Cyberplex Inc. (TSX:CX) a leader in online publishing and customer acquisition
strategies today announced its financial results for the fiscal year and fourth
quarter-ended December 31, 2010. Total revenue for the year was $106.9 million,
a slight decrease from the $110.4 million recorded in 2009, and adjusted EBITDA
for the year was $13.3 million. Total revenue for the fourth quarter was $31.6
million, with gross margin of 33% and adjusted EBITDA of $4.8 million.
Fourth Quarter Operational Highlights
-- Acquired EQ Advertising, a demand side platform ("DSP") with real-time
bidding capabilities to further augment distribution, and deliver
targeted display advertising and performance marketing solutions;
-- Launched four new web properties to increase online audience development
in the finance and retail verticals and to enhance various lead
generation activities;
-- Integrated performance-based campaigns into 80% of the Company's
publishing properties to continue diversifying revenue opportunities
from these properties;
-- Delivered on various strategic initiatives with leading brand
advertisers including Jaguar Canada, and Quest Personals, while
furthering mobile initiatives with industry leader Poynt Solutions.
"During the fourth quarter of 2010, we continued to focus on our publishing and
distribution capabilities and work with clients to target their customers in the
most effective way. By combining our internal publishing capabilities with some
of the best third-party publishers in the industry we continue to deliver
excellent results for our advertisers using both pay per click and
performance-based campaigns." said Geoffrey Rotstein, Chief Executive Officer.
"The Company made significant investments during the quarter in technology and
in its depth of operations as quality and customer satisfaction continued to be
a main focus for all divisions of the organization."
As reported by the Company on January 10, 2011, there was a set-back in
operations due to the integration of the Yahoo! and Bing search platforms in
mid- December, which caused significant disruption. Since that time the Company
has been working diligently to transition its systems and algorithms to adapt to
the newly integrated search marketplace and has been making steady progress.
Following a difficult first two months of 2011, which included negative impacts
from the aforesaid integration, restructuring charges and a strong Canadian
dollar, the Company is performing better in March. Based on preliminary results
which are not yet complete and remain subject to further review, adjusted EBITDA
for the first quarter of 2011 is expected to be breakeven even after a very
difficult start to the year.
The Company is pleased with the assistance and support Yahoo! has provided to
date and is very encouraged by the strength of its partnership with Yahoo!. The
Company remains in discussions with its principal lender, American Capital,
Ltd., to review its debt obligations. As of the date of this release, the
Company is in compliance with its covenants under the terms of its credit
agreement with American Capital, and based on preliminary financial results
which remain incomplete and subject to further review, believes it has the
ability to remain in compliance with the financial covenants and other
obligations that arise under the terms of the credit agreement for the quarter
ending March 31, 2011.
"The discussions with American Capital are now progressing at a quicker pace
than at the outset. We believe that both American Capital and Cyberplex are
motivated to find a reasonable compromise to the current situation," said
Geoffrey Rotstein.
Results for the Year Ended December 31, 2010
-- The Company generated revenue of $106.9 million, a decrease of 3%
compared to $110.4 million generated in 2009
-- Adjusted EBITDA for 2010 was $13.3 million compared to $15.1 million in
2009. Net loss for 2010 was $61.1 million compared to net income of $7.1
million in 2009.
-- Acquisition of Tsavo Media, a leading online publisher on June 8, 2010,
which furthered the Company's distribution capabilities by providing
over 300 web properties and a leading proprietary search technology
platform
-- Acquisition of Surebaby.com, a content rich website providing helpful
parenting information
-- Acquisition of the EQ Advertising Group, an organization that brings a
proprietary DSP with real-time bidding capabilities to the organization
-- Delivered various mobile and video applications to clients as we
continued to evolve our targeted search and customer acquisition
platforms
"We are very proud of our numerous accomplishments in 2010 and strongly believe
that even with the challenges experienced during the later part of December, we
are positioned to be successful" said Ted Hastings, President of Cyberplex. "As
growth and interest in online advertising continues to gain momentum, we have
established a solid foundation. As our industry continues to adapt and client
demands continue to grow, the skills, expertise and technology platforms that we
have developed will allow us to compete with anyone in today's market."
Non-GAAP Financial Measures
This press release includes a discussion of "Adjusted EBITDA," which is a
non-GAAP financial measure. The Company defines Adjusted EBITDA as net income
before (a) interest income (expense); (b) income tax provision (recovery); (c)
amortization of capital and intangible assets; (d) foreign exchange loss (gain);
(e) stock-based compensation expense related to the Company's grant of stock
options;(f) employee termination costs and (g) allowances for accounts in
litigation and other doubtful accounts.
Management uses Adjusted EBITDA as a measurement of the Company's operating
performance because it provides information related to the Company's ability to
provide cash flows for acquisitions, capital expenditures and working capital
requirements. The Company also believes that analysts and investors use Adjusted
EBITDA as a supplemental measure to evaluate the overall operating performance
of companies in its industry. The Company has included allowance for accounts in
litigation and other doubtful accounts in adjusted EBITDA, due to the unusual
amount of allowances in the fourth quarter of 2010 which are not expected to
recur at a similar amount in the future.
The non-GAAP financial measure is used in addition to and in conjunction with
results presented in accordance with GAAP and should not be relied upon to the
exclusion of GAAP financial measures. Management strongly encourages investors
to review the Company's consolidated financial statements in their entirety and
to not rely on any single financial measure. Because non-GAAP financial measures
are not standardized, it may not be possible to compare these financial measures
with other companies' non-GAAP financial measures having the same or similar
names. In addition, the Company expects to continue to incur expenses similar to
the non-GAAP adjustments described above, and exclusion of these items from the
Company's non-GAAP measures should not be construed as an inference that these
costs are unusual, infrequent or non-recurring.
The table below reconciles net income (loss) and Adjusted EBITDA for the periods
presented:
----------------------------------------------------------------------------
Three months ended Twelve months ended
December 31 December 31
2010 2009 2010 2009
----------------------------------------------------------------------------
Net Income
(loss) $ (59,767,497) $ 1,254,726 $ (61,074,414) $ 7,101,620
Add:
Amortization
of capital
and
intangible
assets 4,381,942 121,061 10,594,042 405,141
Intangibles &
Goodwill
impairment 50,289,984 - 50,289,984 -
Allowance for
accounts in
litigation
and other
doubtful
accounts 5,790,205 1,513,063 8,265,205 3,347,288
Special
charges 2,710,477 - 2,710,477 -
Interest
expenses
(income),
net 914,254 (24,982) 2,217,390 26,848
Foreign
exchange
(gain) loss (194,101) 975,472 (910,589) 3,423,700
Employee
termination
costs 26,643 - 238,047 -
Stock based
compensation 121,304 197,373 454,262 735,187
Loss on
disposal of
assets 21,295 - 21,295 -
Income tax
expense
(recovery) 487,006 (306,226) 445,962 78,231
----------------------------------------------------------------------------
Adjusted
EBITDA 4,781,512 3,730,487 13,251,661 15,118,015
----------------------------------------------------------------------------
Conference Call Details
In conjunction with the release, Cyberplex will host a conference call on
Tuesday, March 29, 2011 at 4:30 p.m. EST to discuss the financial results. To
access the call, please dial 1-888-892-3255. Please call five minutes prior to
the call. A replay of the conference call will be available as of 12:00 a.m. the
next day, until midnight June 30, 2011. To access the replay dial 1-800-937-6305
followed by the pass code 173269.
About Cyberplex
Cyberplex Inc. (www.cyberplex.com) is a North American leader in online
publishing and customer acquisition strategies. The Company, through its
subsidiaries, leverages over 300 proprietary web properties and its vast
publisher network to efficiently connect advertisers to their most relevant
online customers and prospects. By combining high quality publishing initiatives
with efficient technology solutions and online marketing expertise, the Company
is able to deliver the optimal targeted audience to online advertisers.
Cyberplex delivers measurable results that improve advertiser ROI, monetize the
value of online properties, and build targeted, loyal online audiences.
Forward-Looking Statements
This news release may contain forward-looking statements that are based on
management's current expectations and are subject to known and unknown
uncertainties and risks, which could cause actual results to differ materially
from those contemplated or implied by such forward-looking statements. Cyberplex
is under no obligation to update any forward-looking statements contained herein
should material facts change due to new information, future events or otherwise.
CYBERPLEX INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, 2010 and 2009
2010 2009
Assets
------------- -------------
Current Assets:
Cash and cash equivalents $ 5,191,691 $ 10,222,001
Restricted cash 2,310,206 -
Short-term investments 1,690,686 11,540,642
Accounts receivable, net of allowance for
doubtful accounts of $3,540,733 (2009 -
$2,270,977) 13,879,570 9,930,149
Income taxes recoverable 632,006 -
Prepaid expenses and other assets 2,320,963 3,303,819
------------- -------------
26,025,122 34,996,611
Restricted cash 1,749,048 -
Property and equipment 2,921,372 921,716
Intangible assets 29,157,932 798,093
Goodwill 1,466,971 14,095,708
Future income tax assets - 582,740
------------- -------------
$ 61,320,445 $ 51,394,868
------------- -------------
------------- -------------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 10,177,981 $ 4,270,080
Current portion of term loans 9,402,402 -
Unearned revenue 664,687 668,255
Income taxes payable 1,729,226 631,465
Deferred lease inducements 115,086 106,618
------------- -------------
22,089,382 5,676,418
Long-term portion of term loans 23,582,779 -
Future income tax liabilities 1,100,000 -
Deferred lease inducements 184,719 156,119
Shareholders' equity 14,363,565 45,562,331
------------- -------------
$ 61,320,445 $ 51,394,868
------------- -------------
------------- -------------
CYBERPLEX INC.
Unaudited Consolidated Statements of Operations
--------------------------------------------- -----------------------------
--------------------------------------------- -----------------------------
Three Months Period Ended Years Ended
----------------------------- -----------------------------
December 31, December 31, December 31, December 31,
2010 2009 2010 2009
-------------- -------------- -------------- --------------
--------------------------------------------- -----------------------------
Revenue $ 31,633,418 $ 24,347,585 $ 106,863,016 $ 110,411,215
Cost of revenue 21,260,256 17,512,801 74,627,889 78,070,649
--------------------------------------------- -----------------------------
10,373,162 6,834,784 32,235,127 32,340,566
Expenses:
Sales and
marketing 2,893,821 2,313,821 10,331,094 12,907,348
General and
administrative 8,635,982 2,554,171 17,610,217 8,450,937
Foreign
exchange
(gain) loss (194,101) 975,472 (910,589) 3,423,700
--------------------------------------------- -----------------------------
11,335,702 5,843,464 27,030,722 24,781,985
Income (loss)
before the
undernoted (962,540) 991,320 5,204,405 7,558,581
Depreciation of
property and
equipment 148,131 108,561 1,290,085 319,903
Amortization of
intangible
assets 4,233,811 12,500 9,303,957 85,238
Special charges 2,710,477 - 2,710,477 -
Impairment of
goodwill and
intangible
assets 50,289,984 - 50,289,984 -
Loss on disposal
of assets 21,295 - 21,295 -
--------------------------------------------- -----------------------------
Income (loss)
from operations (58,366,238) 870,259 (58,411,393) 7,153,440
Interest income 22,168 25,834 74,697 48,522
Interest expense (936,421) (852) (2,292,087) (75,370)
Gain on sale of
investment - 53,259 331 53,259
--------------------------------------------- -----------------------------
(914,253) 78,241 (2,217,059) 26,411
--------------------------------------------- -----------------------------
Income (loss)
before income
taxes (59,280,491) 948,500 (60,628,452) 7,179,851
Income taxes
(recovery)
Current 430,100 276,514 1,500,631 660,971
Future 56,906 (582,740) (1,054,669) (582,740)
--------------------------------------------- -----------------------------
487,006 (306,226) 445,962 78,231
--------------------------------------------- -----------------------------
Net income
(loss) (59,767,497) 1,254,726 (61,074,414) 7,101,620
Unrealized gain
(loss) on
available-for-
sale
securities, net
of tax of nil (24,346) (135,974) (127,282) 172,706
Foreign currency
translation
adjustment (894,641) - (2,491,886) -
Amount
reclassified to
income during
the period - (53,259) - (53,259)
--------------------------------------------- -----------------------------
Comprehensive
income (loss) $ (60,686,484)$ 1,065,493 $ (63,693,582)$ 7,221,067
--------------------------------------------- -----------------------------
Income (loss)
per share:
Basic $ (0.45) 0.02 $ (0.62)$ 0.11
Diluted (0.45) 0.02 (0.62) 0.11
----------------------------- -----------------------------
Weighted average
number of
shares used in
income (loss)
per share :
Basic 133,536,962 68,450,054 98,979,151 62,680,694
Diluted 133,536,962 70,380,964 98,979,151 64,905,988
--------------------------------------------- -----------------------------
CYBERPLEX INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Period Years Ended
Ended December 31 December 31
2010 2009 2010 2009
--------------------------------------------- -----------------------------
Cash flows from
(used in)
operating
activities:
Net income
(loss) $ (59,767,497)$ 1,254,726 $ (61,074,414)$ 7,101,620
Items not
involving cash:
Depreciation of
property and
equipment 148,130 108,561 1,290,085 319,903
Amortization of
intangible
assets 4,233,811 12,500 9,303,957 85,238
Stock-based
compensation 121,304 197,373 454,262 735,187
Amortization of
deferred lease
inducements (27,951) (33,562) (111,379) (89,466)
Unrealized
foreign
exchange loss 390,548 265,131 492,964 666,992
Interest
accrued on
long-term
loans 748,859 - 748,859 -
Future income
taxes (1,310,275) (582,740) (1,054,669) (582,740)
Impairment of
intangible
assets 29,857,394 - 29,857,394 -
Impairment of
goodwill 20,432,590 - 20,432,590 -
Loss on
disposal of
assets 21,295 - 21,295 -
Change in non-
cash operating
assets and
liabilities 7,921,243 (364,904) 6,899,907 (1,014,859)
--------------------------------------------- -----------------------------
2,769,451 857,085 7,260,851 7,221,875
Cash flows from
(used in)
financing
activities:
Decrease in
bank
indebtness - - - (3,535,264)
Repayment of
long-term
loans (1,935,250) - (1,935,250) -
Repayment of
bridge loans - - (9,217,719) -
Proceeds from
exercise of
stock options 105,300 11,600 142,300 243,532
Proceeds from
exercise of
warrants - - - 216,667
Proceeds from
public
offering, net
of issuance
costs 22,661 - 30,795,254 15,887,291
--------------------------------------------- -----------------------------
(1,807,289) 11,600 19,784,585 12,812,226
Cash flows from
(used in)
investing
activities:
Sale (purchase)
of short-term
investments 1,163,036 2,813,735 9,391,958 (11,053,708)
Purchase of
restricted
marketable
securities (10,876) - (413,916) -
Acquisition of
TSAVO, net of
cash acquired 736,403) - (38,004,748) -
Acquisition of
EQ Advertising
Group Ltd.,
net of cash
acquired (882,829) - (882,829) -
Acquisition of
Incentaclick
Media Group
Inc., net of
cash acquired - 369,000 - (2,031,000)
Acquisition of
Eidenai
Innovations
Inc., net of
cash acquired - (110,890) - (202,220)
Proceeds from
disposal of
property and -
equipment 126,186 126,186 -
Additions to
property and
equipment (254,404) (2,236) (1,223,020) (462,963)
Additions to
intangible
assets (55,926) (300,000) (576,413) (392,114)
--------------------------------------------- -----------------------------
651,216) 2,769,609 (31,582,782) (14,142,005)
Foreign exchange
loss on cash
held in foreign
currency (390,548) (265,131) (492,964) (666,992)
--------------------------------------------- -----------------------------
Increase
(decrease) in
cash and cash
equivalents (79,602) 3,373,163 (5,030,310) 5,225,104
Cash and cash
equivalents,
beginning of
period 5,271,293 6,848,838 10,222,001 4,996,897
--------------------------------------------- -----------------------------
Cash and cash
equivalents,
end of period $ 5,191,691 $ 10,222,001 $ 5,191,691 $ 10,222,001
--------------------------------------------- -----------------------------
--------------------------------------------- -----------------------------
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