Jacksonville, Fla.-based Global Axcess Corp. reported a net loss of $96,000 in the third quarter on revenues of $5.8 million as the company invested in expanding its DVD kiosk rental business. Revenues for the independent provider of self-service kiosk solutions rose nearly 9 percent from the same period a year ago.
CEO George McQuain says Global Axcess during the quarter completed its deployment of new DVD kiosks in 323 locations for a major grocery chain.
"DVD revenues increased 498 percent sequentially to approximately $359,000, albeit from a small base of approximately $60,000 in the second quarter 2010. Our heavy investments to complete the initial DVD kiosk installations, which included creating a temporary DVD infrastructure to operationally handle the launch, and to establish a robust DVD library resulted in a small net loss in the third quarter overall," McQuain said.
The company’s core ATM division saw revenues of $5.4 million for the three-month period ended Sept. 30, 2010. Gross profit from continuing operations was $2.3 million, or nearly 40 percent gross margin, for the third quarter of 2010 compared to $2.5 million, or 48 percent, for the same period of 2009. Approximately $417,000 of the increase in cost of revenues year over year related to the DVD business.
Operating expenses for the third quarter ended Sept. 30, 2010, increased nearly 19 percent to $2.3 million from $1.9 million in the year-ago period. The increase was mainly due to $285,953 of expenses incurred in connection with the DVD-rental kiosk initiative. Depreciation expense increased due to increased ATM and DVD kiosks purchased during 2009 and 2010 to support new business in both business lines.
Operating income from continuing operations was $42,081 for the quarter ended Sept. 30, 2010, compared to $623,343 in the year-ago period. During the third quarter of 2010, the Company recorded net interest expense of $137,915 compared to net interest expense of $147,299 for the same period in 2009. EBITDA (earnings before net interest, taxes, depreciation and amortization) for the third quarter of 2010 was $631,906, compared to $1.1 million in the third quarter of 2009. Adjusted EBITDA (EBITDA before stock compensation expenses and loss on early extinguishment of debt) was $686,194 for the third quarter of 2010 from $1.2 million for the third quarter of 2009. EBITDA represents a non-GAAP (Generally Accepted Accounting Principles) financial measure.
Net loss for the third quarter ended Sept. 30, 2010, was $95,834, or $0.00 per share (based on 22.0 million basic and diluted weighted average shares outstanding), which compares to net income of $476,044, or $0.02 per share (based on 21.9 million basic and 23.5 million diluted weighted average shares outstanding, respectively), for the same period of 2009.
