SURREY, BC, May 26, 2020 /CNW/ - INEO Tech Corp. (TSX-V: INEO) (the "Company" or "INEO"), the developer of The Welcoming System for retailers, announces it has filed its condensed interim consolidated Financial Statements and Management's Discussion and Analysis for its fiscal third quarter ended March 31, 2020.
"Fiscal third quarter was a historic quarter for INEO as we listed on the TSX Venture Exchange and completed a $2.8M RTO financing," said Greg Watkin, Chairman and President of INEO. "We managed to deliver solid results for the quarter despite the negative impact of the COVID-19 pandemic. Furthermore, due to the government mandated social distancing measures we shifted our focus from on-site installations to the development of the Company's new wireless version of the INEO Welcoming System. We are excited with the imminent launch of this latest version of The Welcoming System which significantly reduces installation time from over four hours down to one hour. We already have a healthy pipeline of over 40 retail locations interested in the wireless Welcoming System which we will begin to deploy in the coming weeks."
Third Quarter Financial Highlights:
- INEO generated revenue of $80,020 and $279,445 for the three and nine months ended March 31, 2020 compared to revenue of $121,543 and $304,634 for the three and nine months ended March 31, 2019. The decline in revenue is primarily due to the COVID-19 pandemic resulting in a reduction in sales of the Company's legacy electronic article surveillance ("EAS") systems.
- INEO achieved gross margin of 53.4% and 65.8% for the three and nine months ended March 31, 2020, compared to gross margin of 78.0% and 73.8% for the three and nine months ended March 31, 2019. The decline in gross margin is attributable to higher inventory costs due to COVID-19 and a weaker Canadian dollar.
- INEO had a loss of $7,536,367 and $7,792,804 for the three and nine months ended March 31, 2020 compared to a loss of $11,634 and $126,270 for the three and nine months ended March 31, 2019. The increase in loss is primarily due to the RTO transaction, which is treated as a non-cash loss on completion of the RTO of $7,084,833. Excluding this non-cash loss, INEO's losses would be $451,534 and $707,971 for the three and nine months ended March 31, 2020.
- INEO's accounting and legal expenses increased to $81,988 and $259,157 for the three and nine months ended March 31, 2020 compared to $27,713 and $57,772 for the three and nine months ended March 31, 2019 due to costs associated with the RTO transaction.
- INEO had $1,636,517 in cash and cash equivalents as of March 31, 2020, compared to $72,836 as of June 30, 2019. The increase in the Company's cash position is attributed to the proceeds from the Reverse Takeover (RTO) offering.
- As of March 31, 2020, the Company had 40,480,740 shares issued and outstanding.
Third Quarter Business Highlights:
- On January 24, 2020, INEO completed its RTO transaction ("RTO Transaction") with Metron Capital Corp. ("Metron"), carried out by way of a share exchange. In connection with the RTO Transaction, Metron changed its name to "INEO Tech Corp".
- As part of the RTO Transaction INEO completed a private placement offering resulting in the issuance of 8,048,498 subscription receipts of the Company at a price of CDN $0.35 per share for aggregate gross proceeds of $2,816,974.
- On January 29, 2020, INEO's common shares commenced trading on the TSX-V under the new ticker symbol "INEO".
- On February 3, 2020, INEO announced the appointment of Steve Matyas to the Company's Board of Directors. Matyas has vast retail management, operations and executive leadership experience including 27 years at STAPLES, where he held several senior leadership roles including the CEO of STAPLES Retail.
- In March, INEO implemented its business continuity plan, as a result of the COVID-19 pandemic, which included instituting a work from home policy for its employees. INEO also rapidly re-engineered its idle manufacturing capacity to create clear acrylic cashier protection barriers for retailers. A clear acrylic (plexiglass) barrier provides the cashier with some protection from inadvertent contact with customers who may have the COVID-19 virus and allows the retailer to remain open.
- As of March 31, 2020, INEO's network of thirty Welcoming Systems deployed across B.C. and Alberta continue to be operational as they are located within independent liquor stores that remain open throughout the COVID-19 crisis. This has resulted in the Company recording aggregate foot traffic of over 1.1 million individuals across its entire network for the month of March. Social distancing restrictions have caused a major decline in most other Out-of-Home advertising locations; however, INEO's focus on essential retail locations has positioned the Company to be one of the few Digital-Out-of-Home advertising options available that allows brands to display their messaging in an impactful way.
Events after March 31, 2020
- On April 23, 2020, the United States Patent and Trademark Office ("USPTO") granted Patent number US 10,614,691 to INEO, entitled "COMBINATION MEDIA DISPLAY AND ELECTRONIC ARTICLE SURVEILLANCE PEDESTAL". The Company has already received a Canadian patent on this subject matter and also filed for protection under the Patent Cooperation Treaty (PCT), which may lead to the granting of corresponding claims in additional treaty countries.
- On May 5, 2020, the Company announced the acquisition of Newman Loss Prevention ("Newman"), an independent reseller of loss prevention products and services in Calgary, Alberta. This acquisition was approved by the TSX-V on May 12, 2020. The Company's acquisition of Newman includes acquiring ongoing contracts, customer lists and inventory assets, in exchange for 200,000 common shares (issued on May 13, 2020) in the Company with a future earn-out consideration of another 200,000 INEO common shares upon achievement of certain agreed to milestones. Newman serves over 200 retail locations giving INEO a total inventory of over 600 legacy retail locations which are potential upgrade sites for its new Wireless Welcoming System.
"We have a strong balance sheet as a result of the capital raised in the RTO transaction, enabling us to execute on our growth strategy," said Kyle Hall, CEO of INEO. "As the retail sector begins to open up, we are well positioned to ramp up installations of the wireless INEO Welcoming Systems, increasing sales of loss prevention supplies and adding new digital media advertising revenue. Furthermore, we are honored to have assisted and protected front-line retail workers during the COVID-19 pandemic with our acrylic barriers. The Company has had over 400 orders for its acrylic barriers which will help offset the COVID-19 induced decline in sales of loss prevention products to retailers in our fiscal fourth quarter."
About INEO Tech Corp.
INEO Tech Corp., through its wholly owned subsidiary, INEO Solutions Inc., provides retailers with The Welcoming System, a patented in-store and online advertising platform that enhances the customer experience, monetizes the entrances of retail stores and protects against retail theft. The Welcoming System is a revolutionary cloud-based digital advertising and data analytics system, which sends customized advertising to digital screens integrated with theft detection sensor gates at the entrance of retail stores. INEO is publicly traded on the TSX-Venture Exchange under the symbol "INEO-V". INEO Solutions Inc. is a registered trademark of INEO Tech Corp. For more information please visit www.ineosolutionsinc.com.
Forward-Looking Statements
Investors are cautioned that, except as disclosed in the disclosure document, any information released or received with respect to the Company may not be accurate or complete and should not be relied upon. Trading in securities of the Company should be considered highly speculative.
This news release contains forward-looking information, which involves known and unknown risks, uncertainties and other factors that may cause actual events to differ materially from current expectations. Important factors – including the availability of funds, acceptance of the Company's products, competition, and general market conditions – that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed on SEDAR, including the Company's Filing Statement dated January 20, 2020 (see www.sedar.com). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE INEO Tech Corp.
Pardeep Sangha, Investor Relations, INEO Tech Corp., [email protected], (604) 283-2974
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