VRX Worldwide Inc.
TSX VENTURE : VRW

VRX Worldwide Inc.

November 24, 2008 09:00 ET

VRX Reports Third Quarter Results (Unaudited)

- YTD Revenue increases $195,000 - YTD EBITDA improves 31% to ($379,420) - YTD Net Loss improves 33% to ($665,787) - YTD savings from Cost Reduction Initiatives of $162,208 - YTD Licensing fees up 22% to $1,330,283

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 24, 2008) - VRX Worldwide Inc. (TSX VENTURE:VRW) reports its unaudited financial results for the third quarter ending September 30, 2008. The financial results reflect a significant improvement in the Company's EBITDA and Net Loss.



----------------------------------------------------------------------
3rd Quarter % Change vs. % Change vs.
Ended Sept 30/08 3rd Quarter 2nd Quarter
(Million C$) Sept 30/07 Jun 30/08
----------------------------------------------------------------------
Licensing Fees $0.416 3% (14%)
----------------------------------------------------------------------
Service Fees $0.501 (5%) (11%)
----------------------------------------------------------------------
Total Revenue $0.917 (1%) (12%)
----------------------------------------------------------------------

----------------------------------------------------------------------
Nine Months Ended % Change vs.
Sep 30/08 Nine Months ended
(Million C$) Sep 30/07
----------------------------------------------------------------------
Licensing Fees $1.33 22%
----------------------------------------------------------------------
Service Fees $1.61 (3%)
----------------------------------------------------------------------
Total Revenue $2.94 7%
----------------------------------------------------------------------


Total revenue for the third quarter of 2008 was $916,967, a slight decrease from the same period in 2007 and a 12% decrease from the previous quarter. Total revenue for the nine months ended September 30, 2008 was $2,941,480, an increase of 7% over the comparable period in 2007.

"Although we are feeling some affects from the slowing US economy, many of our customers are taking advantage of higher vacancy rates to refresh their image archives and gain market share by launching aggressive on and off-line marketing campaigns," commented David MacLaren, President & CEO of VRX. "Over the past eight years, the cornerstone of our success has been our production capability. Our industry leading production quality, consistency and scalability has continued to win us the industry's largest production contracts, align our interests with those of the world's leading hospitality brands and drive our Licensing revenues. We are confident this trend will continue through this economic downturn."

In the third quarter, VRX's Service fees were generated primarily by production agreements with Fairmont Hotels and Resorts, Red Roof Inns, Best Western and Wyndham Hotel Group. Both Fairmont and Red Roof projects were started in the beginning of the first quarter whereas the Best Western project began in the second quarter and the Wyndham project is now in its third year. As the Company completed shooting most of Wyndham's 6,000 properties in 2007, VRX is currently covering all new openings and renovations of the Wyndham brands: Howard Johnson®, Travelodge®, Super 8®, Days Inn®, Ramada®, Wingate Inn® and Baymont Inn and Suites®. In addition, under the Company's Always Fresh™ program, VRX works with all of its hotel clients to ensure their content is always accurate and update to date.

In September of this year, VRX began working with a new global hospitality brand and expects to commit a large portion of its production resources to the new project over the next two quarters. More details will follow as this project evolves.

Gross Profit

For the three months ended September 30, 2008 gross profit was 42% as compared to 52% for the same time period in 2007. The decrease in gross profit was primarily a result of the higher photography and production costs realized in the quarter to update, maintain and increase the Company's Hotel Content image library. The slight reduction in Licensing fees from the second quarter of 2008 also had an impact on gross profit.

For the nine months ending September 30, 2008, the Company's gross profit was maintained at 44% over the same period in 2007. This level of gross profit was maintained as the higher photography and production costs in the quarter to update, maintain and increase the Company's Hotel Content image library were offset by the increase in Licensing fees.

Costs and Expenses

Total costs and expenses for the three months ended September 30, 2008 were $545,484 (2007 - $629,902) and $1,727,480 (2007 - $1,889,688) for the nine months ended September 30, 2008. For the nine months ended September 30, 2008, sales and marketing amounted to 23% of sales (2007 - 13%), research and development 14% (2007 - 5%) and general, administrative and amortization 21% (2007 - 51%). The shift in costs and expenses is a result of a reclassification of some expenses from general and administrative to sales and marketing and research and development in fiscal 2008. The overall decrease in costs and expenses in the third quarter, as well as in the nine months year-to-date, is a direct result of the company's cost reduction initiatives started in January 2008.

Net Profit/(Loss)

VRX recorded a net loss of $221,949 in the third quarter of 2008 compared with a net loss of $238,375 for the same period in 2007. For the nine months ending September 30, 2008 VRX recorded a net loss of $665,787 compared with a net loss of $986,487 for the same period in 2007, an improvement of 33%. Further, VRX's earnings before interest, taxes, depreciation and amortization (EBITDA) improved 31% for the nine months ending September 30, 2008 over the prior period in 2007.



-------------------------------------------------------------
Nine Months Ended September 30
2008 2007
-------------------------------------------------------------
Licensing Revenue $ 1,330,283 $ 1,090,500
-------------------------------------------------------------
Service Fees $ 1,606,707 $ 1,656,497
-------------------------------------------------------------
Other $ 4,490 $ -
-------------------------------------------------------------
Total Revenue $ 2,941,480 $ 2,746,997
-------------------------------------------------------------
EBITDA $ (379,420) $ (546,032)
-------------------------------------------------------------
Net Income/(Loss) $ (665,787) $ (986,487)
-------------------------------------------------------------
Earnings (Loss) Per Share $ (0.02) $ (0.02)
-------------------------------------------------------------


During the three and nine months ended September 30, 2008, the Company's working capital decreased by $204,310 and $1,409,201 respectively to a deficit of ($1,541,924). The reduction of working capital was mainly attributable to the reclassification of the Sabre convertible debenture from a long term to a short term liability and the loss from operations.

Improvement in the Company's working capital during 2008 is largely dependent on the success of the Company's products and services, along with its ongoing technology and cost reduction initiatives. Ultimately, the Company's increase in liquidity and capital resources will be based upon its ability to achieve consistently profitable operations.

Outlook

Due to current economic uncertainties, the Company expects some of its customers to reduce their marketing budgets while others to take advantage of such reductions to gain market share by increasing their own marketing efforts. This is a trend that management has seen before, in 2001, and expects the Company's production capability to continue to play an important strategic role in winning new business while it strides to deliver more industry leading rich media content solutions to the global hospitality industry.

Detailed Financial Statements

The financial results provided in this release are based upon unaudited results. The full financial statements and the related MD&A are now available on the Company's website, www.vrxworldwide.com and on SEDAR at www.sedar.com.

About VRX

VRX Studios Inc., a wholly owned subsidiary of VRX Worldwide Inc. (TSX VENTURE:VRW) (www.vrxworldwide.com), is the world leader in producing, distributing and licensing high quality, rich media content that educates, inspires, and compels online travel consumers. Leading travel brands such as Harrah's, Hyatt, Fairmont, Wyndham, Travelocity and Orbitz rely on VRX's stunning hotel, cruise and destination content to attract and engage millions of consumers each month. VRX is recognized as one of the fastest growing companies in Canada by Profit magazine (June 2007) and Business in Vancouver (September 2007). To find out more about VRX Studios, its products and services, visit ww.vrxstudios.com.

VRX Worldwide Inc.

David MacLaren, CEO

U.S. 12g#82-4669

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information