TORONTO, Dec. 3 /CNW/ - LOREX Technology Inc. ("LOREX") (TSX: LOX)
announces results(x) for the three and twelve months ended September 30, 2008.
Highlights of the three and twelve month operating results are as
follows:
(Thousands of US $, unless otherwise noted)
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Three months ended Twelve months ended
September 30 September 30
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2008 2007 2008 2007
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Revenue 11,096 12,151 47,693 45,146
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Earnings (loss) before
interest, taxes,
amortization (xx) (112) 12 (143) (468)
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Loss (431) (574) (1,703) (2,140)
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Earnings (loss) per
common share (basic
and diluted) ($0.02) ($0.02) ($0.06) ($0.08)
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Weighted average number
of shares outstanding 26,954,083 26,954,083 26,954,083 26,954,083
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(x) Audited financial information is available at www.sedar.com.
(xx)EBITDA is not a measure of performance under Canadian GAAP. EBITDA
should not be considered in isolation or as a substitute for Net
Earnings nor as a measure of operating performance or profitability.
Commenting on the results for the three and twelve months ended September
30th, Chariman and CEO Henry Schnurbach stated, "We realized growth in
revenues of 5.6% in 2008 but the latter half of the fiscal year was a
challenge as we were impacted in the third and fourth quarters by reduced
shipments to our largest customer as the economic downturn affected this
retailer's sell-through. The events surrounding the reduced demand versus
historical levels resulted in mark downs which impacted this year's earnings.
We rallied and rapidly developed alternatives to support this as well as other
customers' budget concerns for value pricing. Revenues trended higher in the
fourth quarter as we realized growth in most sectors but were negatively
impacted by bad debt expenses and currency variances."
"Our current projections indicate continuing increases in demand through
next year for surveillance and security solutions despite forecast declines in
consumer spending. Management has developed new product options at lower price
points to address budget-conscious consumers and will continue its campaigns
to attract new business from the ecommerce market and the professional
security integrator."
"LOREX and its subsidiary company, Digimerge Technologies are progressing
with new product introductions. This past month, we introduced our newest EZ
Connect IP camera, the LNE3003 that is available at such E-tailers as
Costco.com, Homedepot.com, Bestbuy.com, Tigerdirct.com, Amazon.com and many
others. This wireless network camera is the simplest security camera available
in North America and meets the technology expectation that has become the
LOREX standard."
"In January 2009 the Company will be introducing its H.264 compression
technology to many of our digital video recorders as business evolves to
demanding more to protect their property. We have commitments with major
retailers and distributors for our new products and the revenues in our second
quarter of fiscal 2009 should reflect the increase in demand. Digimerge should
benefit from changes in purchase patterns as business is now more budget
conscious and Digimerge delivers superb featured solutions at very affordable
pricing."
LOREX will be show casing their extensive family of surveillance and
security products in the central hall at the Las Vegas Convention Centre
during the CES Exhibition in January 2009. Digimerge will be attending in
early April ISC West, in Las Vegas and will be exhibiting its security
solutions to major North and South American integrators and dealers.
Based on its current projections, the Company believes specific covenants
will not be met in the first quarter of 2009 and will require amendment to its
bank covenant or the receipt of an interim waiver of compliance. Failure to
comply with debt covenants creates a loan default which could result in the
Company having to immediately pay the loan outstanding unless a waiver is
obtained. While the Company has requested modifications which have been
historically approved, there is no certainty that the Company will be
successful in obtaining modifications to covenants in the future. While the
Company had excess availability under its covenant of $1.3 million at
September 30th, 2008 and forecasts excess availability through fiscal 2009,
Management believes that it be prudent to have availability of additional
financing to support the Company's plans for continued sales growth and/or to
insure sufficient working capital in the event of a reduction in customer
demand.
These consolidated financial statements have been prepared on a going
concern basis in accordance with Canadian generally accepted accounting
principles ("GAAP"). The going concern basis of presentation assumes that the
Company will continue in operation for the foreseeable future and be able to
realize its assets and discharge its liabilities and commitments in the normal
course of business. There is substantial uncertainty about the appropriateness
of the use of the going concern assumption. Before adjusting for changes in
working capital, the Company experienced a net loss and negative cash flows
from operations for the year ended September 30, 2008. Based on the Company's
current projections, the Company believes it is unlikely that it will be in
compliance with the existing quarterly financial covenants beginning in the
first quarter of 2009. Failure to comply with these debt covenants could
result in a requirement to immediately repay the bank loans. The Company has
requested modifications to bank covenants and the bank has accepted those
amendments in the past.
