Revenues up Substantially Over Last Year
CALGARY, Aug. 20 /CNW/ - Zaio Corporation (TSX-V: ZAO) announced today
their financial results for the three months and six months ended June 30,
2007. Revenue in the second quarter increased to CDN$1.7 million
(US$1.5 million) compared to CDN$25,000 (US$22,000) in the second quarter of
2006 bringing the total revenue for the first six months of the year to
$1.8 million (US$1.6 million) compared to $62,000 (US$54,000) for the first
six months of 2006. Net income was a loss of CDN$2.8 million (US$2.6 million)
compared to a loss of CDN$172,000 (US$154,000) in the second quarter of 2006
and CDN$3.8 million (US$3.3 million) for the first six months of 2007 compared
to $377,000 (US$331,000) for same period in the prior year.
During the second quarter, the Company closed an agreement to acquire the
net assets of Realink Corporation, a privately held company with offices in
Tempe, Arizona which operates two divisions that provide services to the
appraisal and mortgage banking industries. The Company's second quarter
results reflect the operations of the acquisition from April 2, 2007 onwards
and the Company's second quarter revenue also reflects the addition of
multiple new revenue streams from the sale of other valuation products.
"This acquisition has provided the Company with the necessary
infrastructure to support an acceleration of our growth and achievement of
Zaio's five year plan," said Thomas Inserra, CEO of Zaio Corporation. "During
the second quarter, Zaio earned revenue of $1.7 million, of which $1.5 million
was Valuation services supplied to customers by Zaio's Realink division. In
addition, Zaio issued 320 Zone licenses to Certified Appraisers bringing the
total for the first six months to 562, just shy of 1,100 since the Company
first began selling the licenses" said Thomas Inserra, CEO of Zaio
Corporation. "In addition to continued strong appraisal zone sales, we have
also been active with our efforts to photograph America, having taken photos
of 7.6 million homes. We are now taking photos at the rate of over 60,000
photos per day," he added.
During the quarter, the Company also closed an oversubscribed
underwritten private placement pursuant to which the Company issued
4,000,000 common shares at a price of CDN$3.00 per share, resulting in gross
proceeds of CDN$12,000,000. The shares were placed with several institutional
investors in Canada and the United States.
Second Quarter 2007 Financial Review
The Company generated revenue of CDN$1.7 million for the second quarter
of 2007, over revenue of CDN$25,000 in the second quarter of 2006. The new
revenue streams added as a result of the Realink acquisition added
$1.5 million or 88% of this revenue. The remaining $0.2 million in revenue is
primarily derived from the licensing of the Company's valuation software to
property appraisers in cities across the United States where Zaio is currently
active. The license fee per zone has increased to US$9,800 from US$9,000 due
to continued demand during the first six months of the year.
The license fee includes a US$500 administration fee payable upon signing
and a discount is available for multiple zone purchases. Only this
administration portion is 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 their zones, thereby allowing
them to proceed with the appraisal valuation process. Until this time the
amount is recorded as deferred revenue on the balance sheet. The Company does
not record the deferred portion of the revenue until the funds are actually
During the second quarter a total of CDN$2.0 million in appraisal zone
sales was deferred bringing the total amount deferred to date to
CDN$5.8 million. If proceeds received during the quarter from the sale of
appraisal zones were included in revenue, the Company would have recorded
revenue of CDN$4.0 million for the second quarter and net loss of CDN$541,000
or $0.015 per share.
Selling, General and Administration Expenses
Selling, General and Administrative expense was just over CDN$2.0 million
for the three months ended June 30, 2007 compared to CDN$158,000 for the same
period in 2006. The Company has grown from 12 employees to over 80 employees
since this time last year resulting in higher salary and compensation costs, a
new office base in Tempe, AZ and the incurrence of higher travel and meeting
expenses which have resulted in the sale of new appraisal zones. The
significant increase in the Company's stock price in the last six months
triggered an equally large increase in the amount of stock compensation
expense recorded for the quarter as options were issued to all new employees.
This non-cash item amounted to CDN$1.2 million and is not included in the
total of selling, general and administrative expense.
The net loss for the three months ended June 30, 2007 was CDN$2.8 million
or $0.076 per share compared to a net loss of CDN$172,000 or $0.006 per share
for the same period in 2006.
Financial Condition and Liquidity
At June 30, 2007, Zaio had total assets of CDN$23.9 million. The
Company's cash balance was just under CDN$13.0 million or 54% of total assets.
The Company has no long-term debt.
Working capital, excluding deferred revenue, was CDN$12.5 million.
Deferred revenue amounts will be transferred to the earnings statement as
certain conditions described earlier are met.
Cash received from the sale of appraisal zones totaled over
CDN$2.2 million in the second quarter of 2007.
On July 16, 2007, the Company's wholly-owned subsidiary Zaio Inc. closed
a previously announced transaction to acquire the assets of Kirchmeyer &
Associates and Real Info Inc., both based in Buffalo, New York. Kirchmeyer is
a national appraisal Company providing appraisal services throughout the
United States. They focus on service and technology solutions that reduce
cycle time and costs associated with evaluating property risks. Real Info has
a proven track record as the most comprehensive business-to-business real
estate information and valuation provider. Its valuation services enable
clients to streamline the appraisal process with cost-effective, accurate and
time saving solutions. On July 30, 2007, the Company announced an agreement to
acquire the assets of Virtual Imaging Corp (VIC), based in Chicago, Illinois.
The closing of this transaction is imminent. VIC was established in 1980 and
is the nation's largest supplier of photos and virtual tour services to
Realtors and MLS boards. This acquisition will allow Zaio to substantially
increase its rate of photography and accelerate its current 5 year plan. The
Company's next quarterly results will include the operating results from both
Zaio Corporation and from the newly acquired assets of these companies (from
the respective dates of acquisition) now held in the Company's wholly-owned
subsidiary, Zaio Inc.
These strategic acquisitions have provided significantly more resources
necessary to support an acceleration of our growth. In fact, as a result, Zaio
now has the current ability to deliver a full range of valuation services in
all 50 states to the mortgage backed securities and lending markets. In
addition, these acquisitions will allow Zaio to substantially increase its
rate of photography and has immediately provided relationships with over
400 institutional clients ordering a wide range of valuation services on
behalf of thousands of customers. Also, Zaio and its affiliated appraisers and
photographers are now simultaneously deployed and implementing these new
automated solutions in more than 200 USA cities across America. Zaio is
quickly adding photos, site verified property data, and valuations to its
National Appraisal Repository so these markets can objectively and "instantly"
value real estate. Zaio's database currently consists of 140 million property
records, and 7.6 million photos growing at the rate of over 60,000 homes per
During the first six months of 2007, a total of 562 Zone licenses were
sold to property appraisers across the country and the rate of photography
rose on a weekly basis. By the end of the second quarter we reached our stated
goal of selling at least 100 appraisal Zones per month and are well on our way
to collecting 100,000 photographs per day. In July the Company began handing
fully completed Zones back to Zone appraisers allowing them to conclude the
valuation process and start the earnings and revenue share process.
At the same time, management is continually exploring opportunities to
align with other strategic partners in the valuation industry and will
consider further acquisitions that allow us to penetrate our various markets
Zaio will be sponsoring the first annual "Appraisal Congress" in
Washington, DC during November to call attention to the nation's growing
mortgage fraud and predatory lending crisis, and to invite leaders in
government and business to develop innovative solutions to these critically
Interested parties can listen to the Q2 conference call by dialing in to
800-733-7571 at 3:00pm ET today.
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: For more company information, visit
www.zaio.com or please contact: Thomas J. Inserra, President and CEO, (480)
575-5111; Rodney D. Mitton, CFO, (403) 802-2033