TORONTO, ONTARIO--(Marketwire - July 26, 2012) - 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:
- 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;
- Shipped more units in the fourth quarter 2012 than any quarter since June 30, 2008;
- 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;
- Re-entered the 'Buy-Here-Pay-Here' marketplace; and
- 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.
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*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.
The Company continues to focus on, and is achieving success in, its key strategy elements to:
- Continue to build revenues and manage costs to maintain profitability and positive cash flow.
- Economically resolve outstanding legal claims (see Subsequent Event below).
- Seek opportunities to form value creating strategic partnerships.
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.
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 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.
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.
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.
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.
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.