CALGARY, April 11 /CNW/ - Zaio Corporation (TSX-V: ZAO) announced today
their fourth quarter and 2006 year-end financial results. The Company
demonstrated improvement in its balance sheet by ending 2006 debt free with
CDN$3.2 million cash compared with CDN$ 107,000 at year end 2005. Revenue in
the fourth quarter of 2006 increased by 241% to CDN$ 175,000 (US$154,000)
compared to CDN$51,000 (US$46,000) in the third quarter of 2006 and increased
262% compared to CDN$48,000 (US$41,000) in the fourth quarter of 2005. Net
Income in the fourth quarter of 2006 was a loss of CDN$775,000 (US$680,000)
compared to a loss of CDN$121,000 (US$103,000) in the fourth quarter of 2005.
"Looking back at 2006, we are pleased to have met or surpassed our
operational goals and end the year with a large cash balance," said Thomas
Inserra, CEO of Zaio Corporation. "This combined with our ongoing sales goals
has allowed the Company to internally fund its expansion objectives into 170
cities within the US that was scheduled to begin in 2007. In addition, the
previously announced Realink acquisition provides Zaio with new customers and
improved technical support, customer service and other resources to support
our aggressive growth strategy, as we expand our geographic coverage."
2006 Financial Review
Revenue was CDN$289,000 for the year ended December 31, 2006 of which
CDN$175,000 was from the fourth quarter. This represents a 198% increase over
Zaio's 2005 revenue of CDN$97,000. Zaio's revenue is currently derived
primarily from the licensing of the Company's valuation software to property
appraisers in cities across the United States where Zaio is currently active
During 2006, licenses in the United States sold for US$7,750 per
appraiser zone up to the end of October at which time the price was increased
to US$8,250, which includes a US$500 administration fee payable upon signing.
In January 2007 this fee increased to US$9,000 and in April increased to
US$9,200 with further increases planned during the year. Only the
administration fee portion of the total fee is initially recognized as revenue
at the time of the sale. The balance of the fee is included in revenue once
the licensees have been supplied with photographs and property data for
appraisal zones, thereby allowing the appraiser to proceed with the appraisal
valuation process. Until that time the amount is recorded as deferred revenue
on the balance sheet.
"It is important to note that the Company does not record the deferred
portion of the revenue until the funds are actually received. A total of
CDN$2.2 million in appraisal zone sales was deferred in 2006. If proceeds
received during the year from the sale of appraisal zones were included in
revenue, the Company would have recorded revenue of CDN$2.5 for the year and
net earnings of CDN$724,000 or CDN$0.026 per share," said Rodney Mitton, chief
financial officer of Zaio Corporation.
Selling, General and Administration Expenses
Selling, General and Administrative expense was CDN$1,324,000 for the
year ended December 31, 2006, compared to CDN$492,000 for the same period in
2005. The Company has grown from 10 employees to 22 employees since this time
last year. It has also incurred higher travel and meeting expenses in the last
two quarters of 2006 resulting in the sale of 480 new appraisal zones.
Salaries and benefits amounted to CDN$588,000 compared to CDN$228,000 in
2005. The increase in the Company's stock price in the last four months of the
year triggered an equally large increase in the amount of stock compensation
expense recorded for the year. This non-cash item amounted to CDN$375,000 and
is not included in the total of Selling, General and Administrative expense.
The net loss in the fourth quarter was CDN$775,000 and for the year was
CDN$1,441,000 or CDN$0.05 per share compared to a net loss of CDN$541,000 or
CDN$0.02 per share a year earlier. The loss for the fourth quarter and for the
year was a result of Zaio's growth strategy and the expenses incurred from the
Financial Condition and Liquidity
At December 31, 2006, Zaio had total assets of CDN$5.9 million. The
Company's cash and database development costs represent 54% and 44% of this
total respectively. The Company's cash balance at December 31, 2006, was
CDN$3.2 million with working capital of CDN$2.8 million, excluding deferred
revenue of CDN$2.2 million. Deferred revenue amounts are expected to be
transferred to the earnings statement over the course of 2007. Cash received
from the sale of appraisal zones totaled over CDN$2.4 million in 2006.
In December, Zaio closed a private placement of 2,025,532 common shares
for gross proceeds of CDN$1,620,425. Proceeds from the issue will be used to
accelerate Zaio's expansion plans for 2007.
"As of year-end 2006, photography is now completed or underway in over 12
metropolitan areas where licenses have been sold; with the number expected to
increase significantly in the months ahead. We continue to explore operational
efficiencies and are presently in discussions with national data providers to
streamline our data collection process. Zaio is also continually exploring
opportunities to align with various strategic partners within the real estate
valuation and lending industries," said Thomas Inserra. "As previously
announced, we expect to start benefiting from the Realink acquisition
throughout the year and we anticipate revenues of about $12 million for the
next 12 months."
Appraiser presentations and opportunities to purchase zones will continue
throughout 2007. Cities scheduled for presentations include Atlanta,
Baltimore, Boston, Chicago, Cincinnati, Cleveland, Colorado Springs, Columbus,
Washington, DC, Dallas, Denver, Detroit, Hartford, Houston, Jacksonville, Las
Vegas, Los Angeles, Miami, New York City, Oakland, Orlando, Palm Beach,
Pensacola, Philadelphia, Phoenix, Reno, Sacramento, San Antonio, San Diego,
San Francisco, San Jose, Santa Barbara, Sarasota, Seattle, St. Louis and Tampa
The Company has initiated a series of presentations to investors
interested in high-growth, small-cap companies in the first half of 2007. In
addition, Zaio has been invited to attend and speak at several
industry-related conferences across the United States during the year. Zaio
continues to attract the interest and attention of the real estate valuation
industry and investors. By capitalizing on the strategic changes and
developments experienced over the last half of 2006 and continuing into 2007,
the Company believes the upcoming year will be a very exciting one for Zaio.
Earnings Conference and Conference Call
We invite you to attend our year end conference call on Thursday April 12
at 12:00 EST via telephone by calling 1 800 732 1073 or listen on-line at:
Zaio is the only known company in the world that develops and maintains a
site-verified database of photos, valuations and property information of
virtually every property in entire cities, using a proprietary "GeoScore"
property rating system. Zaio and its network of premiere, local appraiser
experts photograph and appraise entire cities, one building at a time from the
Zaio is a public corporation that trades under the symbol "ZAO" on the
TS-V Exchange in Canada. Additional information is available for US investors
under the symbol "ZAOFF".
For investors who would like to be added to Zaio's investor distribution
list or receive a 2006 annual report, please contact Collum Hunter at
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this press release. This press
release contains forward-looking statements which may include financial and
business prospects, as well as statements regarding the Company's future
plans, objectives or economic performance and financial outlooks. Such
statements are subject to risk factors associated with the real estate
industry, and the overall economy in both Canada and the United States. The
Company believes that the expectations reflected in this press release are
reasonable, but actual results may be affected by a variety of variables and
may be materially different from the results or events predicted in the
forward-looking statements. Readers are therefore cautioned not to place undue
reliance on these forward-looking statements.
In evaluating forward-looking statements readers should consider the risk
factors which could cause actual results or events to differ materially from
those indicated by such forward-looking statements. These forward-looking
statements are made as of the date hereof, and unless otherwise required by
applicable securities laws, the Company does not intend nor does it undertake
any obligation to update or revise any forward-looking statements to reflect
subsequent information, events, results or circumstances or otherwise.
For further information:
For further information: visit www.zaio.com or please contact: Thomas J.
Inserra, President and CEO, (480) 575-5111; Rodney D. Mitton, CFO, (403)