Guest-Tek announces results for the three months ended June, 2007

    CALGARY, Aug. 23 /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 results for
the three months ended June 30, 2007, the Company's first quarter of fiscal
2008 ("Q1, 2008"). The results show significant progress in improving the
profitability of the Company. Net loss for the quarter decreased to
$541 thousand compared to $2.05 million for Q1, Fiscal 2007. The decrease in
net loss was due to several factors. Revenue increased to $9.01 million in Q1,
2008 from $7.55 million in Q1, 2007, while gross margin increased to
$3.47 million from $1.71 million in Q1, 2007. Gross margin as a percentage of
revenue increased to 38.5% in Q1, Fiscal 2008 from 22.7% in Q1, Fiscal 2007.
Operating expenses decreased to $4.36 million in Q1, 2008 from $4.92 million
in Q1, 2007. Adjusted EBITDA(1) was $13 thousand in Q1, Fiscal 2008, a
significant improvement from negative $2.25 million recorded in Q1, Fiscal
2007. The unaudited financial statements and related management's discussion
and analysis can be viewed on SEDAR at
    Arnon Levy commented, "We are pleased with the progress we have made in
improving the profitability of Guest-Tek. We are particularly pleased that we
have seen improvements in revenue, gross margin, and in operating expenditure.
We have seen exciting new developments in our OneView Internet business such
as the Hyatt Place installations and a growing and profitable upgrade program.
Our OneView Media video-on-demand business is gaining traction with our first
high-definition installation and our agreement to provide free-to-guest IPTV
with Echostar."

    Other highlights for the quarter include:

    -   Seventeen installations completed under an agreement to provide
        OneView Internet to all corporately owned Hyatt Place locations;

    -   A significant agreement with a current customer to upgrade networks
        and install OneView Internet at 354 properties including a
        significant increase in monthly support fees;

    -   Completion of OneView Media high definition ("HD") beta installation
        at Hotel 1000 in Seattle, Washington;

    -   Completion of an agreement with Echostar Communications Corporation
        to provide network programming for the Company's free-to-guest
        OneView Media IPTV service;

    -   Installation of OneView Internet in 14,846 rooms, with a total
        supported base of 508,087 rooms; and

    -   Installation of 120 OneView Media rooms, with a total service base of
        2,373 rooms.

    Performance also improved significantly relative to the fourth quarter of
Fiscal 2007. Net loss decreased from $5.60 million in Q4, 2007 to
$541 thousand in Q1, 2008 due to an increase in gross margin, and a
significant decrease in operating expenses due to the Sigpro intangible asset
and goodwill write down in Q4, 2007.

    (1) Adjusted EBITDA is earnings before interest, taxes, depreciation,
    amortization, gain or loss on sale 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 net income, is a useful
    indication of performance and the Company's ability to generate cash
    from operations.

    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 3,300
properties and over 508,000 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

    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.

    Consolidated Balance Sheets

    June 30, 2007 and March 31, 2007
                                               June 30, 2007  March 31, 2007

    Current assets:
      Cash and cash equivalents                 $  2,089,389    $  1,977,327
      Accounts receivable                          6,970,553       8,637,068
      Installations in progress                      551,620         380,749
      Inventory                                    1,432,511       1,840,810
      Prepaid expenses and deposits                  540,013         603,158
                                                  11,584,086      13,439,112

    Property and equipment                         4,757,047       5,197,564
    Deferred costs                                 3,119,219       3,003,785
    Intangible assets                              6,382,259       6,580,193
    Goodwill                                      11,768,224      11,768,224
                                                $ 37,610,835    $ 39,988,878

    Liabilities and Shareholders' Equity

    Current liabilities:
      Operating line of credit                  $    661,757    $    926,028
      Accounts payable and accrued liabilities     4,230,721       5,303,520
      Customer deposits                            1,713,482       1,720,163
      Deferred revenue                               281,288         281,288
      Current portion of capital lease obligations    19,983          49,729
      Current portion of notes payable               167,027         167,027
                                                   7,074,258       8,447,755

    Deferred revenue                               1,726,404       1,803,822
    Capital lease obligations                              -          12,505
    Deferred leasehold inducement                    213,191         243,641
    Notes payable                                    113,015         150,325
    Future tax liability                           1,363,757       1,716,270

    Shareholders' equity:
      Share capital                               53,761,606      53,761,394
      Contributed surplus                          2,761,200       2,714,892
      Deficit                                    (29,402,596)    (28,861,726)
                                                  27,120,210      27,614,560
                                                $ 37,610,835    $ 39,988,878

    Consolidated Statements of Operations, Comprehensive Loss and Deficit

    Three months ended June 30, 2007 and 2006
                                                        2007            2006
    Revenue                                        9,008,652       7,554,547
    Cost of revenue                                5,540,417       5,841,922
    Gross margin                                   3,468,235       1,712,625

    Operating expenses:
      Selling, general and administrative          2,997,398       3,590,063
      Research and development                       384,214         347,936
      Amortization of property and equipment         499,970         402,163
      Amortization of intangible assets              283,412         244,597
      Amortization of deferred compensation                -         128,044
      Amortization of internally developed software   68,966          64,237
      Foreign currency loss (gain)                    73,298         196,366
      Stock based compensation                        46,308         119,264
      Interest expense                                 2,490           2,767
      Research and development tax credits                 -        (173,153)
                                                   4,356,056       4,922,284
    Loss from operations                            (887,821)     (3,209,659)
    Interest income                                    7,807          12,265
    Loss before income taxes                        (880,014)     (3,197,394)
    Income tax recovery                             (339,144)     (1,149,532)
    Net loss and comprehensive loss                 (540,870)     (2,047,862)
    Deficit, beginning of period                 (28,861,726)    (14,959,825)
    Deficit, end of period                      $(29,402,596)   $(17,007,687)

    Net loss income per share:
      Basic                                     $      (0.03)   $      (0.13)
      Diluted                                          (0.03)          (0.13)

    %SEDAR: 00020221E

For further information:

For further information: Arnon Levy, President & CEO, Guest-Tek, (403)
444-8488,; Geoff Clark, CFO, Guest-Tek, (403)

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