The Futura Loyalty Group Inc.
TSX VENTURE : FUT

The Futura Loyalty Group Inc.

August 30, 2012 08:00 ET

Futura Loyalty Group Announces Q2 2012 Financial Results

TORONTO, ONTARIO--(Marketwire - Aug. 30, 2012) - The Futura Loyalty Group Inc. (TSX VENTURE:FUT) ("Futura" or the "Company") has released its financial results for the three and six-month periods ending June 30, 2012.

Financial Overview

Total revenue from operations for the three-month periods ended June 30, 2012 and 2011 was $683,137 and $563,833 respectively. Excluding revenue from breakage, revenues for the same periods were $502,227 and $506,594 respectively, representing a quarter-over-quarter decrease of 0.9%. Total revenue from operations, for the six-month periods ended June 30, 2012 and 2011 was $1,189,788 and $967,151 respectively. Excluding breakage, revenues for the same periods were $953,545 and $821,901 respectively, representing an increase of 16%.

Gross margins, excluding breakage revenue and breakage expense, for the three-month periods ended June 30, 2012 and 2011 were $225,523 and $220,098 respectively, representing 44.9% of sales and 43.4% respectively. Gross margins, excluding breakage revenue and breakage expense, for the six-month periods ended June 30, 2012 and 2011 were $423,450 and $353,704 respectively, representing 44.4% and 43.0% of sales respectively.

Operating expenses for the three-month periods ended June 30, 2012 and 2011 were $535,406 and $546,561 respectively. Operating expenses for the six-month periods ended June 30, 2012 and 2011 were $1,542,819 and $983,001 respectively. The primary increase in operating expenses related to restructuring costs of $351,714 incurred during the first six months of 2012, offset by a decrease in payroll expenses of 11%.

The loss before financial activities for the three-month period ended June 30, 2012 was $162,116, compared to $269,224 for the same period of 2011. Excluding breakage revenue and expense, the loss before financial activities was $309,883 and $326,463 respectively for the three-month periods ended June 30, 2012 and 2011. Loss before financial activities for the six-month period ended June 30, 2012 was $931,801 compared to $484,047 for 2011. Excluding breakage, the loss before financial activities was $1,119,369 and $629,297 respectively for the six-month periods ended June 30, 2012 and 2011.

The net loss for the three-month period ended June 30, 2012 was $458,142 in comparison to a net loss of $421,226 for the same period of 2011. The net loss for the six-month period ended June 30, 2012 was $1,482,049 compared to a net loss of $685,957 for the first six months of 2011. The primary reasons for the variance in the year 2012 compared to 2011 relates to the items discussed above and the financial activities expenses totaling $550,248 in 2012 compared to $201,910 in 2011.

Operational Overview

The Company launched numerous retailers in the automotive services segment in the quarter. The Company ended in second quarter of 2012 with 710 live merchant locations compared to 596 as at June 30, 2011 and 644 as at year end 2011. The Company also announced that it had signed its first merchants in the U.S. to market the company's branded rewards currency offerings.

The Company announced a strategic agreement with Protractor Software, a leading POS software company in the auto service industry, to integrate the Futura loyalty rewards marketing and technology platform to enable Protractor's thousands of existing users to effortlessly activate Futura's loyalty offering at their in-store point of sale stations providing customers with easy access to some of the best known frequent flyer programs in North America.

The Company also announced that it entered into a sales agreement with its first business-to-business customer, DT Tire Distribution Ltd., a wholesale distributor of tires to issue Miles to their customers through the Futura loyalty rewards marketing and technology platform. As a result of this sales agreement, DT Tire can provide additional marketing and sales loyalty incentives to owners of auto service centres and auto dealers by issuing Miles.

"We made great progress on a number of fronts this quarter with the signing of new merchants, integrating with the Protractor POS system to make it quick and simple for merchants to process loyalty transactions and signing our first B2B deals which opens up a whole new revenue opportunity for the Company" said David Campbell, President and CEO of Futura.

Financial Summary
3 months
ending June
30, 2012
3 months
ending June
30, 2011
6 months
ending June
30, 2012
6 months
ending June
30, 2011
Revenue $ 683,137 $ 563,833 $ 1,189,788 $ 967,151
Gross Margin 373,290 277,337 611,018 498,954
Expenses 535,406 546,561 1,542,819 983,001
Loss Before Financial Activities (162,116 ) (269,224 ) (931,801 ) (484,047 )
Net Loss $ (458,142 ) $ (421,226 ) $ (1,482,049 ) $ (685,957 )
Numbers Excluding Breakage
Revenue $ 502,227 $ 506,594 $ 953,545 $ 821,901
Gross Margin 225,523 220,098 423,450 353,704
Expenses 535,406 546,561 1,542,819 983,001
Loss Before Financial Activities (309,883 ) (326,463 ) (1,119,369 ) (629,297 )

The Company has defined the term "Loss Before Financial Activities" in its consolidated financial statements as this is an effective measure of the operating business, independent of how the business is financed. The Company has also chosen to break out its results herein by showing the numbers independent of breakage revenue and expense, as breakage can randomly and significantly vary from quarter to quarter, thereby making it difficult for readers of the consolidated financial statements to get a clear picture of the business, independent of breakage. Breakage revenue is recorded when a Futura Rewards member has not experienced an eligible transaction for a period of 24 consecutive months.

To see the Company's full financial statements, please go to www.tflg.ca or www.sedar.com.

About Futura Loyalty Group

The Futura Loyalty Group Inc. is an industry-leading provider of integrated and stand-alone loyalty solutions for Canadian and American businesses. The company offers a comprehensive suite of loyalty products and services including access to two existing branded loyalty currencies in Canada and three in the United States. Futura also develops custom loyalty marketing and administration programs for companies wishing to develop proprietary loyalty solutions. Futura's loyalty services include member account set up, management and reward redemption platform, a web-based program transaction reporting interface for merchants, a robust offer management system, retail POS Integration for card swipe issuance, customer loyalty analytics and a proprietary web based reward issuance solution. For more information regarding The Futura Loyalty Group, visit www.futuraloyaltygroup.com or www.tflg.ca.

Forward-Looking Information

This news release includes certain forward-looking information that is based upon current expectations, which involve risks and uncertainties associated with our business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking information, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", "will", "may", "should", "could", and similar expressions to the extent they relate to the Company or its management. The forward looking information is not historical facts, but reflects the Company's current expectations regarding future results or events. Forward-looking information is subject to a number of risks, uncertainties and assumptions that may cause the actual results of the Company to differ materially from those discussed in the forward-looking information, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things, changes in general economic and market conditions; changes to regulations affecting the Company's activities; level of merchant participation in the Company's programs; uncertainties relating to the availability and costs of financing needed in the future; and other factors, including without limitation, those listed under "Economic Dependence" and "Risks and Uncertainties" in MD&A for the three and twelve month periods ended December 31, 2011.

Neither the TSX-Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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