
negative $2.92 million recorded in Fiscal 2007.
    Other highlights for the year include:

    
    -   86 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 and
        Longleat in the UK;
    -   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 VOD and IPTV at the The Water Club, A
        Signature Hotel By Borgata in Altantic 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 Media VOD at five properties within the Real
        Hotels and Resorts Group (Real Intercontinental Costa Rica, Real
        Intercontinental San Salvador, Real Intercontinental Guatemala Real
        Intercontinental Managua, and the Real Intercontinental San Pedro
        Sula);
    -   Completion of a major installation of HSIA, VOD, VoIP, and IPTV at
        Renaissance Montgomery, operated by PCH resorts;
    -   Installation of OneView Media VOD at the Loden Hotel in Vancouver,
        the first Canadian VOD installation;
    -   Completion of VOD installation at 16 properties;
    -   Assumption of 68 Starwood properties from Sprint, added 32,627 rooms
        to our service and support base;
    -   completion of a high speed internet access upgrade at 26 White
        Lodging Services properties with new networks;
    -   Installation of a beta site at Radisson Saskatoon providing a high
        definition in room entertainment system over Shaw coax lines; this is
        the Company's first one in Canada;
    

    Highlights for the Fourth Quarter

    The Company's performance for the three months ended March 31, 2009
("fourth quarter, Fiscal 2009," "Q4, 2009" or "Q4, Fiscal 2009") showed some
improvement over the three months ended March 31, 2008 ("fourth quarter,
Fiscal 2008," "Q4, 2008" or "Q4, Fiscal 2008"). Revenue for Q4, 2009 was
$11.02 million compared to $11.09 million for Q4, 2008. The Company saw a
significant improvement in gross margin in Q4, 2009 compared to Q4, 2008.
Gross margin as a percentage of sales increased to 36.7% in Q4, Fiscal 2009
compared to 31.6% in Q4, Fiscal 2008. Operating expenses increased to $15.60
million in Q4, Fiscal 2009 compared to $5.40 million in Q4, 2008, primarily
due to a write-down in goodwill of $11.77 million. As a result, net loss
increased significantly, to $11.53 million for Q4, 2009 compared to $1.87
million for Q4, 2008. Adjusted EBITDA improved to $850 thousand in Q4, 2009
from $86 thousand in Q4, 2008. Significant events for the quarter include:

    
    -   Assumption of 68 Sprint properties, 32,627 rooms to add to our
        service and support base;
    -   Completion of a high speed internet access upgrade at 26 White
        Lodging Services properties with new networks.
    -   Completion of VOD installation at 6 properties including Ace Palm
        Springs, Quechan Casino resort and JW Marriot Guanacaste in Costs
        Rica;
    -   New contract signed to provide OneView Internet and OneView Media to
        Ritz-Carlton Chicago,;
    -   Installation of a beta site at Radisson Saskatoon providing a high
        definition in room entertainment system over Shaw coax lines; this is
        the Company's first one in Canada;
    -   Installation of OneView Internet in 13,840 rooms, with a total
        supported base of 446,619 rooms;
    -   Installation of 3,721 OneView Media rooms, with a total service base
        of 11,495 rooms;
    

    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 2,696
properties and over 445,000 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

    March 31, 2009 and 2008
    -------------------------------------------------------------------------
                                                          2009          2008
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                   $  2,155,523  $  2,956,869
      Accounts receivable                            7,763,457     8,665,885
      Installations in progress                      1,526,987     1,801,107
      Inventory                                      1,005,453     1,257,983
      Prepaid expenses and deposits                  1,024,083     1,495,486
      -----------------------------------------------------------------------
                                                    13,475,503    16,177,330

    Property and equipment                           3,461,605     4,412,159
    Deferred costs                                   6,686,554     4,566,026
    Intangible assets                                3,807,750     4,371,999
    Goodwill                                                 -    11,768,224
    -------------------------------------------------------------------------
                                                  $ 27,431,412  $ 41,295,738
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:

      Accounts payable and accrued liabilities    $  5,125,927  $  6,527,165
      Customer deposits                              2,474,822     6,085,687
      Deferred revenue                               2,121,226       592,800
      Current portion of notes payable               1,771,644       128,895
      -----------------------------------------------------------------------
                                                    11,493,619    13,334,547
      -----------------------------------------------------------------------

    Deferred leasehold inducement                        5,932       121,843
    Notes payable                                            -     1,743,276
    Deferred revenue                                 5,391,314     2,496,438
    Future tax liability                             1,066,815     1,049,660
    -------------------------------------------------------------------------
                                                     6,464,061     5,411,217
    -------------------------------------------------------------------------
                                                    17,957,680    18,745,764
    -------------------------------------------------------------------------

    Shareholders' equity:
      Share capital                                 53,779,555    53,779,555
      Contributed surplus                            3,081,968     2,912,440
      Deficit                                      (47,387,791)  (34,142,021)
      -----------------------------------------------------------------------
                                                     9,473,732    22,549,974
      -----------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                  $ 27,431,412  $ 41,295,738
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                           Three months ended         Twelve months ended
                                March 31                    March 31
                      --------------------------- ---------------------------
                              2009          2008          2009          2008
    -------------------------------------------------------------------------

    Revenue           $ 11,020,803  $  7,965,534  $ 40,949,395  $ 38,135,328
    Cost of revenue      6,593,593     5,512,968    25,884,044    24,666,219
    -------------------------------------------------------------------------

    Gross margin         4,427,210     2,452,565    15,065,351    13,469,109

    Operating expenses:
      Selling, general
       and
       administrative    3,090,830     2,169,596    12,517,898    13,082,266
      Research and
       development         306,701       133,064       962,878     1,205,010
      Amortization of
       property and
       equipment           160,451       134,000       625,163     1,160,233
      Amortization of
       intangible assets   159,062       201,748       654,212     1,181,739
      Write down of
       goodwill         11,768,224             -    11,768,224             -
      Write down of
       intangible assets         -             -             -     1,189,566
      Amortization of
       internally
       developed
       software            103,794        61,064       360,775       327,932
      Loss on disposal
       of assets                 -          (147)      504,614             -
      Stock based
       compensation         32,247        45,094       169,528       220,120
      Interest expense      45,886         2,507       184,224        27,785
      Foreign currency
       loss (gain)         (65,540)     (639,198)      183,849       994,820
      -----------------------------------------------------------------------
                        15,601,655     2,107,727    27,931,365    19,389,471

    -------------------------------------------------------------------------
    Loss from
     operations        (11,174,446)      344,838   (12,866,014)   (5,920,362)
    Interest income         12,879        15,123        18,278        34,841
    -------------------------------------------------------------------------
    Loss before income
     taxes             (11,161,567)      359,962   (12,847,736)   (5,885,521)
    Income tax expense
     (recovery)            (15,252)       12,261        11,534      (605,226)
    -------------------------------------------------------------------------
    Net loss and
     comprehensive
     loss              (11,146,315)      347,700   (12,859,270)   (5,280,295)
    Deficit, beginning
     of period         (35,854,977)  (32,272,118)  (34,142,021)  (28,861,726)
    -------------------------------------------------------------------------
    Deficit, end
     of period        $(47,001,291) $(31,924,418) $(47,001,291) $(34,142,021)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per
     share basic and
     diluted:         $      (0.73) $       0.02  $      (0.81) $      (0.33)


    -------------------------------
    (1) Adjusted EBITDA is earnings or loss before interest, income taxes,
        depreciation, amortization, gain or loss on sale or disposal 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 earnings
        (loss), 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 on page 9 of this
        MD&A.
    





For further information:

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

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GUEST-TEK INTERACTIVE ENTERTAINMENT LTD.

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