VendTek Systems announces third quarter 2011 financial results

TSX Venture Exchange: VSI

VANCOUVER, Sept. 29, 2011 /CNW/ - VendTek Systems Inc. (TSXV: VSI) (the "Company"), a developer and licensor of software for the global prepaid and financial services markets, today reported its financial results for the third quarter ended July 31, 2011.

Selected Third Quarter Operational Highlights

  • Achieved a number of key milestones in Brazil including receiving certification from all four of the large mobile operators: Vivo, Claro, TIM and Oi.
  • Signed an agreement with Banco Santander S.A. to offer bill payment in Brazil
  • Announced a partnership with Usemyservices to issue 3V Visa and Ukash products
  • Signed a partnership agreement with Roshan and M-Paisa, Afghanistan's first mobile money transfer service.

Selected Financial Information for the Three Months ended July 31st, 2011

  • Revenues for the three months ended July 31, 2011, increased $1.8 million to $28.4 million from $26.6 million for the three months ended April 30, 2011;
  • Software license and service revenues decreased $18,000 to $385,000 for the third quarter of 2011 compared to $403,000 for the second quarter of 2011;
  • Net loss of $1.4 million for third quarter and second quarter of 2011.

Selected Financial Information for the Nine Months ended July 31st, 2011

  • Revenues for the nine months ended July 31, 2011, decreased $10.6 million to $81.6 million from $92.2 million for the corresponding period in 2010;
  • Prepaid revenues in the U.S. increased to $3.2 million in the first nine months of 2011 compared to $3.0 million in the same period of 2010, a 5.7% increase;
  • Software license and service revenues increased $123,000 or 10.5% to $1.3 million for the first nine months in 2011 compared to $1.2 million for the same period in 2010;
  • Net loss of $3.2 million for 2011, compared to $368,000 for 2010.

"We continue to execute on promising new initiatives and to position the company for growth. We are confident that our investment in Brazil will create value for the company and ultimately serve as our platform to other Latin American markets. Internationally, we are working with our partners to expand our existing networks and to drive the number and types of transactions processed through those networks," said Doug Buchanan, President and Chief Executive Officer of VendTek. "Additionally, we are actively seeking distribution partners in new countries."

"Our Adjusted EBITDA1, not including the investment in Brazil and one-time tax accrual, was break even for the three months ended July 31st, 2011. Our investment for our expansion into Brazil was about $580,000 for the quarter and $1.8 million year to date."

VendTek's MD&A and complete statements are available at www.sedar.com and the Company's website www.vendteksystems.com.

Conference Call
VendTek management will host a conference call on Monday October 3, 2011 at 4:00 PM EDT (1:00 PM PDT) to discuss its financial results and operational highlights for the third quarter of fiscal 2011.

To access the conference call by telephone, dial 1-647-427-7450 or 1-888-231-8191 and reference the company name, VendTek Systems Inc., or the conference code 15243648.

A live audio webcast of the conference call will be available at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3582920. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.

______________________________
1 Management defines Adjusted EBITDA as net income adjusted for interest, taxes, depreciation expenses and amortization expenses, foreign exchange differences, accretion expenses and stock based compensation expenses. Please refer to Non-GAAP measures in our MD&A for more information.

VENDTEK  SYSTEMS  INC.
Consolidated Balance Sheets

(expressed in Canadian dollars)

                                     

                     
July 31,
2011
     
October 31,
2010
                          (Unaudited)         (Audited)
                                     
Assets                                    
                                     
Current assets:                                    
  Cash 
Restricted cash  
Accounts receivable 
Inventories  
Deposits 
Prepaid expenses 
                      $




3,108,709
511,516
4,468,506
4,290,635
396,888
329,537
      $




4,832,659
-
4,132,963
1,993,818
50,505
90,581
                          13,105,791         11,100,526
                                     
Equipment                          505,832         554,768
                                     
Intangible assets                          189,992         266,496
                                     
Goodwill                          907,342         907,342
                                     
                        $ 14,708,957       $ 12,829,132
                                     
Liabilities and Shareholders' Equity                                    
                                     
Current liabilities:                                    
  Accounts payable and accrued liabilities 
Capital lease obligation 
Deferred revenue 
                      $

10,698,619
3,895
33,028
      $

9,764,295
7,587
52,030
                          10,735,542         9,823,912
                                     
Convertible debentures                          1,766,988         -
                          12,502,530         9,823,912
                                     
Shareholders' equity:                                    
  Share capital  
Contributed surplus  
Accumulated deficit 
                     

9,956,405
3,523,050
(11,273,028)
     

9,053,612
2,015,055
(8,063,447)
                          2,206,427         3,005,220
                                     
                        $ 14,708,957       $ 12,829,132
                                     
                       

VENDTEK  SYSTEMS  INC.
Consolidated Statements of Operations, Comprehensive Loss and Accumulated Deficit
(expressed in Canadian dollars)
(Unaudited)

                                               
                Three months ended July 31,         Nine months ended July 31,
                2011         2010         2011         2010
                                               
Revenues:                                              
  Prepaid telecommunication 
Hardware and equipment 
Software license and services 
          $

  28,011,999
31,831
385,237
    $

  30,972,641
8,245
482,618
    $

  80,239,728
63,713
1,297,479
    $

  90,952,606
60,719
1,174,160
                28,429,067         31,463,504         81,600,920         92,187,485
                                               
Cost of revenues:                                              
  Prepaid telecommunication 
Hardware and equipment 
Software license and services 
         

  27,067,043
24,054
-
   

  29,850,153
-
-
   

  77,457,233
28,473
81,856
   

  87,589,104
4,246
-
                27,091,097         29,850,153         77,567,562         87,593,350
                1,337,970         1,613,351         4,033,358         4,594,135
                                               
Operating expenses:                                              
  General and administrative 
Selling and marketing 
Research and development 
Restatement costs 
Accretion of convertible debentures 
Amortization 
Interest expense 
Loss (Gain) on disposal of assets 
Foreign exchange loss (gain)  
         







  1,455,505
687,238
194,418
-
126,741
81,932
197,048
(518)
(14,527)
   







  1,233,479
197,743
211,941
-
-
100,556
1,286
280
(9,663)
   







  3,908,993
2,012,348
604,690
-
225,452
242,746
233,389
8,748
6,573
   







  3,220,892
675,560
597,869
189,867
-
288,373
3,616
(5,442)
(8,887)
                2,727,837         1,735,622         7,242,939         4,961,848
                                               
Net loss and comprehensive loss                (1,389,867)         (122,271)         (3,209,581)         (367,713)
                                               
Deficit, beginning of period                (9,883,161)         (7,981,102)         (8,063,447)         (7,735,660)
                                               
Deficit, end of period            $   (11,273,028)     $   (8,103,373)     $   (11,273,028)     $   (8,103,373)
                                               
Basic and diluted loss per share             $   (0.03)       $   (0.00)     $   (0.07)     $   (0.01)
                                               
Weighted average shares outstanding:                                              
  Basic 
Diluted 
         
  49,192,909 
49,192,909 
   
  46,088,051 
46,088,051 
   
  48,352,122 
48,352,122 
   
  46,003,787
46,003,787
                                     
                                     

VENDTEK  SYSTEMS  INC.
Consolidated Statement of Cash Flows
(expressed in Canadian dollars)
(Unaudited)

                                           
            Three months ended July 31,         Nine months ended July 31,
            2011         2010         2011         2010
                                           
Cash provided by (used in):                                          
                                           
Operations:                                          
  Net loss for the period 
Items not involving cash:
      $
  (1,389,867)
    $
  (122,271)
    $
  (3,209,581)
    $
  (367,713)
    Amortization expense 
Accretion expense 
Loss (gain) on disposal of assets 
Stock-based compensation 
     


  81,932
126,741
(518)
45,733
   


  100,556
-
280
32,875
   


  242,746
225,452
8,748
141,494
   


  288,373
-
(5,442)
34,279
            (1,135,979)         11,440         (2,591,141)         (50,503)
  Changes in non-cash operating working capital items            1,147,557         1,590,949         (2,302,377)         186,239
            11,578         1,602,389         (4,893,518)         135,736
                                           
Financing:                                          
  Increase in restricted cash 
Proceeds on issue of convertible
debentures 
Proceeds on issue of shares 
Proceeds from options exercised 
Repayment of lease obligations 
     




  (148,396)

-
-
30,714
(1,246)
   




  -

-
-
80,000
(785)
   




  (511,516)

2,798,712
935,690
76,428
(3,692)
   




  -

-
-
144,800
(12,869)
            (118,928)         79,215         3,295,622         131,931
                                           
Investments:                                          
  Purchase of equipment 
Proceeds on disposition of assets 
Purchase of intangibles 
     

  (22,906)
-
(5,084)
   

  (32,046)
1,027
(36,386)
   

  (104,569)
-
(21,485)
   

  (129,982)
20,405
(41,252)
            (27,990)         (67,405)         (126,054)         (150,829)
                                           
Increase (decrease) in cash            (135,340)         1,614,199         (1,723,950)         116,838
                                           
Cash, beginning of period            3,244,049         1,178,797         4,832,659         2,676,158
                                           
Cash, end of period        $   3,108,709     $   2,792,996     $   3,108,709     $   2,792,996
                                           
Supplemental information:                                          
  Interest paid        $   66,945     $   1,286     $   67,846     $   3,616


SOURCE VendTek Systems Inc.

For further information:

For more information or to receive the complete statements please contact Samantha White at 604-805-4653 or 1-800-806-4958 or investment@vendteksystems.com.

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