Digital Shelf Space Corp.
TSX VENTURE : DSS

Digital Shelf Space Corp.

March 28, 2011 07:00 ET

Digital Shelf Space Corp. Announces Annual Financial Results for the Year Ended December 31, 2010

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 28, 2011) - Digital Shelf Space Corp. ("DSS" or the "Company") (TSX VENTURE:DSS) announces annual financial results for the eleven months ended December 31, 2010.

Financial and Operational Highlights

  • Completed a reverse take-over (Qualifying Transaction) with Pypeline Health Inc. on December 21, 2010.

  • Successfully closed a private placement concurrent with the closing of the Qualifying Transaction of gross proceeds of $1,017,949.

  • Signed an agreement with one of the world's largest talent management companies for business development.

  • The GSP RUSHFIT 8-week ultimate home based video workout program, starring Mixed Martial Arts ("MMA") welterweight world champion Georges St-Pierre, was released December 11, 2010 and was the largest component of revenue. 

  • Revenues of $47,204 in the eleven-month period ended December 31, 2010, represents a significant increase from sales in the year-ended January 31, 2010.

  • Debt of $1,171,561 was converted to equity in connection with the Qualifying Transaction.

Revenue

Revenues for the eleven-month period ended December 31, 2010, was $47,204 as compared to $16,018 during the year ended January 31, 2010. The increase in revenue is directly attributed to the release for sale on the internet (www.gsprushfit.com) of the Company's new product, the GSP RUSHFIT 8-week ultimate home based video workout program, starring MMA welterweight world champion Georges St-Pierre, on December 11, 2010.

Expenses

During the eleven-month period, operating expenses increased to $1,461,342 compared to $1,234,024 for the year-ended January 31, 2010. The Cost of Sales increased to $17,766 due to the increase in sales related to the release of the Company's GSP RUSHFIT program. Other expenses directly related to the release and that were comparatively higher when compared to the year-ended January 31, 2010 were media purchases of $11,588; material design and creative totaled $88,820, and bank charges were $13,948 an increase of $11,091 primarily due to the transitional costs related to the online sales.

As a result of the Qualifying Transaction the Company granted 4,005,000 stock options, resulting in the recognition of stock-based compensation expense in the amount of $352,040 (Jan 31, 2010 - $56,762). Interest expense, representing interest accrued on loans from shareholders and convertible debt, increased to $153,796, an increase of $101,437 over the prior year. The accrued interest and principle were included in the debt to equity conversion at the completion date of the Qualifying Transaction. Professional fees increased $14,971 to $60,259 due to increased accounting and legal costs during the period. 

Decreases were realized in wages of $101,841(Dec 31, 2010 – $141,013; Jan 31, 2010 - $242,854) through staff reductions; management fees fell by $66,081 to $105,000 due to management contracts that were terminated as at November 30, 2010. Also, a re-negotiated contract with the computer server management company resulted in savings of $21,984, reducing content delivery costs to $29,152. Amortization expense fell by $36,812 to $294,717. 

Net Loss

Net loss for the eleven months ended December 31, 2010 was $1,430,016, an increase of $210,929 over the net loss of $1,219,087 for the year-ended January 31, 2010.

Selected Financial Highlights

Selected Annual Information  
    Eleven months ended
December 31, 2010
    Year ended
January 31, 2010
 
             
Net loss $ (1,430,016 ) $ (1,219,087 )
Weighted average number of shares outstanding   10,447,782     8,761,261  
Net loss per share (1) $ (0.14 ) $ (0.14 )
Total assets $ 1,661,338   $ 580,660  
Total liabilities $ 649,306   $ 1,106,622  
Shareholders equity $ 1,012,032   $ (525,962 )
1. Basic and fully diluted net loss per share are the same

About Digital Shelf Space Corp.

Digital Shelf Space is an independent producer of home entertainment content and online delivery technology provider to digital retailers, content owners and aggregators. Digital Shelf Space's proprietary technology platform has been custom built to deliver home entertainment content directly to consumers. The platform blends e-commerce functionality and paid DVD, digital download and streaming video delivery. For more information please visit www.digitalshelfspace.com and to view our recently launched project with Georges St-Pierre, please visit www.gsprushfit.com.

ON BEHALF OF THE BOARD

Jeffrey Sharpe, President & CEO

Forward Looking Statements

This news release contains "forward-looking information" within the meaning of the Canadian securities laws. Forward-looking information is generally identifiable by use of the words "believes", "may", "plans", "will", "anticipates", "intends," "budgets", "could", "estimates", "expects", "forecasts", "projects" and similar expressions, and the negative of such expressions. Forward-looking information in this news release include statements about the Company's strategy, future operations, prospects and plans of management; the Company's expectations with respect to existing and future agreements with third parties; estimates of the length of time the Company's business will be funded by anticipated financial resources; the scope of distribution of GSP RUSHFIT, the timing of and potential growth of Canadian and International sales as a result of the Northern Response partnership, and anticipated results and benefits of consumer use of celebrity fitness products.

In connection with the forward-looking information contained in this news release, the Company has made numerous assumptions, regarding, among other things, the timing and quantum of revenue generated through sales of the Company's products; the sufficiency of budgeted expenditures in carrying out planned activities; the Company's ability to protect its intellectual property rights and not to infringe on the intellectual property rights of others; the availability and cost of labour and services; expected growth of sales as a result of the Northern Response Partnership and consumer demand ;and expected results from the use of celebrity fitness products. While the Company considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies.

Additionally, there are known and unknown risk factors which could cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. Known risk factors include, among others: the substantial investment of capital required to produce and market video and entertainment productions, the need to obtain additional financing and uncertainty as to the availability and terms of future financing, unpredictability of the commercial success of our programming, difficulties in integrating technological changes and other trends affecting the entertainment industry, significant competition in the global economic market, the possibility the rate of growth of the market for fitness media will slow, reliance on the health and marketability of celebrity fitness talent in productions owned by the Company, the possibility of competition from other ecommerce and online marketing vendors, the continued strong growth in adoption of digital media, the possibility of new fitness titles from traditional large studios that target the male demographic, large media production companies may move ecommerce operations in-house rather than outsourcing, reliance on production studios continuing to outsource ecommerce operations, reliance on a number of key employees, limited operating history, the possibility of claims against the intellectual property rights of the Company, the possibility of infringements upon the intellectual property rights of the Company; the Company may not have sufficiently budgeted for expenditures necessary to carry out planned activities; future operating results are uncertain and likely to fluctuate; the Company may not have the ability to raise additional financing required to carry out its business objectives on commercially acceptable terms, or at all; and volatility of the market price of the Company's shares.

A more complete discussion of the risks and uncertainties facing the Company is disclosed in the Company's Filing Statement dated November 16, 2010 and continuous disclosure filings with Canadian securities regulatory authorities at www.sedar.com. All forward-looking information herein is qualified in its entirety by this cautionary statement, and the Company disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.

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