MONTREAL, Feb. 29, 2016 /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 the financial results for its third
quarter ended December 31, 2015. All
amounts are stated in Canadian dollars, unless otherwise noted.
FINANCIAL HIGHLIGHTS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2015
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Three
months
Q3 Fiscal
2016
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Three
months
Q3 Fiscal
2015
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Nine
months
Q3 Fiscal
2016
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Nine
months
Q3 Fiscal
2015
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Revenue
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$
—
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$
—
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$
—
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$ 815,923
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Adjusted negative
EBITDA(1)
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$(1,459,161)
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$(2,264,341)
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$(4,833,167)
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$(5,291,049)
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Net loss
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$(1,702,769)
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$(2,929,508)
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$(5,062,183)
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$(7,169,495)
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Basic and diluted net
loss per share
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$(0.03)
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$(0.07)
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$(0.11)
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$(0.17)
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(1)
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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 and comprehensive
loss, as determined in accordance with IFRS, to Adjusted Negative
EBITDA.
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Third Quarter and Subsequent Event Highlights
- On February 26, 2016, the Company
announced that it successfully completed a private placement for
gross proceeds totalling $2,300,000.
- On February 18, 2016, the Company
announced that it had signed a license agreement with Yazmi
USA LLC ("Yazmi"), a Maryland based company that has extensive
operations in Africa. Yazmi and
EXO U plan to implement a pilot phase during March, 2016, which, if
successful, will lead to an initial product rollout in August,
2016.
- On February 3, 2016, the Company
announced that it had signed an exclusive European distribution
agreement with Genee World Ltd. ("Genee World"). This distribution
agreement enables the distribution of the Ormi software platform
with Genee World's technology
solutions for Kindergarten to Grade 12 ("K-12"), higher education
institutions and corporations. This agreement initially provides
that every large format interactive screen sold by Genee World is bundled with a classroom license
of EXO U and, in subsequent years, moves to a subscription service
where the companies will share revenue from the classroom license
renewals.
- On January 20, 2016, the Company
announced the launch dates for Ormi at both the BETT and TCEA
conferences, two of the largest education conferences held in
Europe and North America respectively.
- On December 24, 2015, the Company
announced the results of its annual general meeting of
shareholders. Of note was the election of the Company's Chief
Executive Officer, Mr. Kevin Pawsey
, as well as Messrs. Matt Cooper and
Sean Maniaci to the Board of
Directors.
- On December 17, 2015, the Company
announced that it had signed a non-exclusive master distribution
agreement for K-12 and higher education institution sales with Qomo
HiteVision L.L.C., a major distributor and manufacturer of
interactive screens located in the United
States. This Agreement is expected to generate revenue for
the Company in the school year beginning in September 2016.
- On December 3, 2015, the Company
announced that it had licensed Panasonic Corporation of America to
sell its Ormi software platform to schools, districts and higher
education institutions in North
America. Revenue from this agreement is expected to begin in
the latter part of the 2016 calendar year.
- During the month of November
2015, the Company announced the appointments of Mr.
Jim Kirchner as senior Vice
President of Business Development, Mr. Roberto Torreggiani as Vice President of Sales,
and Mr. Ian Bryan as Vice President
of Marketing. All three of these executives have extensive
experience in the education technology market and are making a
significant positive impact on the business.
- On October 23, 2015, the Company
appointed Mr. Kevin Pawsey as the
Chief Executive Officer of the Company. Mr. Pawsey previously held
the title of Chief Operating Officer at the Company.
- On October 23, 2015, the Company
announced that it had completed its previously announced private
placement for gross proceeds of $2,444,750.
Mr Kevin Pawsey, CEO of EXO U
stated, "During Q3, we have completed a thorough business review
resulting in a more focused strategic plan for 2016, with the focus
on building sustainable distribution channels and revenue streams
in North America, Europe and the Middle East. We have made progress in
North America with QOMO Hite
Vision, Panasonic and Genee World in
Europe resulting in a visible
pipeline for calendar year 2016. The new leadership team recruited
in Q3 has the relevant experience in education technology in both
K-12 and higher education and this is reflected in improved
product, channel management and branding that we have recently
announced. I am pleased with the progress of the team and we are
constantly working to identify and engage additional distribution
channels in the fields of Whole Class Teaching and Bring Your Own
Device technologies. As stated in the business update released on
February 3, 2016, we anticipate the
majority of our revenues will flow during fiscal 2017 and we will
be managing our operations and cash flow in anticipation of this.
The next three months will be focused on continuing to build our
sales pipeline, managing costs and continuing to focus on building
a world class solution for the technologies that teachers and
students use daily."
Financial Results
EXO U had no revenue for the three months ended December 31, 2015 and the corresponding period in
the prior year. Similarly, revenues for the nine months ended
December 31, 2015 were nil as
compared to revenues of $815,923 for
the same period in the prior year. The absence of sales was
attributable to the building of new sales channels with partners
coupled with the timing of the launch of the new version of the
Company's product offering, Ormi. The Company continues to conduct
a number of demonstrations, trials and pilots on an ongoing basis
in order to develop revenue opportunities.
Research and development ("R&D") expense amounted to
$667,640 and $2,424,317, respectively, for the three and
nine-month periods ended December 31,
2015, compared to the $1,185,188 and $2,656,531 incurred in the three and nine-month
periods ended December 31, 2014.
Selling, general, and administrative expenses for the third
quarter were $841,929, a decrease of
$287,837 from expenses incurred
during the same period in the prior year. On a year-to-date basis,
these expenses are down to $2,559,464
for this fiscal year as compared to $3,473,067 in fiscal 2015. Cost containment and
staff reductions were the major reasons for reduced expenses.
During the three-month period ended December 31, 2015, the Company incurred an
expense of $64,698 for stock-based
compensation costs, while for the nine-month period ended
December 31, 2015, the Company
recognized a recovery of stock-based compensation expense of
$124,885. This compares to an expense
of $563,788 and $1,654,404 respectively for the three and
nine-month periods ended December 31,
2014. During the nine-month period ended December 31, 2015, a significant number of stock
options were cancelled that were not yet vested and this resulted
in a credit to expense in the period.
Adjusted Negative EBITDA was $1,459,161 for the quarter, compared to negative
$2,264,341 in the same period in the
prior year. On a year-to-date basis, Adjusted Negative EBITDA was
$4,833,167 as compared to
$5,291,049 in 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. annex to this
press release, for further details with respect to the Company's
non-GAAP financial performance measures.)
As at December 31, 2015, the
Company had a cash of $2,058,637.
This represents a decrease of $2,033,506 from the Company's cash position as at
March 31, 2015.
Subsequent Event and Financing Update
On February 26, 2016, the Company
completed a non-brokered private placement of 20,000,000 units
("Units") at a price of CAD$0.10 per
Unit for aggregate gross proceeds to the Company of CAD$2,000,000 (the "Private Placement"). The
Company also completed, on that same date, an additional
non-brokered private placement of 2,500,000 Units at a price of
CAD$0.12 per Unit for aggregate gross
proceeds to the Corporation of CAD$300,000 (the "Additional Private
Placement").
Each Unit consisted of one common share (each, a "Common Share")
in the capital of the Company and one common share purchase warrant
(each, a "Warrant"). Each Warrant issued pursuant to the Private
Placement and the Additional Private Placement shall entitle the
holder thereof to acquire one Common Share at a price of
CAD$0.15 and CAD$0.16, respectively, for a period of
twenty-four months from the closing date (the "Expiration Date").
The Warrants are subject to an accelerated expiry if, at any time
after the four-month hold period expires, the 20 trailing-day
volume weighted average price of the Common Shares on the TSX
Venture Exchange exceeds CAD$0.30, in
which event the holder will be given notice that the Warrants will
expire 30 days following the date of such notice. The Warrants will
be exercisable by the holder during the 30-day period between the
notice and the expiration of the Warrants.
In connection with the Private Placement and the Additional
Private Placement, the Company paid finder's fees to certain arm's
length parties which consisted of cash payments in the aggregate
amount of CAD$58,099 and USD$50,000, and the issuance of 566,644
compensation warrants entitling such holders to purchase Common
Shares.
Going Concern
The unaudited interim condensed consolidated financial
statements of the Company for the three and nine-month periods
ended December 31, 2015 have been
prepared on a going concern basis, which implies the Company will
continue to operate for the foreseeable future and will be able to
realize its assets and discharge its liabilities and its
commitments in the normal course of business.
As at December 31, 2015, the
Company had not yet achieved profitable operations nor positive
cash flows from operating activities and has accumulated losses of
$26,833,957 since inception,
including the net loss of $5,062,183
for the nine-month period ended December 31,
2015. The Company used $4,182,578 of cash from its operating activities
for the nine-month period ended December 31,
2015. 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.
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 may continue to seek additional sources of financing in the
form of equity and/or debt financing and could pursue joint venture
or other partnership agreements; however, no assurance can be given
that any such additional financing, joint venture or partnership
will be available generally or on terms favourable to the
Company.
As a result of the recent financing completed by the Company,
management of the Company has a reasonable expectation that the
Company will be able to continue operations in the future. 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.
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 months ended December
31, 2015 and 2014, 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". EXO U develops an innovative software platform
that 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.
For more information, visit EXOU.com or follow us on Twitter
@exo_u.
Cautionary Note Regarding 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. 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, 2015,
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 unaudited interim 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 from operations, 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 in the "Other Financial Measures"
section of the Company's management's discussion and analysis for
the three and nine months ended December 31,
2015.
The following is a reconciliation of Negative EBITDA and
Adjusted Negative EBITDA to net loss for the three and nine-month
periods ended December 31, 2015 and
2014:
(in Canadian
dollars)
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Nine months
ended
December 31, 2015
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Nine months
ended
December 31, 2014
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Nine months
ended
December 31, 2015
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Nine months
ended
December 31, 2014
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Net Loss
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(1,702,769)
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(2,929,508)
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(5,062,183)
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(7,169,495)
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Financials expenses
(income), net
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2,919
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(6,569)
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(544)
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(16,087)
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Depreciation of
property & equipment
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13,343
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15,827
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39,418
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43,901
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Amortization of
intangible assets
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37,065
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37,065
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111,196
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111,197
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Negative
EBITDA
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(1,649,442)
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(2,883,185)
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(4,912,113)
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(7,030,484)
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Stock-based
compensation
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64,698
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563,788
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(124,885)
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1,654,404
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Net loss on foreign
exchange
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125,583
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55,056
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203,831
|
85,031
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Adjusted Negative
EBITDA
|
(1,459,161)
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(2,264,341)
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(4,833,167)
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(5,291,049)
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SOURCE EXO U Inc