Espial Reports 2014 Second Quarter Results

OTTAWA, July 22, 2014 /CNW/ - Espial(®) Group Inc. ("Espial" or the 
"Company"), (TSX: ESP), a leader in the delivery of on-demand TV software and 
services, today announced its second quarter financial results for the three 
and six month periods ended June 30, 2014. 
Espial Q2 Highlights 


        --  Q2 revenue increased 107% to $4.7 million from $2.3 million
            last year.
        --  Q2 EBITDA income increased to $0.6 million compared to a loss
            of $1.5 million last year.
        --  For the six months ended June 30, 2014 revenue increased 101%
            to $9.7 million, from $4.8 million last year.
        --  For the six months ended June 30, 2014, EBITDA income increased
            to $1.9 million compared to a loss of $3.9 million last year.
        --  Announced a joint RDK solution with Samsung Electronics to
            provide a home entertainment HTML5 user experience, combining
            Samsung's IP set-top box and home media gateway with the Espial
            STB Client.
        --  Selected by a global top 5 TV manufacturer to power its next
            generation smart TVs.
        --  Completed a $10 million equity offering.

"Q2 was another strong quarter for us and we are pleased with our growth. We 
believe our progress is a result of our commitment and focus to deliver 
world-class products based on open technologies. In Q2, we saw growing 
momentum for open platforms like ours - that are based on RDK and HTML5 - that 
allow TV service providers to rapidly introduce innovative services and rich 
user experiences. We recently announced a partnership with Samsung to provide 
a joint RDK and HTML5 solution on Samsung set-top-boxes", said Jaison Dolvane, 
CEO, Espial.  "Samsung is a major consumer TV brand and this partnership 
reinforces Espial's leadership as RDK continues to gain momentum.  During the 
quarter, we also continued to make progress with major operators globally who 
are undertaking RDK evaluation projects with us.  On the Smart TV front, we 
secured a top five TV manufacturer win and further expanded our footprint in 
an existing customer to increase use of Espial software across a broader range 
of TV models."

Financial Summary

For the three-month period ended June 30, 2014, the Company reported revenue 
of $4.7 million compared with revenue of $2.3 million for the three months 
ended June 30, 2013. Earnings before interest, foreign exchange, taxes, stock 
compensation, depreciation and amortization (EBITDA) for the second quarter of 
fiscal 2014 was income of $0.6 million compared to a loss of  $1.5 million in 
the second quarter of fiscal 2013. Net income for the quarter was $0.1 million 
or $0.00 per share, compared with a net loss of $2.1 million last year, or 
$0.15 per share.

Q2 Financial Results
        --  Revenue for the second quarter of fiscal 2014 was $4,712,514
            compared with revenue of $2,279,506 in the same period a year
            ago. Second quarter software license revenue was $1,109,268
            compared with software license revenue of $949,471 in the
            second quarter of fiscal 2013. Professional services revenue
            for the second quarters of 2014 and 2013 were $2,411,387 and
            $254,777 respectively.  Maintenance and support revenue for the
            second quarter was $1,191,859 compared with $1,075,258 last
            year.
        --  North American revenue was $2,371,417 in the second quarter of
            fiscal 2014 compared to $812,923 in 2013. Asia revenue was
            $1,113,030 in the second quarter of 2014 compared to $463,787
            in 2013.  European revenue was $1,228,067 in the second quarter
            of 2014 compared to $1,002,796 in 2013
        --  Gross margin for the second quarter of fiscal 2014 was 72
            percent compared with 78 percent in the second quarter of
            fiscal 2013.
        --  Operating expenses for the second quarter of fiscal 2014 were
            $3,157,315 compared with $3,738,296 in the second quarter of
            fiscal 2013.
        --  Earnings for the second quarter of fiscal 2014 before interest,
            foreign exchange, taxes, stock compensation, depreciation and
            amortization (EBITDA) was income of $601,952 compared to a loss
            of $1,480,644 in the second quarter of fiscal 2013.
        --  Net income in the second quarter was $90,571 compared with a
            loss of $2,132,914 last year.

A complete set of financial statements and management's discussion and 
analysis for the period ended June 30, 2014 will be available at 
http://www.sedar.com.

Conference Call

The Company will be hosting a conference call to discuss the Q2 2014 financial 
results on July 22, 2014 at 10:00 a.m. Eastern Time (ET). The phone number to 
join the results discussion is:
        --  Toll free line  (Canada/US) -  +1 888-390-0605
        --  Toll line (international/local) - +1 416-764-8609

The playback for the call will be available until 11:59pm ET on August 23, 
2014, at the following numbers and passcode:
        --  Toll line: +1 416-764-8677, Passcode:  151923
        --  Toll-free line: +1-888-390-0541, Passcode: 151923

About Espial (www.espial.com)

Espial is a leading supplier of digital TV and IPTV software and solutions to 
cable MSOs and telecommunications operators as well as consumer electronics 
manufacturers. Espial's middleware, video-on-demand, and browser products 
power a diverse range of pay-TV and Internet TV business models. Over 35 
million licenses of its patented software are in use across the world. Espial 
is headquartered in Ottawa, Canada and has offices in the United States, 
Europe, and Asia. Visit www.espial.com or contact via phone at +1 613 230 4770.

Forward Looking Statement

This press release contains information that is forward looking information 
with respect to Espial within the meaning of Section 138.4(9) of the Ontario 
Securities Act (forward looking statements) and other applicable securities 
laws. In some cases, forward-looking information can be identified by the use 
of terms such as "may", "will", "should", "expect", "plan", "anticipate", 
"believe", "intend", "estimate", "predict", "potential", "continue" or the 
negative of these terms or other similar expressions concerning matters that 
are not historical facts. In particular, statements or assumptions about, , 
economic conditions, benefits of new customer and partner relationships, 
future opportunities for the company and products and any other statements 
regarding Espial's objectives (and strategies to achieve such objectives), 
future expectations, beliefs, goals or prospects are or involve 
forward-looking information.

Forward-looking information is based on certain factors and assumptions. While 
the company considers these assumptions to be reasonable based on information 
currently available to it, they may prove to be incorrect. Forward-looking 
information, by its nature necessarily involves known and unknown risks and 
uncertainties. A number of factors could cause actual results to differ 
materially from those in the forward-looking statements or could cause our 
current objectives and strategies to change, including but not limited to 
changing conditions and other risks associated with the on-demand TV software 
industry and the market segments in which Espial operates, competition, 
Espial's ability to effectively develop its distribution channels and generate 
increased demand for its products, economic conditions, technological change,  
unanticipated changes in our costs, regulatory changes, litigation, the 
emergence of new opportunities, many of which are beyond our control and 
current expectation or knowledge.

Additional risks and uncertainties affecting Espial can be found in 
Management's Discussion and Analysis of Results of Operations and Financial 
Condition and its Annual Information Form for the fiscal year ended December 
31, 2013 filed on SEDAR at www.sedar.com. If any of these risks or 
uncertainties were to materialize, or if the factors and assumptions 
underlying the forward-looking information were to prove incorrect, actual 
results could vary materially from those that are expressed or implied by the 
forward-looking information contained herein and our current objectives or 
strategies may change. Espial assumes no obligation to update or revise any 
forward looking statements, whether as a result of new information, future 
events or otherwise, except as required by law. Readers are cautioned not to 
place undue reliance on these forward-looking statements that speak only as of 
the date hereof.

Non-IFRS Financial Measures

Earnings before interest, foreign exchange, taxes, stock compensation, 
depreciation and amortization (EBITDA) is a non-IFRS financial measure that 
does not have any prescribed meaning by IFRS and is therefore unlikely to be 
comparable to similar measures presented by other issuers.  Management 
believes that this non-IFRS financial measure, when taken together with the 
corresponding consolidated IFRS measures, increases the transparency of the 
Company's current results and enables investors to more fully understand 
trends in its current and future performance. A reconciliation of net loss to 
earnings before interest, foreign exchange, taxes, stock compensation, 
dividends on redeemable preferred shares, depreciation and amortization is as 
follows:
                    June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013
                       (3 months)    (3 months)    (6 months)    (6 months)
                      (unaudited)   (unaudited)   (unaudited)   (unaudited)
                                                                           
    Net income
    (loss) and
    Comprehensive
    loss                  $90,571  ($2,132,915)    $1,119,146  ($5,405,084)
    Add                                                                    
    Stock
    compensation          150,584        37,268       184,345        80,050
      Depreciation                                                  100,937
      of property
      and equipment        46,115        51,652        85,816
    Amortization of
    intangibles           160,770       393,556       321,539       755,517
                          448,040   (1,650,439)     1,710,846   (4,468,580)
                                                               
    Less (add)                                                             
    Net interest
    income
    (expense)            (10,913)     (133,210)      (94,619)     (267,572)
    Foreign
    exchange gain
    (loss)               (92,321)        22,253        21,460     (201,030)
    Income taxes         (50,678)      (58,837)     (123,765)     (102,681)
                                                               
    Earnings before
    interest,
    foreign
    exchange,
    taxes, stock
    compensation,
    depreciation
    and
    amortization         $601,952  ($1,480,645)    $1,907,771  ($3,897,297)


Q2 Consolidated 
Statements of Income 
(Loss) 


                            Three Months Ended                  Six Months Ended
                          June 30,        June 30,         June 30,         June 30,
                              2014            2013             2014             2013
                       (Unaudited)     (Unaudited)      (Unaudited)      (Unaudited)
    Revenue                                                                         
      Software       $   1,109,268   $     949,471    $   4,536,619    $   2,338,915
      Professional       2,411,387         254,777        2,771,781     
      services                                                               502,596
      Support and        1,191,859       1,075,258        2,378,938     
      maintenance                                                          1,980,053
    Total revenue        4,712,514       2,279,506        9,687,338        4,821,564
    Cost of revenue      1,310,717         504,330        2,064,848        1,017,647
                                                                                    
    Gross margin         3,401,797       1,775,176        7,622,490        3,803,917
    Expenses                                                                        
      Sales and            924,620         992,918        1,846,921     
      marketing                                                            2,128,341
      General and          637,026         545,775        1,180,964     
      administrative                                                       1,134,283
      Research and       1,434,899       1,806,048        2,956,995     
      development                                                          3,570,356
      Business                   -               -                -     
      restructuring
      charges                                                              1,049,222
      Amortization         160,770         393,556          321,539     
      of intangible
      assets                                                                 755,517
                         3,157,315       3,738,297        6,306,419        8,637,719
    Income (loss)          244,482                                      
    before other
    income (expense)                   (1,963,121)        1,316,071      (4,833,802)
      Interest               6,469           2,749           11,544     
      income                                                                  10,467
      Foreign             (92,321)          22,253           21,458     
      exchange
      (loss) gain                                                          (201,030)
      Interest            (17,381)       (135,959)        (106,163)     
      expense                                                              (278,038)
                                                                                    
    Income (loss)          141,249                                      
    before taxes                       (2,074,078)        1,242,910      (5,302,403)
                                                                                    
    Income tax            (50,678)                                      
    expense                               (58,837)        (123,765)        (102,681)
    Net income       $      90,571   $                $                $
    (loss) and
    comprehensive
    income (loss)                      (2,132,915)        1,119,145      (5,405,084)
                                                                                    
    Income (loss)    $        0.00   $                $                $
    per common share
    - basic                                 (0.15)             0.06           (0.38)
                                                                                    
    Weighted average    20,629,280                                      
    number of common
    shares
    outstanding -
    basic                               14,106,829       20,218,270       14,106,829
                                                                                    
    Income (loss)    $        0.00   $                $                $
    per common share
    - diluted                               (0.15)             0.05           (0.38)
                                                                                    
    Weighted average    23,960,897                                      
    number of common
    shares
    outstanding -
    diluted                             14,106,829       23,018,360       14,106,829
    Consolidated Balance Sheets
                                          June 30, 2014   December 31, 2013
                                                                           
                                                                           
    CURRENT ASSETS                                                         
      Cash and cash equivalents         $    14,427,985   $       7,407,093
      Accounts receivable                     3,970,236           2,057,222
      Investment tax credits receivable         462,460             312,027
      Prepaid expenses and other assets         758,234             502,990
                                             19,618,915          10,279,332
                                                                           
      Equipment                                 517,262             539,348
      Intangible assets                       1,802,528           2,099,398
      Goodwill                                3,340,808           3,340,808
                                        $    25,279,513   $      16,258,886
                                                                           
    CURRENT LIABILITIES                                                    
      Accounts payable and accrued                        $
      liabilities                       $     2,539,355           1,872,505
      Provisions                                290,153             281,813
      Deferred revenue                        4,024,649           4,052,700
      Term Debt                                       -           2,442,056
                                              6,854,157           8,649,074
    Provisions                                  220,304             363,132
    Total Liabilities                         7,074,461           9,012,206
                                                                           
    SHAREHOLDERS' EQUITY                                                   
      Share capital                          87,298,111          77,781,292
      Warrants                                1,574,067           1,436,004
      Share based payments reserve           12,309,425          12,125,080
      Deficit                              (82,976,551)        (84,095,696)
                                             18,205,052           7,246,680
                                        $    25,279,513   $      16,258,886
    Statements of Cash Flows
                                                       Six Months Ended
                                           June 30, 2014      June 30, 2013
                                             (unaudited)        (unaudited)
    CASH PROVIDED BY (USED IN) OPERATING                                   
      Net income (loss)                    $   1,119,145    $   (5,405,084)
      Items not affecting cash                                             
        Depreciation of property and              85,816            100,938
        equipment                                         
        Amortization of intangible assets        321,539            755,517
        Share-based compensation expense         184,345             80,051
        Interest accretion on term debt           57,945             81,139
        Provisions                             (134,488)            454,316
                                               1,634,302        (3,933,123)
                                                               
        Changes in non-cash operating        (1,679,892)            580,828
        working capital items                             
                                                (45,590)        (3,352,295)
      INVESTING                                                            
        Purchase of property and equipment      (63,730)           (21,501)
        Purchase of intangible software         (24,669)            (5,255)
        Purchase of business                           -        (2,120,412)
        Redemption of short- term                      -          8,054,551
        investments                                       
                                                (88,399)          5,907,383
      FINANCING                                                            
        Operating line draw (repayment)                -        (2,008,384)
        Repayment of term debt               (2,500,000)                  -
        Options exercised                          2,960                  -
        Warrants exercised                       474,582                  -
        Proceeds from equity financing        10,000,080                  -
        Costs of share issuance                (822,741)                  -
                                               7,154,881        (2,008,384)
      Net cash and cash equivalents inflow     7,020,892            546,704
      Cash and cash equivalents, beginning                        3,055,644
      of period                                7,407,093     
      Cash and cash equivalents, end of    $                      3,602,348
      period                                  14,427,985    $



SOURCE  Espial Group 
For inquiries from the financial press or analysts, contact: 
Carl Smith Chief Financial Officer Espial Group Inc. Email:csmith@espial.com 
Phone: +1 613-230-4770 
Kirk Edwardson Director, Marketing Espial Group Inc. 
Email:kedwardson@espial.com Phone: +1-613-230-4770 x1145 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/July2014/22/c8329.html 
CO: Espial Group
ST: Ontario
NI: SOF INTERNET TVNEWS ERN CONF ECO  
-0- Jul/22/2014 10:00 GMT
 
 
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