Advant-e Corporation Announces Third Quarter 2008 Results
and 3rd Quarter 2008 Preliminary Results |
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Company Reports 5% Decrease in Revenue and
26% Net Income Decline over Q3 2007 |
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DAYTON, Ohio, November 14, 2008 -- Advant-e Corporation (OTC Bulletin Board: ADVC), a provider of Internet-based Electronic Data Interchange and electronic document management software and services today announced financial and operating results for the quarter ending September 30, 2008.
For the third quarter of 2008 the Company reported revenue of $2,067,253, a 5% decrease over revenue of $2,178,155 in the third quarter of 2007. The decrease is attributable primarily to lower software license revenue from Merkur Group partially offset by increased revenue from Edict Systems hosted EDI services.
Net income for the third quarter of 2008 was $247,079, or $.04 per share, a 26% decrease over net income of $335,884, or $.05 per share, for the same period in 2007.
For the nine months ended September 30, 2008, the Company reported revenue of $6,712,754, a 32% increase over revenue of $5,075,628 for the same period in 2007. The increase is attributable primarily to organic growth from Edict Systems and the inclusion of three quarters of Merkur Group revenue in 2008 compared to only one quarter in 2007. Net income for the nine-months ended September 30, 2008 was $791,614, or $.12 per share, a 12% increase over net income of $708,602, or $.11 per share, for the same period in 2007.
Jason K. Wadzinski, Chairman, Chief Executive Officer, and President, remarked, “While we continue to experience growth in our core EDI products and services from Edict Systems, weakness in new software sales for Merkur Group during the quarter produced weaker results than we expected. However, year-to-date Merkur revenue is up 13% over last year due to above average sales activity in the first half of this year.”
“We believe that both Edict Systems and Merkur Group will face challenges related to the current deteriorating economic conditions,” continued Mr. Wadzinski. “Potential customers are facing budgetary constraints, shifting priorities, and less internal resources for implementation which causes delayed decisions and increased lead times.”
ADVANT-E CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) |
Three Months Ended
September 30, |
Nine months Ended
September 30, |
|
2008 |
2007 |
2008 |
2007 |
Revenue |
$2,067,253 |
2,178,155 |
6,712,754 |
5,075,628 |
Cost of revenue |
792,351 |
818,716 |
2,615,977 |
1,810,060 |
Gross margin |
1,274,902 |
1,359,439 |
4,096,777 |
3,265,568 |
Marketing, general and administrative expenses |
884,584 |
876,090 |
2,869,978 |
2,231,039 |
Operating income |
390,318 |
483,349 |
1,226,799 |
1,034,529 |
Other income (loss), net |
(25,852) |
18,002 |
(2,241) |
73,257 |
Income before income taxes |
364,466 |
501,351 |
1,224,558 |
1,107,786 |
Income tax expense |
117,387 |
165,467 |
432,944 |
399,184 |
Net income |
$ 247,079 |
335,884 |
791,614 |
708,602 |
Basic and diluted earnings per share |
$ .04 |
.05 |
.12 |
.11 |
Weighted average shares outstanding |
6,791,399 |
6,845,015 |
6,807,085 |
6,612,266 |
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ADVANT-E CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS |
September 30,2008
(Unaudited) |
December31,
2007 |
Assets |
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Current Assets: |
|
|
Cash and cash equivalents |
$ 2,702,779 |
2,039,447 |
Short-term investments |
265,515 |
292,151 |
Accounts receivable, net |
727,334 |
805,241 |
Prepaid software maintenance costs |
182,787 |
183,618 |
Prepaid expenses and deposits |
56,235 |
68,930 |
Prepaid income taxes |
55,553 |
-- |
Deferred income taxes |
154,262 |
40,057 |
Total current assets |
4,144,465 |
3,429,444 |
Software development costs, net |
132,900 |
194,238 |
Property and equipment, net |
390,761 |
433,658 |
Goodwill |
1,474,615 |
1,450,368 |
Other intangible assets, net |
435,110 |
498,644 |
Total assets |
$ 6,577,851 |
6,006,352 |
Liabilities and Shareholders’ Equity |
|
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Current liabilities: |
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Accounts payable |
$ 191,730 |
211,738 |
Accrued salaries and other expenses |
251,147 |
273,210 |
Income taxes payable |
-- |
112,700 |
Deferred revenue |
648,046 |
645,093 |
Total current liabilities |
1,090,923 |
1,242,741 |
Deferred income taxes |
309,143 |
288,858 |
Total liabilities |
1,400,066 |
1,531,599 |
Shareholders’ equity: |
|
|
Common stock, $.001 par value; 20,000,000 shares authorized; 6,772,061 shares issued and 6,755,961 outstanding at September 30, 2008; 6,875,015 shares issued and 6,815,015 shares outstanding at December 31, 2007 |
6,772 |
6,875 |
Paid-in capital |
2,070,872 |
2,210,200 |
Retained earnings |
3,124,291 |
2,332,678 |
Treasury stock at cost, 16,100 shares at September 30, 2008 and 60,000 shares at December 31, 2007 |
(24,150) |
(75,000 ) |
Total shareholders’ equity |
5,177,785 |
4,474,753 |
Total liabilities and shareholders’ equity |
$ 6,577,851 |
6,006,352 |
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ADVANT-E CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) |
Nine months Ended
September 30, |
|
2008 |
2007 |
Cash flows from operating activities: |
|
|
Net income |
$ 791,614 |
708,602 |
Adjustments to reconcile net income to net cash flows from operating activities: |
|
|
Depreciation |
205,845 |
162,233 |
Amortization of software development costs |
61,338 |
48,300 |
Amortization of other intangible assets |
63,534 |
21,178 |
Deferred income taxes |
(93,920) |
(41,784) |
Purchases of trading securities |
(213,754) |
(154,868) |
Proceeds from sales of trading securities |
209,724 |
159,184 |
Net unrealized (gains) losses on trading securities |
38,095 |
(12,573) |
Net realized gains on sales of securities |
(7,429) |
(12,972) |
Increase (decrease) in cash arising from changes in assets and liabilities: |
|
|
Accounts receivable |
77,906 |
(101,139) |
Prepaid software maintenance costs |
831 |
(26,430) |
Prepaid expenses and deposits |
12,695 |
(3,841 ) |
Prepaid income taxes |
(55,553) |
-- |
Accounts payable |
(20,008) |
70,493 |
Accrued salaries and other expenses |
(22,063) |
68,320 |
Income taxes payable |
(136,947) |
6,407 |
Deferred revenue |
2,953 |
38,310 |
Net cash flows from operating activities |
914,861 |
929,420 |
Cash flows from investing activities: |
|
|
Purchases of property and equipment |
(162,948) |
(181,246) |
Software development costs |
— |
(15,363) |
Cash paid for purchase of Merkur Group, Inc. |
— |
(971,338) |
Net cash flows from investing activities |
(162,948) |
(1,167,947) |
Cash flows from financing activities: |
|
|
Net payments on bank line of credit |
— |
(20,000) |
Purchase of treasury stock |
(88,581) |
(75,000) |
Net cash flows from financing activities |
(88,581) |
(95,000) |
Net increase in cash and cash equivalents |
663,332 |
(333,527) |
Cash and cash equivalents, beginning of period |
2,039,447 |
2,209,782 |
Cash and cash equivalents, end of period |
$ 2,702,779 |
1,876,255 |
Supplemental disclosures of cash flow items: |
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Income taxes paid |
$ 718,100 |
434,561 |
Non-cash transactions |
|
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Retirement of 60,000 shares repurchased in 2007 and held as treasury stock |
75,000 |
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Common stock issued in connection with purchase of Merkur Group, Inc. |
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568,692 |
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