Edge Total Intelligence Inc. (TSXV: CTRL/ FSE:Q5i) (“edgeTI”, “we”,
“our” or the “Company”), a leader in real-time digital operations
solutions, announces operating and consolidated results for the
fourth quarter and year ended December 31, 2021. Financial
information is expressed in United States (US) dollars unless
otherwise indicated. Readers should refer to the Company’s audited
annual financial statements and related management discussion and
analysis for the year ended December 31, 2021 that are posted on
its profile on SEDAR (www.sedar.com).
Highlights
- Subscription
Revenues Grew 59% to reach $2.27 Million
- Completed
Migration to SaaS-like Subscription Model featuring Recurring
Revenue
- Completed
Reverse Acquisition and Raise of $3.8 Million net of share issuance
costs
- Release of
DevOps automation and low-code capabilities enabled customer
expansion and new opportunities.
|
Q4, |
Year Ended December 31, |
Selected Quarterly and Annual Information |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Revenue |
$ |
890,213 |
|
$ |
1,335,533 |
|
$ |
4,087,791 |
|
$ |
6,116,092 |
|
Cost of revenue |
|
376,178 |
|
|
314,785 |
|
|
1,412,225 |
|
|
1,328,304 |
|
Gross
profit |
|
514,035 |
|
|
1,020,748 |
|
|
2,675,566 |
|
|
4,787,788 |
|
Gross
margin % |
|
58% |
|
|
76% |
|
|
65% |
|
|
78% |
|
Selling
and marketing expenses |
|
364,273 |
|
|
213,970 |
|
|
1,471,346 |
|
|
1,399,647 |
|
Administrative expenses |
|
500,110 |
|
|
464,648 |
|
|
2,119,984 |
|
|
1,701,108 |
|
Research
and development expenses |
|
280,483 |
|
|
418,315 |
|
|
1,128,388 |
|
|
990,324 |
|
Impairment |
|
2,349,000 |
|
|
- |
|
|
2,349,000 |
|
|
- |
|
Other (income) expenses |
|
(106,518) |
|
|
(229,734) |
|
|
(57,931) |
|
|
166,085 |
|
|
|
3,387,348 |
|
|
867,199 |
|
|
7,010,787 |
|
|
4,257,164 |
|
Operating income (loss) |
|
(2,873,313) |
|
|
153,549 |
|
|
(4,335,221) |
|
|
530,624 |
|
Reverse
acquisition expenses |
|
5,198,395 |
|
|
- |
|
|
5,198,395 |
|
|
- |
|
Interest |
|
273,696 |
|
|
273,273 |
|
|
1,033,252 |
|
|
976,129 |
|
Change in
fair value of warrant liability |
|
48,122 |
|
|
(2,384,548) |
|
|
48,122 |
|
|
(2,384,548) |
|
Foreign exchange loss |
|
52,061 |
|
|
1,903 |
|
|
52,061 |
|
|
1,903 |
|
Loss before income taxes |
|
(8,445,587) |
|
|
2,262,921 |
|
|
(10,667,051) |
|
|
1,937,140 |
|
Income tax expense |
|
2,356 |
|
|
752 |
|
|
2,356 |
|
|
752 |
|
Net (loss) income |
|
(8,447,943) |
|
|
2,262,169 |
|
|
(10,669,407) |
|
|
1,936,388 |
|
Other comprehensive loss |
|
|
|
|
Foreign currency translation gain |
|
54,500 |
|
|
- |
|
|
54,500 |
|
|
- |
|
Net (loss) income and comprehensive (loss)
income |
|
(8,393,443) |
|
|
2,262,169 |
|
|
(10,614,907) |
|
|
1,936,388 |
|
Net (loss) Income per share - basic |
$ |
(0.95) |
|
$ |
0.28 |
|
$ |
(1.30) |
|
$ |
0.24 |
|
Net (loss) Income per share - diluted |
$ |
(0.95) |
|
$ |
0.06 |
|
$ |
(1.30) |
|
$ |
0.05 |
|
Share capital - issued and outstanding SVS |
|
16,919,644 |
|
|
8,004,000 |
|
|
16,919,644 |
|
|
8,004,000 |
|
Share capital - issued and outstanding MVS |
|
26,600 |
|
|
- |
|
|
26,600 |
|
|
- |
|
Assets, Cash Flows, & Non IFRS Measures
As at December 31, |
|
|
2021 |
|
|
2020 |
|
|
Change |
|
|
% Change |
|
Total assets |
$ |
9,985,779 |
|
$ |
10,424,740 |
|
$ |
(438,961) |
|
|
-4% |
|
Total non-current liabilities |
$ |
7,498,466 |
|
$ |
8,599,168 |
|
$ |
(1,100,702) |
|
|
-13% |
|
|
Year ended December 31, |
|
|
|
|
2021 |
|
|
2020 |
|
|
Change |
|
|
% Change |
|
Cash flow used in operating activities |
$ |
(1,236,920) |
|
$ |
(1,273,058) |
|
$ |
36,138 |
|
|
-3% |
|
Cash flows from financing activities |
$ |
5,795,572 |
|
$ |
2,580,788 |
|
$ |
3,214,784 |
|
|
125% |
|
Cash used in investing activities |
$ |
(876,240) |
|
$ |
(1,202,422) |
|
$ |
326,182 |
|
|
-27% |
|
|
|
|
|
|
Non- IFRS Measures |
|
Q4 2021 |
|
|
Q3 2021 |
|
|
Q2 2021 |
|
|
Q1 2021 |
|
Monthly Recurring Revenue (MRR) |
$ |
305,653 |
|
$ |
297,757 |
|
$ |
252,601 |
|
$ |
261,945 |
|
|
Q4 |
|
Year ended December 31, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Adjusted EBITDA |
$ |
22,244 |
|
$ |
133,757 |
|
$ |
(132,951) |
|
$ |
1,632,595 |
|
Commenting on the Company's performance in the
fourth quarter of 2021, Jason James, Chief Financial Officer
said:
“The fourth quarter marked the completion of
multiple milestones, with the reverse acquisition and private
placement of $3.8 million net of share issuance costs. Our sales
team completed the transition to a SaaS-like subscription-based
recurring revenue model, which led to lower revenues compared to
the prior year. We believe this was a temporary headwind to our
reported revenue growth as we achieved an adjusted EBITDA of
$22,246 and grew exit Q4 2021 monthly recurring revenue (MRR)
sequentially from Q3 2021. As trade shows began to return to
in-person events, several new public sector opportunities from the
DoDIIS conference (sponsored by Defense Intelligence Agency)
increased our pipeline. Our support and development teams rallied
to serve customers through the holiday season in response to the
Apache Log4J zero-day vulnerabilities that impacted thousands of
software titles and products and their respective customers.”
Commenting on 2021 and the Company's outlook,
Jim Barrett, Chief Executive Officer, said:
"Beyond the reverse acquisition milestone to
become a public company, edgeTI grew subscription software licenses
59% year-over-year, which will help create shareholder value in the
long run as we transition to a subscription-driven business model.
Our platforms are embedded in the critical operations and
ultimately become a direct cost of a service or operating expense.
Gross margins for the Company moved downward by 12% as we remained
committed to customer-led development and buyer demand which
resulted in new customer wins and expanded uses for our products.
We are extremely proud of the efforts of our people in driving the
ingredients needed for our growth and their exemplary efforts in
serving our clients and industry stakeholders through all market
conditions. Moving forward, edgeTI will execute its growth
strategy: 1) increasing awareness across our industry and investors
through programs like Gartner’s Emerging Tech CEO Program; 2)
adding strategic partnerships and sales resources to expand wins in
our proven use cases; 3) continuing to remove barriers to adoption
and accelerate achievement of customer value; and 4) being mindful
of customer challenges and needs that we believe will deepen
relationships and expand our ability to address more
customers.”
Events subsequent to Fiscal year-end
- January 24th
edgeTI's subordinate voting shares ("SVS") began trading again
under its new TSXV symbol "CTRL".
- February 8th
Sophic Capital engaged for Investor Relations expertise
- March 8th CEO
Presented at the Q1 2022 Virtual Investor Summit
- March 29th SVS
began trading on Frankfurt Stock Exchange under symbol "Q5i"
- April 4th Demoed
at Smart Cities Connect 2022 Spring Conference
- April 11th
edgeTI and SD3IT teamed up for TechNet Indo-Pacific Spring
2022
- April 25th
credit and convertible note agreement with Lotus Domain III, L.P.
("Lotus"), a related party of the Company, of US$700,000 plus
accrued interest of US$74,602.74 was converted to 1,577,815
subordinate voting shares of the Company (the "Conversion")
Outlook
Continual threats, challenges, and opportunities
require public and private organizations to achieve greater agility
and efficiency when making decisions and executing them. Digital
Transformation ("DX") is the means to address these needs.
According to the IDC Statista Research Department, spending on DX
worldwide in 2022 is projected to reach US$1.8 trillion and by
2025, global DX spending is forecast to reach US$2.8 trillion. The
Company’s platform, edgeCore™, facilitates DX with its unique
capabilities that accelerate success and lower cost of operations
by bringing intelligence and execution together in a single system
that does not add a new data store. Operationally, the Company is
executing its growth plan and driving monthly recurring revenue
subscriptions.
Related Party Disclosure
As a result of Lotus being a controlling
shareholder of the Company, and Christian Mack and David Roman
being insiders of Lotus and also directors of the Company, the
Conversion is considered to be a related party transaction under
applicable securities laws. Where available, the Company has relied
upon exemptions in respect of the formal valuation and minority
shareholder approval requirements under applicable securities laws.
The Conversion is not subject to the formal valuation requirements
under Multilateral Instrument 61-101 -Protection of Minority
Security Holders in Special Transactions ("MI 61-101"), and the
Company has relied upon the exemption in paragraph (b) of section
5.7(1) of MI 61-101 as the fair market value of the securities
issued pursuant to the Conversion does not exceed $2,500,000 and
meets the other requirements set out in paragraph (b).
About edgeTI
Edge Total Intelligence (“edgeTI”) helps
customers achieve the impossible with its real-time digital
operations software, edgeCore™. Global enterprises, service
providers, and governments are more profitable when insight and
action are united to deliver fluid experiences via the platform's
low-code development capability. With edgeTI, customers improve
their margins and agility by rapidly transforming siloed systems
and data across evolving situations in business, technology, and
cross-domain operations. Traded on: TSXV: CTRL FSE: Q5i
Learn more at https://edgeti.com/investors.
On behalf of the Board of Directors
Jim Barrett CEO Edge Total Intelligence Inc.
Jason James CFOEdge Total Intelligence Inc.
For further Information contact:
Nick BrigmanPhone: 888-771-3343 Email:
ir@edgeti.com
Neither the 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.
Forward-Looking Information and
Statements
Certain statements in this news release are
forward-looking statements or information for the purposes of
applicable Canadian and US securities law, including statements
regarding The Company's transition to a subscription-driven
business model, the execution of the Company's growth strategy, the
anticipated future worldwide spending on DX, the Company's
expectations for its 2022 MRR and ARR and other matters.
Forward-looking statements consist of statements that are not
purely historical, including any statements regarding beliefs,
plans, expectations or intentions regarding the future. Such
information can generally be identified by the use of
forwarding-looking wording such as "may", "expect", "estimate",
"anticipate", "intend", "believe" and "continue" or the negative
thereof or similar variations. The reader is cautioned that
assumptions used in the preparation of any forward-looking
information may prove to be incorrect. Events or circumstances may
cause actual results to differ materially from those predicted, as
a result of numerous known and unknown risks, uncertainties, and
other factors, many of which are beyond the control of the Company,
including but not limited to, business, economic and capital market
conditions.
Such statements and information are based on
numerous assumptions regarding present and future business
strategies and the environment in which the Company will operate in
the future, including the demand for its products, anticipated
costs, and the ability to achieve goals. Factors that could cause
the actual results to differ materially from those in
forward-looking statements include, the continued availability of
capital and financing, the impact of Covid-19 or other viruses and
diseases on the Company's ability to operate, competition and
general economic, market or business conditions. Forward-looking
statements contained in this news release are expressly qualified
by this cautionary statement. The reader is cautioned not to place
undue reliance on any forward-looking information. The
forward-looking statements contained in this news release are made
as of the date of this news release. Except as required by law, the
Company disclaims any intention and assumes no obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
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