The Company’s unaudited condensed consolidated interim financial statements for the nine month period ended September 30, 2017 are included herewith.
(Unaudited – Expressed in U.S. Dollars)
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2017
(Unaudited - Expressed in U.S. dollars)
1.
|
Nature and Continuance of Operations
|
|
|
|
IGEN Networks Corp, (“IGEN”, or the “Company”) was incorporated in the State of Nevada on November 14, 2006. As of May 5, 2014, through the acquisition of Nimbo LLC based in Murrieta, California, the Company has focused on the automotive industry in offering GPS based services to the consumer through dealership channels across the United States. Services that are offered on an annual renewal basis include stolen vehicle protection solutions, lot inventory management, smart phone based roadside assistance programs, and real-time vehicle health and driver behavior information direct to the consumer.
|
|
|
|
The accompanying condensed consolidated interim financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. In the opinion of management, the accompanying condensed consolidated interim financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.
|
|
|
|
The preparation of these condensed consolidated interim financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.
|
|
|
|
These condensed consolidated interim financial statements have been prepared on a going concern basis, which imply 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 the continued financial support from its shareholders, on the ability of the Company to grow its revenue base, on its ability to successfully grow the companies in which it is invested, and on the ability of the Company to obtain necessary equity financing to both support the latter objectives and to invest in and grow new companies. The Company has incurred recurring losses since inception, incurred a net loss of $800,169 and negative cash flow from operations of $462,360 during the nine months ended September 30, 2017, and had accumulated losses of $9,312,479 and a working capital deficit of $1,009,299 as at September 30, 2017. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. Although there are no assurances that management’s plans will be realized, management believes that the Company will be able to continue operations into the future. These condensed consolidated interim 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.
|
|
|
2.
|
Summary of Significant Accounting Policies
|
|
(a)
|
Basic of Presentation and Consolidation
|
|
|
|
|
|
These condensed consolidated interim financial statements and related notes include the records of the Company and the following wholly-owned subsidiaries:
|
|
IGEN Business Solutions Inc.
|
|
Incorporated in Canada (Refer to Note 15)
|
|
Nimbo, LLC
|
|
Incorporated in USA
|
|
|
All inter-company transactions and balances have been eliminated. These condensed consolidated interim financial statements are presented in accordance with accounting principles generally accepted in the United States, are expressed in U.S. dollars, and, in management’s opinion, have been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below.
|
IGEN NETWORKS CORP.
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2017
(Unaudited - Expressed in U.S. dollars)
2.
|
Summary of Significant Accounting Policies
(continued)
|
|
|
|
|
(b)
|
Reclassifications
|
|
|
|
|
|
Certain reclassifications have been made to the prior period figures to conform to the current period’s presentation.
|
|
|
|
|
(c)
|
Use of Estimates
|
|
|
|
|
|
The preparation of these condensed consolidated interim financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated interim financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, valuation of inventory, the useful lives and recoverability of equipment, impairment of goodwill, valuation of notes payable, fair value of derivative liabilities and convertible debentures, fair value of stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
|
|
|
|
|
(d)
|
Recent Accounting Pronouncements
|
|
|
|
|
|
A number of new standards, and amendments to standards and interpretations, are not yet effective for the period ended September 30, 2017, and have not been applied in preparing these condensed consolidated interim financial statements.
|
|
|
|
|
|
In September 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-13,
“Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.”
The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Both of the below entities may still adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective date and transition requirements for the amendments for ASU 2014-09 and ASU 2016-02.
|
|
|
|
|
|
In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04,
“Intangibles – Goodwill and Other”
(Topic 350). ASU 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value but the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendment should be applied on a prospective basis and is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
|
|
|
|
|
|
In November 2016, the FASB issued ASU No. 2016-18,
“Statement of Cash Flows
” (Topic 230), which update the guidance as to how restricted cash should be presented and classified. The updates are intended to reduce diversity in practice. The amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those annual periods, with early adoption permitted.
|
IGEN NETWORKS CORP.
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2017
(Unaudited - Expressed in U.S. dollars)
2.
|
Summary of Significant Accounting Policies
(continued)
|
|
|
|
|
(d)
|
Recent Accounting Pronouncements (continued)
|
|
|
|
|
|
In May 2014, the FASB issued ASU 2014-09,
“Revenue from Contracts with Customers”
(Topic 606), which updated the guidance in ASC Topic 606, Revenue Recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this update deferred the effective date for implementation of ASU 2014-09 by one year and is now effective for annual reporting periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. In April 2016, FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and in May 2016, ASU 2016-12, Revenues from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients both of which provide supplemental adoption guidance and clarification to ASU 2014-09. ASU 2016-10 and ASU 2016-12 must be adopted concurrently with the adoption of ASU 2014-09.
|
|
|
|
3.
|
Accounts and Other Receivables
|
|
|
|
|
As at September 30, 2017 and December 31, 2016, accounts and other receivables consisted of the following:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
$
|
|
|
$
|
|
Trade accounts receivable
|
|
|
218,520
|
|
|
|
149,825
|
|
GST and other receivables
|
|
|
9,384
|
|
|
|
8,331
|
|
Allowance for doubtful accounts
|
|
|
(1,618
|
)
|
|
|
(1,618
|
)
|
|
|
|
226,286
|
|
|
|
156,538
|
|
4.
|
Equipment
|
|
|
|
As at September 30, 2017 and December 31, 2016, equipment consisted of the following:
|
|
|
|
|
|
|
|
|
Net Carrying Value
|
|
|
|
|
|
|
Accumulated
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
2017
|
|
|
2016
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Computer equipment
|
|
|
44,166
|
|
|
|
40,530
|
|
|
|
3,636
|
|
|
|
6,189
|
|
Office equipment
|
|
|
1,603
|
|
|
|
1,116
|
|
|
|
487
|
|
|
|
573
|
|
Software
|
|
|
6,012
|
|
|
|
6,012
|
|
|
|
-
|
|
|
|
375
|
|
Total
|
|
|
51,781
|
|
|
|
47,658
|
|
|
|
4,123
|
|
|
|
7,137
|
|
|
Depreciation expense for the nine months ended September 30, 2017 and 2016 was $3,014 and $7,727, respectively.
|
IGEN NETWORKS CORP.
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2017
(Unaudited - Expressed in U.S. dollars)
5.
|
Accounts Payable and Accrued Liabilities
|
|
|
|
As at September 30, 2017 and December 31, 2016, accounts payable and accrued liabilities consisted of the following:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
$
|
|
|
$
|
|
Trade accounts payable
|
|
|
614,447
|
|
|
|
494,492
|
|
Accrued liabilities
|
|
|
19,200
|
|
|
|
36,056
|
|
Accrued interest payable
|
|
|
13,341
|
|
|
|
12,862
|
|
Payroll and commissions payable
|
|
|
57,035
|
|
|
|
32,063
|
|
Taxes payable
|
|
|
1,247
|
|
|
|
6,379
|
|
|
|
|
705,270
|
|
|
|
581,852
|
|
6.
|
Notes Payable
|
|
|
|
|
(a)
|
On September 30, 2014, the Company issued a note payable for $95,000 in exchange for settlement of accounts payable. The note payable is unsecured, bears interest at 5% per annum, and is due on demand. The note payable was accounted for at amortized cost using the effective interest rate method with the effective interest rate of 14% per annum. The Company recorded a debt discount of $16,163 to the note payable, which is amortized over the term of the note, and a corresponding amount to additional paid-in capital at issuance. During the year ended December 31, 2016, the Company repaid $30,000 of the principal. During the nine months ended September 30, 2017, the Company repaid $65,000 of the principal and $7,000 of accrued interest. As at September 30, 2017, the carrying value of the note payable is $nil (December 31, 2016 – $65,000) and the Company recorded accrued interest of $3,711 (December 31, 2016 – $10,711), which has been included in accounts payable and accrued liabilities.
|
|
|
|
|
(b)
|
As at September 30, 2017, the Company had a note payable of $5,702 (Cdn$7,075) (December 31, 2016 – $14,998 (Cdn$20,000)) owed to a director, which is unsecured, bears interest at 5% per annum, and is due on October 30, 2017. During the nine months ended September 30, 2017, the Company repaid $10,000 (Cdn$12,925) of the principal. As at September 30, 2017, the Company recorded accrued interest of $2,386 (Cdn$2,960) (December 31, 2016 – $1,767 (Cdn$2,373)), which has been included in accounts payable and accrued liabilities.
|
|
|
|
|
(c)
|
On March 23, 2017, the Company entered into the loan agreement with a third party for a principal amount of $8,695, which includes a one-time loan fee of $695, which was charged to interest expense. The note payable is unsecured, non-interest bearing, and requires minimum payments of 10% of the loan every ninety days from the start date of March 26, 2017. 25% of all funds processed through the Company’s PayPal account will be used to pay off the loan until the loan is repaid in full. As at September 30, 2017, the balance of the note payable was $3,018.
|
|
|
|
7.
|
Convertible Debentures
|
|
|
|
|
(a)
|
On March 30, 2017, the Company issued a convertible debenture to a third party in the principal amount of $50,000 which is unsecured, bears interest at 12% per annum, calculated monthly and not in advance, and is due on September 30, 2017. Subject to the approval of the holder of the convertible debenture, the Company may convert any or all of the principal and/or interest at any time following the six month anniversary of the issuance date of the convertible debenture (September 30, 2017) into common shares of the Company at a price per share equal to a 20% discount to the fair market value of the Company’s common stock.
|
|
|
|
IGEN NETWORKS CORP.
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2017
(Unaudited - Expressed in U.S. dollars)
7.
|
Convertible Debentures
(continued)
|
|
|
|
|
|
The Company analyzed the conversion option under ASC 815,
“Derivative and Hedging”
(“ASC 815”), and determined that the conversion feature should be classified as a liability and recorded at fair value due to there being no explicit limit to the number of shares to be delivered upon settlement of the conversion option. The fair value of the derivative liability resulted in a discount to the convertible debenture of $32,127. The carrying value of the convertible debenture will be accreted over the term of the convertible debenture up to the value of $50,000. During the nine months ended September 30, 2017, $32,127 (2016 - $nil) of accretion expense had been recorded. As at September 30, 2017, the carrying value of the convertible debenture is $50,000 (December 31, 2016 - $nil).
|
|
|
|
|
(b)
|
On May 1, 2017, the Company issued two convertible debentures for aggregate proceeds of $50,000 which are unsecured, bear interest at 12% per annum, calculated monthly and not in advance, and are due on May 1, 2019. Subject to the approval of the holder of the convertible debenture, the Company may convert any or all of the principal and/or interest at any time following the six month anniversary of the issuance date of the convertible debenture (November 1, 2017) into common shares of the Company at a price per share equal to a 20% discount to the fair market value of the Company’s common stock. The fair value of the derivative liabilities resulted in a discount to the convertible debentures of $45,400. The carrying value of the convertible debentures will be accreted over the term of the convertible debentures up to the value of $50,000. During the nine months ended September 30, 2017, $18,980 (2016 - $nil) of accretion expense had been recorded. As at September 30, 2017, the carrying value of the convertible debentures is $23,580 (December 31, 2016 - $nil).
|
|
|
|
|
(c)
|
On August 7, 2017, the Company issued a convertible debenture to a third party in the principal amount of $161,250 with an original issuance discount of $11,250 and incurred $3,500 of financing costs to a third party, which is unsecured, bears interest at 5% per annum, and is due on August 7, 2018. The holder may convert any or all of the principal and/or interest at any time following the six month anniversary of the issuance date of the convertible debenture (February 7, 2018) into common shares of the Company at a price per share equal to 75% multiplied by the closing price of the Company’s common stock preceding the trading day that the Company receives a notice of conversion. The fair value of the derivative liabilities resulted in a discount to the convertible debentures of $161,250. The carrying value of the convertible debentures will be accreted over the term of the convertible debentures up to the value of $161,250. During the nine months ended September 30, 2017, $1,215 (2016 - $nil) of accretion expense had been recorded. As at September 30, 2017, the carrying value of the convertible debenture is $1,215 (December 31, 2016 - $nil).
|
|
|
|
8.
|
Derivative Liabilities
|
|
|
|
|
The Company issues share purchase warrants as part of its private placements with exercise prices denominated in Canadian dollars, which differs from the Company’s functional currency of U.S. dollars and cannot be considered to be indexed to the Company’s own stock. The Company records the fair value of its share purchase warrants with a Cdn$ exercise price in accordance with ASC 815. The fair value of the derivative liabilities is revalued quarterly with corresponding gains and losses recorded in the consolidated statement of operations. As at September 30, 2017, the Company had derivative liabilities of $9,751 (December 31, 2016 - $27,930) relating to the share purchase warrants. The Company uses a multi-nominal lattice model to fair value the derivative liabilities. The following inputs and assumptions were used to value the share purchase warrants denominated in Canadian dollars during the nine months ended September 30, 2017 and 2016, assuming no expected dividends:
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
Expected volatility
|
|
|
196
|
%
|
|
88%-111%
|
|
Risk free interest rate
|
|
|
1.06
|
%
|
|
0.59%-0.73%
|
|
Expected life (in years)
|
|
|
0.5
|
|
|
1.37 – 4.25
|
|
IGEN NETWORKS CORP.
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2017
(Unaudited - Expressed in U.S. dollars)
8.
|
Derivative Liabilities
(continued)
|
|
|
|
During the nine months ended September 30, 2017, the Company issued four convertible debentures with variable exercise prices based on discount to market rates. The Company records the fair value of its convertible debentures with variable exercise prices based on future market rates in accordance with ASC 815. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. As at September 30, 2017, the Company had derivative liabilities of $245,127 (December 31, 2016 - $nil) relating to the fair value of the conversion feature of the convertible debentures. The Company uses a multi-nominal lattice model to fair value the derivative liabilities. The following inputs and assumptions were used to value the convertible debentures outstanding during the nine months ended September 30, 2017 and 2016, assuming no expected dividends:
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2017
|
|
2016
|
|
Expected volatility
|
|
180 - 243%
|
|
|
-
|
|
Risk free interest rate
|
|
1.06 - 1.47%
|
|
|
-
|
|
Expected life (in years)
|
|
0.25 - 1.59
|
|
|
-
|
|
|
During the nine months ended September 30, 2017, the Company recorded a gain on fair value of derivative liabilities of $579 (2016 – $14,413).
|
|
|
9.
|
Related Party Transactions
|
|
(a)
|
During the nine months ended September 30, 2017, the Company incurred $186,983 (2016 - $173,724) in management and consulting fees to companies controlled by three officers of the Company.
|
|
|
|
|
(b)
|
As at September 30, 2017, the Company owed $128,500 (December 31, 2016 - $132,053) to officers of the Company and companies controlled by officers of the Company, which is included in accounts payable and accrued liabilities. The amounts owed are unsecured, non-interest bearing, and due on demand.
|
10.
|
Common Stock
|
|
|
|
|
Share transactions for the period ended September 30, 2017:
|
|
|
|
|
(a)
|
On March 2, 2017, the Company issued 2,222,222 units at $0.09 per unit for proceeds of $200,000. Each unit consisted of one share of common stock and one share purchase warrant exercisable until March 2, 2019. The share purchase warrant is exercisable at $0.18 per share for the first year and $0.23 per share thereafter.
|
|
|
|
|
(b)
|
On March 2, 2017, the Company issued 56,000 shares of common stock with a fair value of $5,640 for consulting services rendered by a company controlled by the Vice President of Finance of the Company. The fair value of common shares was determined based on the end of day trading price of the Company’s common stock on the date of issuance.
|
|
|
|
|
(c)
|
On April 20, 2017, the Company issued 49,020 shares of common stock with a fair value of $5,392 for consulting services rendered. The fair value of common shares was determined based on the end of day trading price of the Company’s common stock on the date of issuance.
|
|
|
|
|
(d)
|
On June 23, 2017, the Company issued 147,059 units at $0.17 per unit for proceeds of $25,000 which was received as at December 31, 2016. Each unit consisted of one common share and one share purchase warrant exercisable at $0.35 per share for a period of two years from their date of issuance.
|
|
|
|
|
(e)
|
On July 1, 2017, the Company issued 49,020 shares of common stock with a fair value of $4,902 for consulting services rendered. The fair value of common shares was determined based on the end of day trading price of the Company’s common stock on the date of issuance.
|
IGEN NETWORKS CORP.
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2017
(Unaudited - Expressed in U.S. dollars)
10.
|
Common Stock
(continued)
|
|
|
|
|
(f)
|
On August 29, 2017, the Company issued 1,875,000 shares of common stock at $0.08 per share for proceeds of $150,000.
|
|
|
|
|
(g)
|
On September 7, 2017, the Company issued 49,020 shares of common stock with a fair value of $3,922 for consulting services rendered. The fair value of common shares was determined based on the end of day trading price of the Company’s common stock on the date of issuance.
|
|
|
|
|
(h)
|
During the year ended December 31, 2015, the Company issued 498,801 common shares with a fair value of $107,944 for services. Of this amount, $70,300 relates to services to be rendered, which was recorded as deferred compensation. The fair value of the common stock was determined based on the closing price of the Company’s common stock on the date of issuance. During the nine months ended September 30, 2017, the Company expensed $19,592 (2016 - $26,234) of the deferred compensation as consulting fees, which reflects the pro-rata portion of the services provided to July 24, 2017. The services have been fully earned as of September 30, 2017.
|
|
|
|
11.
|
Share Purchase Warrants
|
|
|
|
The following table summarizes the continuity schedule of the Company’s share purchase warrants:
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
average
|
|
|
|
|
|
|
exercise
|
|
|
|
Number of
|
|
|
price
|
|
|
|
warrants
|
|
|
$
|
|
|
|
|
|
|
|
|
Balance, December 31, 2016
|
|
|
4,055,294
|
|
|
|
0.20
|
|
Issued
|
|
|
2,419,281
|
|
|
|
0.17
|
|
Expired
|
|
|
(997,166
|
)
|
|
|
0.26
|
|
Balance, September 30, 2017
|
|
|
5,477,409
|
|
|
|
0.19
|
|
|
As at September 30, 2017, the following share purchase warrants were outstanding:
|
Number of warrants
|
|
|
Exercise price
|
|
|
|
|
outstanding
|
|
|
$
|
|
|
Expiry date
|
|
|
357,143
|
|
|
|
0.14
|
|
|
October 12, 2017
|
|
|
980,392
|
|
|
|
0.15
|
|
|
December 2, 2017
|
|
|
294,118
|
|
|
|
0.35
|
|
|
December 11, 2017
|
|
|
588,235
|
|
|
|
0.15
|
|
|
December 13, 2017
|
|
|
588,240
|
|
|
|
Cdn$0.34
|
|
|
March 29, 2018
|
|
|
250,000
|
|
|
|
0.15
|
|
|
May 4, 2018
|
|
|
2,222,222
|
|
|
|
0.18
|
|
|
March 2, 2019
|
|
|
50,000
|
|
|
|
0.20
|
|
|
January 2, 2022
|
|
|
147,059
|
|
|
|
0.35
|
|
|
June 23, 2019
|
|
|
5,477,409
|
|
|
|
|
|
|
|
|
|
During the nine months ended September 30, 2017, the Company issued 50,000 share purchase warrants with a fair value of $2,185 as contract fees to a third party for future financing, which was recorded as stock-based compensation expense. The Company uses the Black-Scholes option pricing model to establish the fair value of share purchase warrants issued, assuming no expected dividends or forfeitures, volatility of 173%, risk-free rate of 1.14%, and an expected life of 3 years.
|
IGEN NETWORKS CORP.
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2017
(Unaudited - Expressed in U.S. dollars)
12.
|
Stock Options
|
|
|
|
The following table summarizes the continuity schedule of the Company’s stock options:
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
average
|
|
|
Aggregate
|
|
|
|
Number of
|
|
|
exercise
price
|
|
|
intrinsic
value
|
|
|
|
options
|
|
|
$
|
|
|
$
|
|
Balance, December 31, 2016
|
|
|
4,000,000
|
|
|
|
0.16
|
|
|
|
-
|
|
Granted
|
|
|
1,550,000
|
|
|
|
0.13
|
|
|
|
-
|
|
Expired
|
|
|
(625,000
|
)
|
|
|
0.14
|
|
|
|
-
|
|
Balance, September 30, 2017
|
|
|
4,925,000
|
|
|
|
0.15
|
|
|
|
750
|
|
|
|
|
Outstanding
|
|
|
Exercisable
|
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
Range of
|
|
|
|
|
|
average
|
|
|
average
|
|
|
|
|
|
average
|
|
exercise
prices
|
|
|
Number of
|
|
|
remaining contractual
|
|
|
exercise
price
|
|
|
Number of
|
|
|
exercise
price
|
|
$
|
|
|
shares
|
|
|
life (years)
|
|
|
$
|
|
|
shares
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.07
|
|
|
|
75,000
|
|
|
|
0.50
|
|
|
|
0.07
|
|
|
|
75,000
|
|
|
|
0.07
|
|
|
0.09
|
|
|
|
910,000
|
|
|
|
0.50
|
|
|
|
0.09
|
|
|
|
910,000
|
|
|
|
0.09
|
|
|
0.13
|
|
|
|
1,425,000
|
|
|
|
4.61
|
|
|
|
0.13
|
|
|
|
1,100,000
|
|
|
|
0.13
|
|
|
0.16
|
|
|
|
225,000
|
|
|
|
3.37
|
|
|
|
0.16
|
|
|
|
112,500
|
|
|
|
0.16
|
|
|
0.19
|
|
|
|
2,270,000
|
|
|
|
2.98
|
|
|
|
0.19
|
|
|
|
2,270,000
|
|
|
|
0.19
|
|
Cdn$0.25
|
|
|
|
20,000
|
|
|
|
2.98
|
|
|
Cdn$0.25
|
|
|
|
20,000
|
|
|
Cdn$0.25
|
|
|
|
|
|
|
4,925,000
|
|
|
|
2.97
|
|
|
|
0.15
|
|
|
|
4,487,500
|
|
|
|
0.15
|
|
|
On May 11, 2017, the Company granted 1,550,000 stock options to officers, directors, employees, and consultants of the Company, which are exercisable at $0.13 per share and expire on May 11, 2022. Of this amount, 1,150,000 stock options vested on the date of grant, 50,000 stock options vests on October 21, 2017, 50,000 stock options vests on November 11, 2017, and the remaining 300,000 stock options vests on May 11, 2018.
|
|
|
|
The fair values of stock options granted are amortized over the vesting period where applicable. During the nine months ended September 30, 2017, the Company recorded $135,450 (2016 - $24,590) of stock-based compensation in connection with the vesting of options granted. The Company uses the Black-Scholes option pricing model to establish the fair value of options granted assuming no expected dividends or forfeitures and the following weighted average assumptions:
|
|
|
2017
|
|
|
2016
|
|
Expected volatility
|
|
|
132
|
%
|
|
|
200
|
%
|
Risk free interest rate
|
|
|
1.82
|
%
|
|
|
1.52
|
%
|
Expected life (in years)
|
|
|
4.8
|
|
|
|
5
|
|
IGEN NETWORKS CORP.
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2017
(Unaudited - Expressed in U.S. dollars)
13.
|
Segmented Information
|
|
|
|
The Company has one reportable segment: vehicle tracking and recovery solutions. The Company allocates resources to and assesses the performance of each reportable segment using information about its revenue and operating income (loss). The Company does not evaluate operating segments using discrete asset information.
|
|
|
|
The following table summarizes the financial performance of the Company’s reportable segments:
|
|
|
Nine months ended
|
|
|
|
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
Vehicle tracking and recovery solutions
|
|
|
1,041,789
|
|
|
|
828,570
|
|
|
|
|
|
|
|
|
|
|
Total consolidated net revenue
|
|
|
1,041,789
|
|
|
|
828,570
|
|
|
Segmentation by geographical location is not presented as all revenues are earned in U.S. Total assets by segment are not presented as that information is not used to allocate resources or assess performance at the segment level and is not reviewed by the Chief Operating Decision Maker of the Company.
|
|
|
14.
|
Concentration Risk
|
|
|
|
The Company extends credit to customers on an unsecured basis in the normal course of business. The Company’s policy is to perform an analysis of the recoverability of its receivables at the end of each reporting period and to establish allowances where appropriate. The Company analyzes historical bad debts and contract losses, customer concentrations, and customer credit-worthiness when evaluating the adequacy of the allowances.
|
|
|
|
During the nine months ended September 30, 2017, the Company had one (2016 - two) customers which accounted for 48% (2016 - 75%) of total revenues.
|
|
|
|
As at September 30, 2017, the Company had one (December 31, 2016 - two) customers which accounted for 99% (December 31, 2016 - 90%) of accounts receivable.
|
|
|
15.
|
Discontinued Operations
|
|
|
|
On November 7, 2017, the Company filed a Certification of Dissolution of IGEN Business Solutions Inc.
|
|
|
|
The following table summarizes the carrying amounts of the assets and liabilities from discontinued operations;
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Assets from discontinued operations
|
|
$
|
|
|
$
|
|
Cash
|
|
|
(101
|
)
|
|
|
1,343
|
|
Accounts and other receivables
|
|
|
1,864
|
|
|
|
5,891
|
|
Prepaid expenses and deposits
|
|
|
3,947
|
|
|
|
3,502
|
|
Equipment
|
|
|
184
|
|
|
|
248
|
|
Total
|
|
|
5,894
|
|
|
|
10,984
|
|
IGEN NETWORKS CORP.
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2017
(Unaudited - Expressed in U.S. dollars)
15.
|
Discontinued Operations
(continued)
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Liabilities from discontinued operations
|
|
$
|
|
|
$
|
|
Accounts payable and accrued liabilities
|
|
|
159,587
|
|
|
|
161,024
|
|
|
The following table shows the results of operations of IGEN Business Solutions Inc. for the three and nine months ended September 30, 2017 and 2016 which are included in the loss from discontinued operations:
|
|
|
Three months ended
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
Nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Loss from discontinued operations
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Consulting and business development fees
|
|
|
-
|
|
|
|
5,604
|
|
|
|
16,424
|
|
|
|
16,862
|
|
Depreciation
|
|
|
-
|
|
|
|
-
|
|
|
|
78
|
|
|
|
-
|
|
Foreign exchange gain
|
|
|
-
|
|
|
|
(4,568
|
)
|
|
|
(25,725
|
)
|
|
|
-
|
|
General and administrative
|
|
|
-
|
|
|
|
3,127
|
|
|
|
12,469
|
|
|
|
37,130
|
|
Management fees
|
|
|
-
|
|
|
|
38,500
|
|
|
|
49,728
|
|
|
|
106,400
|
|
Professional fees
|
|
|
(32,005
|
)
|
|
|
4,043
|
|
|
|
2,678
|
|
|
|
-
|
|
Travel
|
|
|
-
|
|
|
|
517
|
|
|
|
10,210
|
|
|
|
-
|
|
Other income
|
|
|
-
|
|
|
|
-
|
|
|
|
(180
|
)
|
|
|
-
|
|
|
|
|
(32,005
|
)
|
|
|
47,223
|
|
|
|
65,682
|
|
|
|
160,392
|
|
16.
|
Subsequent Events
|
|
|
|
Subsequent to September 30, 2017, the Company issued shares of common stock as follows,
|
|
|
|
|
|
|
·
|
1,428,571 shares of common stock for proceeds of $100,000;
|
|
|
|
|
|
|
·
|
625,000 shares of common stock for conversion of debt and accrued interest of $50,000;
|
|
|
|
|
|
|
·
|
174,020 shares of common stock for services rendered; and
|
|
|
|
|
|
|
·
|
150,000 shares of common stock to an employee as a promotion bonus.
|
|
|
|
|
|
On October 6, 2017, the Company granted 250,000 stock options to a consultant, which vest immediately, are exercisable at $0.08 per share, and expire on October 6, 2022.
|