Valu-Net reports $6.6 million revenue for 1999
TORONTO, Feb. 18 /CNW/ - Valu-net Corporation ("Valu-net") (CDNX: VNE) -
Valu-net Corporation today reported its operating results for the fiscal year
ended September 30, 1999.
President's Report
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David Lucatch, President and CEO of Valu-net Corporation, is pleased to
report the Company's results for the year ended September 30, 1999. The
progress of the Company's eMerge and CPAC electronic commerce programs,
together with the acquisition of Global Wholesale Networks.com Inc., were
significant accomplishments in 1999. The Company completed two private
placement financings, in September, 1999 and in February, 2000, raising
$4,800,000, which will provide needed capital to develop its electronic
commerce and online marketing programs. Income and cash flow from Global
Wholesale, and from Computer Discount Depot Inc., when that transaction is
completed, are also expected to contribute to funding future growth. Since
November 4, the effective date of the acquisition of CDD, its
business-to-business unit, AII97.com, has recorded sales computer equipment
sales, to the end of January, of over $6.4 million, with operating income of
over $207,000.
Financial Results
-----------------
Revenue for the fiscal year ended September 30, 1999 was $6,621,000,
compared with $2,113,000 in 1998. Product revenue of $6,359,000 was earned in
1999 by Valu-net's subsidiary, Global Wholesale since its acquisition
effective June 9, 1999. Electronic commerce sales increased to $262,000 from
$78,000 in 1998. The net loss for the year was $2,321,944 ($0.08 per share),
compared with $3,194,000 ($0.15 per share) in 1998. Expenses for the year
included unusual charges, as explained more fully below, of $425,000
($1,938,000 in 1998). The balance of the loss represents the costs of building
the Company's e-commerce business in excess of e-commerce revenues. The
company continues to invest in market development, compensation and
administration costs for its online commerce programs.
Product sales of $2,035,000 in 1998 and related product costs pertain to
a one-time project undertaken by the Company's telecommunications subsidiary
which has now been discontinued. The project resulted in litigation, and the
Company provided for uncollectible accounts of $1,938,000 in 1998. The
lawsuits were settled in 1999 for $425,000, which was paid in cash and common
shares.
Recent Developments
-------------------
Effective November 4, 1999, Valu-net Corporation and Applied Innovations
Group Inc. entered into agreements expanding their business relationship to
include reciprocal equity investments, as well as building Computer Discount
Depot Inc., a wholly owned subsidiary of Valu-net, jointly managed by the two
companies for the purpose of selling computer products, peripherals,
electronics and related services over the Internet. The transaction is subject
to regulatory and shareholder approval and other conditions. CDD will operate
two business units, each with its own Internet presence: AII97.com, under
licence from AIG, a business to business website, and
ComputerDiscountDepot.com, focussing on business to consumer online sales. In
addition, CDD will provide Internet based e-commerce services to other AI
Group companies. Since the effective date, AII97.com has completed sales to
the end of January of over $6.4 million, with operating income of over
$207,000.
On February 9, 2000 the company completed a private placement of 2.5
million units at a price of $1.20 per unit, to raise gross proceeds of
$3,000,000. Each unit is comprised of one common share and one common share
purchase warrant. Each warrant will entitle the holder to acquire one common
share of the Company at an exercise price of $1.85, expiring August 9, 2001.
Twenty-five percent of the funds raised in the placement have been made
available to the Company upon closing of the transaction and the remaining net
proceeds have been placed in escrow pending shareholder and regulatory
approval and completion of the AI Group transaction by April 17, 2000. In the
event this condition is not satisfied investors will be entitled to request
that the escrowed funds be refunded to them.
About Valu-net Corporation
Founded in 1995, Valu-net develops online marketing and electronic
commerce programs for selling products over the Internet. This expertise is
used to directly create Internet business initiatives through Valu-net's own
divisions, joint ventures, and industry partnerships. In addition, Valu-net is
able to offer merchants a complete range of business enabling services to meet
the growing demand for secure and effective electronic commerce. These
services are available to merchants directly through Valu-net or indirectly
through agreements with agencies and resellers. Valu-net's division, The
eMerge Alliance (www.emergealliance.org) offers merchants easy entry into the
electronic commerce market with a turnkey solution that is both scalable and
cost-effective. Further information is available through Valu-net's corporate
web site at www.vncorp.com.
Valu-net trades on the Canadian Venture Exchange under the symbol VNE and
has approximately 40 million shares outstanding.
The Canadian Venture Exchange has neither approved nor disapproved the
information herein contained.
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VALU-NET CORPORATION
Consolidated Balance Sheets
As at September 30 1999 1998
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Assets
Current
Cash $ 43,089 $ 5,000
Amounts receivable 222,359 23,168
Subscription receivable 750,000
Loan receivable 111,000
Prepaid expenses and other assets 55,794 89,393
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1,071,242 228,561
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Capital assets 396,860 222,559
Goodwill 1,228,739
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$ 2,696,841 $ 451,120
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Liabilities and Shareholders' Equity (Deficit)
Liabilities
Current
Accounts payable and accrued liabilities $ 1,397,294 $ 1,333,815
Current portion of loans and advances
payable 145,009 548,740
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1,542,303 1,882,555
Loans and advances payable 59,500 78,901
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1,601,803 1,961,456
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Shareholders Equity (Deficit)
Share capital 7,942,303 3,014,985
Deficit (6,847,265) (4,525,321)
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1,095,038 (1,510,336)
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$ 2,696,841 $ 451,120
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VALU-NET CORPORATION
Consolidated Statements of Operations
For the Years Ended September 30 1999 1998
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Revenue
Electronic commerce $ 261,782 $ 77,818
Product sales 6,359,275 2,035,058
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6,621,057 2,112,876
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Expenses
Product costs 6,231,220 550,185
Wages and consulting fees 1,002,679 687,214
Office and general 263,851 272,224
Professional fees 240,154 105,848
Corporate development 203,632 115,362
Marketing, advertising and promotion 292,060 590,618
Financial 206,933 289,750
Provision for legal settlement 425,000
Gain on settlement of debt (50,000)
Write off of deferred charges 259,942
Write off of goodwill 420,114
Bad debts 1,937,861
Depreciation and amortization 127,472 77,911
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8,943,001 5,307,029
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Net loss $(2,321,944) $(3,194,153)
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Net loss per share $ (0.08) $ (0.15)
VALU-NET CORPORATION
Consolidated Statements of Cash Flows
For the Years Ended September 30 1999 1998
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Cash provided by (used in):
Operations
Net loss $(2,321,944) $(3,194,153)
Add (deduct) items not affecting cash
Depreciation 95,863 77,911
Amortization of goodwill 31,609
Provision for legal settlement 100,000
Gain on settlement of debt (50,000)
Non-cash expenses for services and
interest 121,962
Write off of goodwill 420,114
Write off of deferred costs 259,942
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(2,022,510) (2,436,186)
Change in non-cash working capital (note 14) 8,887 876,320
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(2,013,623) (1,559,866)
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Financing
Loans and advances repaid (168,281) (48,337)
Convertible debentures issued 658,990 793,000
Issuance of capital stock for cash 1,814,337 45,000
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2,305,046 789,663
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Investing
Product development costs (29,750)
Net purchase of capital assets (270,164) (16,236)
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(270,164) (45,986)
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Increase (decrease) in cash 21,259 (816,189)
Cash in subsidiaries acquired 16,831 419,619
Cash, beginning of year 5,000 401,570
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Cash, end of year $ 43,089 $ 5,000
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%SEDAR: 00008990E
-30-
For further information: VALU-NET INVESTOR RELATIONS CONTACT:
Jay Hussey, The Equicom Group Inc., Phone (416) 815-0700 ext. 225,
Fax (416) 815-0080, jhussey@equicomgroup.com; VALU-NET MEDIA RELATIONS
CONTACT: Brad Friesen, Friesen Strategic Inc., Phone (416) 921-6789,
Fax (416) 921-6121, brad@friesenstrategic.com;
To request a free copy of this organization's annual report, please go to
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