AirIQ Inc. ("AirIQ") (TSX VENTURE:IQ), a supplier of wireless location- based
services, today announced its financial results for the fifteen months ended
March 31, 2011.
"The Company continues to focus on key elements of its strategy", said Don
Gibbs, President and Chief Executive Officer of AirIQ, "of building revenues,
managing costs and seeking value creating partnerships. During the year we
accomplished a tremendous amount, as outlined in the 'Business Review' section
below. One of these accomplishments was the changing of our year-end - from
December 31st to March 31st, - and so it should be noted that the Company's
audited consolidated financial statements include information for a 15 month
reporting period and not the usual 12 months. During this period of economic
turmoil the Company managed to improve gross profits and continued to reduce
expenses. We were also able to settle two lawsuits against the Company."
"Subsequent to the period end, the Company raised $1.3 million in a shareholder
rights offering that was fully subscribed. The rights offering was quickly
followed with a non-brokered private placement for $416 thousand, 89.9% of which
was taken up by officers, directors and insiders of the Company", continued Mr.
Gibbs. "We cannot thank our stakeholders enough for their support. We are now in
a position to expand our customer base, launch new products and drive to
profitability and positive cash flow."
Unless otherwise noted herein, and except share and per share amounts, all
references to dollar amounts are in thousands of Canadian dollars.
Business Review
In January 2010, the Company reduced its Board from seven to four members and
reduced the non- executive Board compensation. In June 2010 David Vaughn did not
run for re-election and the Board was further reduced to three persons.
Subsequent to the period end, on April 30, 2011 Randall Reynolds resigned from
the Board and Messrs. Emmanuel Mounouchos and Mathew Wilson were appointed to
the Board. The Board of four members then implemented a non-cash payment Board
compensation policy and agreed to grant stock options for shares of the Company
to compensate its non-executive Board members.
On February 12, 2010, the Company's common shares were listed for trading on the
TSX Venture Exchange ("TSXV") under the symbol "IQ". The Company met the
requirements to list its common shares on the TSXV as a Tier II company, and the
reactivation from the NEX to the TSXV was approved.
In March 2010, the Company announced the re-launch of its consumer solution,
MobileIQ, with the intention of expanding its subscriber base throughout North
America. Also in March 2010, the Company launched a monthly rental program to
enter an attractive niche in the marketplace.
At the end of March, 2010, following full transition of services related to the
Company's marine business sold in November of 2009, the Company further reduced
operating costs by reducing staff and hours in its Client Care operation and
infrastructure costs.
On October 7, 2010, the Company entered into a credit agreement with Eventi
Credit Inc. ("Eventi") and Mosaic Capital Partners LP ("Mosaic") for a loan of
$500.
In January 2011, the Company changed its fiscal year end from December 31st to
March 31st resulting in a fifteen (15) month reporting period from January 1,
2010 to March 31, 2011.
On January 27, 2011, the Company filed a Notice of Intention with the securities
regulators declaring its intention to be qualified to file a short form
prospectus under National Instrument 44-10.
On February 3, 2011, the articles of the Company were amended to consolidate the
Company's issued and outstanding common shares on the basis of one (1) post
consolidation common share for every forty (40) pre-consolidation shares (the
"Consolidation"). As a result, the then issued 174,146,741 common shares were
consolidated into 4,353,687 common shares. The exercise price and the number of
common shares issuable under all of the Company's outstanding warrants and stock
options were also proportionately adjusted upon Consolidation.
On February 28, 2011, the Company filed a short-form prospectus offering
4,353,687 rights to subscribe for up to 8,707,374 common shares of the Company
at a price of $0.15 per common share (the "Rights Offering"). (See Subsequent
Events - Rights Offering below).
Subsequent Events
Rights Offering
On April 12, 2011, the Company completed the Rights Offering and issued an
aggregate of 8,707,374 common shares for $0.15 per share for gross proceeds of
approximately $1,306.
Payment on Promissory Notes
On May 3, 2011, the Company paid $125 to each of the Lenders in reduction of the
principal amount outstanding on the Promissory Notes. The repayment was made
with proceeds from the Rights Offering and in accordance with the terms set out
in the short-form prospectus. Following this repayment, the Company owes $125 in
principal to each of the Lenders.
Private Placement
On May 31, 2011 the Company closed a non-brokered private placement for
2,772,886 common shares at a price of $0.15 per share, for total consideration
of $416 (the "Private Placement").
Following the Rights Offering and the Private Placement, the Company has a total
of 15,833,947 common shares issued and outstanding.
Overview
The Company's audited consolidated financial statements include the accounts of
AirIQ and its subsidiaries, AirIQ U.S. Holdings, Inc. ("AirIQ Holdings"), AirIQ
U.S., Inc. ("AirIQ USA"), and AirIQ, LLC ("AirIQ LLC"). All inter-company
balances and transactions have been eliminated on consolidation. The Company's
audited consolidated financial statements for the twelve months ended December
31, 2009 also include the accounts of AirIQ's former subsidiaries, AirIQ Marine,
Inc. ("AirIQ Marine") and Oceantrac Incorporated.
The Company's audited consolidated financial statements as at and for the
fifteen months ended March 31, 2011, including notes thereto, and Management's
Discussion and Analysis for the same period were filed with the Canadian
securities regulatory authorities on July 29, 2011, and will be available on the
Company's website (www.airiq.com) and on the System for Electronic Document
Analysis and Retrieval ("SEDAR") website (www.sedar.com).
Results of Continuing Operations
Revenues
Revenues for the fifteen months ended March 31, 2011, decreased 30% to $3,697
from $5,257 for the twelve month period ended December 31, 2009.
Revenues received from equipment sold in connection with service contracts are
recorded as deferred revenue and recognized over the initial term of the service
contract.
Sales of hardware contracts recorded to deferred revenues were approximately
$676 during the fifteen month period ended March 31, 2011 compared to $647
during the twelve month period ended December 31, 2009. Revenues recognized from
deferred revenues for the fifteen month period ended March 31, 2011 was
approximately $722 compared to $1,693 during the twelve month period ended
December 31, 2009. The reduction in revenues can be attributed to the expiration
of customer hardware contracts that had been deferred from sales in prior
periods.
Overall, revenues related to service contracts sold in connection with hardware
equipment decreased by $486 from $3,314 for the twelve months ended December 31,
2009 to $2,828 for the fifteen month period ended March 31, 2011. Included in
this decrease is approximately $166 related to the difference in the average US
dollar exchange rates which decreased from $1.14 for the twelve months ended
December 31, 2009 compared to $1.03 for the fifteen months ended March 31, 2011.
The remaining difference of $320 is attributable to the expiration of customer
contracts and lower sales when compared to the twelve month period ended
December 31, 2009.
Included in the Company's reported revenues are sales of lost units of
approximately $110 during the fifteen months ended March 31, 2011. Included in
the Company's reported revenues for the twelve month period ended December 31,
2009 was a one-time amount of $100 related to revenues associated with a dealer
revenue sharing program. Neither of these revenues had any associated direct
cost of sales.
Gross Profit
Overall, gross profit for the fifteen months ended March 31, 2011, decreased 14%
to $2,273 from $2,639 for the comparative twelve months ended December 31, 2009.
Equipment gross profits increased by approximately $12 to $222 during the
fifteen month period ended March 31, 2011 from $210 for the twelve month period
ended December 31, 2009 due to a combination of lower hardware and amortization
costs.
Service contract gross profits declined by approximately $399 to $2,051 during
the fifteen month period ended March 31, 2011 from $2,450 for the twelve month
period ended December 31, 2009. Included in this decrease is approximately $163
related to the difference in the average US dollar exchange rates which
decreased from $1.14 for the twelve months ended December 31, 2009 compared to
$1.03 for the fifteen months ended March 31, 2011. The remaining difference of
$236 is attributable to the expiration of customer contracts and lower sales
when compared to the twelve month period ended December 31, 2009.
Expenses and Other Items
Sales and marketing, engineering and research and general and administrative
expenses totalled $3,285 and $4,159 for the fifteen months ended March 31, 2011
and twelve months ended December 31, 2009, respectively.
Overall these expenses were reduced by $874 for the fifteen months ended March
31, 2011 when compared to the twelve months ended December 31, 2009. Expense
reductions were achieved in the following areas; a) wages and related expense
reductions of approximately $215 due to the Company's restructuring initiatives
completed in 2009, b) travel expense of approximately $151 primarily related to
lower personnel due to the restructuring initiatives, c) premise lease savings
of approximately $102 due to the relocation of the Company's head office in 2009
and, d) other cost reductions of approximately $406 related to consulting fees,
audit fees, director fees, legal fees and other costs.
Net loss
The Company's net loss from continuing operations for the fifteen months ended
March 31, 2011 year was $1,263 as compared to a net loss of $3,316 for the
twelve months ended December 31, 2009, a decrease of $2,053.
The decrease in net loss period-over-period can be attributed to improvement in
the following areas; a) expense reductions of approximately $874, b) reductions
in interest expense of $360, c) reductions in amortization of approximately
$323, d) reduced impairment of long-lived asset costs of $133, e) reduced
restructuring cost of $393, f) reduction of foreign exchange losses of
approximately $22 and, g) reduced stock-based compensation expense of $314. The
reduction in expenses was partially offset by lower gross profits of $366.
AMENDMENT OF FINANCIAL STATEMENTS
The Company's consolidated financial statements for the year ended December 31,
2009 have been amended for an adjustment to stock based compensation expense to
properly reflect the vesting of certain options. The adjustment has been
reflected on a retroactive basis, resulting in the following changes to the
prior comparative figures from those previously presented:
As Previously As
Reported Adjustment Restated
----------------------------------------------------------------------------
$ $ $
Contributed Surplus (2,245) (164) (2,409)
Deficit (95,984) (164) (96,148)
Stock-based compensation 153 164 317
Net loss from continuing operations (3,152) (164) (3,316)
Net earnings (loss) and comprehensive
income (loss for the year) 299 (164) 135
----------------------------------------------------------------------------
The accompanying condensed consolidated financial statements do not include any
adjustments to the amounts and classification of assets and liabilities that may
be necessary should the Company be unable to continue as a going concern.
AirIQ Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars except share and per share amounts)
March 31, 2011 December 31, 2009
$ $
--------------------------------------------------------------------------
(amended)
ASSETS
Current
Cash 169 744
Accounts receivable 310 419
Inventory 94 338
Prepaid expenses 304 111
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Total current assets 877 1,612
--------------------------------------------------------------------------
Property, plant and equipment 186 401
Intangible assets 211 392
--------------------------------------------------------------------------
1,274 2,405
--------------------------------------------------------------------------
--------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current
Accounts payable and accrued liabilities 1,410 1,562
Income taxes payable 130 177
Deferred revenue 379 443
Obligations under capital lease 20 89
Promissory notes 500 -
--------------------------------------------------------------------------
Total current liabilities 2,439 2,271
--------------------------------------------------------------------------
Deferred revenue 116 143
Obligations under capital lease 7 19
--------------------------------------------------------------------------
Total liabilities 2,562 2,433
--------------------------------------------------------------------------
Shareholders' equity (deficiency)
Share capital 89,263 89,263
Other paid-in capital 4,448 4,448
Contributed surplus 2,412 2,409
Deficit (97,411) (96,148)
--------------------------------------------------------------------------
Total shareholders' equity (deficiency) (1,288) (28)
--------------------------------------------------------------------------
1,274 2,405
--------------------------------------------------------------------------
--------------------------------------------------------------------------
AirIQ Inc.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
AND COMPREHENSIVE INCOME (LOSS)
(in thousands of Canadian dollars except share and per share amounts)
15 months ended 12 months ended
March 31, 2011 December 31, 2009
$ $
----------------------------------------------------------------------------
(amended)
Revenues 3,697 5,257
Direct cost of sales 1,424 2,618
----------------------------------------------------------------------------
Gross profit 2,273 2,639
----------------------------------------------------------------------------
Expenses
Sales and marketing 902 981
Engineering and research 420 472
General and administration 1,963 2,706
Stock-based compensation 3 317
Foreign exchange loss 10 32
----------------------------------------------------------------------------
3,298 4,508
----------------------------------------------------------------------------
Loss before the following and
discontinued operations (1,025) (1,869)
----------------------------------------------------------------------------
Interest expense 49 409
Restructuring charges - 393
Impairment of long-lived assets 46 179
Amortization 143 466
----------------------------------------------------------------------------
238 1,447
----------------------------------------------------------------------------
Net loss from continuing operations (1,263) (3,316)
Net earnings from discontinued operations - 3,451
----------------------------------------------------------------------------
Net earnings (loss) and comprehensive
income (loss) for the period (1,263) 135
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Loss per share from continuing operations
(basic and diluted) (0.29) (0.82)
Earnings (loss) per share from
discontinued operations
(basic and diluted) - 0.85
----------------------------------------------------------------------------
Loss per share (basic and diluted) (0.29) (0.03)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
AirIQ Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars except share and per share amounts)
15 months ended 12 months ended
March 31, 2011 December 31, 2009
$ $
----------------------------------------------------------------------------
(amended)
OPERATING ACTIVITIES
Net loss from continuing operations (1,263) (3,316)
Add (deduct) items not involving cash
Stock-based compensation 3 317
Amortization of property, plant and
equipment 211 585
Amortization of intangible assets 420 1,211
Impairment loss on disposal of
property, plant and equipment 46 200
Other - 199
Changes in non-cash balances related to
operations
Accounts receivable 109 806
Inventory 244 142
Prepaid expenses (109) (2)
Accounts payable and accrued
liabilities (236) (1,414)
Income taxes payable (47) (64)
Deferred revenue (91) (1,061)
Service contract costs (239) (341)
----------------------------------------------------------------------------
Cash used in operating activities (952) (2,738)
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from disposal of business (net
of cash disposed of $341) - 2,155
Purchase of property, plant and
equipment (48) (117)
Proceeds from disposal of property,
plant and equipment 6 -
----------------------------------------------------------------------------
Cash provided by investing activities (42) 2,038
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Repayment of obligations under capital
lease (81) (167)
Proceeds from issuance of common shares - 200
Cost of issuance of common shares - (3)
Repayment of term loan - (2,574)
Proceeds from promissory notes 500 -
----------------------------------------------------------------------------
Cash used in financing activities 419 (2,544)
----------------------------------------------------------------------------
Effect of foreign exchange on cash - (9)
Net change in cash from continuing
operations (575) (3,253)
Net cash used by discontinued operations - 1,558
Cash, beginning of period 744 2,439
----------------------------------------------------------------------------
Cash, end of period 169 744
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Supplementary cash flow information
Interest paid 36 410
Non-cash investing and financing
transactions
Property, plant and equipment
purchased under capital leases 21 4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
AirIQ Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY (DEFICIENCY)
(in thousands of Canadian dollars except share and per share amounts)
Other
Share paid-in Contributed
capital capital surplus Deficit Total
# $ $ $ $ $
----------------------------------------------------------------------------
Balance, January 1,
2009 160,813,408 89,066 4,448 2,092 (96,283) (677)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Issued re
subscription
agreement 13,333,333 197 - - - 197
Stock-based
compensation - - - 317 - 317
Net income for the
year - - - - 135 135
----------------------------------------------------------------------------
Balance, December
31, 2009
(as amended) 174,146,741 89,263 4,448 2,409 (96,148) (28)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Stock consolidation (169,793,054) - - - - -
Stock-based
compensation - - - 3 - 3
Net loss for the
period - - - - (1,263)(1,263)
----------------------------------------------------------------------------
Balance, March 31,
2011 4,353,687 89,263 4,448 2,412 (97,411)(1,288)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
No Conference Call
AirIQ will not be holding a conference call to discuss results. The Company's
financial statements, including complete financial statements and Management's
Discussion and Analysis will be available on the Company's website www.airiq.com
and at www.sedar.com by end of day July 29, 2011.
About AirIQ
AirIQ currently trades on the TSX Venture Exchange under the symbol IQ. AirIQ's
office is located in Pickering, Ontario, Canada. The Company offers a suite of
location based services that generate recurring revenues from each device
deployed. AirIQ delivers services to two primary markets: Commercial Fleets and
dealers that service Consumer segments. AirIQ provides vehicle owners with the
ability to monitor, manage and protect their mobile assets. Services include:
instant vehicle locating, boundary notification, automated inventory reports,
maintenance reminders, security alerts and vehicle disabling and unauthorized
movement alerts. For additional information on AirIQ or its products and
services, please visit the Company's website at www.airiq.com.
Forward-looking Statements
This news release contains forward-looking information based on management's
best estimates and the current operating environment. These forward-looking
statements are related to, but not limited to, AirIQ's operations, anticipated
financial performance, business prospects and strategies. Forward-looking
information typically contains statements with words such as "hope", "goal",
"anticipate", "believe", "expect", "plan" or similar words suggesting future
outcomes. These statements are based upon certain material factors or
assumptions that were applied in drawing a conclusion or making a forecast or
projection as reflected in the forward-looking statements, including AirIQ's
perception of historical trends, current conditions and expected future
developments as well as other factors management believes are appropriate in the
circumstances.
Such forward-looking statements are as of the date which such statement is made
and are subject to a number of known and unknown risks, uncertainties and other
factors, which could cause actual results or events to differ materially from
future results expressed, anticipated or implied by such forward-looking
statements. Such factors include, but are not limited to, changes in market and
competition, technological and competitive developments and potential downturns
in economic conditions generally. Therefore, actual outcomes may differ
materially from those expressed in such forward-looking statements.
Forward-looking statements are provided for the purpose of providing information
about management's current expectations and plans relating to the future.
Readers are cautioned that such information may not be appropriate for other
purposes. Other than as may be required by law, AirIQ disclaims any intention or
obligation to update or revise any such forward-looking statements, whether as a
result of such information, future events or otherwise.
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