VANCOUVER, April 28 /CNW/ - IP Applications Corp. (TSX-Venture: IPX)
today announced its quarterly and financial year-end results for the
nine-month period ended December 31, 2005. The Company changed its fiscal year
end from March 31 to December 31 in 2005.
Revenue grew substantially by 68% to $6.3 million for the nine month
period ended December 31, 2005 compared to the corresponding period in 2004.
The Company held a cash balance of $434,690 at December 31, 2005. For the
quarter, revenue increased 46% to $2.34 million compared with $1.60 million
for the same period in 2004. The loss for the nine months was $2.9 million or
$0.21 per share (basic) and the loss for the quarter was $1.54 million or
$0.10 per share (basic).
The Company absorbed significant expenses related to acquisitions,
facilities and other non-recurring items during the quarter as it brought its
cost structure into line with revenues to enable it to generate positive cash
flows from operations in 2006.
Achievements in 2005:
- Increased revenue by 68%
- Raised gross proceeds of $2.2 million from three private
placements during the period
- Acquired and successfully migrated over 40,000 subscribers from
two customer contract acquisitions
- Consolidated multiple Greater Vancouver office locations into one
location
- Made significant progress in aligning our cost structure towards
generating positive cash flows from operations
Background:
Revenues include fees for back office, technical support, and channel
services billed to clients. These fees are primarily recurring monthly and are
earned on a per end-user basis. The Company also charges additional fees to
clients for the provisioning of end users and new services onto the Company's
platform.
Approximately 70% of the increase in revenues for the nine months
resulted from increases in billings to two existing customers and from five
new customers, two of which were acquired in capital transactions during the
year.
The company's costs for the period also increased. Some of the increased
costs were a result of one-time events and unusual circumstances. The
Company's Gross Margin improved from 36% to 37% as compared to the comparable
period a year earlier.
Direct costs include expenses related to the provisioning of back office,
channel services and technical support costs. The majority of these costs are
proportionate to the time taken to provide third-party channel services and
Help Desk technical support to the end-users of customers.
Direct costs of $4,010,797 for the nine-months ended December 31, 2005
represent an increase of $1,598,537 or 66% over the corresponding period in
the prior year, roughly in line with the increase in revenue in the period of
68%.
Operating Expenses increased because capital transactions in the year
resulted in an increase in intangible assets of $1,221,864. Amortization of
these assets increased operating expenses after June 2005.
General & administrative costs include general office, rent and occupancy
fees, insurance, bad debt expense, regulatory costs, director's fees,
consulting fees, professional fees and salaries paid to finance and
administration employees of the Company. The increase of $668,225 during the
nine-months ended December 31, 2005 arose from an unusually large bad debt of
$223,600, from $223,548 in contract termination charges and from $134,193 in
extraordinary occupancy expenses during the period the company was
consolidating its multiple premises into one location.
The Company also booked an expense of $307,116 to reflect impairment in
the value of office computer hardware, software and leasehold improvements
associated with the now-vacated office premises in New Westminster and further
expense of $209,687 because the sublease income for the space does not fully
cover the ongoing rent expense.
Additional details on both quarter and financial year-end results,
including the Audited Consolidated Financial Statements and Management
Discussion and Analysis, are available at www.sedar.com under IP Applications
Corp.
About IP Applications
IP Applications Corp. is uniquely positioned to serve companies that are
bringing online products, services, content, and internet access to market. IP
Applications provides a flexible combination of technology, systems and
expertise for customers who have identified channels and products but who lack
the delivery and support capabilities. IP Applications' integrated Operational
Support System, Help Desk and Network Monitoring Systems dramatically reduce
the cost, complexity and time to market for online products and services.
Forward-Looking Statements
This press release may contain forward-looking statements. Actual events
or results may differ materially from those described in the forward-looking
statements due to a number of risks and uncertainties. Forward-looking
statements are based on management's estimates, beliefs, and opinions. The
company assumes no obligation to update forward-looking statements.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
Signed,
Richard Topham
Chief Financial Officer, IP Applications Corporation
