TORONTO,
"We experienced tremendous growth in Q2, which was fueled by the momentum behind our Q1 acquisition of Menlo Technologies, organic growth in our cloud solutions business, and the launch of our payments intelligence solution, LedgerPay," said
FY2020 Q2 Financial Results:
The Corporation's unaudited financial statements for the quarter ended
- Revenue for the quarter ended
June 30, 2020 was$13.1 million versus$4.1 million for the quarter endedJune 30, 2019 . - Gross profit for the quarter ended
June 30, 2020 was$5.6 million as compared to$1.7 million for the quarter endedJune 30, 2019 . - Adjusted EBITDA for the quarter ended
June 30, 2020 was$2.8 million or 21% of revenue as compared to an Adjusted EBITDA of$0.3 million or 6% of revenue for the three months endedJune 30, 2019 . - Net loss for the quarter ended
June 30, 2020 was$5.8 million or a loss of$0.05 per share. Included in the net loss was: - Fair value of derivative liability loss of
$5.3 million related to the revaluation of convertible debt issued in connection with the acquisition of Menlo. - Amortization expense of
$1.0 million . - Stock-based compensation of
$180,000 . - Depreciation expense of
$190,000 .
FY2020 Q2 Business Highlights:
"I deeply appreciate the dedication shown to our customers by the
- Completed a bought deal financing raising gross proceeds of
C$16 million to enable growth through future acquisitions, investments in sales initiatives, marketing of intellectual property offerings, and other general corporate purposes. - The Company continues the market advancement of the LedgerPay solution platform and excited to recognize LedgerPay's revenue contribution in the quarter.
- Recognized by Microsoft for achieving the Advanced Specialization certification in Modernizing Web Applications. Only 19 Microsoft partners worldwide have achieved this certification by passing a rigorous audit process.
- Won and delivered a project with
Inform Diagnostics , a subspecialty anatomic pathology provider, to build a mobile application to track case status for COVID-19 testing and anatomical pathology specimens. - Won and delivered an Azure Data and Analytics project for
Massanutten Resorts , resulting in a published case study highlighting the success of the project. - The Corporation won their first large Microsoft Azure migration in the State and Local Government sector.
- As a result of a proof-of-concept executed in 2019, won the follow-on project of the development of a consumer application that analyzes a golfer's putting stroke for a major golf equipment manufacturer.
- Chosen to implement an integrated Dynamics CE and Dynamics Business Central Platform for a large Crown corporation.
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Corporate Matters
The Corporation has issued 12,071,428 common shares pursuant to the exercise of common share purchase warrants at a price of
"We believe that forfeiture of 7.4 million in potential warrant dilution along with retirement of over
"We are excited to exercise our warrants as we continue to have strong belief in the
The
About
Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA and Adjusted EBITDA as a percentage of revenue
Financial Measures and Adjusted EBITDA
There are measures included in this news release that do not have a standardized meaning under generally accepted accounting principles (GAAP) and therefore may not be comparable to similarly titled measures and metrics presented by other publicly traded companies. The company includes these measures because it believes certain investors use these measures and metrics as a means of assessing financial performance. EBITDA (earnings before interest, taxes, depreciation and amortization is calculated as net earnings before finance costs (net of finance income), income tax expense, and depreciation and amortization of intangibles) is a non-GAAP financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.
We prepare and release quarterly unaudited and annual audited financial statements prepared in accordance with IFRS. We also disclose and discuss certain non-GAAP financial information, used to evaluate our performance, in this and other earnings releases and investor conference calls as a complement to results provided in accordance with IFRS. We believe that current shareholders and potential investors in our Corporation use non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues, in making investment decisions about our Corporation and measuring our operational results.
The term "Adjusted EBITDA" refers to a financial measure that we define as earnings before certain charges that management considers to be non-operating expenses and which consist of interest, taxes, depreciation, amortization, stock-based compensation (for which we include related fees and taxes), changes in fair value of derivatives, acquisition-related expenses and listing expense. Adjusted EBITDA as a percentage of revenues divides Adjusted EBITDA for a period by the revenues for the corresponding period and expresses the quotient as a percentage.
Management considers these non-operating expenses to be outside the scope of
Management believes that investors and financial analysts measure our business on the same basis, and we are providing the Adjusted EBITDA financial metric to assist in this evaluation and to provide a higher level of transparency into how we measure our own business. However, Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues are non-GAAP financial measures and may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues should not be construed as a substitute for net income determined in accordance with IFRS or other non-GAAP measures that may be used by other companies, such as EBITDA. The use of Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues does have limitations. As these acquisition-related expenses charges may continue as we pursue our consolidation strategy, some investors may consider these charges and expenses as a recurring part of operations rather than expenses that are not part of operations.
Cautionary Note Regarding Forward Looking Information
Neither
Forward-Looking Statements: Some statements in this news release contain forward-looking information. These statements include, but are not limited to, statements with respect to proposed activities, consolidation strategy and future expenditures. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, among others the limited history of operations, lack of profitability, availability of financing, the need for additional financing and the timing and amount of expenditures, information pertaining to strategy, plans, or future financial performance, such as statements with respect to future revenues, EBITDA, cash flows and other statements that express management's expectations or estimates of future performance, the anticipated timing of future cash flow and positive EBITDA, ability to successfully execute on consolidation strategies, the failure to find economically viable acquisition targets, funding for internally developed technology solutions, client retention and attrition, client demands, reliance on key personnel, economic spending in the IT industry and technological changes in the IT industry.
These forward-looking statements are based on reasonable assumptions and estimates of management of the Corporation at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: changes in technology, customer markets and demand for the Corporation's services; the efficacy of the Corporation's software and product offering; sales and margin risk; acquisition and integration risks; dependence on economic and market conditions including, but not limited to, access to equity or debt capital on favourable terms if required; changes in market dynamics including business relationships and competition; information system risks; risks associated with the introduction of new products; product design risk; risks related to the Corporation being a holding company; environmental risks; customer and vendor risks; credit risks; tax and insurance related risks; risks of legislative changes; risks relating to remote operations; key executive risk; risk of litigation risks; risks related to contracts with third party service providers; risks related to the enforceability of contracts; risks related to general economic, market and business conditions, including, but not limited to, the ongoing impact of the COVID-19 pandemic; the limited operating history of the Corporation; reliance on the expertise and judgment of senior management of the Corporation; risks related to proprietary intellectual property and potential infringement by third parties; risks relating to financing activities including leverage; risks relating to the management of growth; increased costs associated with the Corporation becoming a publicly traded company; increasing competition in the industry; risks relating to energy costs; reliance on key inputs, suppliers and skilled labour; cyber-security risks; risks related to quantifying the Corporation's target market; risks related to industry growth and consolidation; fraudulent activity by employees, contractors and consultants; conflicts of interest; risks related to the cost structures of certain projects; risks relating to certain remedies being limited and the difficulty of enforcement of judgments and effect service outside of
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