Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 
The feature you requested does not exist. However, we suggest the following feature:

IGEN : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

share with twitter share with LinkedIn share with facebook
share via e-mail
0
05/22/2017 | 09:27pm CEST

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") provides information for the three-month period ended March 31, 2017. This MD&A should be read together with our unaudited condensed consolidated interim financial statements and the accompanying notes for the three-month period ended March 31, 2017 (the "consolidated financial statements"). The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). Except where otherwise specifically indicated, all amounts in this MD&A are expressed in United States dollars.

Certain statements in this MD&A constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. You should carefully read the cautionary note in this MD&A regarding forward-looking statements and should not place undue reliance on any such forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements".

Additional information about the Company, including our most recent consolidated financial statements and our Annual Information Form, is available on our website at www.igen-networks.com, or on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Cautionary Note Regarding Forward-looking Statements

Certain statements and information in this MD&A may not be based on historical facts and may constitute forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities laws ("forward-looking statements"), including our business outlook for the short and longer term and our strategy, plans and future operating performance. Forward-looking statements are provided to help you understand our views of our short and longer term prospects. We caution you that forward-looking statements may not be appropriate for other purposes. We will not update or revise any forward-looking statements unless we are required to do so by securities laws. Forward-looking statements:

• Typically include words and phrases about the future such as "outlook",

"may", "estimates", "intends", "believes", "plans", "anticipates" and

"expects";

• Are not promises or guarantees of future performance. They represent our

current views and may change significantly;

• Are based on a number of assumptions, including those listed below, which

could prove to be significantly incorrect:



 -  Our ability to find viable companies in which to invest


 -  Our ability successfully manage companies in which we invest


 -  Our ability to successfully raise capital


 -  Our ability to successfully expand and leverage the distribution channels of
    our portfolio companies;


 -  Our ability to develop new distribution partnerships and channels


 -  Expected tax rates and foreign exchange rates.


• Are subject to substantial known and unknown material risks and

uncertainties. Many factors could cause our actual results, achievements and

developments in our business to differ significantly from those expressed or

implied by our forward-looking statements. Actual revenues and growth

projections of the Company or companies in which we are invested may be lower

than we expect for any reason, including, without limitation:



 -  the continuing uncertain economic conditions


 -  price and product competition


 -  changing product mixes,


 -  the loss of any significant customers,


 -  competition from new or established companies,


 -  higher than expected product, service, or operating costs,


 -  inability to leverage intellectual property rights,


 -  delayed product or service introductions


Investors are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future results.

                                       3

--------------------------------------------------------------------------------

Table of Contents

Overview

During the first quarter of 2017 the Company continued to focus on initiatives to grow revenue, expand its customer base, and develop new revenue streams for its wholly owned subsidiary Nimbo LLC. The company also continued to pursue strategic merger and acquisition activities with targeted technologies and technology companies, and raising required capital.

Notable highlights of the 3 months period ended March 31, 2017 include the following Company achievements:

- On January 17, 2017, the Company announced a new nation-wide marketing

initiative for increased exposure through Verizon Wireless' B2B channels to

automotive dealerships across the US.

- On March 7, 2017, the Company announced receipt of new orders for Nimbo's

pre-loaded automotive dealership product and services.

- On March 7, 2017, the Company announced expansion of Nimbo's sales force

including increased staffing in California and the opening of new sales office

  in Charlotte, NC.



- Quarterly revenue growth.

· Q1 2017 Revenues of $323,376;

o 3% growth over the previous quarter;

o 18% growth over the similar period in 2016.

- Gross Profit growth (quarter-on-previous-quarter):

· Q1 2016 Gross Profit of $133,567

o 49% growth over the previous quarter

o 5% reduction over the similar period in 2016



- Healthy Gross Margin

· Q1 2017 Gross margins of 41%

o Up from 29% in previous quarter, and 34.5% for all of 2016

o Down from 51% in the similar period in 2016

- Improved Net Loss (quarter-on-previous-quarter)

· Net loss of ($234,761)

o 18% reduction over previous quarter

o 24% increase over similar period in 2016




                                       4

--------------------------------------------------------------------------------

Table of Contents

Financial Condition and Results of Operations

Capital Resources and Liquidity

Current Assets and Liabilities, Working Capital, Net Debt

As of March 31, 2017, the Company's current assets were $245,546, a marginal reduction of 3% over the quarter. The most significant increase to current assets was an increase in restricted cash and prepaid expenses of $16,033, which was primarily increases to existing deposits and secured letters of credits for vendors, and the most significant reduction was an $18,688 reduction in accounts receivables.

Current liabilities dropped $13,686, or 1%, over the quarter. The company was able to reduce its accounts payable and notes payable by a total of $56,490, but this was offset by a $50,000 in a new convertible debenture. The Company also saw a net reduction of $29,634 in the current portion of its deferred revenue that was converted to revenue recognized during the period.

The Company finished the third quarter with a working capital deficiency of ($830,740), an improvement of $5,743 over the quarter. Of the total working capital deficiency, ($209,534) is short-term deferred revenue liabilities that will convert to revenue, ($82,474) is non-cash derivative liabilities associated with estimating potential foreign-exchange impact on warrants issued in Canadian dollars and with fluctuating conversion prices for the convertible debenture (see Note 8 to the consolidated financial statements), and ($50,000) is a new convertible debenture, offset by $32,106 of unamortized discount on the convertible debenture. The Company intends to improve its working capital position through ongoing equity and debt financing and continued focus on growth in its cash flow.

The Company monitors its net debt1 to ensure that its capital structure is maintained by a strong balance sheet to fund its future growth. Net debt is used in this document in the context of liquidity and is calculated as the total of the Company's current liabilities, less deferred revenue and derivative liabilities, less current assets. There is no U.S. GAAP measure that is reasonably comparable to net debt. The Company's net debt for the period ended March 31, 2017 was $538,732, a decrease of 5% over the quarter.

Total Assets and Liabilities, Net Assets

The Company's total assets as of March 31, 2017 were $757,039, a reduction of $9,343 over the quarter. This decrease was commensurate with the respective changes in current assets previously discussed; changes in noncurrent assets were not significant.

Total liabilities increased marginally ($19,467, or 2%) over the quarter. This increase was composed primarily of the $33,153 increase in net non-current deferred revenue offset by the $13,686 decrease in current liabilities previously discussed. Non-current deferred revenue accounts for pre-paid services that are to be provided beyond a one-year timeframe. This liability is eventually converted first to current deferred revenue as it comes within one year, and then to recognized or earned revenue.

The above resulted in net assets of ($426,385), a decrease over the quarter of ($28,810). However, 74% of this is $316,672 in deferred revenue, both current and longer term, that will eventually become earned.

As of the date these financial statements were issued the Company believes it has access to adequate working capital and projected net revenues to maintain existing operations for approximately two months without requiring additional funding. The Company's business plan is predicated on raising further capital for the purpose of further investment and acquisition of targeted technologies and companies, to fund growth in these technologies and companies, and to expand sales and distribution channels for companies it currently owns or is invested. It is anticipated the Company will continue to raise additional capital through private placements and debt financing in the both the near and medium term.

--------------------------------------------------------------------------------

1See non-GAAP Measures discussion on page 7


                                       5

--------------------------------------------------------------------------------

  Table of Contents


Results of Operations

Revenues and Net Income (Loss)

Revenues

The Company had first quarter revenues of $323,376, a marginal 3% increase over the previous quarter but an 18% increase over the similar period in 2016. Sales growth was due primarily to growth of pre-loaded product and services sold into automotive dealer markets.

First quarter gross profits of $133,567 were a significant 49% increase over the previous quarter, though marginally down by $6,726 from the similar quarter in 2016.

Similarly, gross margins for the first quarter of 41% was a significant increase over gross margins of 29% recorded in the previous quarter, but were down from the 51% reported in the similar period in 2016. Reduced gross margins year on year were not unexpected, as Q1 2016 was a bit of an anomaly; by comparison, gross margins for all of 2016 were 34.5% and all of 2015 was 31%. The growth in gross margins over the previous quarter was due to a larger percentage of high-margin deferred revenues being recognized in the recent quarter, combined with a marginal drop in hardware sales; service revenues and hardware revenues were up 12% and down 1.5% respectively, compared to the previous quarter.

The Company continues to review hardware, inventory, and order fulfillment strategies as well as product and service pricing and delivery models to try to grow sales and maximize overall margins.

In 2016, the Company implemented a pricing model based on initial lower margin sales of services and hardware that is pre-loaded in automotive dealership lots, with follow-on high margin revenue generated by subsequent sell-through to end customers. The Company anticipates this pricing, margin, and revenue recognition model will continue to grow in 2017.

Expenses

Expenses for Q1 2017 totaled $345,643, a 4% increase over the previous quarter, and a 13% increase over the similar period in 2016, though this is understated somewhat as it includes $16,416 of foreign exchange gain. Net any foreign exchange loss/gain, expenses increased 19% over Q1 2016. Though overall expenses were reduced over the quarter, the Company continues to incur increases particularly in salaries and expenses related to sales, and anticipates this will continue as the Company continues to invest in growing its sales organization. The Company also anticipates increases in development-associated labour and material costs in the next several quarters.

Net Income (Loss)

The Company had a Q1 2017 net loss of ($234,761), an increase of ($45,087) over the same period in 2016, but an improvement of $50,830, or 18% over the previous quarter.

The Company believes the requirement to defer a significant portion of its revenue results in the reported net income/(loss) not adequately reflecting actual sales growth or cash flow. When cash received from deferred revenue sales is included, and therefore on a non-GAAP basis, the Company's funds flow from operations was ($184,356)2.

The Company continues to invest in personnel, channels, and product development in order to drive revenue growth and increase gross profits sufficient to enable the Company to achieve profitability.

Cash Flows and Cash Position

The Company saw a decrease of ($1,500) in cash over the period. Net cash of $217,698 used in operating activities was offset by net financing cash of $233,000 raised via private placements, notes payable, and convertible debt. Cash at the end of the period was $38,523.

--------------------------------------------------------------------------------

2See non-GAAP Measures discussion on page 7


                                       6

--------------------------------------------------------------------------------

  Table of Contents


Non-GAAP Measures

This document contains the terms "funds flow from operations", and "net debt" which are not recognized measures under U.S. GAAP and may not be comparable to similar measures presented by other companies.

a) The Company considers funds flow from operations to be a key measure that indicates the Company's ability to generate the funds necessary to support future growth through capital investment and to repay any debt. Funds flow from operations is a measure that represents cash generated by operating activities, including deferred revenue generated in the period, before changes in non-cash working capital, and may not be comparable to measures used by other companies. Funds flow from operations per share is calculated using the same weighted-average number of shares outstanding, as in the case of the earnings per share calculation for the period.

A reconciliation of funds flow from operations to cash provided by operating activities is presented as follows:


                                              Three Months                  Twelve Months
     Funds Flow from Operations              Ended March 31               Ended December 31
                                           2017           2016           2016           2015
Cash provided by operating activities   $ (217,698 )   $  (25,807 )   $ (305,353 )   $ (327,647 )
Change in non-cash working capital          29,823        (96,859 )     (345,596 )     (293,103 )
Change in deferred revenue                   3,519         (2,975 )      256,353        136,255
Funds flow from operations              $ (184,356 )   $ (125,641 )   $ (394,596 )   $ (484,495 )
 Per share, basic and diluted           $    (0.01 )   $    (0.00 )   $    (0.01 )   $    (0.02 )


b) Net debt (working capital) is closely monitored by the Company to ensure that its capital structure is maintained by a strong balance sheet to fund its future growth. Net debt is used in this document in the context of liquidity and is calculated as the total of the Company's current liabilities, less deferred revenue and derivative liabilities, less current assets. There is no U.S. GAAP measure that is reasonably comparable to net debt.

The following table outlines the Company calculation of net debt:

Net Debt                                     Three Months                    Twelve Months
                                            Ended March 31                 Ended December 31
                                          2017            2016            2016            2015
Current assets                        $    245,546     $  230,952     $    253,489     $  120,974
Current liabilities                     (1,076,286 )     (827,100 )     (1,089,972 )     (746,389 )
 Adjust current deferred revenue           209,534         53,825          239,168         56,800
 Adjust current derivatives                 82,474              -           27,930         33,982
             Net debt                 $   (538,732 )   $ (542,323 )   $   (569,385 )   $ (534,633 )




                                       7

--------------------------------------------------------------------------------

Table of Contents

© Edgar Online, source Glimpses

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news
Date Title
09:27p IGEN : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)
09:27p PANHANDLE OIL & GAS INC : Other Events (form 8-K)
09:27pDJVIVENDI : Streaming Services Are Music to Vivendi's Ears
09:27p JBS SA : DEADLINE TODAY: Lundin Law PC Announces a Securities Class Action Lawsuit against JBS S.A. and Encourages Investors with Losses to Contact the Firm
09:26p CATO CORP : Results of Operations and Financial Condition, Financial Statements and Exhibits (form 8-K)
09:26p DATA STORAGE : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)
09:25p DANA GAS PJS : UAE’s Dana Gas receives overdue $20 m payment from Egypt
09:25p ABBOTT LABORATORIES : Cairo Pharmaceuticals finalizes from operate Brufen production line
09:25p DRONE GUARDER, INC. : Other Events (form 8-K)
09:25p JUNE 8 : Middle Flour Mills' OGM to review 2017/2018 budget
Latest news