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.
Neither 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.
Contacts: AirIQ Inc. Donald Gibbs President and Chief Executive
Officer (905) 831-6444, Ext. 4255 dgibbs@airiq.com
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