PHOENIX, Ariz., April 26, 2000 (PRIMEZONE)-
-- Company successfully raised over $11 million through a series
of private placements in 1999
-- In 1999, management completed a significant restructuring
initiative to divest of under performing and non-core assets
and operations, taking a clean balance sheet approach for the
future
-- Current industry projections call for substantial growth in
the travel sector over the next five to ten years, with a
moderate increase in Internet bookings relative to the travel
agency supported segment
Points North Digital Technologies, Inc. (CDNX:PNS), a business-to-business (B2B) e-commerce company for the travel industry, today announced operating and financial results for the fiscal year ended December 31, 1999. Losses were $5.2 million in 1999 due to non-recurring restructuring charges, the associated write down of goodwill and the increase in infrastructure investment of core business assets.
Glen Kerby, Chief Executive Officer, commented, "Points North is rapidly emerging as the leading end-to-end business solution for the travel industry. 1999 was a watershed year in the history of Points North as it successfully re-engineered itself from a multi-faceted, integrated, travel, new media production and travel technology research and development company, into a tightly focused, business-to-business e-commerce company providing information technology solutions for the travel industry. We are pleased with our rapid progress as we aggressively execute our business strategy based upon solid financial and operational fundamentals."
Mr. Kerby continued, "Specifically, in the past year funding was used to finish development of our operating system, begin distribution and set in motion the flow of electronic commerce revenues for the company. Additionally, we streamlined operations and addressed and divested any and all non-core assets while re-engineering the Travel Plus and Skyhigh groups to suit the needs of the Peragis ASP environment. Thus, we have raised the funds required to properly move the corporation from a research and development group into an active marketing and sales organization."
1999 Review
During the year, capital raised included gross proceeds of $9.75 million from the issuance of Common Shares and a further $1.6 million (after adjusting for conversions during the year) from the issuance of unsecured and/or subordinated convertible debentures. Proceeds from these private placements were applied during the year primarily in connection with the Corporation's continued development and commercial roll out of its Peragis suite of products; and left the Company with cash reserves at year end of over $7.6 million.
These reserves, coupled with acquisitions that Points North has been aggressively pursuing since early 2000 - beginning with its purchase of XsIdeas Inc. of Winston-Salem, North Carolina in January 2000, will be applied to continue to accelerate the rollout of the Company's Peragis Pro solution on travel agency desktops throughout Canada and the United States, and to the continued development and commercialization of other products in the Company's suite of Peragis travel solutions. Points North's balance sheet was further strengthened in the first quarter of 2000 when:
-- a total of approximately $2 million in convertible
debentures that were included in the Company's current
liabilities as of December 31, 1999 were converted into
Common Shares;
-- the Company purchased all of the outstanding class X preferred
shares of its Travel Plus subsidiary at a price less than half
the value at which those shares were carried as a liability on
the Company's balance sheet;
-- 40,000 Common Share Purchase Warrants were exercised at
$3.25 per share.
Management also made some tough decisions throughout the year that are reflected in significant losses on the Company's operating statement. Approximately $31.6 million, or 77%, of the Company's consolidated gross revenues of $41 million; and approximately 22% of the Company's consolidated losses of approximately $3 million (before the under noted items), were attributable to the operations of Points North's United Kingdom and South African subsidiaries, Bluebird Holidays and Bluebird Holidays SA.
Bluebird SA's operations were wound down by the second quarter of 1999 and Points North divested itself of Bluebird UK in September 1999, as well as selling its Cook Island Holidays division in December 1999. Also in late 1999, the Company restructured its Creative House media division to focus its film, audio and new media production support on Points North's Peragis suite of products.
Non-recurring losses and write downs on the disposition of these assets, combined with the write down of goodwill and other restructuring charges totaled approximately $2.1 million, bringing total losses for the year to approximately $5.2 million. The Company has divested itself of unprofitable or under-performing assets and operations. Its remaining Travel Division assets, including Skyhigh Holidays and Travel Plus are operating successfully in their core businesses, and also contribute significantly to the Company's Technology Division by providing travel industry expertise and serving as a venue for beta testing of the Company's Peragis products. The successful re-engineering of these traditional distribution and product models will serve to assist other consortiums and tour operators or specialty portal producers in developing new profit centers and profit sharing potential with a strong infrastructure.
Also, Points North recognized its first significant revenues pertaining to its Peragis Pro technology in the first quarter of 2000, and this revenue stream is expected to grow significantly as additional desktops are installed in the future. These expected revenue streams, combined with the Company's significant cash reserves, are considered by management to be adequate to continue with an aggressive installation strategy for its Peragis technology for the remainder of the year. However, the lag time between desktop installations and revenues, together with the desire on the part of management to accelerate its installation schedule and aggressively pursue related acquisition opportunities, may lead the Company to seek additional capital financing during the fiscal year of 2000.
Points North's Common Shares are listed on the Canadian Venture Exchange under the symbol "PNS" (CUSIP No.: 7308907102).
About Points North and Peragis
Points North's Peragis travel solution offers buyers and sellers of travel products unique real-time, business-to-business e-commerce solutions. The company has formed strategic alliances and business relationships with leading reservations systems and travel suppliers such as Sabre, Galileo, Sprint Canada Inc., Compaq Financial Services Canada and EDS Innovations Inc. Points North and Peragis, Inc. offices can be found in the US: Arizona and North Carolina; and in Canada: Saskatchewan, Alberta and Ontario.
Summary
Balance Sheet Data ($000's, except Share Nos.)
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1999 1998
---- ----
Assets
Cash 7,652 1,035
Total Assets 11,494 10,335
Liabilities
Current Liabilities(1) 5,264 5,788
Long Term Debt 90 347
Other Debt 290 1,545
--- -----
5,644 7,680
Shareholders' Equity 5,850 2,655
Share Outstanding at December 31 12,655,787 7,191,281
(1) Includes current portion of Long Term Debt.
Operating Data ($000's, except Per Share)
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1999 1998
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Gross Revenue 41,022 51,119
Cost of Sales 39,243 48,004
Gross Profit 1,779 3,115
Operating Expenses 4,778 4,377
Loss Before Undernoted Items (2,999) (1,262)
Other Expenses (2,128) (3,669)
Loss Before Income Taxes (5,127) (4,931)
Income Taxes - Current 54 9
Loss (5,181) (4,940)
Loss Per Share (0.64) (0.74)
The Company expects to file its full financial statements with regulatory authorities shortly, and to mail financial statements to shareholders by not later than May 20, 2000. Once filed with regulatory authorities, the financial statements may be viewed at www.sedar.com and, pending mailing, any shareholder entitled to receive financial statements may obtain a copy from the Company upon request.
This release contains forward-looking statements including discussions on Points North's position, growth opportunities and strategies. These forward-looking statements involve known and unknown risks, which may cause our actual results and performance to be materially different from the future results and performance stated or implied by the forward looking statements. Some of the risks you should consider include Points North's ability to negotiate and enter into new client engagements and whether those engagements will be on terms favorable to Points North, Points North's ability to realize its anticipated growth rates, and how Points North manages its growth and integration of acquired businesses and personnel.
The Canadian Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.