News release

Magor announces 2013 annual and fourth quarter results

OTTAWA, Ont. – August 28, 2013 – Magor Corporation (TSXV:MCC), a global leader in visual collaboration solutions, today announced its fourth quarter (Q4) financial results for the three and twelve-month periods ended April 30, 2013.

Financial and Operational Highlights

  • Revenue grew by 62.3% to $837,325 in Q4 2013, compared to $515,847 in Q4 2012.
  • Software sales grew by 162.2% to $272,338 in Q4 2013, compared to $103,859 in Q4 2012.
  • Hardware sales grew by 86.4% to $503,899 in Q4 2013, compared to $270,343 in Q4 2012.
  • Gross profit grew by 68% to $437,940 in Q4 2013, compared to $260,732 in Q4 2012.
  • Gross profit margin for Q4 2013 increased to 52.3% from 50.6% in Q4 2012, and increased to 48% in FY2013 from 47.5% in FY2012.
  • Order backlog of $436,179 as at April 30, 2013, compared to $583,896 as at January 31, 2013.
  • During the quarter, Magor completed its public offering and announced the closing of its “Qualifying Transaction” and changed its name to Magor Corporation from Magor Communications Corp.
  • Concurrent with the reverse acquisition, the Company completed its public offering of 10,000,514 common shares for aggregate gross proceeds of $5,900,303.

“The strength of our financial results clearly speaks to the quality of our disruptive technology, and the great market opportunity ahead,” said Mike Pascoe, President and CEO of Magor Corporation. “To ensure accelerated growth, we anticipate the full launch of our Aerus cloud-based services this fall, transitioning us into a revenue model that adds monthly recurring revenue to our current transaction business. We are confident that Aerus will help us accelerate our long-term growth and bring more stability and certainty into the Company’s cash flow going forward. As we transition to more of a recurring revenue model, near term revenue growth may be adversely affected; however with a higher expected mix of monthly recurring revenue we expect our results to become more predictable. With the launch of Aerus, we also expect to be well positioned to establish relationships with a number of service providers and vertical solutions providers that can extend our services to their enterprise and government customers. In addition, we are on schedule to introduce our services on the Windows operating platform later this year. This significant addition will make our collaborative solutions more accessible to clients and give us an opportunity to OEM our services.”

Financial Highlights

Revenue

Total revenue was $837,325 and $1,963,709 for the three-month and twelve-month periods ended April 30, 2013, compared to $515,847 and $1,882,772 for the corresponding periods in 2012.

Revenue from hardware was $503,899 and $1,053,107 for the three-month and twelve-month periods ended April 30, 2013, compared to $270,343 and $984,670 for the corresponding periods in 2012.

Revenue from software was $272,338 and $636,746 for the three-month and twelve-month periods ended April 30, 2013, compared to $103,859 and $543,427 for the corresponding periods in 2012.

Revenue from support and other services was $61,088 and $273,856 for the three-month and twelve-month periods ended April 30, 2013, compared to $141,645 and $354,675 for the corresponding periods in 2012.

The increases in hardware and software revenues for the quarter were largely attributable to the fulfillment of a significant order obtained earlier in the year.

The decrease in support services revenue for the quarter was due to a decline in the number of customers renewing their support agreements on software installations related to the timing of these agreements, combined with the reduction in installation revenues resulting from the type of systems installed in the current year compared to the prior year.

Gross Profit and Gross Profit Margin

Gross profit was $437,940 and $942,900 for the three-month and twelve-month periods ended April 30, 2013, compared to $260,732 and $894,301 for the corresponding periods in 2012.

Gross profit margin was 52.3% and 48.0% for the three-month and twelve-month periods ended April 30, 2013, compared to 50.6% and 47.5% for the corresponding periods in 2012.

Operating Expenses

Operating expenses were $1,356,179 and $5,522,308 for the three-month and twelve-month periods ended April 30, 2013, compared to $829,761 and $4,860,029 for the corresponding periods in 2012.

Sales and Marketing

Sales and marketing expenses were $780,623 and $2,719,994 for the three-month and twelve-month periods ended April 30, 2013, compared to $492,712 and $2,219,149 for the corresponding periods in 2012.

The increase in Sales and Marketing for the quarter was largely attributed to the increase in sales, marketing and promotional activities undertaken by the Company as part of the efforts to prepare the market for the launch of Aerus cloud-based services, including market research, hiring of sales consultants and the redesign of the Company’s website. Due to the cost constraint program that was implemented in the prior year, the Company had reduced its sales and marketing expenditures to preserve its financial resources. 

The increase in Sales and Marketing for the fiscal year was due to increase in sales, marketing and promotional activities undertaken during the year due to the additional financing resources available in the current year from the financing initiatives undertaken during the summer of 2013.

General and Administrative

General and administrative expenses were $329,649 and $1,164,527 for the three-month and twelve-month periods ended April 30, 2013, compared to $269,868 and $1,112,012 for the corresponding periods in 2012.

The increase in general and administrative expenses during the quarter and the year by the Company was as a result of becoming a publicly listed company.

Research and Development

Research and development expenses were $141,576 and $1,260,958, for the three-month and twelve-month periods ended April 30, 2013, compared to negative expense of $96,357 and expense of $1,077,335 for the corresponding periods in 2012.

During Q4 2012, the Company recorded $441,526 in government incentives, which resulted in negative expenses being reported in the quarter as compared to $364,793 in government incentives recorded during Q4 2013. Total research and development expense before government incentives were $506,369 for three-month period ended April 30, 2013, compared to $345,169 for the comparable period in the prior year. The increase in research and development for the quarter was largely due to additional consulting expenses incurred on the development of the new cloud-based Aerus product offering.

During FY2013 the Company recorded government incentives from investment tax credits of $504,000 compared to $414,526 recorded on FY2012. In addition the Company recorded government incentives from a non-interest bearing government loan which totaled $234,919. Total research and development expenses before government incentives were $1,999,977 for FY2013 compared to $1,518,861 for the prior fiscal year. The increase in research and development for the year was largely due to additional consulting expenses incurred on the development of the new cloud-based Aerus product offering.

Net Loss

Net loss and total comprehensive loss was $3,603,939 or $0.11 per share and $8,553,043 or $0.39 per share, for the three-month and twelve-month periods ended April 30, 2013, compared to $957,993 or $0.05 per share and $5,190,257 or $0.29 per share for the corresponding periods in 2012.

The increase in net loss for the quarter and twelve month period was primarily due to listing and financing expenses relating to the Company going public, as well as the Company increasing its operating expenses, particularly in the areas of sales and marketing, and research and development, as mentioned earlier.

Cash and Working Capital

As at April 30, 2013, the Company had cash on hand of $2,792,075 compared to $145,404 as at April 30, 2012.

As at April 30, 2013, the Company’s working capital was $3,154,028 compared to a working capital deficiency of $3,032,391 as at April 30, 2012.

About Magor Corporation:

Magor enables people to engage in high-quality visual conversations while simultaneously sharing, viewing and editing relevant collaborative material on desktops, laptops, tablets, smartphone applications, whiteboards and other devices. Magor fits any workflow so that users have the freedom to work together naturally anytime, regardless of location, network or device. To find out more about Magor Corporation (TSX-V: MCC), visit our website at http://www.magorcorp.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For further information, please contact:

Mike Pascoe
President and CEO
Magor Corporation
613-686-1731
mike.pascoe@magorcorp.com

Babak Pedram
Investor Relations
Virtus Advisory Group Inc.
416-995-8651
bpedram@virtusadvisory.com

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