Message #5 From:
NewsBot Date: June 28, 2006 05:00:00 AM
DWVS News DataWave Reports 18th Consecutive Quarter and 5th Consecutive Year of Profitability
WAYNE, N.J.--(BUSINESS WIRE)--June 28, 2006--DataWave Systems Inc. (OTCBB: DWVS), a premier provider of prepaid and stored value delivery systems, today reported financial results for the fourth quarter and year ended March 31, 2006.
Total revenue for the fourth quarter of fiscal 2006 was $8.1 million compared to $7.7 million for the same period in fiscal 2005. Revenue for the fourth quarter of fiscal 2005 included higher than normal promotional activity, which accounted for $1.0 million, during a seasonally weak period. Operating income for the fourth quarter of fiscal 2006 was $506,000 versus an operating loss of $7,000 for the same period last year. Net income for the fourth quarter of fiscal 2006 was $313,000, or $0.01 per diluted share, versus net income of $41,000, or $0.00 per diluted share, for the same period last year.
Total revenue for the year ended March 31, 2006 increased 32% to $32.1 million, compared to $24.3 million for fiscal 2005. Operating income for the year ended March 31, 2006 was $1.5 million, versus operating income of $486,000 for last year. Net income for the year ended March 31, 2006 was $1.1 million, or $0.02 per diluted share, versus net income of $663,000, or $0.01 per diluted share, for last year. The company generated approximately $3.4 million of cash flow from operations for the full year, resulting in approximately $7.0 million of cash and cash equivalents as of March 31, 2006.
Josh Emanuel, Chairman and Chief Executive Officer, stated, "Fiscal 2006 marked another year of strong organic growth--with operating income increasing three-fold over the prior year. We added over 30 new retail partners and introduced more than 100 new pre-paid products through our existing distribution channels. We have also built a very strong financial foundation with no long-term debt and $7 million of cash and cash equivalents at the end of fiscal 2006."
Mr. Emanuel continued, "During the fourth quarter, our seasonally weakest period, we generated over $1 million of cash flow from operations--reinforcing the solid foundation of our business. We are especially pleased with 7-Eleven's recent decision to renew its relationship with DataWave through a new multi-year agreement, on the strength of our cutting-edge technology, our superior customer service, and our attractive portfolio of pre-paid products."
Mr. Emanuel concluded, "Looking ahead, we continue to expand our retail network, both in Canada and the U.S., which currently includes over 10,000 locations throughout North America. We also plan to introduce new third-party gift cards and cash cards that will cost-effectively leverage our existing distribution network. As a result, we remain confident in our ability to maintain organic revenue growth of at least 20 percent annually."
As of December 31, 2005, the Company had more than 4,900 terminals installed, and more than 1,100 host-to-host or distributor locations. Daily transactions processed for the quarter averaged more than 36,400 compared with 30,500 a year ago.
About DataWave
DataWave has been an innovator and developer of prepaid and stored-value programs and merchandising solutions since it was founded in 1994. DataWave pioneered systems that allow for point-of-sale activation of high value, high shrinkage products, such as cash cards, prepaid phone cards and prepaid wireless time. These systems work equally well over the Internet, through intelligent freestanding vending machines and POSA terminals, or with various card activation devices, including cash registers.
This press release contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. Words such as "expect", "believe", "anticipate", "may", "will", "plan", "intend", "estimate", "could", and other similar expressions are intended to identify these forward-looking statements. In particular, statements in this release regarding expansion of the Company's retail network, plans by the Company for introduction of third-party gift cards and cash cards and the Company's anticipated organic revenue growth rate are forward looking. Statements in this press release, and elsewhere , that look forward in time or include anything other than historical information involve risks and uncertainties that may affect the Company's actual results of operations. These statements by the Company are subject to certain risks, including, among others, future demand for its products and brand, competition from other businesses providing similar products, the ability to maintain profitability and control expenses and the Company's ability to successfully execute its business strategy. These and other risks and uncertainties are discussed in more detail in the Company's periodic reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, which are available at the SEC website at www.sec.gov.
"DataWave" is a registered trademark of the Company. All other trademarks and trade names referred to are the property of their respective owners.
(tables follow)
DATAWAVE SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
As at March 31, 2006 and 2005
(Expressed in United States dollars, except share amounts)
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2006 2005
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Assets
Current
Cash and cash equivalents $ 6,967,032 $ 4,526,512
Restricted cash 203,807 34,000
Accounts receivable and other 7,472,542 7,366,712
Inventories 6,308,442 4,155,614
Prepaid expenses and deposits 383,332 336,800
Deferred income taxes 229,938 -
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Total current assets 21,565,093 16,419,638
Machinery and equipment, net 2,278,016 2,453,571
Equity investment 194,850 39,387
Deferred development costs 51,695 101,567
Other long term receivables 127,738 124,008
Goodwill 1,881,910 1,857,985
Intangible assets, net 828,764 1,079,843
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Total assets $ 26,928,066 $ 22,075,999
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Liabilities
Current
Accounts payable and accrued liabilities $ 17,890,603 $ 14,547,422
Deferred revenue 1,095,544 839,303
Current portion of capital lease
obligations 63,884 78,344
Current portion of deferred inducement 31,902 31,002
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Total current liabilities 19,081,933 15,496,071
Capital lease obligations - 61,668
Deferred income taxes 320,780 309,509
Deferred inducement 365,911 342,184
Convertible promissory note - 600,000
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Total liabilities 19,768,624 16,809,432
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Commitments
Stockholders' equity
Common shares
Authorized, 100,000,000 common shares,
$0.001 par value
Issued, 54,326,834 and 46,826,834 shares
issued and outstanding at March 31, 2006
and March 31, 2005, respectively 54,327 46,827
Additional paid-in capital 18,512,908 17,920,408
Accumulated other comprehensive income 616,375 465,048
Accumulated deficit (12,024,168) (13,165,716)
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Total stockholders' equity 7,159,442 5,266,567
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Total liabilities and stockholders' equity $ 26,928,066 $ 22,075,999
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DATAWAVE SYSTEMS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Twelve month period ended March 31, 2006 and 2005
(Expressed in United States dollars, except share amounts)
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Three months ended Twelve months ended
March 31, March 31,
2006 2005 2006 2005
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Revenue
Sales $ 6,033,090 $ 5,644,551 $23,893,289 $16,783,031
Net agency sales 2,104,712 2,087,445 8,200,728 7,543,982
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Total revenue 8,137,802 7,731,996 32,094,017 24,327,013
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Operating costs and
expenses
Cost of revenues
(exclusive of
depreciation and
amortization) 4,648,569 5,188,410 20,653,512 15,543,066
General and
administrative 1,578,010 926,997 4,706,619 3,278,871
Selling and
marketing 555,756 517,350 2,068,272 1,905,988
Product
development 473,580 385,427 1,712,788 1,312,263
Depreciation and
amortization 376,240 261,371 1,487,965 1,142,474
Merger costs - 459,408 - 658,652
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Total operating
costs and expenses 7,632,155 7,738,963 30,629,156 23,841,314
----------------------------------------------------------------------
----------------------------------------------------------------------
Operating income 505,647 (6,967) 1,464,861 485,699
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Other income 64,520 37,015 192,044 39,265
Gain on foreign
exchange 495 (5,828) 11,646 34,605
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Income before
income taxes 570,662 24,220 1,668,551 559,569
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Income taxes (293,010) - (682,466) -
Equity income from
investee 35,393 16,757 155,463 103,878
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Net income $ 313,045 $ 40,977 $ 1,141,548 $ 663,447
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Net income per
share
- basic $ 0.01 $ 0.00 $ 0.02 $ 0.02
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- diluted $ 0.01 $ 0.00 $ 0.02 $ 0.01
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Weighted-average
number of common
shares
- basic 47,607,656 44,134,126 47,607,656 44,134,126
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- diluted 56,164,713 47,494,126 56,164,713 47,494,126
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DATAWAVE SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31, 2006 and 2005
(Expressed in United States dollars, except share amounts)
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2006 2005
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Operating activities
Net income $ 1,141,548 $ 663,447
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 1,487,965 1,142,474
Equity (income) from investments (155,463) (103,878)
Deferred income taxes (229,938) -
Merger costs - 235,000
Amortization of lease inducement 10,799 25,547
Net change in non-cash operating assets
and liabilities
Accounts receivable and other 112,461 (3,787,862)
Inventories (1,997,801) (2,074,656)
Prepaid expenses and deposits (34,037) 113,603
Other long term receivables 897 -
Accounts payable and accrued liabilities 2,851,971 7,981,805
Deferred revenue 228,222 817,858
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Net cash provided by operating activities 3,416,624 5,013,338
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Investing activities
Restricted cash (169,807) 20,000
Deferred development costs - (94,786)
Purchase of machinery and equipment (839,803) (912,044)
Purchase of intangible - (265,000)
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Net cash used in investing activities (1,009,610) (1,251,830)
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Financing activity
Repayment of capital lease obligations (79,470) (87,402)
----------------------------------------------------------------------
Net cash used in financing activity (79,470) (87,402)
----------------------------------------------------------------------
Effect of exchange rate changes on cash
and cash equivalents 112,976 -
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Increase in cash and cash equivalents 2,440,520 3,674,106
Cash and cash equivalents,
beginning of year 4,526,512 852,406
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Cash and cash equivalents, end of year $ 6,967,032 $ 4,526,512
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