Message #6 From:
NewsBot Date: August 9, 2006 05:33:00 AM
DWVS News DataWave Reports 19th Consecutive Quarter of Profitability; Net Income Doubles on 49% Revenue Growth
WAYNE, N.J.--(BUSINESS WIRE)--Aug. 9, 2006--DataWave Systems Inc. (OTCBB: DWVS), a premier provider of prepaid and stored value delivery systems, today reported financial results for the first quarter ended June 30, 2006.
Total revenue for the first quarter of fiscal 2007 increased 49% to $10.3 million from 7.0 million for the same period in fiscal 2006. Operating income was $266,955 versus $97,467, representing a nearly three-fold increase. Included in operating income for the first quarter of fiscal 2007 was $355,000 of non-cash stock-based compensation expense. Operating expense leverage more than compensated for the decline in gross margin which fell as pre-paid long distance margins compressed partially offset by product mix shift in favor of pre-paid cellular and fees and services. Net income for the first quarter of fiscal 2007 was $288,380, or $0.01 per diluted share, double the $138,000, or $0.00 per diluted share, reported for the same period last year.
"DataWave turned in another quarter of organic revenue growth of at least 20 percent compared to last year's fourth quarter and profitability, leveraging our retail network to distribute products from our diverse portfolio of pre-paid products as planned," said Josh Emanuel, chairman and chief executive officer. "Revenue from both our pre-paid cellular business and fees and services more than doubled as we continued to advance our strategy of expanding the high growth point-of-sale-activation business while managing the ongoing maturation of our legacy pre-paid long distance business. As we move forward into the second quarter, a seasonally strong quarter, we plan to stay sharply focused on optimizing our retail network in both Canada and the U.S., launching new products and adding new retail partners."
As of June 30, 2006, the Company had 4,991 terminals installed, and 858 host-to-host or distributor locations. Daily transactions processed for the quarter averaged more than 45,000 compared with 34,000 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 optimizing our retail network in both Canada and the U.S., launching new products and adding new retail partners 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.
DATAWAVE SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
As at June 30, 2006 and March 31, 2006
(Expressed in United States dollars, except share amounts)
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June 30, March 31,
2006 2006
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Assets
Current
Cash and cash equivalents $ 7,287,439 $ 6,967,032
Restricted cash 205,629 203,807
Accounts receivable and other 9,218,544 7,472,542
Inventories 8,895,902 6,308,442
Prepaid expenses and deposits 464,961 383,332
Deferred income taxes 229,938 229,938
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Total current assets 26,302,413 21,565,093
Machinery and equipment, net 2,258,124 2,278,016
Equity investment 343,499 194,850
Goodwill 1,913,728 1,881,910
Intangible assets, net 759,103 828,764
Other assets 172,774 179,433
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Total assets $ 31,749,641 $ 26,928,066
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Liabilities
Current
Accounts payable and accrued liabilities $ 21,710,580 $ 17,890,603
Deferred revenue 1,324,986 1,095,544
Other current liabilities 77,814 95,786
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Total current liabilities 23,113,380 19,081,933
Deferred income taxes 335,769 320,780
Deferred inducement 386,013 365,911
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Total liabilities 23,835,162 19,768,624
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Commitments
Stockholders' equity
Common shares
Authorized, 100,000,000 common shares,
$0.001 par value Issued, 54,326,834
shares issued and outstanding at
June 30, 2006 and March 31, 2006,
respectively 54,327 54,327
Additional paid-in capital 18,867,907 18,512,908
Accumulated other comprehensive income 728,033 616,375
Accumulated deficit (11,735,788) (12,024,168)
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Total stockholders' equity 7,914,479 7,159,442
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Total liabilities and stockholders' equity $ 31,749,641 $ 26,928,066
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DATAWAVE SYSTEMS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three month period ended June 30, 2006 and 2005
(Expressed in United States dollars, except share amounts)
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Three months
ended June 30,
2006 2005
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Revenue
Sales $ 8,205,747 $5,053,588
Net agency sales 2,121,503 1,898,818
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Total revenue 10,327,250 6,952,406
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Operating costs and expenses
Cost of revenues (exclusive of
depreciation and amortization) 7,146,069 4,559,363
General and administrative 1,328,759 948,268
Selling and marketing 649,206 581,548
Product development 603,462 396,573
Depreciation and amortization 332,799 369,187
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Total operating costs and expenses 10,060,295 6,854,939
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----------------------------------------------------------------------
Operating income 266,955 97,467
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Other income 85,017 34,864
Gain on foreign exchange (4,413) (3)
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Income before income taxes 347,559 132,328
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Income taxes (207,828) (28,705))
Equity income from investee 148,649 34,248
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Net income $ 288,380 $ 137,871
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Net income per share $
- basic $ 0.01 $ 0.00
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- diluted $ 0.01 $ 0.00
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Weighted-average number of common shares
- basic 54,326,834 46,826,834
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- diluted 56,556,232 56,023,391
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DATAWAVE SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three month period ended June 30, 2006 and 2005
(Expressed in United States dollars, except share amounts)
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Three months
ended June 30,
2006 2005
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Operating activities
Net income $ 288,380 $ 137,871
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 332,799 369,187
Equity (income) from investments (148,649) (34,248)
Stock based compensation 354,999 -
Amortization of lease inducement 2,985 7,546
Net change in non-cash operating assets
and liabilities
Accounts receivable and other (1,455,218) (176,972)
Inventories (2,285,377) (1,315,832)
Prepaid expenses and deposits (64,158) (75,278)
Accounts payable and accrued
liabilities 3,122,130 (1,264,262)
Deferred revenue 191,787 109,612
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Net cash provided by (used in) operating
activities 339,678 (2,242,376)
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Investing activities
Restricted cash (1,822) -
Purchase of machinery and equipment (153,413) (346,766)
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Net cash used in investing activities (155,235) (346,766)
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Financing activity
Repayment of capital lease obligations (22,302) (21,228)
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Net cash used in financing activity (22,302) (21,228)
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Effect of exchange rate changes on cash and
cash equivalents 158,266 -
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Increase in cash and cash equivalents 320,407 (2,610,370)
Cash and cash equivalents, beginning of
year 6,967,032 4,560,512
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Cash and cash equivalents, end of year $ 7,287,439 $ 1,950,142
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