[December 19, 2014] |
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The Marketing Alliance Announces Financial Results for Its Fiscal 2015 Second Quarter and Six Months Ended September 30, 2014
The Marketing Alliance, Inc. (OTC: MAAL) ("TMA"), today announced
financial results for its fiscal 2015 second quarter and six months
ended September 30, 2014.
Mr. Timothy M. Klusas, TMA's Chief Executive Officer, stated, "We were
pleased with revenue increases this quarter in our insurance and family
entertainment businesses. However, revenue growth in our land
improvement business was challenged by low crop prices. We felt like we
continued to take steps to reduce costs and operate more efficiently,
despite the setbacks of low crop prices which drive the demand for our
services. TMA remains committed to growing each of our lines of business
while continuing to explore opportunities to increase returns for our
shareholders." Mr. Klusas provided additional details below on each of
the Company's operations for the second quarter of the fiscal 2015 year:
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Insurance Distribution Business: "We are pleased with
our results for the quarter, as we saw an increase in commission
revenues this quarter over the prior year period. We commend our
network of brokerage general agents, as they have continued to have to
adapt to changes within the industry throughout a protracted
low-interest rate environment. Low interest rates have the general
effect of making some life insurance products more expensive causing
an environment where product prices are increasing, or some products
even discontinued. Also, annuity and long-term care products could
appear less attractive to consumers than in past periods of time when
interest rates were closer to historical averages. However, we are
continuing to work with our distributors to ensure that they have
top-notch access and information on a broad spectrum of insurance
products offered by our carriers.
-
Earth Moving (Land Improvement - Construction): "Market
conditions continued to impact our results for the quarter, as low
prices for soybeans and corn have caused many of our customers to
defer or alter purchases of land improvement and crop yield-improving
services. We have continued to evaluate ways to more efficiently
utilize assets in this operating environment, including expanding our
market by geography and areas served as well as looking for
opportunities to reduce costs.
-
Family Entertainment: "We are pleased to report an 18% increase
in year-over-year revenue for business. We believe the increase is
attributable in part to internal improvements that the Company has
made since we acquired these facilities in September 2012. These
improvements included increased marketing efforts to expand our
customer base and purchasing additional video game machines for our
customers to enjoy during their visit."
Fiscal 2015 Second Quarter Financial Review
-
Total revenues for the three-month period ended September 30, 2014,
were $6,236,435, as compared to $6,261,436 in the prior year quarter.
The decrease was due to a $299,972 decline in construction revenue
which was partially offset by an increase of $220,569 in commission
revenue and a $54,402 increase in revenue from the two family
entertainment facilities.
-
Net operating revenue (gross profit) for the quarter was $1,722,337,
compared to net operating revenue of $1,721,114 in the prior-year
fiscal period.
-
Operating expenses decreased by $5,146 for the fiscal 2015 second
quarter as compared to the prior year, due in part to less
compensation expense for the quarter versus the prior year. The
decrease in compensation expense was offset by increases in
administrative and professional related expenses from the prior year,
of which approximately $50,000 of the increase in this quarter was a
unique one-time expense related to a non-recurring project.
-
Operating income was $177,967, compared to operating income of
$171,598 reported in the prior-year period, resulting from similar
levels of gross profit and overall operating expenses in the prior
year period.
-
Operating EBITDA (excluding investment portfolio income) for the
quarter was $333,253 compared to $332,927 in the prior-year period. A
note reconciling operating EBITDA to operating income can be found at
the end of this release.
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Net income (loss) for the fiscal 2015 second quarter was ($36,926), or
($0.01) per share, as compared to net income of $187,447, or $0.03 per
share, in the prior year period despite nearly the same levels of
operating income. The net loss for the fiscal 2015 second quarter was
the result of the performance of the Company's investment portfolio as
compared to the same period of the prior year. (Operating EPS and Net
EPS are stated after giving effect to a 2:1 stock split for
shareholders of record as of February 28, 2014 and paid March 28, 2014
for all periods. Shares outstanding increased to 6,024,200 from
3,012,100 with this stock split and have been retroactively adjusted
to account for the split.)
-
Net investment loss, net (from investment portfolio) for the second
quarter ended September 30, 2014 was $247,256, as compared to net
investment gain, net of $148,104, for the same quarter of the previous
fiscal year. The decrease was largely due to increased realized and
unrealized losses on investments during the period as opposed to
realized and unrealized gains in the prior year period.
-
Capital expenditures were approximately $308,000 in the quarter and
comprised primarily of the purchase of real estate for the
construction / land improvement business of roughly $240,000. Rental
expense (replaced by this purchase) for the facility that housed the
construction / land improvement business was $60,000 in the prior
fiscal year. Most of the remaining purchases were for new video game
machines in the family entertainment business, completing projects at
those facilities.
Fiscal 2015 Six Months Financial Review
-
Total revenues for the six months ended September 30, 2014 were
$12,785,973, compared to $13,250,497 in revenues for the prior-year
period. Construction revenues were $644,603 less than the prior
period, although the decrease was partially offset by insurance
distribution revenue increases and family entertainment revenue
increases.
-
Net operating revenue (gross profit) was $3,747,551, which compares to
net operating revenue of $3,831,233 in the prior-year fiscal period.
-
Operating income was $925,593 compared to $754,940 for the prior-year
period, driven mostly by a $254,335 decrease in operating expenses.
The decrease in operating expenses was due to declines in
compensation, office, and payroll related expenses.
-
Operating EBITDA (excluding investment revenue) for the six months was
$1,245,991 versus $1,067,993 in the prior-year period. A note
reconciling Operating EBITDA to Operating Income can be found at the
end of this release.
-
Net income for the six months ended September 30, 2014 was $490,825,
or $0.08 per share, compared to $477,819 or $0.08 per share, in the
prior-year period.
Balance Sheet Information
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TMA's balance sheet at September 30, 2014 reflected cash and cash
equivalents of approximately $5.5 million, working capital of $11.5
million, and shareholders' equity of $13.3 million; compared to $5.5
million, $11.3 million, and $12.8 million, respectively, at March 31,
2014.
About The Marketing Alliance, Inc.
Headquartered in St. Louis, MO, TMA operates three business segments.
TMA provides support to independent insurance brokerage agencies, with a
goal of providing members value-added services on a more efficient basis
than they can achieve individually. The Company also owns an earth
moving and excavating business and two children's play and party
facilities. Investor information can be accessed through the shareholder
section of TMA's website at: http://www.themarketingalliance.com/shareholder-information.
TMA's common stock is quoted on the OTC Markets (http://www.otcmarkets.com)
under the symbol "MAAL".
Forward Looking Statement
Investors are cautioned that forward-looking statements involve risks
and uncertainties that may affect TMA's business and prospects. Examples
of forward-looking statements include, among others, statements we make
regarding our expectations for our performance during fiscal 2015 and
the production of favorable returns to shareholders and, our attempts to
reduce costs of our earth moving and excavation business. Any
forward-looking statements contained in this press release represent our
estimates only as of the date hereof, or as of such earlier dates as are
indicated, and should not be relied upon as representing our estimates
as of any subsequent date. These statements involve a number of risks
and uncertainties, including, but not limited to, expectations of the
economic environment; material adverse changes in economic conditions in
the markets we serve and in the general economy; future regulatory
actions and conditions in the states in which we conduct our business;
the integration of our operations with those of businesses or assets we
have acquired or may acquire in the future and the failure to realize
the expected benefits of such acquisition and integration. While we may
elect to update forward-looking statements at some point in the future,
we specifically disclaim any obligation to do so.
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Consolidated Statement of Operations
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Quarter Ended
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Year to Date
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3 Months Ended
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6 Months Ended
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9/30/2014
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9/30/2013
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9/30/2014
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9/30/2013
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Commission revenue
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$
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5,513,621
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$
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5,293,052
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$
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11,183,502
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$
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11,068,259
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Construction revenue
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360,526
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660,498
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915,921
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1,560,524
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Family entertainment revenue
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$
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362,288
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$
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307,886
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686,550
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621,714
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Revenues
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6,236,435
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6,261,436
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12,785,973
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13,250,497
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Distributor Related Expenses
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Bonus & commissions
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3,705,731
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3,634,177
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7,333,463
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7,469,852
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Processing & distribution
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447,987
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389,373
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924,582
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813,207
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Depreciation
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2,711
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3,219
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5,378
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5,688
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Total
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4,156,429
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4,026,769
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8,263,423
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8,288,747
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Cost of Construction
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Direct and Indirect costs of construction
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208,751
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372,259
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462,255
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852,669
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Depreciation
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84,045
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89,443
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170,524
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179,032
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Total
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292,796
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461,702
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632,779
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1,031,701
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Family entertainment cost of sales
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64,873
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51,851
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142,220
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98,816
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Net Operating Revenue
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1,722,337
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1,721,114
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3,747,551
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3,831,233
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Operating Expenses
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1,544,370
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1,549,516
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2,821,958
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3,076,293
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Operating Income
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177,967
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171,598
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925,593
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754,940
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Other Income (Expense)
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Investment gain, (loss) net
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(247,256)
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148,104
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(134,079)
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29,950
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Interest expense
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(28,872)
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(21,791)
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(58,391)
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(50,645)
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Gain on sale of assets
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8,738
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11,380
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8,541
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11,380
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Interest rate swap, fair value adjustment
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5,744
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(2,024)
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6,051
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15,305
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Income (Loss) Before Provision for Income Tax
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(83,679)
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307,267
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747,715
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760,930
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Provision for income taxes
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(46,753)
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119,790
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256,890
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283,111
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Net Income (loss)
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$
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(36,926)
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$
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187,477
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$
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490,825
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$
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477,819
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Average Shares Outstanding
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6,024,200
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6,024,200
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6,024,200
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6,024,200
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Operating Income per Share
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$
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0.03
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$
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0.03
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$
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0.15
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$
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0.13
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Net Income per Share
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$
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(0.01)
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$
|
0.03
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$
|
0.08
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$
|
0.08
|
|
|
|
|
|
|
|
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Note: * - Operating EPS and Net EPS stated after giving effect to 2:1
stock split for shareholders of record as of February 28, 2014 and paid
March 28, 2014 for all periods. Shares outstanding increased to
6,024,200 from 3,012,100 with this stock split and have been
retroactively adjusted to account for the split.
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Consolidated Selected Balance Sheet Items
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As of
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Assets
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9/30/14
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3/31/14
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Cash & Equivalents
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$
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5,543,421
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$
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5,531,060
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Investments
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5,223,543
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5,245,505
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Receivables
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7,943,674
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7,607,064
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Other
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1,454,660
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1,899,946
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Total Current Assets
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20,165,298
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20,283,575
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Property and Equipment, Net
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1,579,025
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1,490,381
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Intangible Assets, net
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783,785
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835,290
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Other
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904,509
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920,566
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Total Non Current Assets
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3,267,319
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3,246,237
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Total Assets
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$
|
23,432,617
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$
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23,529,812
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Liabilities & Stockholders' Equity
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|
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Total Current Liabilities
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$
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8,622,861
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$
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8,993,130
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Long Term Liabilities
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|
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|
|
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|
|
|
1,512,705
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|
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1,730,456
|
|
|
|
|
|
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Total Liabilities
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|
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10,135,566
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10,723,586
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|
|
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Stockholders' Equity
|
|
|
|
|
|
|
|
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13,297,051
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|
|
12,806,226
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|
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|
|
|
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Liabilities & Stockholders' Equity
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|
|
|
|
|
|
$
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23,432,617
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$
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23,529,812
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|
|
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Note - Operating EBITDA (excluding investment
portfolio income)
Fiscal year 2015 second quarter operating EBITDA (excluding investment
portfolio income) was determined by adding fiscal year 2015 second
quarter operating income of $177,967 and depreciation and amortization
expense of $155,286 for a sum of $333,253. Fiscal year 2014 second
quarter operating EBITDA (excluding investment portfolio income) was
determined by adding fiscal year 2014 second quarter operating income of
$171,598 and depreciation and amortization expense of $161,329 for a sum
of $332,927. The Company elects not to include investment portfolio
income because the Company believes it is non-operating in nature.
Fiscal year 2015 six months operating EBITDA (excluding investment
portfolio income) was determined by adding fiscal year 2015 six month
operating income of $925,593 and depreciation and amortization expense
of $320,398 for a sum of $1,245,991. Fiscal year 2014 six months
operating EBITDA (excluding investment portfolio income) was determined
by adding fiscal year 2014 six month operating income of $754,940 and
depreciation and amortization expense of $313,053 for a sum of
$1,067,993. The Company elects not to include investment portfolio
income because the Company believes it is non-operating in nature.
The Company uses Operating EBITDA as a measure of operating performance.
However, Operating EBITDA is not a recognized measurement under U.S.
generally accepted accounting principles, or GAAP, and when analyzing
its operating performance, investors should use Operating EBITDA in
addition to, and not as an alternative for, income as determined in
accordance with GAAP. Because not all companies use identical
calculations, its presentation of Operating EBITDA may not be comparable
to similarly titled measures of other companies and is therefore limited
as a comparative measure. Furthermore, as an analytical tool, Operating
EBITDA has additional limitations, including that (a) it is not intended
to be a measure of free cash flow, as it does not consider certain cash
requirements such as tax payments; (b) it does not reflect changes in,
or cash requirements for, its working capital needs; and (c) although
depreciation and amortization are non-cash charges, the assets being
depreciated and amortized often will have to be replaced in the future,
and Operating EBITDA does not reflect any cash requirements for such
replacements, or future requirements for capital expenditures or
contractual commitments. To compensate for these limitations, the
Company evaluates its profitability by considering the economic effect
of the excluded expense items independently as well as in connection
with its analysis of cash flows from operations and through the use of
other financial measures.
The Company believes Operating EBITDA is useful to an investor in
evaluating its operating performance because it is widely used to
measure a company's operating performance without regard to certain
non-cash or unrealized expenses (such as depreciation and amortization)
and expenses that are not reflective of its core operating results over
time. The Company believes Operating EBITDA presents a meaningful
measure of corporate performance exclusive of its capital structure, the
method by which assets were acquired and non-cash charges, and provides
additional useful information to measure performance on a consistent
basis, particularly with respect to changes in performance from period
to period.
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