EXO U announces its fourth quarter and fiscal 2015 financial results

MONTREAL, July 9, 2015 /CNW Telbec/ - EXO U Inc. (TSXV: EXO) ("EXO U" or the "Company"), a software provider that develops cross platform operating system agnostic software that enables development of highly customizable touch-based user interfaces and experiences, today announced its financial results for its fourth quarter and fiscal year ended March 31, 2015. All amounts are stated in Canadian dollars, unless otherwise noted.

 

FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS AND YEAR ENDED MARCH 31, 2015









Three months
Fiscal 2015

Three months
Fiscal 2014

 

Fiscal 2015

 

Fiscal 2014







Revenue


$       —

$ 65,667

$815,923

$138,974

Adjusted negative EBITDA 1


$(1,607,177)

$(1,342,693)

$(6,898,226)

$(3,928,926)

Net loss


$(2,025,337)

$(1,640,416)

$(9,194,832)

$(7,670,579)

Basic and diluted net loss per share


$(0.05)

$(0.05)

$(0.22)

$(0.24)







1.

Adjusted negative EBITDA is a non-IFRS measure. Please refer to the annex of this press release for the Company's definition of such measure and for a reconciliation of net loss and comprehensive loss as determined in accordance with IFRS to adjusted negative EBITDA.

 

Q4, Fiscal 2015 and Subsequent Highlights

  • On July 8, EXO U announced it had entered into an agreement with Mackie Research Capital Corporation in respect of a private placement, on a best efforts basis, to raise up to $5 million dollars with a targeted close on or about July 29, 2015.
  • Multiple partnership agreements signed with key educational sector's players such as Bi2U, SigmaNet, Cisco, Spongelab, CGI, CrowdMark and the French company WebServices for Education.
  • EXO U joined Panasonic's booth at the prestigious ISTE (International Society for Technology in Education) show in Philadelphia from June 28 to July 1. EXO U set up five mini classrooms to showcase its new digital education platform. The show generated over 40 new requests for pilots from potential customers throughout the United States.
  • Launch of the Company's New Digital Education Platform on April 6, 2015, at the ASU-GSV conference in Scottsdale, Arizona. Over two thousand attendees from around the world in the education field as well as investors attended the three day event. The Company had excellent participation at its "21st Century Classroom" and participants were able to both see and experience the EXO U solution. The event garnered over 20 requests for pilots from various districts in the United States.
  • In December 2014, a pilot of the Company's education solution was successfully deployed in two Canadian high schools with more than 250 students. The feedback was very positive with teachers stating that the software facilitated, among other things, better classroom management, improvements in teaching time, faster transitions during lessons as well as increased student discipline and responsibility in their use of technology in the classroom. A summary of the case study can be found using the following link http://www.exou.com/pdf/en-US/exo-u-montreal-case-study_02-2015.pdf
  • As at March 31, 2015, the Company had a $4,092,143 cash balance.
  • For the second consecutive quarter, tight cost control translated to a reduction in expenses ($915,767 reduction compared to the previous quarter ended December 31, 2014). A portion of this reduction was due to some one time items.

"This past fiscal year was one of great change and evolution for EXO U. We signed a number of strategic partnership agreements, launched the new version of our software, completed successful pilots of our solution in Canada and The United States and figured prominently in some major industry shows such as ASU GSV and ISTE", said Shan Ahdoot, President and Chief Executive Officer of EXO U. "These important achievements have contributed in generating many new customer opportunities throughout North America for EXO U. With the planned completion of the private placement financing, our short-term objectives are to continue developing our digital education platform, leverage our existing partners to grow our customer base, and, most of all, successfully deploy the pilots that have been requested from us to ultimately convert these numerous customer opportunities into commercial contracts. We are driven to succeed on all of these fronts."

Financial Results

EXO U had no revenue in the fourth quarter of the fiscal year ended March 31, 2015 compared to revenues of $65,667 one year earlier, while on a year-to-date basis, Fiscal 2015 revenues amounted to $815,923, representing revenues from three digital classrooms delivered to Panama, and revenues of Fiscal 2014 reached $138,974 following delivery of a marketing analysis and study of the education environment of a country in Latin America. As at March 31, 2015, the Company has $386,925 of deferred revenues recorded on the audited consolidated statement of financial position.  These deferred revenues are related to a contract signed with the Government of Panama to deliver, among other services, licenses of EXO U's solution.  As of March 31, 2015, the Company did not recognize any revenue from this license agreement as the revenue recognition criteria were not fully fulfilled.  While attempting to continue performance of its obligations under this license agreement contract, due to an extension requested by the former government of Panama to provide the content that they are required to provide and a subsequent change in government in Panama, the Company believes there is a risk that complete implementation and roll-out will not occur.

Research and development ("R&D") expense was $879,114 and $3,535,645 respectively for the fourth quarter and the fiscal year, increases of $406,402 and $1,996,486 respectively compared to the same periods of last year.  These increases are mainly explained by hirings in the R&D department as EXO U's technical employees drive its product development.

Selling, general, and administrative expenses for the fourth quarter were $795,106, down $234,623 from that incurred in the same period last year. On a year-to-date basis, these expenses increased from $2,762,405 in Fiscal 2014 to $4,268,173 for this fiscal year.  This increase is due to the hiring of new staff, travel costs, professional fees and business development.  The establishment of the Palo Alto facility in California and the higher loss on foreign exchange also contributed to the increased costs.

Stock-based compensation in the fourth quarter increased year over year from $194,101 to $243,603 and from $1,050,968 to $1,898,007 for the fiscal year, reflecting the issuance of stock options to new employees, to the independent members of the Company's board of directors and to certain third parties.

Adjusted negative EBITDA was $1,607,177 for the quarter, compared to negative $1,342,693 in the same period last year, an increase of $264,484. On a year-to-date basis, adjusted negative EBITDA reached $6,898,226 compared to $3,928,926 twelve months ago.  These increases in the adjusted negative EBITDA are explained by higher spending in the development of the Company's solution as well as increased staffing in order to achieve the Company's goals and objectives.

As of March 31, 2015, the Company had a cash balance of $4,092,143, a decrease of $2,894,312 from the position it had as at March 31, 2014. The cash used in operating and investing activities, in order to develop the solution, was partly offset by the cash generated during the fiscal year from the exercise of warrants and stock options.

Subsequent event – Financing Agreement

On July 8, 2015 the Company announced that it had entered into an agreement with Mackie Research Capital Corporation (the "Agent") as sole agent in respect of a private placement to be undertaken on a best efforts basis (the "Offering") of up to $5,000,000 of units (the "Units") of the Corporation at a price of $1,000 per Unit. The Agent will have the option, exercisable at any time up to 48 hours prior to the closing of the Offering, to increase the size of the Offering by up to 15% (the "Agent's Option").

Each Unit will consist of one $1,000 principal amount convertible senior secured debenture (the "Debentures") and 610 common share purchase warrants (the "Warrants"). Each Warrant will entitle the holder thereof to acquire one common share (each, a "Common Share") of the Corporation at a price of $0.82 per Common Share until the third anniversary of the closing of the Offering. The Debentures will have a term of five years and bear interest at a rate of 10% per annum. The principal amount of each Debenture (the "Principal Amount") will be convertible, for no additional consideration, into Common Shares of the Corporation at the option of the holder at a conversion price of $1.10 per Common Share. The Principal Amount will also be convertible at the Corporation's option in certain circumstances. The Debentures will be redeemable in whole or in part by the Corporation after two years at a price equal to the Principal Amount multiplied by 103%, plus accrued and unpaid interest.

The net proceeds of the Offering will be used by the Corporation for general corporate and working capital purposes. The Offering is expected to close on or about July 29, 2015.

In consideration for its services, the Corporation will pay to the Agent a commission (the "Commission") equal to 6.0% of the gross proceeds of the Offering, including the gross proceeds raised from the exercise of the Agent's Option, as applicable. The Agent will also receive non-transferable options (the "Compensation Options"), to purchase such number of Common Shares of the Corporation in an amount equal to 6.0% of the gross proceeds of the Offering divided by the exercise price of the Warrants, including the exercise of the Agent's Option, as applicable. The Compensation Options will have the same term as the Warrants and an exercise price equal to the Warrant exercise price. For any Units sold to a party sourced by the Corporation, up to a maximum of $2.5 million of the Offering, the Agent's Commission and Compensation Options will be reduced to 3% and 3%, respectively.

Going concern considerations

The audited consolidated financial statements of the Company for the year ended March 31, 2015 have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon, among other things, the Company's ability to generate future profitable operations by securing contracts and growing its revenue base, and its ability to obtain additional financing in the form of equity and/or debt financing, joint venture agreements, or in another form in order to meet its obligations arising from normal business operations.

As at March 31, 2015, the Company had not yet achieved profitable operations and has accumulated losses of $21,771,774 since inception, including the net loss of $9,194,832 for the year ended as at the same date. The Company used $6,325,423 of cash from its operating activities for the year ended March 31, 2015. The Company expects to continue to incur further operating losses and negative cash flows from operating activities in the development of its business, and these material uncertainties cast significant doubt upon the Company's ability to continue as a going concern.  Furthermore, as at March 31, 2015, the Company's committed cash obligations and expected level of expenses for the next twelve months exceeds its actual cash resources.  Whether and when the Company can attain profitability and positive cash flows from operating activities is uncertain.

Although there are no assurances that management's plans will be realized, management has a reasonable expectation that the Company will be able to continue operations in the future, considering, among other things, the further reduction of the Company's current operating costs and the possibility of obtaining financing through the equity or debt capital markets, through joint venture agreements, or other financing options.

Accordingly, the audited consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The audited consolidated financial statements and related notes, and Management's Discussion and Analysis for the years ended March 31, 2015 and 2014, are available under the Company's profile on SEDAR at www.sedar.com.

About EXO U

EXO U's shares trade on the TSX Venture Exchange under the ticker symbol EXO.V.  EXO U develops an innovative software platform which enables businesses and educational institutions to securely mobilize and manage their mobile workforce and students by delivering engaging experiences spanning desktop and mobile applications. At the core of EXO U's platform is the smart and agnostic EXO engine that unifies multiple software platforms, allowing devices to interact and communicate seamlessly together. It enables true mobility for businesses and educational organizations by solving important mobility issues such as security, privacy, collaboration, and management of application and content. EXO U's technology agnostic framework delivers to end users a safe, reliable, and intuitive smart workspace designed for connecting with people, accessing services, and sharing information and digital content, while requiring minimal infrastructure and optional Internet connectivity. It simplifies management of the entire application lifecycle, freeing the organizations to focus on building engaging apps that work across different operating systems and form factors, thus increasing productivity for developers and reducing total cost of ownership for organizations. By offering an engaging and exceptional user experience on all computing devices, without compromising security or protected information, the EXO U enterprise and education solutions allow organizations to embrace consumerization and enjoy all the benefits of mobile. For more information, visit http://www.exou.com and follow us on Twitter @exo_u.

Disclaimer in Regards to Forward Looking Statements

Certain statements made in this press release that are not historical facts are forward-looking information within the meaning of application securities laws.  These forward-looking statements are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events and there is no assurance that current opportunities being pursued or discussions with any government authorities will result in any definitive agreements being entered into or that the Company will be able to obtain financing to continue its operations on acceptable terms or at all. Readers are cautioned not to place undue reliance on these forward-looking statements. For additional information with respect to certain of these and other assumptions and risk factors, please refer to EXO U's management's discussion and analysis for the year ended March 31, 2015 available under the Company's profile on SEDAR at www.sedar.com. The forward-looking information contained in this press release represents EXO U's current expectations. EXO U disclaims any intention and assumes no obligation to update or revise any forward-looking information, except as required by applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts any responsibility for the adequacy or accuracy of this release.

 

ANNEX

Adjusted negative EBITDA for the three-month period and fiscal year ended March 31, 2015 and 2014

(in Canadian dollars)

Three months ended
March 31, 2015

Three months ended
March 31, 2014

Year ended
March 31, 2015

Year ended
March 31, 2014






Net Loss and Comprehensive Loss

(2,025,337)

(1,640,416)

(9,194,832)

(7,670,579)






Financials expenses (income), net

7,306

344

(8,781)

14,656

Depreciation of property & equipment

14,778

11,531

58,679

41,542

Amortization of intangible assets

37,065

19,425

148,262

128,997

Impairment charge

15,200

74,500

15,200

74,500

Negative EBITDA

(1,950,988)

(1,534,616)

(8,981,472)

(7,410,884)






Stock-based compensation

243,603

194,101

1,898,007

1,050,968

Net loss (gain) on foreign exchange              

100,208

(2,178)

185,239

50,659

Listing costs

2,380,331






Adjusted Negative EBITDA

(1,607,177)

(1,342,693)

(6,898,226)

(3,928,926)

 

Management uses Net  Loss and Comprehensive Loss as presented in the audited consolidated statement of loss and comprehensive loss as well as loss before financing expenses (income), income taxes, depreciation of property and equipment and amortization of intangible assets (including impairment charge) ("Negative EBITDA") and Adjusted Negative EBITDA as measures to assess the performance of the Company. Negative EBITDA and Adjusted Negative EBITDA are other financial measures.

Negative EBITDA represents an indication of the Company's capacity to generate income from operations before taking into account management's financing decisions, cost of depreciation of property and equipment, amortization of intangible assets as well as income taxes.

Adjusted Negative EBITDA represents an indication of the Company's capacity to generate income from operations before taking into account certain non-cash transactions. Adjusted Negative EBITDA is a measure used by the Company to make strategic decisions, forecast future results and evaluate its performance. Adjusted Negative EBITDA is Negative EBITDA excluding stock-based compensation expenses, foreign exchange gains (losses) and other one-time and unusual items.

Neither Negative EBITDA nor Adjusted Negative EBITDA represent the actual cash used by operating activities, nor are they recognized measures of financial performance under International Financial Reporting Standards ("IFRS"). EXO U's definition of Negative EBITDA and Adjusted Negative EBITDA may differ from that used by other companies. Investors are cautioned that Negative EBITDA and Adjusted Negative EBITDA should not be considered as an alternative to Net Loss and Comprehensive Loss determined in accordance with IFRS or indicators of the Company's performance.

 

SOURCE EXO U Inc

For further information: For investor or media inquiries, please contact:Sean Peasgood, Sean@SophicCapital.com, 416.565.2805; Doug McCollam, dmccollam@exou.com, 514.212.7407

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