Mr. James Matthews reports
ARMADA ANNOUNCES Q1 2015 RESULTS
Armada Data Corp. has released its interim financial results for the quarter ended Aug. 31, 2014, which have now been filed on SEDAR and are available to view on the company's website.
SELECTED QUARTERLY INFORMATION
Fiscal year 2015 2014 2014 2014 2014
Quarter ended Aug. 31, 2014 May 31, 2014 Feb. 28, 2014 Nov. 30, 2013 Aug. 31, 2013
Total sales $570,012 $456,549 $629,869 $704,626 $764,576
Cost of goods sold (17,977) (18,619) (128,856) (85,911) (62,034)
Gross operating profit 552,035 437,930 501,013 618,715 702,542
Comprehensive (loss) income (2,267) (331,393) (58,352) (5,338) 154,941
Comprehensive (loss) income per share $0.00 $(0.02) $(0.01) $0.00 $0.01
Fiscal year 2013 2013 2013
Quarter ended May 31, 2013 Feb. 28, 2013 Nov. 30, 2012
Total sales $731,644 $727,511 $738,763
Cost of goods sold (110,123) (115,184) (63,475)
Gross operating profit 621,521 612,327 675,288
Comprehensive (loss) income (519,430) 26,633 (31,503)
Comprehensive (loss) income per share $(0.03) $0.01 $(0.01)
The prior periods comparative figures have been reclassified where necessary to conform to the current period's presentation.
Operations
The company's total sales decreased by 25 per cent in the quarter ended Aug. 31, 2014, from $764,576 in 2013 to $570,012. Gross operating profit of $552,035 in 2014 is a decrease of 21 per cent over $702,542 in 2013.
The company reported a comprehensive loss of $2,267 this quarter, compared with comprehensive income of $154,941 last year due to the following factors:
- The continuing monthly operating losses incurred by the Mister Beer division -- for this quarter, $92,956. Despite the significant monthly operating losses, the division made positive strides in the production facility by way of developing an all-new brewery team since the resignation of brewmaster, Stefan Riedelsheimer;
- Management's decision to discontinue offering outside Web development services in order to concentrate fully on internal development;
- The company decided to not offer third party advertising on its websites for security reasons.
Armada Data's core data business earned a before-tax profit of $90,689, which was allocated to absorb the continuing operating losses sustained by Mister Beer Inc.
The insurance services division experienced a decrease in revenue from $284,400 in 2013 to $216,375 in 2014, or by 24 per cent. The decrease in revenue was the result of unusual flooding in Alberta and Ontario in the summer of 2013, resulting in an unusually high number of claims.
The retail services division revenue was down 15 per cent to $105,473 in 2014 from $123,482. The updated CarCostCanada website, as well as the new partners and discounts program, clearly helped the CarCostCanada membership program maintain a strong presence in the marketplace, despite increasing competition. Management believes these improvements have assisted in slowing the downward trend that the membership sales have been on, and have formulated a plan to realize sustained growth, increased market share and new partnerships. These improvements should start to be realized in fiscal 2015, and the company will keep building on these strategies in future years.
The dealer services division revenue decreased by 11 per cent from $205,512 in 2013 to $182,958 in 2014, due to the past decreases in membership sales, which drove the dealer lead generation program, but also due to some manufacturer intervention on the part of an automaker that discourages their dealer body from participating in any type of third party lead generation program. This division's dealer development team has a plan to service the customers who find themselves without a dealer referral, although full implementation of this program will not be complete immediately.
The advertising/marketing services division, which derives its revenue from the sale of on-line third party advertising on the CarCostCanada and TheCarMagazine websites, decreased from $7,466 to $662, or 91 per cent. This reduction was due to CarCostCanada's decision to further secure the websites from e-commerce fraud, site hacking and on-line intruders; management continues to look into technology that will allow it to provide customers with a fully secure website while it delivers third party advertisements.
The information technology division revenue decreased 28 per cent to $25,372, down from $35,090. This reduction is solely due to management's decision to devote its resources to internal Web development only. IT continues to offer technical support and website hosting to hundreds of customers, and develop new customer relationships on a regular basis.
The Mister Beer division's revenues are down from $108,626 to $39,172, or 64 per cent. Direct product costs and labour decreased by 71 per cent from $62,034 to $17,977. The net revenue for Mister Beer went from $46,592 in 2013 to $21,195 in 2014, a decrease of 55 per cent. Mister Beer decided not to support the bulk wort sales to independent brew your own businesses due to licensee discontent, collection problems and delivery challenges. The Mister Beer division is now a listed vendor with Home Hardware, and is now undergoing a test opportunity with Canadian Tire convenience stores in Ontario.
Total expenses before amortization increased to $526,813 compared with $519,449, a 1-per-cent increase over last year.
The bank indebtedness increased from $134,783 at Aug. 31, 2013, to $227,620 at Aug. 31, 2014, attributed to subsidizing the monthly operating losses incurred by the Mister Beer division.
Accounts receivable decreased to $275,852 as at Aug. 31, 2014, from $487,518 last year. Related party accounts receivable decreased from $4,719 to $3,937. Accounts payable decreased to $212,140 as at Aug. 31, 2014, from $252,587 a year earlier.
Related parties accounts payable decreased to $6,126 as at Aug. 31, 2014, from $6,547 last year. As a result of the loss reported by the company for this period, the company's retained earnings decreased to a deficit of $1,110,873 as at Aug. 31, 2014, compared with a deficit of $767,807 last year.
Management does not plan on issuing any dividends until further notice.
Revenues earned by the divisions are as indicated in the attached table.
Three months ended Year ended
Aug. 31, 2014 Aug. 31, 2013 May 31, 2014
Insurance services $216,375 $284,400 $983,405
Retail services 105,473 123,482 437,734
Dealer services 182,958 205,512 676,995
Internet technology 25,372 35,090 104,654
Advertising/marketing services 662 7,466 8,336
Total revenue -- Armada Data 530,840 655,950 2,211,124
Revenue -- Mister Beer 39,172 108,626 344,496
Less direct product costs/wages -- Mister Beer (17,977) (62,034) (295,420)
Total revenue -- Mister Beer $21,195 $46,592 $49,076
Total consolidated revenue $552,035 $702,542 $2,260,200
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