Espial Group Inc. Reports Third Quarter 2009 Results

OTTAWA, Nov. 5 /CNW Telbec/ - Espial(R) Group Inc. ("Espial" or the "Company"), (TSX:ESP), a leader in the delivery of digital TV software, today announced its third quarter financial results for the three-month period ended September 30, 2009.

    
    Q3 HIGHLIGHTS:

    -   Announced Com Hem AB, Sweden's largest cable operator with 1.8
        million homes served, has launched its next generation digital TV and
        VOD services - named Com Hem On Demand - using Espial's Evo TV
        Service Platform.

    -   Announced Chongqing Cable TV Network, a China based cable provider
        that provides analog and digital TV services to 4.2 million
        subscribers, has selected Espial MediaBase to power their on-demand
        services including video-on-demand, network PVR and timeshift TV
        services.

    -   Released Espial MediaBase 9.0 video-on-demand platform with
        dramatically improved capture and streaming performance, lower power
        consumption with Solid State Storage and improved back office support
        for cable operators.

    -   Added eight new service provider customers.
    

For the three-month period ended September 30, 2009 the Company reported revenues of $2.9 million compared to revenues of $3.7 million for the three months ended September 30, 2008. Prior year revenue included $0.7 million of non-recurring professional services. Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) for the third quarter of fiscal 2009 was a loss of $0.5 million compared to a loss of $0.6 million in fiscal 2008. Net loss for the quarter was $1.0 million or $0.07 per share, compared to a net loss of $0.9 million last year, or $0.06 per share.

"We are pleased with our results for the first nine months this year and have grown our business by 33% over last year," noted Jaison Dolvane, President and CEO of Espial. "In Q3, we announced the successful launch of Com Hem's hybrid IP Cable service, a major cable operator in Europe. This is a premier showcase for the Evo TV Service Platform highlighting it's openness, scalablity and customizability. We also announced that Chongqing Cable TV Network, one of China's largest cable operators, has selected Espial MediaBase to power their on-demand services. Again, this testifies to the scalability, reliability and performance of our VOD system. These are two major milestones for the company that demonstrates the strength of our products and services for major telcos and cable companies globally."

Q3 Financial Results

Third quarter revenues were $2,923,521 compared with revenues of $3,729,476 in the same period a year ago. Third quarter software license and royalty revenues were $1,894,381 compared to software license and royalty revenues of $1,696,277 in the third quarter of fiscal 2008. Professional services for the third quarters of 2009 and 2008 were $282,048 and $1,564,243 respectively. Maintenance and support revenues for the third quarter were $747,093 compared to $468,955 last year.

Gross margins for the third quarter of fiscal 2009 were 79% compared with 72% in the third quarter of fiscal 2008.

Operating expenses in the third quarter of fiscal 2009 were $3,216,395 compared to $3,622,233 in the third quarter of fiscal 2008.

Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) for the third quarter of fiscal 2009 was a loss of $479,608 compared to a loss of $562,506 in fiscal 2008.

Net loss in the third quarter was $993,442 compared to a loss of $875,391 last year.

Cash and cash equivalents at September 30, 2009 was $ 7,910,447.

    
    The Company will be hosting a conference call to discuss the third quarter
financial results on November 5, 2009 at 5:15 PM Eastern Standard Time (EST).
The phone number to join the results discussion is:

    -   Toll line - 416 644 3431

    -   Toll free line - 877 974 0450

    The playback for the call will be available until Saturday, December 5,
2009 at the following numbers and passcode:

    -   Toll line: 416-640-1917 - passcode: 4180391 followed by the number
        sign.

    -   Toll free line: 877-289-8525 - passcode: 4180391 followed by the
        number sign.
    

About Espial (www.espial.com)

Espial provides scalable and open digital TV software to service providers in the cable, telecommunications and hospitality industries. Its middleware, video-on-demand and browser solutions provide superior service delivery, advanced service innovation tools and the ability to implement flexible business models. Espial serves a range of market segments including, IPTV, Cable, hybrid IP, over-the-top, multi-dwelling unit and enterprise. With over 7 million subscribers using Espial's patented solutions, Espial is a leading supplier of TV software. Espial is headquartered in Ottawa, Canada with offices around the world in USA, Europe and Asia. For more information please call +1.613.230.4770 or visit @ www.espial.com .

Forward Looking Statement

This press release contains information that is forward looking information with respect to Espial within the meaning of Section 138.4(9) of the Ontario Securities Act (forward looking statements) and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of theses terms or other similar expressions concerning matters that are not historical facts. In particular, statements about the benefits and synergies of the Kasenna acquisition transaction, future opportunities for the company and products and any other statements regarding Espial's future expectations, beliefs, goals or prospects are or involve forward-looking information.

Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves risks and uncertainties, including Espial's ability to effectively integrate Kasenna operations and effectively develop its distribution channels, and generate increased demand for its products. Additional risks and uncertainties affecting Espial can be found in Espial's Annual Report for the fiscal year ended December 31, 2008 and in its most recent quarterly report filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein. Espial assumes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

Non-GAAP Financial Measures

Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) is a non-GAAP financial measure that does not have any prescribed meaning by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. Management believes that this non-GAAP financial measure, when taken together with the corresponding consolidated GAAP measures, increases the transparency of the Company's current results and enables investors to more fully understand trends in its current and future performance. A reconciliation of net loss to earnings before interest, foreign exchange, taxes, stock compensation, dividends on redeemable preferred shares, depreciation and amortization is as follows:

    
                                                     September     September
                                                      30, 2009      30, 2008
                                                    -------------------------
                                                     (3 months)    (3 months)
                                                    (Unaudited)   (Unaudited)

    Net loss and Comprehensive loss                $  (993,442)  $  (875,391)

    Add

      Stock compensation                                75,000        47,300

      Depreciation of property and equipment            74,274        72,359

      Amortization of intangibles                      282,365       249,769
    -------------------------------------------------------------------------
                                                      (561,803)     (505,963)
    -------------------------------------------------------------------------
    Less (add)

    Interest income                                     13,103        88,003

    Foreign exchange gain (loss)                       (95,298)      (31,460)
                                                   --------------------------
    Earnings before interest, foreign exchange,
     taxes, stock compensation, depreciation
     and amortization                              $  (479,608)  $  (562,506)
                                                   --------------------------
                                                   --------------------------



    ESPIAL GROUP INC.
    Consolidated Balance Sheet
    (in Canadian dollars)
    -------------------------------------------------------------------------
                                                  September 30,  December 31,
                                                          2009          2008
                                                    (unaudited)   (unaudited)
    -------------------------------------------------------------------------

    CURRENT ASSETS
      Cash and cash equivalents                   $  7,910,447  $ 10,476,443
      Short-term investments                           122,246       122,246
      Accounts receivable                            3,166,330     2,269,251
      Investment tax credits receivable                475,000       363,424
      Prepaid expenses                                 201,056       209,974
    -------------------------------------------------------------------------
                                                    11,875,079    13,441,338

    Property & equipment                               787,318       899,734
    Intangible assets                                4,663,565     4,338,814
    Goodwill                                         3,340,808     4,489,077
    -------------------------------------------------------------------------
                                                  $ 20,666,770  $ 23,168,963
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CURRENT LIABILITIES
      Operating line                              $    800,214  $          -
      Accounts payable and accrued liabilities       1,438,454     2,229,241
      Deferred revenue                               1,860,403     1,270,407
    -------------------------------------------------------------------------
                                                     4,099,071     3,499,648
    -------------------------------------------------------------------------
    COMMITMENTS
    SHAREHOLDERS' EQUITY
      Share capital                                 74,859,576    74,859,576
      Warrants                                         164,435       164,435
      Contributed surplus                           10,427,143    10,249,143
      Deficit                                      (68,883,455)  (65,603,839)
    -------------------------------------------------------------------------
                                                    16,567,699    19,669,315
    -------------------------------------------------------------------------
                                                  $ 20,666,770  $ 23,168,963
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    ESPIAL GROUP INC.
    Consolidated Statement of Operations and Comprehensive Loss
    (in Canadian dollars except share data)

                              Three Months Ended           Nine Months Ended
                         September     September     September     September
                          30, 2009      30, 2008      30, 2009      30, 2008
                        (unaudited)   (unaudited)   (unaudited)   (unaudited)
    -------------------------------------------------------------------------
    Revenue           $  2,923,521  $  3,729,476  $  9,117,045  $  6,831,237

    Cost of revenue        618,372     1,039,177     2,028,714     2,223,208
    -------------------------------------------------------------------------

    Gross margin         2,305,149     2,690,299     7,088,331    4,608,029
    -------------------------------------------------------------------------

    Expenses

      Sales and
       marketing         1,073,955     1,409,766     3,188,495     3,871,328

      General and
       administrative      461,387       830,153     1,516,123     1,799,489

      Research and
       development       1,250,691     1,012,886     4,146,014     2,899,393

      Stock compensation
       expense              75,000        47,300       178,000        44,800

      Depreciation of
       property &
       equipment            74,177        72,359       213,631       201,595

      Amortization of
       intangible assets   282,365       249,769       849,249       249,769
    -------------------------------------------------------------------------
                         3,217,575     3,622,233    10,091,512     9,066,374
    -------------------------------------------------------------------------
    Loss before other
     income (expense)     (912,426)     (931,934)   (3,003,181)   (4,458,345)
    -------------------------------------------------------------------------
    Other income
     (expenses)
      Interest income       12,996        88,003        63,576       334,964
      Foreign exchange
       gain (loss)         (94,012)      (31,460)     (340,011)       80,052
    -------------------------------------------------------------------------
                           (81,016)       56,543      (276,435)      415,016
    -------------------------------------------------------------------------
    Net loss and
     comprehensive loss   (993,442)     (875,391)   (3,279,616)   (4,043,329)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per
     common share -
     basic and
     diluted          $      (0.07) $      (0.06) $      (0.23) $      (0.38)
    Weighted average
     number of common
     shares- basic
     and diluted        14,101,829    13,583,109    14,101,829    10,757,789
    

%SEDAR: 00025301E

SOURCE Espial Group

For further information: For further information: Inquiries from financial press or analysts: Carl Smith, Chief Financial Officer, Espial Group Inc., Email: csmith@espial.com, Phone: (613) 230-4770; Kirk Edwardson, Director, Marketing, Espial Group Inc., Email: kedwardson@espial.com, Phone: (613) 230-4770 x1145

Organization Profile

Espial Group

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890