MONTREAL, Feb. 26, 2015 /CNW Telbec/ - EXO U Inc. (TSXV: EXO) ("EXO U" or the "Company"), a software provider that develops cross platform operating system agnostic software that enables development of highly customizable touch-based user interfaces and experiences, today announced its financial results for its third quarter ended December 31, 2014. All amounts are stated in Canadian dollars, unless otherwise noted.
| FINANCIAL HIGHLIGHTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2014 |
|||||
| Three months |
Three months |
Nine months |
Nine months |
||
| Revenue |
$ - |
$ - |
$815,923 |
$73,307 |
|
| Adjusted negative EBITDA 1 |
$(2,264,341) |
$(979,724) |
$(5,291,049) |
$(2,586,233) |
|
| Net loss |
$(2,929,508) |
$(1,333,138) |
$(7,169,495) |
$(6,030,163) |
|
| Basic and diluted net loss per share |
$(0.07) |
$(0.04) |
$(0.17) |
$(0.20) |
|
| 1. |
Adjusted negative EBITDA is a non-IFRS 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. |
Q3 Fiscal 2015 and Subsequent Highlights
-subsequent to the quarter, on February 11, 2015, the Company was named to the 2015 TSX Venture 50. This prestigious annual listing is comprised of the top ten firms in five sectors who are ranked on a formula that gives equal weighting to share price appreciation, market cap growth, trading volume, and analyst coverage.
-on December 23, 2014 EXO U announced a 10 year agreement, in US dollars, with the Institute of Economics and Management, a university located in the Russian Federation, for the deployment, after a successful pilot phase, of 2,360 licences.
-in December 2014, a pilot of the Company's education solution was successfully deployed in two Canadian high schools with more than 250 students. The feedback was very positive with teachers stating that the software facilitated, among other things, better classroom management, improvements in teaching time, faster transitions during the lessons as well as increased student discipline and responsibility in their use of technology in the classroom. A summary of the case study can be found using the following link http://www.exou.com/pdf/en-US/exo-u-montreal-case-study_02-2015.pdf
-as at December 31, 2014, the Company had a $6,239,283 cash balance. The cash outflow from operating activities was $1,755,468 for the quarter.
-focused control on operations resulted in an expense reduction of $90,997 from the previous quarter.
"Signing our first contract outside the Americas in our third quarter was an important milestone for our Company. We were very pleased also to complete a very successful pilot in North America." said Shan Ahdoot, President and Chief Executive Officer of EXO U. "These recent achievements as well as the launch of the new and improved version of our education software planned at the ASU-GSV Summit in Phoenix, Arizona in April will be instrumental to our growth by facilitating the signing of current global opportunities and generating new opportunities in the North American market."
Financial Results
EXO U had no revenue in the third quarter of the fiscal years ended December 31, 2014 and 2013, while on a year-to-date basis, Fiscal 2015 revenues amounting to $815,923, representing revenues from the three digital classrooms delivered to Panama. As at December 31, 2014, the Company has $386,925 of deferred revenues recorded on the unaudited interim consolidated statement of financial position. These deferred revenues are related to a contract signed with the Government of Panama to deliver, among other services, licenses of EXO U's solution. As of December 31, 2014, the Company did not recognize any revenue from this license agreement as the revenue recognition criteria were not fully fulfilled. While attempting to continue performance of its obligations under this license agreement contract, due to an extension requested by the former government of Panama to provide the content that they are required to provide and a subsequent change in government in Panama, the Company believes there is a risk that complete implementation and roll-out will not occur in the current fiscal year.
On a year-to-date basis, gross margin reached $683,451 representing 84% of revenue.
Research and development ("R&D") expense was $1,185,188 and $2,656,531 respectively for the third quarter and the nine-month period, increases of $780,249 and $1,590,084 respectively compared to the same periods of last year. These increases are mainly explained by hirings in the R&D department as EXO U's technical employees drive its product development.
Selling, general, and administrative expenses for the third quarter were $1,129,766, up $508,210 from that incurred in the same period last year. On a year-to-date basis, these expenses increased from $1,732,676 in Fiscal 2014 to $3,473,067 for this fiscal year. These increases are due to the hiring of new staff, travel and leaving costs, professional fees and business development. The establishment of the Palo Alto facility in California and the higher loss on foreign exchange also contributed to the increased costs.
Stock-based compensation in the third quarter increased year over year from $281,191 to $563,788 and from $856,867 to $1,654,404 for the nine-month period, reflecting the issuance of stock options to the new employees, to the independent members of the Company's board of directors and to certain third parties.
Adjusted negative EBITDA was $2,264,341 in the quarter, compared to negative $979,724 in the same period last year, an increase of $1,284,617. On a year-to-date basis, adjusted negative EBITDA reached $5,291,049 compared to $2,586,233 twelve months ago. These increases in the adjusted negative EBITDA are explained by higher spending in the development of the Company's solution as well as increased staffing in order to achieve the Company's goals and objectives.
As of December 31, 2014, the Company had a cash balance of $6,239,283, a decrease of $747,172 from the position it had as at March 31, 2014. The cash used in operating and investing activities, in order to develop the solution, was partly offset by the cash generated during the nine-month period from the exercise of warrants and stock options.
Going concern considerations
The unaudited interim condensed consolidated financial statements of the Company for the three- and nine-month periods ended December 31, 2014 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. 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.
As at December 31, 2014, the Company had not yet achieved profitable operations and has accumulated losses of $19,746,437 since inception, including the net loss of $7,169,495 for the nine-month period ended as at the same date. 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 upon the Company's ability to continue as a going concern. Whether and when the Company can attain profitability and positive cash flows from operating activities is uncertain.
Although there are no assurances that management's plans will be realized, management has a reasonable expectation that the Company will be able to continue operations in the future, considering, among other things, the reduction of the Company's current operating costs and the possibility of obtaining financing.
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.
The unaudited interim condensed consolidated financial statements and related notes and Management's Discussion and Analysis for the three- and nine-month periods ended December 31, 2014 and 2013, are available under the Company'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.V. 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 EXOengine that unifies multiple software platforms, allowing devices to interact and communicate seamlessly together. It enables true mobility for businesses and educational organizations by solving important mobility issues such as security, privacy, collaboration, and management of application and content. EXO U's technology agnostic framework delivers to end users a safe, reliable, and intuitive smart workspace designed for connecting with people, accessing services, and sharing information and digital content, while requiring minimal infrastructure and optional Internet connectivity. It simplifies management of the entire application lifecycle, freeing the organizations to focus on building engaging apps that work across different operating systems and form factors, thus increasing productivity for developers and reducing total cost of ownership for organizations. By offering an engaging and exceptional user experience on all computing devices, without compromising security or protected information, the EXO U enterprise and education solutions allow organizations to embrace consumerization and enjoy all the benefits of mobile. For more information, visit http://www.exou.com and follow us on Twitter @exo_u.
Disclaimer in Regards to Forward Looking Statements
Certain statements made in this press release that are not historical facts are forward-looking information within the meaning of application securities laws. These forward-looking statements are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events and there is no assurance that current opportunities being pursued or discussions with any government authorities will result in any definitive agreements being entered into or that the Company will be able to obtain financing to continue its operations on acceptable terms or at all. Readers are cautioned not to place undue reliance on these forward-looking statements. 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 three- and nine-month periods ended December 31, 2014 available under the Company's profile on SEDAR at www.sedar.com. The forward-looking information contained in this press release represents EXO U's current expectations. EXO U disclaims any intention and assumes no obligation to update or revise any forward-looking information, except as required by applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts any responsibility for the adequacy or accuracy of this release.
ANNEX
Adjusted negative EBITDA for the three- and nine-month periods ended December 31, 2014 and 2013
| (in Canadian dollars) |
Three months |
Three months |
Nine months |
Nine months |
| Net Loss |
(2,929,508) |
(1,333,138) |
(7,169,495) |
(6,030,163) |
| Financials expenses (income), net |
(6,569) |
(664) |
(16,087) |
14,312 |
| Depreciation of property & equipment |
15,827 |
10,247 |
43,901 |
30,011 |
| Amortization of intangible assets |
37,065 |
36,524 |
111,197 |
109,572 |
| Negative EBITDA |
(2,883,185) |
(1,287,031) |
(7,030,484) |
(5,876,268) |
| Stock-based compensation |
563,788 |
281,191 |
1,654,404 |
856,867 |
| Net loss on foreign exchange |
55,056 |
26,116 |
85,031 |
52,837 |
| Listing costs |
- |
- |
- |
2,380,331 |
| Adjusted Negative EBITDA |
(2,264,341) |
(979,724) |
(5,291,049) |
(2,586,233) |
Management uses net loss as presented in the unaudited interim 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 (including impairment charge) ("Negative EBITDA") and Adjusted Negative EBITDA as measures to assess the performance of the Company. Negative EBITDA and Adjusted Negative EBITDA are other financial measures.
Negative EBITDA represents an indication of the Company's capacity to generate income from operations before taking into account management's financing decisions, cost of depreciation of property and equipment, amortization of intangible assets as well as income taxes.
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 performance. Adjusted Negative EBITDA is Negative EBITDA excluding stock-based compensation expenses, foreign exchange gains (losses) and other one-time and unusual items.
Neither Negative EBITDA nor Adjusted Negative EBITDA represent the actual cash provided by operating activities, nor are they recognized measures of financial performance under International Financial Reporting Standards ("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 determined in accordance with IFRS or indicators of the Company's performance.
SOURCE EXO U Inc
For investor or media inquiries, please contact: Sean Peasgood, [email protected], 416.565.2805
Share this article