AirIQ Inc. ("AirIQ") (TSX VENTURE:IQ), a supplier of wireless asset management
services, today announced its financial results for the year ended March 31,
2012.
"It has been an exciting and transformational year for the Company and its
employees," said Donald Gibbs, President and Chief Executive Officer of AirIQ.
The main highlights of the year were as follows. The Company:
1. Achieved positive EBITDAS in the fourth quarter. (EBITDAS represents
earnings before interest, tax, depreciation, amortization, shared-based
compensation expense and the gain on business acquisition.) This is the
first positive EBITDAS in over 6 years;
2. Shipped more units in the fourth quarter 2012 than any quarter since
June 30, 2008;
3. Integrated two new products into the Company's portfolio with "over the
air capability" to reconfigure devices remotely without customers having
to send them back;
4. Re-entered the 'Buy-Here-Pay-Here' marketplace; and
5. Completed a rights offering in April of 2011 and closed a private
placement in May of 2011, raising an aggregate of approximately $1,722.
"The positive EBITDAS achievement is a tribute to the hard work and efforts of
the Company's employees, who continue to streamline costs and expenses,"
continued Mr. Gibbs. "More importantly, the team sold the most units in the
fourth quarter 2012 since the quarter ended June 2008. These sales are not
reflected on the Company's reported IFRS revenue due to the Company's required
accounting treatment which defers hardware sales over the corresponding period
of the service contract. As a result, the Company is deferring more revenue than
is being recognized from the deferred pools. Subsequent to the year end, the
Company was also successful in settling a long time outstanding product
liability claim with a former customer in Fargo, North Dakota. This was the
final lawsuit that I inherited when I first became Chief Executive Officer of
AirIQ, and I am pleased to report that the settlement was well within the amount
provisioned on the Company's books," reported Mr. Gibbs.
Financial Highlights
Three months Twelve months
ended ended
31-Mar-12 31-Mar-12
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Total Revenue $ 530 $ 2,380
Gross Margin $ 415 $ 1,766
Gross Margin % 78.3% 74.2%
Net Income (loss) $ 16 $ (310)
Net Income (loss) per share, basic and diluted $ 0.00 $ (0.03)
EBITDAS(i) $ 28 $ (147)
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(i)The Company has included information concerning EBITDAS because it believes
that it may be used by certain investors as one measure of the Company's
financial performance. EBITDAS is not a measure of financial performance under
IFRS and is not necessarily comparable to similarly titled measures used by
other companies. EBITDAS should not be construed as an alternative to net income
or to cash flows from operating activities (as determined in accordance with
IFRS ) or as a measure of liquidity.
Business Review
The Company continues to focus on, and is achieving success in, its key strategy
elements to:
1. Continue to build revenues and manage costs to maintain profitability
and positive cash flow.
2. Economically resolve outstanding legal claims (see Subsequent Event
below).
3. Seek opportunities to form value creating strategic partnerships.
Subsequent Event
Subsequent to the year end, on June 27, 2012, the Company entered into an
agreement with a former customer for the settlement of a product liability claim
filed in the District Court, East Central Judicial District in Fargo, North
Dakota. Pursuant to the settlement agreement, the parties agreed to release all
claims against each other in consideration of the Company paying the former
customer a total of US$98. Approximately one third of the settlement amount was
covered by the Company's insurers, and the remaining amount payable by the
Company is well within the amount provisioned on its books for settlement.
Payment of the settlement amount will be made in instalments with final payment
to be made on November 15, 2012. Once all payments are made, the parties will
file a stipulation for dismissal of the action, with prejudice. As security for
the installment payments, the Company has granted a first security interest on
its assets, which will be released immediately on final payment of the amount
owing under the settlement.
As a word of caution when reviewing the Company's Financial Statements and
Management's Discussion and Analysis ("MDA") for the year ended March 31, 2012,
that the Company is reporting for a 12 month period ended March 31, 2012, with
comparative information for a 15 month period ended March 31, 2011. In the MDA,
to make comparisons more meaningful, the Company has included certain financial
information for a 12 month period ended March 31, 2011, which are clearly marked
"unaudited".
Unless otherwise noted herein, and except share and per share amounts, all
references to dollar amounts are in thousands of Canadian dollars.
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 as at and for the year
ended March 31, 2012, including notes thereto, and Management's Discussion and
Analysis for the same period were filed with the Canadian securities regulatory
authorities on July 27, 2012, 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).
Revenues
Revenues for the year ended March 31, 2012, decreased 36% and 15% to $2,380 from
$3,697 and $2,790 for the fifteen months ended March 31, 2011 and for the twelve
month period ended March 31, 2011 respectively. Approximately 76% of the total
revenue for the year represents recurring revenue from the Company's airtime
customers.
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 units associated with service contracts recorded to deferred
revenues were approximately $515, during the year ended March 31, 2012, compared
to $676 during the fifteen months ended March 31, 2011 and $556 for the twelve
month period ended March 31, 2011.
Revenues recognized from deferred revenues for the year ended March 31, 2012
were approximately $528 compared to $767 during the fifteen months ended March
31, 2011 and $541 for the twelve month period ended March 31, 2011. This decline
is attributable to the fact that such revenues were fully recognized from sales
of hardware units associated with service contracts, and that had been
previously deferred.
Overall, revenues related to service contracts sold in connection with hardware
equipment decreased by $1,016 from $2,828, for the fifteen months ended March
31, 2011 and by $322 from $2,134 for the twelve months ended March 31, 2011 to
$1,812 for the twelve months ended March 31, 2012.
Included in the Company's reported revenues are miscellaneous equipment sales of
approximately $12 during the year ended March 31, 2012, compared to $25 and $14
for the fifteen months and twelve months ended March 31, 2011, respectively.
Also included in the Company's reported revenues are sales of lost units of
approximately $18 during the year ended March 31, 2012 compared to $110 and $108
for the fifteen and twelve months ended March 31, 2011, respectively.
Gross Profit
Overall, gross profit decreased by 22% to $1,766 for the year ended March 31,
2012 compared to $2,273 for the fifteen months ended March 31, 2011 and remained
virtually unchanged at $1,765 when compared to the twelve months ended March 31,
2011.
Equipment gross profits increased by approximately 42% and 66% to $316 during
the year ended March 31, 2012 from $222 for the fifteen months ended March 31,
2011 and from $190 for the twelve months ended March 31, 2011 respectively, due
to a combination of lower hardware and costs of deferred revenues.
Service contract gross profits decreased by approximately 29% and 8% to $1,450
for the year ended March 31, 2012 from $2,051 for the fifteen months ended March
31, 2011 and $1,574 for the twelve months ended March 31, 2011 respectively.
Expenses and Other Items
Sales and marketing, research and development and general and administrative
expenses totalled $1,977 for the year ended March 31, 2012 compared to $3,287
for the fifteen months ended March 31, 2011 and $2,554 for the twelve months
ended March 31, 2011.
Overall these expenses were reduced by $1,310 for the year ended March 31, 2012
when compared to the fifteen months ended March 31, 2011 and $577 when compared
to the twelve months ended March 31, 2011.
Expense reductions for the year ended March 31, 2012 when compared to the
fifteen months ended March 31, 2011 were achieved in the following areas; a)
wages and related expense reductions of approximately $430 due to the Company's
restructuring initiatives and work sharing programs, b) legal fees of
approximately $54 primarily related to the reduced legal costs due to the
settlement of suits c) computer operating expense savings of approximately $128
due to the reduction of co-location expenses, (d) consulting fee costs were
reduced by $241 and (e) other cost reductions of approximately $457 related to
audit fees, director fees, share based payment and other costs.
Net loss
The Company's net loss from continuing operations for the year ended March 31,
2012 was $310, as compared to a net loss of $1,262 for the fifteen months ended
March 31, 2011 and $922 for the twelve months ended March 31, 2011, an
improvement of $952 and $612 respectively.
The decrease in net loss for the year ended March 31, 2012 when compared to the
fifteen month period ended March 31, 2011 can be attributed to improvement in
the following areas; a) expense reductions of approximately $1,310, b) decrease
in amortization of approximately $31 c) reduced interest expense of $31, d) the
decrease in foreign exchange of approximately $1, e) the reduction in impairment
of long lived assets of $41, f) gain on business acquisition of $45, and g)
decreased gross profits of $507.
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 on July 27, 2012.
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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