- Record Licensing Fees: up 76% over Q1'06, 26% over Q4/06
- Record Q1 Service Fees: up 50% over previous record set in Q1'03
- Record Q1 Revenue: up 67% over previous record set in Q1'04
VANCOUVER, May 31 /CNW/ - VRX Worldwide Inc. (TSX.V:VRW) today reported
its unaudited financial results for the first quarter ending March 31, 2007.
The financial results reflect record first quarter revenues across the entire
company.
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1st Quarter Ended % Increase vs. % Increase vs.
March 31/07 1st Quarter 4th Quarter
(Million C$) Mar 31/06 Dec. 31/06
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Licensing Fees $0.32 76% 26%
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Service Fees $0.64 215% -63%
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Total Revenue $0.96 150% -52%
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Total revenue for the first quarter of 2007 reached a record of $960,000, exceeding the previous first quarter record set in 2004 by $387,000. In 2004 VRX was producing hotel content exclusively for the world's largest online travel agency at that time and its only licensing product was Destination Content. Today's record numbers come from a diverse customer, product and service base.
"Over the years our revenues have been dramatically affected by swings in service work. For the first time we can see this reality changing as our licensing business begins to take hold and Licensing Fees continue their steady growth," commented David MacLaren, President and CEO. "Over the past two quarters we've seen our quarterly Licensing Revenues surge sixty nine percent to $320,000. This rapid growth marks the beginning of the demand by online travel agencies for our Hotel Content. Our growing Licensing Fees are the cornerstone of VRX's future success as they will provide us with the stability and cash flow to continue to gain market share, develop new products, and expand our target markets."
During the first quarter, VRX's Licensing Revenues increased 76 per cent over the first quarter of 2006 and 26 percent over the fourth quarter to a record $320,000. This growth is the result of VRX's licensing clients continuing to integrate VRX's Hotel Content into their websites, an increased number of images available for licensing and an increased number of new clients licensing VRX's Hotel, Cruise and Destination Content.
In addition to achieving record first quarter top line Revenue and Licensing Fees, VRX posted record first quarter Service Fees, which were up 215% over the first quarter of 2006.
VRX's custom services agreement with Wyndham Hotel Group (formerly Cendant Hotel Group) continues to be a strong contributor to our Service Revenues. As of March 31, 2007, VRX had shot a total of 4,362 Wyndham hotels, 3,752 of which were shot in 2006. On May 8, 2007 VRX announced phase three of the Wyndham project which extends the contract into 2008 and adds Baymont Inn and Suites(R). The total number of Wyndham properties now under contact to be photographed is 5,300.
Expenses
VRX is continuing to make progress on reducing its production costs. As compared with the first quarter of 2006, revenue increased 150% while expenses increased only 23%.
Accounts showing a material increase as compared with the First quarter of 2006 include: photographer and production fees, which increased by $210,424 ($573,766 vs. $363,342) reflecting the increased production activity; general and administrative costs, which increased by $50,263 ($436,493 vs. $386,230) due to increased support activities related to ongoing service work, salaries and benefits, and director fees; Interest and accretion expense increasing $39,000 ($65,574 vs. $26,098) reflecting that the $1.1 million debenture issued during the first quarter of 2006 was only outstanding for approximately two months in the first quarter of 2006 as compared to the entire first quarter in 2007 and a change in the methodology for calculating accretion expense in the 2006 period differs from that used in the 2007 period; Foreign exchange loss which increased by $16,547 ($16,179 vs. $(368)); and Sales, marketing and product promotion which increased $16,186 (126,894 vs. $110,708) reflecting the increased marketing efforts that ultimately led to increased sales. Accounts showing a material decrease include: Investor relations expenses, which decreased $23,911 ($17,130 vs. $41,041) as the result of the termination of one investor relations agreement; Research and development, which decreased by $20,650 ($2,141 vs. $22,791) as efforts were focused improving existing products and production efficiency; and stock based compensation, which decreased by $10,641 primarily as the result of historic option grants now being fully amortized.
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Three Months Ended March 31
2007 2006
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Licensing Revenue $ 320,134 $ 181,472
Service Fees 642,738 203,697
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Total Revenue 962,872 385,169
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EBITA (209,115) (536,131)
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Net Income/(Loss) (324,467) (632,852)
Earnings (Loss) Per Share $ (0.01) $ (0.02)
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Net Income (Loss)
VRX recorded a Net Loss of $324,467 in the first quarter as compared with
a net loss of $632,852 in the first quarter of 2006. This reflects an
improvement in Net Income of 59% over the previous year. Further, VRX's
earnings before interest, taxes, and amortization (EBITA) improved 156%.
Balance Sheet Items
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March 31, December 31,
2007 2006
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Current Assets $ 1,172,597 $ 1,024,498
Property Plant & Equipment 226,308 271,013
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$ 1,398,905 $ 1,295,511
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Accounts Payable & Accrued Liabilities $ 401,230 $ 367,528
Deferred Revenue 417,436 59,912
Due to Related Parties - -
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Current Liabilities 818,666 427,422
Liability Component of Convertible Debenture 853,395 820,367
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1,672,061 1,247,809
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Shareholder's Equity (273,156) 47,702
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$ 1,398,905 $ 1,295,511
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Balance sheet items of note include: a decrease in Working capital to $353,931 as compared with $597,056 at December 31, 2006 due primarily to the cash loss from operations of $241,000; Deferred revenue increased as the result of prepaid licensing fees and advance payments for service work in progress; Accounts receivable increased to $488,636 from $379,333 at year end largely due to service work delivered at the end of the quarter; and Accounts Payable and Accrued Liabilities at $401,230 were marginally greater than the $367,528 at year end due to current invoices received, but unpaid at quarter end.
Outlook
Licensing Revenue is expected to maintain its strong growth trend throughout 2007 driven by the combination of an increasing number of licensing clients, further integration by existing clients, and a growing archive of Hotel, Cruise and Destination Content. Service revenue is expected to continue to comprise a large percentage of total revenue as VRX is expanding existing service contracts and is negotiating several new service contracts.
Detailed Financial Statements
The financial results provided in this release are based upon unaudited results management believes to be accurate; however, until such time as the audit process is complete, full financial statements and the related MD&A will not be published on either the Company's website, www.vrxworldwide.com, or on SEDAR at www.sedar.com.
About VRX
VRX Studios Inc., a wholly owned subsidiary of VRX Worldwide Inc. (www.vrxworldwide.com), is the world leader in producing and syndicating high quality, web-ready, rich media content that educates, inspires, and compels online travel consumers. Leading travel brands such as Carnival, Hyatt, Travelocity, Lastminute, Southwest Vacations, Orbitz and many others rely on VRX's stunning visual content to attract and engage consumers. Each month, millions of people interact with VRX's Hotel, Cruise and Destination Content in their search for their perfect vacation. To find out more about VRX Studios, its products and services, visit www.vrxstudios.com.
VRX Worldwide Inc.
per "David MacLaren"
David MacLaren, President and CEO
The TSX Venture Exchange has not reviewed this release and does not
accept responsibility for the accuracy or adequacy of its contents
