ProLink Solutions, a wholly-owned subsidiary of ProLink Holdings Corp. announced last Saturday that it has commenced litigation against Elumina Iberica, S.A., Elumina Iberica UK Limited, GP ADS, S.L., and GP ADS LTD and related parties (collectively “Elumina”) as a result of multiple breaches, including non-payment, under its distribution agreement.
ProLink has also commenced legal action against Elumina in connection with the previously announced acquisition of Elumina. Effective 1st February 2008, the Company terminated its distribution agreement with Elumina Iberica S.A. On 9th January 2008 the Company had terminated its agreement to acquire Elumina.
Pursuant to the terms of the acquisition agreement, ProLink is filing claims against Elumina with the International Chamber of Commerce Court of Arbitration, seeking a determination that it properly terminated the acquisition and damages for non-payment of $4.5 million in receivables generated from ProLink’s sales of commercial equipment and other services to Elumina.
The Company has also filed a complaint in U.S. District Court in Phoenix against Kevin Clarke, doing business as Elumina UK, for non-payment of goods sold and delivered, and has filed a claim against Elumina Iberica, S.A. with the International Centre of Dispute Resolution (ICDR) for arbitration under the UNCITRAL Arbitration Rules for arbitration, for arbitration in Phoenix, Arizona as provided for in the parties‘ Exclusive Licensing and Distribution Agreement seeking damages for non-payment of goods sold and delivered, breach of representations and warranties, legal fees and consequential damages.
The Company expects to take an undetermined non-cash reserve in its 2007 fourth quarter, in connection with the $4.5 million receivable from Elumina. $1 million of the outstanding amount is insured by the Export-Import Bank of the United States.
Notwithstanding the loss of its self-styled ‘largest customer’ ProLink Solutions has just announced record fourth quarter revenue with gross margin more than doubled to 52%.
In the quarter ended 31st December 2007 the Company generated revenue in excess of $6.0 million, a significant increase compared to the same period in fiscal 2006 when the Company had revenue of approximately $3.8 million. The fourth quarter is seasonally a slower period for the Company as many of the golf courses in the Eastern and Midwestern parts of the United States are closed.
Gross margin of approximately 52% for the period was up over 100% as compared to the fiscal 2006 fourth quarter. A significant increase in new system sales and upgrades, advertising revenues and greater adoption of the ProLink System contributed to the higher revenue and improved profitability. These increases more than offset the impact of reduced international volumes.
The Company also expects operating expenses to have declined in the fourth quarter 2007, as a result of the completion of a restructuring and realignment previously disclosed.
“The fourth quarter results reflected many of the initiatives we implemented earlier in 2007,” said Lawrence D. Bain, CEO of ProLink Solutions. “Advertising sales continue to develop well despite the fact that it was too early to see the financial impact of our agreement with ABC News Media Sales. We also continued the trend seen during the third quarter 2007, as new course upgrades, installations and refinancing increased, despite the fourth quarter being our slowest quarter of the year.
“We are pleased that the operating changes we implemented during the summer have helped to improve profitability. Our gross margin, which was 40.1 percent in the second quarter and 48.0 percent in the third quarter, continues to improve. We anticipate gross margin to continue being strong in fiscal 2008 as revenue from digital media sales continues to grow. We believe a more favourable mix of business, combined with the operational improvements we made during the second half of 2007, positions ProLink to deliver solid operating results in 2008.”
“Although we expect some near-term volatility in our European business due to the termination of our distribution agreement with Elumina, we expect the other international markets we operate in to continue to grow. The European markets should get back on line shortly as we devote direct attention to Europe until we appoint a replacement distributor,” concluded Bain.
Following the announcement (Golf Business News 5th February http://www.golfbusinessnews.com/news/news.asp?storyid=4421 that ProLink is looking for a new distributor in Europe, it is understood that there have been serious expressions of interest from more than 30 companies.