MONTREAL, Nov. 29, 2016 /CNW Telbec/ - EXO U Inc. ("EXO U"
or the "Company") (TSXV: EXO) today announced the financial results
for the three and six months ended September
30, 2016. All amounts are stated in Canadian dollars, unless
otherwise noted.
FINANCIAL HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED
SEPTEMBER 30, 2016
Second Quarter and Subsequent Event Highlights
- On November 21, 2016, the Company
announced that it had entered into a non-binding letter agreement
with Alternative Capital Group Inc. for a credit facility of up to
$4 million. The finalization of the
credit facility is still subject to the satisfactory completion of
certain conditions, which includes due diligence, a mutually
agreeable final loan documentation and TSX Venture Exchange and
shareholder approval. Although the completion of all the conditions
of the financing are progressing positively, there can be no
assurance that the financing will be finalized. The credit facility
will also include the issuance by the Company to the lender of
bonus warrants to purchase a substantial number of common shares of
the Company. Please see the Company's news release dated
November 21, 2016 for further
details.
- On October 4, 2016, the Company
secured a loan from Investissement Québec for $379,530. This loan will significantly help to
carry the Company forward to its longer-term financing.
- On September 27, 2016, the
Company announced that it had become a referral partner with
Samsung Electronics America Ltd. Samsung will promote, bundle
and refer Ormiboard to new and current Samsung customers.
- In the second quarter ended September
30, 2016, the Company recorded its first sales ($88,465) and revenue ($37,139) in over a year. All the sales and
revenue were for its new product offerings.
- Research and development and selling, general and
administrative expenses were $711,500
in the quarter ended September 30,
2016, down 54% from the $1,555,700 recorded in the same period in the
previous year. This is a direct result of the significant
downsizing and other cost controls that the Company has
instituted. Six-month year-to-date expenses of $2,100,000 were also down significantly from the
$3,500,000 recorded in the same
period last year.
- On August 26, 2016, the Company
announced the launch of Ormiboard, a first of its kind digital
learning environment that redefines whole classroom teaching by
transforming any device with any operating system into an
easy-to-use whiteboarding and collaborative tool.
|
Three months
ended
September 30,
2016
|
Three months
ended
September
30,2015
|
Six months ended
September 30, 2016
|
Six months ended
September 30, 2015
|
|
|
|
|
|
Revenue
|
$37,139
|
-
|
$37,139
|
-
|
Adjusted Negative
EBITDA 1
|
$(557,940)
|
$(1,505,560)
|
$(1,941,622)
|
$(3,374,006)
|
Net loss
|
$(536,249)
|
$(1,257,766)
|
$(2,103,729)
|
$(3,359,414)
|
Basic and diluted net
loss per share
|
$(0.01)
|
$(0.03)
|
$(0.03)
|
$(0.08)
|
|
|
1.
|
Adjusted Negative
EBITDA is a non-GAAP financial performance measure. Please refer to
the annex of this press release for the Company's definition of
such measure and for a reconciliation of net loss, as determined in
accordance with IFRS, to Adjusted Negative EBITDA.
|
"I am pleased on the progress we made saving costs and
conserving cash, while at the same time expanding our revenue
channels", said Jim Kirchner, CEO
since July. "In the last quarter, we have reduced our costs
by over 50% and launched our flagship product, Ormiboard. In the
coming quarter, we are planning to release an enhanced version of
Ormiboard as well as make significant efforts in converting our
opportunities into revenue. Additionally, we will be focused on
finalizing the financing with ACG in the next 30 days."
Financial Results
The Company recorded $37,139 of
revenue and invoiced $88,465 in the
three months ended September 30, 2016. There were no sales or
revenues in the corresponding period in the prior year. The
difference between sales and revenue is reflected in deferred
revenue and will be reflected in revenue over the next year. The
Company expects that additional sales and revenue will be recorded
in future periods.
R&D expense was $239,255 in
the quarter ended September 30, 2016,
down significantly from the $717,457
incurred in the three-month period ended September 30, 2015. Year to date expenses at
$724,026 were also down from the
$1,756,677 incurred in the
corresponding period last year. In both cases, expenses were down
primarily due to decreased staffing levels.
Selling, general, and administrative ("SG&A") expenses for
the three-month period ended September 30, 2016 were
$472,213, a decrease of $365,993 or 44% from the same period last year.
SG&A expenses were also down 50% from the previous quarter
ended June 30, 2016. These
significant savings were due to employee downsizing as well as
reduced professional fees, public company costs and rent.
Stock based compensation costs in the quarter was a credit of
$147,665 and was the main factor in a
six- month year to date credit expense of $9,635. For the six-month period ended
September 30, 2015 this expense was a
credit of $189,583.
Adjusted Negative EBITDA was $557,940 for the quarter ended September 30, 2016, compared to a negative
$1,505,560 for the same period in the
prior year. On a six-month year to date basis, the Company has
recorded a negative EBITDA loss of $1,941,622, which is substantially better than
the same period last year's loss of $3,374,006 (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 September 30, 2016, the
Company had a cash position of $375,637. This represents a decrease of
$2,126,226 from the Company's cash
position from March 31, 2016. Since
the end of the quarter, the Company received a loan of $379,530 and has entered into a non-binding
letter agreement with a lender for a credit facility of up to
$4 million, detailed above in the
first bullet of our highlights.
Going concern considerations
The unaudited consolidated financial statements of the Company
for the three and six-month periods ended September 30, 2016 have been prepared on a going
concern basis, which implies that the Company will continue to
realize its assets and discharge its liabilities in the normal
course of business. 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 the form of equity and/or debt financing,
joint venture agreements, or in another form in order to meet its
obligations arising from normal business operations.
As at September 30, 2016, the
Company had not yet achieved profitable operations and had
accumulated losses of $29,885,918
since inception, including the net loss of $2,103,729 for the six-month period ended as at
the same date. The Company used $2,126,226 of cash for its operating activities
for the six-month period ended September 30,
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 these material
uncertainties cast significant doubt on the Company's ability to
continue as a going concern. Furthermore, as at September 30, 2016, the Company's committed cash
obligations and expected level of expenses for the next twelve
months exceed its actual cash resources. Whether and when the
Company can attain profitability and positive cash flows from
operating activities is uncertain, particularly as a result of
current market conditions and the length of time required to
generate positive cash flows from new customers or partner
agreements.
Management believes that the Company will be able to obtain
additional funds through financing or partnerships 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. The Company was able to secure a $379,530 loan from Investissement Québec in
October and has entered into a non-binding letter agreement for a
secured credit facility of up to $4
million with Alternative Capital Group Inc. The finalization
of the credit facility is still subject to the satisfactory
completion of certain conditions, which includes due diligence, a
mutually agreeable final loan documentation and TSX Venture
Exchange and shareholder approval. There can be no assurance that
the financing will be finalized.
Accordingly, the unaudited interim condensed 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 unaudited interim condensed consolidated financial
statements and related notes, and Management's Discussion and
Analysis for the three and six month periods ended September 30, 2016 are available under the
Company's profile on SEDAR at www.sedar.com.
About EXO U
At EXO U, we believe that people learn best with instructional
technologies that support and do not interrupt the momentum of
teaching, learning, and collaboration—whether they are learning in
person, remotely, or across an evolving device landscape. That is
why our web-based whiteboarding and classroom management solutions
for educational institutions and corporations work on any device
with any operating system, anytime and anywhere, solving important
mobility issues such as security, privacy, real-time collaboration,
and management of application and content. EXO U's shares trade on
the TSX Venture Exchange under the ticker symbol EXO.V. EXO U's
Ormi 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. For more information about Ormiboard, visit
https://www.ormiboard.com and follow us on Twitter @ormiboard.
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 Company to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking information, including, but not limited to,
risks related to whether or not the Company will enter into the
credit facility, and risks related to the Company's incapacity to
execute on its business plan. 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 Company'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 Company
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
Company.
Negative EBITDA represents an indication of the Company'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 Company's capacity to generate income from
operations before taking into account certain non-cash
transactions. Adjusted Negative EBITDA is a measure used by the
Company 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 Company's performance. These measures are
identified and defined under "Other Financial Measures" in
the Company's management's discussion and analysis for the three
months ended June 30, 2016.
The following is a reconciliation of Negative EBITDA and
Adjusted Negative EBITDA to net loss for the three and six-month
periods ended September 30, 2016 and
2015:
(In Canadian
dollars)
|
Three months
ended
September 30, 2016
|
Three months
ended
September 30, 2015
|
Six months ended
September 30, 2016
|
Six months ended
September 30, 2015
|
|
|
|
|
|
Net Loss
|
(536,249)
|
(1,257,766)
|
(2,103,729)
|
(3,359.414)
|
|
|
|
|
|
Financials expenses
(income), net
|
(11,489)
|
2,422
|
(3,776)
|
(3,463)
|
Depreciation of
property & equipment
|
81,122
|
13,036
|
89,494
|
26,075
|
Amortization of
intangible assets
|
33,267
|
37,065
|
66,533
|
74,131
|
Impairment
charge
|
|
|
|
|
Negative
EBITDA
|
(433,493)
|
(1,205,241)
|
(1,951,622)
|
(4,262,671)
|
|
|
|
|
|
Stock-based
compensation
|
(147,665)
|
(359,358)
|
(9,635)
|
(189,583)
|
Net loss (gain) on
foreign
exchange
|
21,074
|
59,039
|
19,941
|
78,248
|
Adjusted Negative
EBITDA
|
(557,940)
|
(1,505,560)
|
(1,941,622)
|
(3,374,006)
|
SOURCE EXO U Inc