Press Release
Creative Vistas Reports 32% Increase in Second Quarter Revenues, Driven by U.S. Expansion
Creative Vistas Inc.
today reported financial results for the second quarter ended June 30, 2008. Following are key highlights for the quarter:
- Booming Dependable HomeTech division helps drive revenues up 32% for second quarter and 35% for first half
- Company projects positive EBITDA for third quarter and second half of 2008
- U.S. sales rise from zero at start of 2008 to $1 million in second quarter
- US Sales expected to continue to increase significantly over the next two quarters. US Revenues expected to grow to an annual run rate of $15 to $18 Million a year by year end.
- Capital infusion of $5.6 million from 180 Connect sale to finance accelerated growth beginning in third quarter
For the second quarter ended June 30, 2008, the Company’s revenues totaled $12.59 million, up 32% from $9.58 million in the second quarter of 2007. The increase was primarily due to sharply increased sales in the Company’s Dependable HomeTech division (formerly Cancable Inc.), which performs installation, repair and other services for major broadband providers in Canada and the U.S. Revenues from the U.S. expansion, which began earlier in 2008, reached $1 million in the second quarter and are projected to growth to an annual run-rate of at least $15 million to $18 million by the end of the current fiscal year.
Net loss for the second quarter of 2008 was ($2.95 million), or ($0.08) per fully diluted share, compared to net income of $191,726, or $0.01 per fully diluted share, in the second quarter of 2007. As expected, the shift to a loss reflected higher general and administrative expenses, which rose to $3.95 million from $2.00 million a year earlier, primarily because of non-recurring costs related to the Company’s U.S. expansion strategy. It also included a non-cash adjustment for the issuance of stock-purchase warrants and common stock.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were negative in the second quarter of 2008, at ($831,600), compared to positive EBITDA of $974,800 a year earlier. As in prior quarters, the net income and EPS results for the second quarter of 2008 have been affected substantially by adjustments related to Creative Vistas’ capital structure. For that reason, the Company believes EBITDA provides a useful tool, in conjunction with measures recognized under generally accepted accounted principles (“GAAP”), for gauging the ongoing performance of its operating units. However, CVAS does not consider EBITDA an adequate substitute for GAAP-recognized measures.
On the balance sheet, CVAS reported cash and cash equivalents totaling $2.54 million on June 30, 2008, compared to $1.96 million on December 31, 2007. Long-term liabilities on June 30, 2008 totaled $21.12 million, compared to $18.79 million at the end of 2007.
Subsequent to the end of the second quarter of 2008, CVAS realized proceeds of approximately $5.6 million from the sale of its stake in 180 Connect Inc., a major U.S. provider of services to the cable and satellite industry. The acquisition of 180 Connect by DirecTV Group, Inc. (Nasdaq: DTV - News) was completed on July 9, 2008.
CEO Projects Sharp U.S. Growth, Positive EBITDA in 2008
Dominic Burns, CEO of Creative Vistas, commented, “The big story for Creative Vistas in the second quarter of 2008, as in the first, was our rapid expansion in the U.S., driven by the superior field services of our Dependable HomeTech division. DHT is just beginning to take advantage of the competitive edge provided by its proprietary business intelligence software, which gives cable-system operators an unparalleled analysis on customer contacts, fuel costs and other critical operational data.”
Mr. Burns continued, “Our rapid growth south of the Canadian border has temporarily impacted net income and EBITDA with non-recurring costs. However, we expect that the negative EBITDA trend will reverse in the third quarter and second half, generating positive EBITDA excluding non-cash expenses for the last two quarters of 2008.. Helping boost our growth in the second half will be the infusion of $5.6 million in working capital that we gained in July 2008 from the sale of our stake in 180 Connect. Ultimately, we expect our new U.S. operations, which should grow from zero to nearly $15 to $18 million a year run rate in less than 12 months, to also become a key source of revenues for the company in the future.”
First Half Revenues Rise 35%
For the six months ended June 30, 2008, Creative Vistas reported revenues of $23.38 million, up 35% from $17.37 million a year earlier. As in the second quarter, the increase was due largely to rising sales at Dependable HomeTech, both in the U.S. and Canada.
Net loss for the first six months of 2008 was ($9.33 million), or ($0.25) per fully diluted share, compared to a net loss of ($340,372), or ($0.01) per fully diluted share, in the first six months of 2007. The increase in net loss was due to expansion-related general and administrative costs, financing expenses and non-cash adjustment for the issuance of stock purchase warrants and common stock.
If you would like to be added to Creative Vistas’ investor email lists or have additional questions, please contact Haris Tajyar with Investor Relations International at htajyar@irintl.com. For further information on Creative Vistas, please visit www.creativevistasinc.com.
About Creative Vistas
Creative Vistas Inc. is a leading provider of broadband-related services as well as security technologies and systems. Through its subsidiary Dependable HomeTech, formerly known as Cancable Inc., Creative Vistas provisions the deployment and servicing of broadband technologies to the commercial and residential market in Canada and the U.S. Through its subsidiaries AC Technical Systems Ltd. and Iview Digital Video Solutions Inc., it offers proprietary and non-proprietary technologies to the integrated electronic security and surveillance market. Its growing list of customers for broadband-related services include major cable-system operators in Ontario, Canada and U.S. metropolitan markets including New Orleans and Baton Rouge, La., and Charlotte, N.C. Its security and surveillance systems are used by numerous high-profile clients including government, school boards, retail outlets, banks and hospitals. Creative Vistas is based in Ontario, Canada.
Forward-Looking Statements: Statements about the Company's future expectations, including future revenues and earnings, and all other statements in this press release other than historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as the term is defined in the Private Securities Litigation Reform Act of 1995. The Company's actual results could differ materially from expected results for reasons described from time to time in the Company's public filings. The Company undertakes no obligation to update forward-looking statements to reflect subsequently occurring events.
1 EBITDA represents, for any relevant period, income (loss) before income taxes, depreciation of property, plant and equipment, interest expense (including amortization of debt issuance costs) and amortization of intangible assets.
Creative Vistas, Inc.
Condensed Consolidated Balance Sheets |
June 30, 2008 |
|
December 31, 2007 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current Assets |
|
|
|
Cash and bank balances |
$ 2,540,203 |
|
$ 1,960,340 |
Accounts receivable, net of allowance for doubtful accounts of $469,980 and $405,432 |
6,266,791 |
|
6,187,551 |
Income tax receivable |
293,602 |
|
448,126 |
Inventory and supplies |
976,646 |
|
1,043,815 |
Prepaid expenses |
622,479 |
|
270,930 |
Due from related parties |
2,530 |
|
2,581 |
Total current assets |
10,702,251 |
|
9,913,343 |
Property plant and equipment, net of depreciation |
8,862,756 |
|
6,352,014 |
Deposits |
329,500 |
|
125,498 |
Goodwill |
3,097,485 |
|
3,101,598 |
Intangible assets |
1,323,267 |
|
1,717,003 |
Other investments – available for sale securities |
5,530,200 |
|
- |
Restricted cash |
- |
|
53,430 |
Deferred financing costs, net |
621,423 |
|
551,747 |
Deferred income taxes |
37,315 |
|
37,547 |
|
$ 30,504,197 |
|
$ 21,852,180 |
Liabilities and Shareholders' (Deficit) |
|
|
|
Current Liabilities |
|
|
|
Bank indebtedness |
$ 2,853,108 |
|
$ - |
Accounts payable and accrued liabilities |
6,428,880 |
|
6,074,212 |
Current portion of obligations under capital leases |
1,673,482 |
|
1,195,366 |
Deferred income |
181,761 |
|
91,900 |
Deferred income taxes |
25,858 |
|
25,858 |
Current portion of term notes |
1,750,000 |
|
2,240,356 |
Current portion of other payable |
297,030 |
|
303,030 |
Due to related parties |
7,601 |
|
8,143 |
Total current liabilities |
13,217,720 |
|
9,938,865 |
Term notes |
14,811,219 |
|
13,565,421 |
Notes payable to related parties |
1,500,000 |
|
1,500,000 |
Obligations under capital lease |
4,575,296 |
|
3,184,103 |
Other payables |
- |
|
303,030 |
Due to related parties |
228,584 |
|
233,203 |
|
34,332,819 |
|
28,724,622 |
Shareholders' (deficit) |
|
|
|
Share capital |
|
|
|
Authorized |
|
|
|
50,000,000 no par value preferred shares undesignated, none issued or outstanding |
|
|
|
100,000,000 no par value common shares 37,224,926 and 34,494,623 issued and outstanding |
|
|
|
Common stock |
6,488,137 |
|
1,439,307 |
Deferred compensation |
(636,372) |
|
- |
Additional paid-in capital |
13,757,869 |
|
4,958,871 |
Accumulated (deficit) |
(21,780,236) |
|
(12,445,468) |
Accumulated other comprehensive (losses) |
|
|
|
Foreign currency translation adjustment |
(741,371) |
|
(825,152) |
Unrealized loss on available for sale securities |
(916,649) |
|
- |
|
(3,828,622) |
|
(6,872,442) |
|
$ 30,504,197 |
|
$ 21,852,180 |
Creative Vistas, Inc. |
|
|
|
|
|
|
Condensed Consolidated Statements of Operations and Comprehensive Losses |
(Unaudited) |
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
June 30 |
|
June 30 |
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
Contract and service revenue |
|
|
|
|
|
|
|
|
Contract |
|
$ 1,786,195 |
|
$ 1,534,017 |
|
$ 3,265,514 |
|
$ 2,861,264 |
Service |
|
10,803,125 |
|
8,023,515 |
|
20,095,102 |
|
14,477,444 |
Other |
|
5,541 |
|
19,049 |
|
15,600 |
|
31,493 |
|
|
12,594,861 |
|
9,576,581 |
|
23,376,216 |
|
17,370,201 |
Cost of sales |
|
|
|
|
|
|
|
|
Contract |
|
1,083,059 |
|
889,505 |
|
1,983,766 |
|
1,811,501 |
Service |
|
8,669,381 |
|
5,735,967 |
|
16,076,602 |
|
10,345,667 |
|
|
9,752,440 |
|
6,625,472 |
|
18,060,368 |
|
12,157,168 |
|
|
2,842,421 |
|
2,951,109 |
|
5,315,848 |
|
5,213,033 |
Operating expenses |
|
|
|
|
|
|
|
|
Project |
|
266,018 |
|
323,637 |
|
592,073 |
|
605,303 |
Selling |
|
261,382 |
|
211,726 |
|
479,979 |
|
387,570 |
General and administrative |
|
3,954,241 |
|
1,996,591 |
|
7,536,495 |
|
3,747,547 |
|
|
4,481,641 |
|
2,531,954 |
|
8,608,547 |
|
4,740,420 |
Income (Loss) from operations |
|
(1,639,220) |
|
419,155 |
|
(3,292,699) |
|
472,613 |
Interest and other expenses |
|
|
|
|
|
|
Net financing expenses |
|
1,383,466 |
|
740,091 |
|
5,816,383 |
|
1,299,289 |
Amortization of deferred charges |
|
45,700 |
|
46,575 |
|
89,915 |
|
91,851 |
Foreign currency translation gain (loss) |
|
(119,459) |
|
(559,237) |
|
135,775 |
|
(578,155) |
|
|
1,309,707 |
|
227,429 |
|
6,042,073 |
|
812,985 |
Income (loss) before income taxes |
|
(2,948,927) |
|
191,726 |
|
(9,334,772) |
|
(340,372) |
Income taxes |
|
- |
|
- |
|
- |
|
- |
Net income (loss) |
|
(2,948,927) |
|
191,726 |
|
(9,334,772) |
|
(340,372) |
Other comprehensive income (loss): |
|
|
|
|
|
|
Unrealized gain (loss) – available for sale securities |
|
1,941,633 |
|
- |
|
(916,649) |
|
- |
Foreign currency translation adjustment |
|
(96,891) |
|
(407,810) |
|
(452,498) |
|
(452,498) |
Comprehensive (loss) |
|
$ (1,104,185) |
|
$ (216,084) |
|
$ (10,703,919) |
|
$ (792,870) |
Basic weighted-average shares |
|
37,147,384 |
|
33,576,678 |
|
36,667,096 |
|
33,475,041 |
Diluted weighted-average shares |
|
37,147,384 |
|
39,132,316 |
|
36,667,096 |
|
33,475,041 |
Basic earnings (loss) per share |
|
$ (0.08) |
|
$ 0.01 |
|
$ (0.25) |
|
$ (0.01) |
Diluted earnings (loss) per share |
|
$ (0.08) |
|
$ 0.01 |
|
$ (0.25) |
|
$ (0.01) |
Contact:
Investor Relations International
Haris Tajyar, 818-382-9700
htajyar@irintl.com
OR
Creative Vistas, Inc.
Sayan Navaratnam, 905-666-8676
sayan@creativevistasinc.com
|