MONTREAL, July 29, 2016 /CNW Telbec/ - EXO U Inc. ("EXO U"
or the "Corporation") (TSXV: EXO) today announced the financial
results for its fourth quarter and fiscal year ended March 31, 2016. All amounts are stated in
Canadian dollars, unless otherwise noted.
FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS AND YEAR ENDED
MARCH 31, 2016
|
|
Three
months
Fiscal
2016
|
Three
months
Fiscal
2015
|
Fiscal
2016
|
Fiscal
2015
|
|
|
|
|
|
|
Revenue
|
|
$386,925
|
-
|
$386,925
|
$ 815,923
|
Adjusted negative EBITDA
1
|
|
$(1,084,320)
|
$(1,607,177)
|
$(5,917,487)
|
$(6,898,226)
|
Net
loss
|
|
$(948,232)
|
$(2,025,337)
|
$(6,010,415)
|
$(9,194,832)
|
Basic and diluted net loss
per share
|
|
$(0.02)
|
$(0.05)
|
$(0.12)
|
$(0.22)
|
|
|
|
|
|
|
1.
|
Adjusted Negative EBITDA is a non-GAAP financial
performance measure. Please refer to the annex of this press
release for the Corporation's definition of such measure and for a
reconciliation of net loss and comprehensive loss, as determined in
accordance with IFRS, to Adjusted Negative
EBITDA.
|
Fourth Quarter, Fiscal 2016 and Subsequent Event
Highlights
- In July 2016, the Company
underwent a number of changes to its leadership and organizational
structure. On July 12, the Company
appointed Jim Kirchner, as its new
Chief Executive Officer, replacing Kevin
Pawsey who resigned as CEO but remains on the Board of
Directors.
- In July 2016, the Company
restructured and reduced its work force to significantly lower its
expenses. The workforce reduction cost savings and other expense
reductions, will reduce the normalized spend by approximately
50%.
- On May 11, 2016, the Company
announced launch dates and activities for Ormiboard, its new white
boarding software for Kindergarten to Grade 12 classrooms and
professional learning environments that allows collaboration on any
device or display.
- On June 8, 2016, the Company
introduced the launch of Ormiboard Pro, a first of its kind front
of class visual creation and collaboration tool, at Infocomm
2016.
- On June 28, 2016, the Company
announced it had entered into an amendment to the previously
announced reseller agreement with a division of Panasonic
Corporation of America ("Panasonic") for the sale and distribution
of 1,500 Ormiboard Pro licenses.
- On June 2, 2016, the Company
announced that it had entered into an agreement with Tyton Partners
Capital Markets, LLC for advisory services including, but not
limited to, assessing business development and partnership
opportunities, including channel joint venture partnerships and
identifying, evaluating and coordinating capital market
opportunities.
- On April 7, 2016, the Company
announced that Ormi, the Company's mobile device teaching platform
for schools, was named a finalist for the 2016 SIIA CODiE Awards in
the Best Post-Secondary Learning Content Solution category. The
CODiE Awards are the premier awards for the software and
information industries.
- On February 26, 2016, the Company
announced that it successfully completed a private placement for
gross proceeds totaling $2,300,000.
This followed the successful completion of a private placement on
October 23, 2015 for gross proceeds
of $2,444,750.
- During the year, the Company entered into a number of
distribution and reseller agreements with various partners
including, among others, Panasonic, Genee World Ltd., QOMO
HiteVision LLC. and Today's Classroom Inc.
- During the year, a number of distribution and reseller
agreements were cancelled, put on hold or not renewed. These
included, among others, Yazmi USA,
ProEducation and WebServices pour l'Éducation.
"With the launch of Ormiboard Pro over the summer and the
pending launch of Ormiboard Go, EXO U is in a unique position to
provide educators with a collaboration & whiteboarding solution
not currently available within our marketplace," stated newly
appointed CEO Jim Kirchner. "While
the immediate future is not without its challenges for us as a
company, we are driving hard to realize a steadily increasing level
of adoption by district, schools and classroom educators across the
US and abroad."
Financial Results
Revenues for the year ended March 31,
2016 were $386,925 compared to
$815,923 in the previous year. At
March 31, 2015, the Company had
deferred revenue of $386,925 relating
to the first milestone of a project with a Latin American client.
This portion of the project was completed in fiscal 2014 and the
Company had received the related payment; however, this milestone
has no stand-alone value for the customer without the completion of
the subsequent milestones. As a result, it was not recognized as
revenue as at March 31, 2015. In
order to fully complete its obligations under this contract, the
customer would need to inform the Company of the content to be
included in the virtual library. The customer has not responded to
the Company for over two years and therefore the Company believes
this is a breach of contract and that it has no further obligations
toward the customer. Therefore, the Company recognized the related
deferred revenue of $386,925 as
revenue in fiscal 2016.
Research and development ("R&D") expense amounted to
$527,612 for the fourth quarter of
fiscal 2016, a reduction of $351,502
compared to expenses incurred during the same period in the prior
year. For the year ended March 31,
2016, the R&D expense amounted to $2,951,929 compared to $3,535,645 for the prior year.
Selling, general and administrative ("SG&A) expenses for the
fourth quarter of fiscal 2016 were $993,835, an increase of $198,729 from expenses incurred during the same
period last year . For the year ended March
31, 2016, SG&A expenses amounted to $3,553,299, as compared to $4,268,173 for the prior year. The increased
expenses for the three months ended March
31, 2016 as compared to the same period in the prior year
was mainly due to increased public company costs as well as a shift
in focus from R&D to sales and marketing activities. The
decreased SG&A expenses for the year ended March 31, 2016 as compared to the prior year was
largely due to a decrease in professional fees and overall reduced
compensation costs.
During the three-month period ended March
31, 2016, the Company recognized a recovery of $40,160 for stock-based compensation expenses,
while for the year ended March 31,
2016, the Company recognized a recovery of stock-based
compensation expense of $165,045.
This compares to expenses of $243,603
and $1,898,007, respectively, for the
three-month period and year ended March 31,
2015. During the three and twelve-month periods ended
March 31, 2016, a significant number
of stock options were cancelled that were not yet vested, largely
as a result of employee downsizing and resignations, and resulted
in a credit to stock-based compensation expense for the year.
Adjusted Negative EBITDA was $1,084,320 for the quarter, compared to negative
$1,607,177 for the same period in the
prior year. On a year to date basis, Adjusted Negative EBITDA was
$5,917,487, as compared to
$6,898,226 for the same period in the
prior year. (Please refer to the annex of this press release for
the company's definition of Adjusted Negative EBITDA and for a
reconciliation of net loss and comprehensive loss, as determined in
accordance with IFRS, to Adjusted Negative EBITDA and for further
details with respect to the company's non-GAAP financial
performance measures.)
As at March 31, 2016, the Company
had a cash position of $2,051,863.
This represents a decrease of $2,040,280 from the Company's cash position as at
March 31,2015.
Appointment to Board and Option Grants
The Board has granted 250,000 options to Jim Kirchner under the Company's stock option
plan. The options are exercisable at a price of $0.08 per common share of the Company for a
period of 10 years following the date of grant. The options shall
vest one-third annually over the next three years. Mr. Kirchner is
also appointed to the Board of Directors of the Company effective
August 1, 2016.
Going concern considerations
The consolidated financial statements of the Company for the
year ended March 31, 2016 have been
prepared on a going concern basis, which implies the Company will
continue to realize its assets and discharge its liabilities in the
normal course of business.
As at March 31, 2016, the Company
had not yet achieved profitable operations and has accumulated
losses of $27,782,189 since
inception, including the net loss of $6,010,415 for the year ended as at the same
date. The Company used $5,805,545 of
cash from its operating activities for the year ended March 31, 2016. The Company expects to continue
to incur further operating losses and negative cash flows from
operating activities in the development of its business, and this
indicates the existence of a material uncertainty that may cast
significant doubt on the Company's ability as a going concern.
Furthermore, as at March 31, 2016,
the Company's committed cash obligations and expected level of
expenses for the next twelve months exceeds its actual cash
resources. Whether and when the Company can attain profitability
and positive cash flows from operating activities is uncertain, in
particular as a result of current market conditions and the length
of time required to generate positive cash flows from new customer
or partner agreements.
The continuation of the Company as a going concern is dependent
upon, among other things, the Company's ability to generate future
profitable operations by securing contracts and growing its revenue
base, and its ability to obtain additional financing in order to
meet its obligations arising from normal business operations. The
Company will continue to seek additional sources of financing in
the form of equity and/or debt financing and will continue to
pursue joint venture or other partnership agreements. At the same
time, the Company has recently reduced its current operating costs
in order to improve its liquidity. Whether and when the Company can
obtain additional financing or attain profitability and positive
cash flows from operating activities is uncertain, in particular as
a result of current market conditions and the length of time
required to generate positive cash flows from new customer or
partner agreements. Management believes that the Company will be
able to obtain additional funds through financing or partnership
agreements, but there is no assurance that it will be able to do
so. Without additional financing or other revenues, the Company
will be forced to cease operations.
Accordingly, the consolidated financial statements do not
include any adjustments to the recoverability and classification of
recorded asset amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going
concern. Such adjustments could be material.
The audited consolidated financial statements and related notes,
and Management's Discussion and Analysis for the three months and
years ended March 31, 2016 and 2015,
are available under the Corporation's profile on SEDAR at
www.sedar.com.
About EXO U
EXO U's shares trade on the TSX Venture Exchange under the
ticker symbol EXO. EXO U develops an innovative software platform
which enables businesses and educational institutions to securely
mobilize and manage their mobile workforce and students by
delivering engaging experiences spanning desktop and mobile
applications. At the core of EXO U's platform is the smart and
agnostic EXO engine that unifies multiple software platforms,
allowing devices to interact and communicate seamlessly together.
EXO U was recently a finalist for the 2016 SIIA CODiE Award. For
more information, visit http://www.exou.com and follow us
on Twitter @exo_u.
Cautionary Note Regarding to Forward Looking Information
Certain statements included herein, including those that express
management's expectations or estimates of EXO U's future
performance or future events, constitute "forward-looking
information" within the meaning of applicable securities laws. Such
forward-looking information and statements are often, but not
always, identified by the use of words such as "plans", "expects",
"estimates", "intends", "anticipates", or "believes", or variations
of such words and phrases (or the negative form thereof) or
statements that certain actions, events or results "may", "could",
"would", "might", or "will" be taken, occur or be achieved.
Forward-looking information is necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
management at this time, are inherently subject to significant
business, economic, regulator and competitive uncertainties and
contingencies that could cause actual results, performance or
achievements of the Corporation to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking information. For additional information with
respect to certain of these and other assumptions and risk factors,
please refer to EXO U's management's discussion and analysis for
the year ended March 31, 2016,
available under the Corporation's profile on SEDAR
at www.sedar.com. Forward-looking information contained herein
is presented as of the date of this news release and the
Corporation disclaims any obligation to update any forward-looking
statements, whether as a result of new information, future events
or results, except as may be required by applicable securities
laws. There can be no assurance that forward-looking information
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers are cautioned not to place undue reliance on
these forward-looking statements.
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.
ANNEX
Management uses net loss and comprehensive loss as presented in
the audited condensed consolidated statement of loss and
comprehensive loss as well as loss before financing expenses
(income), income taxes, depreciation of property and equipment and
amortization of intangible assets ("Negative EBITDA") and Adjusted
Negative EBITDA as measures to assess the performance of the
Corporation.
Negative EBITDA represents an indication of the Corporation's
capacity to generate income, excluding the impact of management's
financing activities, cost of depreciation of property and
equipment, amortization of intangible assets as well as income
taxes.
"Adjusted Negative EBITDA" is a further refinement of Negative
EBITDA to exclude stock-based compensation expenses and foreign
exchange gains (losses). Adjusted Negative EBITDA represents an
indication of the Corporation's capacity to generate income from
operations before taking into account certain non-cash
transactions. Adjusted Negative EBITDA is a measure used by the
Corporation to make strategic decisions, forecast future results
and evaluate its performance.
Negative EBITDA and Adjusted Negative EBITDA do not have any
standardized meaning prescribed by Canadian Generally Accepted
Accounting Principles ("GAAP") and International Financial
Reporting Standards ("IFRS") and may not be comparable to similar
measures presented by other entities. Neither Negative EBITDA nor
Adjusted Negative EBITDA represent the actual cash used by
operating activities, nor are they recognized measures of financial
performance under IFRS. EXO U's definition of Negative EBITDA and
Adjusted Negative EBITDA may differ from that used by other
companies. Investors are cautioned that Negative EBITDA and
Adjusted Negative EBITDA should not be considered as an alternative
to net loss and comprehensive loss determined in accordance with
IFRS or indicators of the Corporation's performance. These measures
are identified and defined under "Other Financial Measures"
in the Corporation's management's discussion and analysis for the
year ended March 31, 2016.
The following is a reconciliation of Negative EBITDA and
Adjusted Negative EBITDA to net loss and comprehensive loss for the
three-month periods and fiscal years ended March 31, 2016 and 2015:
(In Canadian
dollars)
|
Three months ended
March 31,
2016
|
Three months ended
March 31, 2015
|
Year ended
March 31,
2016
|
Year ended March 31,
2015
|
|
|
|
|
|
Net Loss and Comprehensive
Loss
|
(948,232)
|
(2,025,337)
|
(6,010,415)
|
(9,194,832)
|
|
|
|
|
|
Financials expenses
(income), net
|
15,957
|
7,306
|
(15,413)
|
(8,781)
|
Depreciation of
property &
equipment
|
13,140
|
14,778
|
52,558
|
58,679
|
Amortization of intangible
assets
|
37,062
|
37,065
|
148,258
|
148,262
|
Impairment
charge
|
|
15,200
|
|
15,200
|
Negative
EBITDA
|
(882,073)
|
(1,950,988)
|
(5,794,186)
|
(8,981,472)
|
|
|
|
|
|
Stock-based
compensation
|
(40,160)
|
(243,603)
|
(165,045)
|
1,898,007
|
Net loss (gain) on foreign
exchange
|
(162,087)
|
100,208
|
41,744
|
185,239
|
Adjusted Negative
EBITDA
|
(1,084,320)
|
(1,607,177)
|
(5,917,487)
|
(6,898,226)
|
SOURCE EXO U Inc