TIO Networks Corp. 2008, Q2 financial results



    "Strong Quarter over Quarter Performance in Transactions and
    Profitability"

    BURNABY, BC, March 25 /CNW/ - TIO Networks Corp., owner of North
America's leading automated bill payment and financial services
network, (TSX-V: TNC), today announced operating results for the second
quarter ended January 31, 2008.
    Total recurring revenue for the quarter, including transaction services
and maintenance/licensing services revenue, increased 14% and accounted for
$3,246,196 or 96% of total revenue, compared to $2,849,853 or 91% for the
quarter ended January 31, 2007. The gross profit on recurring revenue for the
quarter increased 3% to $1,221,918, compared to gross profit of $1,185,367 for
same period one year ago. Given that approximately 99% of the Company's
recurring revenue was generated in the US, recurring revenue for the quarter
was adversely affected by a 14% change in currency caused by devaluation in
the US dollar as compared to the same period one year ago. The number of
revenue generating transactions increased 43% to 1,378,403 compared to 966,748
for the same period last year and improved by 89,061 transactions or 7% over
the previous quarter.
    
    Highlights for the quarter include the following:

    -  TIO announced it had signed an agreement with CPS Energy (largest
       utility in San Antonio)
    -  TIO announced it had signed an agreement with IPP of America to add
       more than 4500 new locations to the TIO Network by leveraging TIO's
       API (application programming interface) - subsequent to Q2, 612 of
       these locations have gone live and cumulatively commenced generating
       revenues.
    -  TIO announced it had achieved full compliance to PCI DSS in the United
       States
    -  TIO announced it had signed an agreement with ACE Cash Express
       (largest chain of check cashers in the US) to add more than 1700
       locations to the TIO Network by leveraging TIO's API
    -  TIO announced it had signed an agreement with Work Wireless to
       integrate TIO bill payments by leveraging TIO's API
    -  TIO announced it had received approval to expand the TIO prepaid
       MasterCard program beyond initial pilot to the entire E-Wiz network.
       TIO also announced the addition of a savings program for its prepaid
       cardholders.
    

    Revenue for the quarter ended January 31, 2008 was $3,397,437, an
increase of 8% from $3,147,674 from the same period one year ago. (*)Earnings
before interest, tax, depreciation, amortization and stock-based compensation
(EBITDA) was a loss of $541,000 compared to a profit of $59,000 one year ago
and a loss of $817,000 during the previous quarter representing a quarter over
quarter EBITDA improvement of 34%. Cumulative Currency translation from US to
Canadian dollars had an unfavorable impact on EBITDA of approximately $43,000
for Q2 2008. Net loss for the quarter ended January 31, 2008 was $1,526,351
compared to a loss of $669,670 for the same period one year ago.
    
    Contributing to the financial results for Q2 was:

    1- Amortization of property and equipment of $743,701 (compared with
$462,711 in Q2 2007),
    2- Loss on disposals of property of equipment (due mainly to one-time
write-off of leasehold improvements) in the amount of $93,658
    3- Research and Development expenses of $304,193 compared to $180,544 in
Q2 2007,
    4- Reduced margins for the quarter in the amount of $184,000 or 14% due to
foreign exchange as compared to the exchange rates adopted in the same period
last year,
    5- Decrease in one-time revenues to $151,240 for the quarter as compared
to $297,820 in the same period last year and
    6- Increase in operations costs to $1,859,119 compared to $1,443,797
during the same period last year primarily due to continued start-up costs
associated with the Company's new field engineer maintenance program.
    

    During Q2, the Company has taken action on more than $1M/year of cost
savings. The full impact in cost savings is expected to be fully incorporated
into the Company's reported financial results by Q3. Management expects more
cost actions will be acted upon during subsequent quarters.
    The following metrics are key measures on the Company's quarterly
performance in terms of deployments, transactions and profit margins:

    

    -------------------------------------------------------------------------
                                          Clerk Assisted (TIO Express)
    -------------------------------------------------------------------------
                                      TIO provides
                                      platform and           TIO provides
    Metric                             processing          processing only
    -------------------------------------------------------------------------
    No. of Locations               Q2 08       Q1 08      Q2 08       Q1 08
    -------------------------------------------------------------------------
    Contracted                     2,456       1,751    6200(xxx)   6200(xxx)
    ------------------------------
    Configured/Activated           1,951       1,471      0(No.)        0
    ------------------------------
    Transacted(*)                  1,611       1,158      0(No.)        0
    -------------------------------------------------------------------------
                                           Self-Service (TIO Kiosks)
    -------------------------------------------------------------------------
    No. of Locations                     Q2 08                    Q1 08
    -------------------------------------------------------------------------
    Deployed(xx)                         1,437                    1,416
    ------------------------------
    Installed & Transacting(*)           1,284                    1,278
    -------------------------------------------------------------------------
                                        Clerk Assisted and Self-Service
    -------------------------------------------------------------------------
                                         Q2 08                    Q1 08
    -------------------------------------------------------------------------
    Total number of locations
     Transacted(*)                       2,895                    2,436
    ------------------------------
    Number of Revenue Generating
     transactions                      1,378,403                1,289,342
    ------------------------------
    Number of transactions under
     fixed fee contracts                147,849                  154,656
    ------------------------------
    Total Number of Transactions       1,543,848                1,459,693
    ------------------------------
    Transactional Revenues            $3,156,378               $3,188,431
    ------------------------------
    Transactional Gross Profit        $1,147,928               $1,095,472
    ------------------------------
    Gross Margin % from
     Trans Revenue                       36.4%                    34.4%
    ------------------------------
    Recurring Revenues
     (transaction + fixed fee
     revenues)                        $3,246,197               $3,283,000
    ------------------------------
    Quarter to Quarter Transaction
     Growth                                7%                       5%
    ------------------------------
    Quarter to Quarter Growth in
     Transactional Gross Margin        5%(xxxx)                     1%
    -------------------------------------------------------------------------

    Notes:

    (*)    This includes all locations which have transacted in the 6 month
           period ended Jan 31, 2008

    (xx)   75% of Deployed Kiosks are Owned by TIO (Q1 76%)

    (xxx)  Approximate figures based on contracts executed to date. These
           figures will be updated as implementation occurs.

    (xxxx) Gross margins were negatively impacted by the weaker US Dollar -
           the unfavorable currency impact was 6% compared to the previous
           quarter

    No. 612 of these locations were activated and started generating income
    subsequent to the quarter end
    

    "During the second quarter, we commenced several cost actions to improve
efficiencies in our operations department and further across our organization.
These actions include the outsourcing of our primary call center offshore,
reductions in our sales and marketing expenses, reductions in operational
staff and improved efficiencies in field maintenance operations", said Hamed
Shahbazi Chairman and CEO of TIO Networks, "Q2 EBITDA revenues reflect only a
portion of these cost reduction initiatives as there is a delay between the
time actions were taken to reduce costs and the time at which they are fully
reflected in our operating results".
    "Despite strong economic headwinds caused by the sub-prime mortgage
meltdown, during Q2 we delivered location growth, transaction growth, improved
profitability and a myriad of significant new contracts that substantially
increase our processing footprint across the United States. With our current
rate of network growth and confirmed pipeline of new network implementations,
we expect to surpass the 10,000 location barrier this calendar year. Given
that the majority of these new locations do not require a material amount of
capital expenditures, TIO is well poised to materially grow its business while
reducing its cash usage".

    Conference Call:

    You are invited to attend a conference call on Tuesday, March 25, 2008 at
10:30am EST to review the financial results. The dial-in numbers
are 416-644-3419 in Toronto, or, Toll Free 1-800-731-5774. Callers should
request the TIO Networks Conference.

    About TIO Networks Corp.

    TIO Networks Corp. powers the "Walk Up Financial Services" marketplace
with thousands of leading edge automated self-service and clerk assisted
solutions. TIO owns the largest and most convenient national network of cash
accepting ATMs for bill payment and prepaid services for the 'cash preferred'
consumer marketplace in North America. TIO symbolizes fast, convenient, safe
and secure access to key financial services. For more information, please
visit www.TIOnetworks.com


    The TSX Venture Exchange has not reviewed this news release and does not
    accept responsibility for its adequacy and accuracy.

    (*)EBITDA: Earnings before interest, tax, depreciation, amortization &
    stock-based compensation

    EBITDA is not a defined term under Canadian generally accepted accounting
    principles, nor does it have a standard, agreed upon meaning.
    Accordingly, the Company's EBITDA may not be directly comparable to
    EBITDA reported by other issuers. Management had determined EBITDA is a
    useful supplemental measure in evaluating the Company's performance as it
    provides investors with an indication of cash available for debt service,
    working capital needs and capital expenditures. This non-GAAP measure is
    intended to provide additional information on the Company's performance
    and should not be considered in isolation or as a substitute for measures
    of performance prepared in accordance with GAAP.

    %SEDAR: 00010068E




For further information:

For further information: Derek Lai, Acting CFO, TIO Networks, Tel: (604)
298-4636, Ext. 269, Toll Free: 1-888-679-3322, Email:
Derek.Lai@tionetworks.com; John Lewis, Business Development, TIO Networks,
Tel: (416) 364-2266, Email: jrlewis@TIOnetworks.com


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