[March 06, 2015] |
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The Marketing Alliance Announces Unaudited Financial Results for Its Fiscal 2015 Third Quarter and Nine Months Ended December 31, 2014
The Marketing Alliance, Inc. (OTC:MAAL) ("TMA"), today announced
unaudited financial results for its fiscal 2015 third quarter and nine
months ended December 31, 2014.
Mr. Timothy M. Klusas, TMA's Chief Executive Officer, provided
additional details below on each of the Company's operations for the
third quarter of the fiscal 2015 year:
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Insurance Distribution Business: "We reported another quarterly
gain in commission revenue (versus the prior year period) in our
insurance business. We worked closely with our network of independent
General Agents to ensure that they had both the access and information
concerning the wide range of products offered by our carrier network.
Our expenses increased due to additional marketing expenses necessary
to grow the insurance business and establish new carrier
relationships. We felt that this effort allowed each distributor to
better compete in the marketplace by providing a more diversified
offering to its customer base, which has been important given the
rapid changes in product / carrier availability in the current low
interest rate environment. Throughout this period of low interest
rates, we have seen many life insurance products increase in price to
non-competitive levels or even discontinue. We feel, over the
long-term, our investments in a wide range of carrier relationships
strengthen our value proposition to distributors by having a more
diversified pool of carrier partners to ensure access to competitive
life insurance products. However, in the short term, changes in
product can lead to challenging business conditions for our
distributors and create additional marketing expenses for TMA. We were
pleased to see additional revenues this quarter, and our plans are to
continue to assist our distribution partners to steadily improve
production levels."
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Earth Moving (Land Improvement - Construction): "We saw
progress through increased sales during the fiscal third quarter,
which is seasonally one of the Company's strongest. We continued to
focus on actively seeking projects that best utilize our assets and
reinvigorated our marketing efforts to reach those customers and
markets. I am particularly pleased that we accomplished this in the
backdrop of challenged corn and soybean prices for our customers,
which is their main source of revenue to pay for our services. We have
worked diligently to explain to farmers, that, in the long-term, an
improved crop field drainage scheme will ultimately yield a higher
amount of harvestable bushels per acre. We continued to see progress
in selling our value proposition of improved crop yields through our
draining and tiling services. While this has been a long process, we
felt our marketing efforts were much more productive than in the past."
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Family Entertainment (including acquisition of new franchises): "We
have been happy with the performance at our two existing family
entertainment franchised locations in St. Louis. The improvements made
to these facilities have increased revenues at each location. We felt
this was a good platform to seek additional opportunities to build
upon with what we have learned. As a result, we were happy to
effectuate an opportunity to acquire additional existing Monkey Joe's
franchised locations in Florida at the beginning of 2015 (current
fiscal 2015 fourth quarter). We felt comfortable with our ability to
integrate these two additional locations into our current operations,
which are managed in St. Louis."
Fiscal 2015 Third Quarter Financial Review
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Total revenues for the three-month period ended December 31, 2014 were
$7,399,580, as compared to $6,869,504 in the prior year quarter. The
increase was due to improvements in revenue for each of the three
business lines of the Company when compared to the prior year period.
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Net operating revenue (gross profit) for the quarter was $1,731,495,
compared to net operating revenue of $1,774,704 in the prior-year
fiscal period. Gross profit was adversely affected by additional
marketing investments required to grow the Company's insurance
distribution business.
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Operating income was $340,528, compared to operating income of
$222,699 reported in the prior-year period. The increase in operating
income was primary due to reductions in operating expenses and
increases in revenue for the fiscal 2015 third quarter as compared to
the prior year.
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Operating EBITDA (excluding investment portfolio income) for the
quarter was $496,053, compared to $387,278 in the prior-year period. A
note reconciling operating EBITDA to operating income can be found at
the end of this release. The increase in Operating EBITDA (excluding
investment portfolio income) was driven by many of the same reasons as
Operating income.
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Net income for the fiscal 2015 third quarter was $262,671, or $0.04
per share, as compared to net income of $252,145, or $0.04 per share,
in the prior year period. (Operating EPS and Net EPS are stated after
giving effect to the 100% stock split effective February 28, 2014 for
all periods. Shares outstanding increased to 6,024,200 from 3,012,100
with this stock split, and per share information has been
retroactively adjusted to account for the split.) Net income was
adversely affected by investment loss, net (from investment
portfolio), below.
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Investment loss, net (from investment portfolio) for the third quarter
ended December 31, 2014 was $2,952, as compared to investment gain,
net, of $227,105 for the same quarter of the previous fiscal year.
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Capital expenditures in the quarter were $116,126, of which most were
for the Land Improvement-Construction business for the purchases of
two new pieces of equipment to enhance our capabilities. One piece of
equipment replaces a less-efficient older model of similar equipment
and allows us to do more different types of projects, while a second
purchase allows us to undertake projects that are more complex and
greater in size than before.
Fiscal 2015 Nine Months Financial Review
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Total revenues for the nine months ended December 31, 2014 were
$20,185,553, compared to $20,120,001 in revenues for the prior-year
period.
-
Net operating revenue (gross profit) was $5,479,046, which compares to
net operating revenue of $5,605,937 in the prior-year fiscal period.
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Operating income was $1,266,121, compared to $977,639 for the
prior-year period. The increase in operating income was primarily due
to reductions in operating expenses versus the prior year period.
-
Operating EBITDA (excluding investment revenue) for the nine months
was $1,742,044 versus $1,455,271 in the prior-year period. A note
reconciling Operating EBITDA to Operating income can be found at the
end of this release. The increase in Operating EBITDA (excluding
investment portfolio income) was driven by many of the same reasons as
Operating income.
-
Net income for the nine months ended December 31, 2014 was $753,496,
or $0.13 per share, compared to $729,964 or $0.12 per share, in the
prior-year period. (As noted above, per share information has been
retroactively adjusted to account for the 100% stock split effective
February 28, 2014.)
Balance Sheet Information
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TMA's balance sheet at December 31, 2014 reflected cash and cash
equivalents of approximately $5.9 million, working capital of $11.9
million, and shareholders' equity of $13.6 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. 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: the product lines, and
the prices and other terms and characteristics of the product lines,
offered by life insurance carriers; the desirability of carrier product
lines the desirability of carrier product lines to our distributors and
their customers; 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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Three-months ended
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Nine-months ended
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December 31,
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December 31,
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(Unaudited)
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(Unaudited)
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2014
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2013
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2014
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2013
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Commission revenue
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$
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6,313,729
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$
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5,877,841
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$
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17,497,231
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$
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16,946,100
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Construction revenue
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680,517
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630,415
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1,596,438
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2,190,939
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Family entertainment revenue
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405,334
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361,248
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1,091,884
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982,962
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Total revenues
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7,399,580
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6,869,504
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20,185,553
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20,120,001
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Distributor related expenses:
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Distributor bonuses and commissions
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4,766,404
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4,210,579
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12,099,867
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11,680,431
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Business processing and distributor costs
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422,350
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343,556
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1,346,932
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1,156,763
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Depreciation
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2,736
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3,145
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8,114
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8,833
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5,191,490
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4,557,280
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13,454,913
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12,846,027
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Costs of construction:
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Direct and indirect costs of construction
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334,359
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374,363
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796,614
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1,227,032
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Depreciation
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84,585
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86,712
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255,109
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265,744
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418,944
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461,075
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1,051,723
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1,492,776
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Family entertainment costs of sales:
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57,651
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76,445
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199,871
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175,261
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Net operating revenue
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1,731,495
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1,774,704
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5,479,046
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5,605,937
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Operating Expenses
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1,390,967
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1,552,005
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4,212,925
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4,628,298
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Operating income
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340,528
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222,699
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1,266,121
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977,639
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Other income (expense):
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Investment gain, net
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(2,952
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)
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227,105
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(137,031
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)
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257,055
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Interest expense
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(27,084
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)
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(29,750
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)
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(85,475
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)
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(80,395
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Gain on sale of assets
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-
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(3,184
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)
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8,541
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8,196
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Interest rate swap, fair value adjustment
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469
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4,265
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6,520
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19,570
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Income before provision for income taxes
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310,961
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421,135
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1,058,676
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1,182,065
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Provision for income taxes
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48,290
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168,990
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305,180
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452,101
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Net income
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$
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262,671
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$
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252,145
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$
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753,496
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$
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729,964
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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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0.06
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$
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0.04
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$
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0.21
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$
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0.16
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Net Income per Share
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$
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0.04
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$
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0.04
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$
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0.13
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$
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0.12
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Note: * - Operating EPS and Net EPS stated after giving effect to the
100% stock split for shareholders effective February 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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12/31/14
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3/31/14
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Assets
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(Unaudited)
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(Audited)
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Cash & Equivalents
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$ 5,926,647
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$ 5,531,060
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Investments
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5,157,790
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5,245,505
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Receivables
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7,770,170
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7,607,064
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Other
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1,401,409
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1,899,946
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Total Current Assets
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20,256,016
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20,283,575
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Property and Equipment, Net
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1,552,716
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1,490,381
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Intangible Assets, net
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763,233
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835,290
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Other
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664,973
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920,566
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Total Non Current Assets
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2,980,922
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3,246,237
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Total Assets
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$ 23,236,938
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$ 23,529,812
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Liabilities & Stockholders' Equity
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Total Current Liabilities
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$ 8,353,680
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$ 8,993,130
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Long Term Liabilities
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1,323,536
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1,730,456
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Total Liabilities
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9,677,216
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10,723,586
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Stockholders' Equity
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13,559,722
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12,806,226
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Liabilities & Stockholders' Equity
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$ 23,236,938
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$ 23,529,812
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Note - Operating EBITDA (excluding investment
portfolio income)
Fiscal year 2015 third quarter operating EBITDA (excluding investment
portfolio income) was determined by adding fiscal year 2015 third
quarter operating income of $340,528 and depreciation and amortization
expense of $155,525 for a sum of $496,053. Fiscal year 2014 third
quarter operating EBITDA (excluding investment portfolio income) was
determined by adding fiscal year 2014 third quarter operating income of
$222,699 and depreciation and amortization expense of $164,579 for a sum
of $387,278. The Company elects not to include investment portfolio
income because the Company believes it is non-operating in nature.
Fiscal year 2015 nine months operating EBITDA (excluding investment
portfolio income) was determined by adding fiscal year 2015 nine month
operating income of $1,266,121 and depreciation and amortization expense
of $475,923 for a sum of $1,742,044. Fiscal year 2014 nine months
operating EBITDA (excluding investment portfolio income) was determined
by adding fiscal year 2014 nine months operating income of $977,639 and
depreciation and amortization expense of $477,632 for a sum of
$1,455,271. 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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