Brief Summary: Q4 2015 and FY 2015 Results for Several Portfolio Companies

This week was a heavy week for Canadian companies to file their Q4 2015 and FY 2015 numbers on SEDAR. Many companies filed yesterday, so I would expect several press releases on Monday morning discussing the results that were filed.  I do not want to spend much time on 2015 numbers because within the next week or so we will also likely get the Q1 2016 results from all of these companies also. Those are the results we will spend a bit more time on since they are more current and will show progress (or lack thereof) since the end of 2015.

Let's take a quick look at Q4 2015/FY 2015 numbers (with an emphasis on FY 2015 numbers) for several of our portfolio companies:

 

ACKROO (AKR.V)  

  • Key Takeaways:
    • 37% YOY Revenue Growth
    • 72% Q4 2015 rev growth compared to same period in 2014
    • The results show a slight margin decrease from 73% in 2014 to 67% in 2015. The slight margin decrease primarily relates to Dealer Rewards which has an associated licensing fee. Once the company raises sufficient cash it will likely pay off all debts owed to DealerRewards Canada, and the gross margin will increase back to normalized 70%+ levels. 
    • The ability of the company to successfully raise cash will determine the speed at which the company can scale its business. The current private placement, if successful, would pave the way for significant growth and scale.
  • Key/Interesting Statements from the MD&A:
    • "2015 was an important year as the Company positioned itself for scale."
    • "The Company put great focus on operational enhancements in order to increase revenues, and reduce support time and costs. This focus resulted in the Company’s best year to date not just from a revenue perspective but from an operational improvement perspective as well."
    • "The Company has also continued to have conversations with other targets in an effort to be a consolidator in the marketplace and have several interested parties they are in discussion with."
  • Link of Interest:
    • Here is an excellent report by Philippe Bergeron‐Bélanger and Mathieu Martin of espacemc.com on Ackroo that you can use to supplement your due diligence and understanding of Ackroo: Click Here

Full Year 2015 Financial Snapshot and Comparisons:

Q4 2015 Financial Snapshot and Comparisons:

 

RYU APPAREL (RYU.V)

  • Key Takeaways:
    • 2015 was both a transitional and monumental year for RYU. The company had to transition its inventory from old ("old" meaning old inventory prior to the new management team's true product development involvement) to new. We should see new SKUs launching soon that the company is very excited about that should add very nice incremental revenues.
    • Revenue generated from the single Vancouver flagship store was a clear validation that there is a market for the RYU product. 
    • Investing in RYU takes vision, but investors are well aligned with Marcello Leone, the CEO, on this journey that has started (and continues to significantly financially support) in a very promising fashion.
  • Key/Interesting Statements from the MD&A:
    • "We spent all of 2015 selling off all of the old product, closing down all the stores and our office location in the USA, and anything where the old RYU showed up on the market. While this was happening we designed a completely new DNA, designed a new line and launched it to the world on November 27, 2015 at the opening of our Flagship store at 1745 W 4th Avenue, in Vancouver, BC. Our revenue from the store for the year ended December 31, 2015 was $245,167, a great success that validated that there was a gap in the market."
    • "During Q4 2015 our new product line arrived and we launched it to the world on November 27, 2015 at the opening of our Flagship store at 1745 W 4th Avenue, in Vancouver, BC. Our revenue from the store for the Q4 2015 was $254,664, of which $245,167 was from the new RYU product line, a great success that validated that there was a gap in the market."
    • "Our Beta 37.5 design lab in Squamish is housed with some of the best talent in the world and management anticipates that our next launch of product will be game changing. The work that our team has done in 2015 is unprecedented in thisindustry. We have created an entire brand, DNA, launched a store and delivered product.  Most companies would take three years to do half of what we did."
    • "We are starting to see our product show up in all major gyms and on all the best athletes in Vancouver."

Full Year 2015 Financial Snapshot and Comparisons:

Q4 2015 Financial Snapshot and Comparisons:

 

KRAKEN SONAR (PNG.V) 

  • Key Takeaways
    • Q4 2015 was very soft on the revenue side. As we know, however, that revenues with Kraken can be quite lumpy as it is dependent on when orders come in.
    • There is some deferred revenue from 2015 (roughly $200k) that will appear in the Q1 2016 results. 
    • Cash is roughly $800k at the end of 2015, which should be sufficient to last through the end of 2016. However, I would not rule out a capital raise once Kraken identifies new products to expand into. 
    • The financials continue to show a company that are ramping up for expected significant growth, and I suspect that the Q1 2016 results will show very encouraging numbers as well as a provide an update as to the key partnership with Elbit Systems in Israel. With Kraken's gross margin percentage (65%+), as orders roll in for KATFISH it will have a significant, positive impact to the net income for the company.
    • Continued product validation through its partnership with Elbit should provide continued momentum for the company in securing orders from other current and potential customers. 
  • Key/Interesting Statements from the MD&A:
    • "During fiscal 2015, the Company continued to ramp-up its business activities. Administrative expenses rose by roughly 35% to $1,274,686 (2014 - $947,353); however, employee costs more than doubled over those of the prior year, increasing to $785,001 (2014 - $324,623)."
    • "Employee costs increased by $460,378 during fiscal 2015, from $324,623 in 2014, to $785,001 - reflecting a ramp-up in staffing levels to facilitate current and planned corporate growth. Government assistance, offset against employee costs, totaled $698,370 (2014 -$403,947)."

Full Year 2015 Financial Snapshot and Comparisons:

Q4 2015 Financial Snapshot and Comparisons:

 

IVRnet (IVI.V) 

  • Key Takeaways
    • Despite showing a decrease in annual revenues, the IVRnet story gets very interesting in 2016 because in April the company began to realize new revenues from the launch of Nextext into the North American market.
    • Despite the descrease in revenues, the company achieved positive net income.
    • The nice thing about IVRnet is the base of recurring revenue it generates via its legacy products, thus creating a nice margin of safety as it continues to development and sell its new product offerings.
  • Key/Interesting Statements from the MD&A:
    • "The Nextext project began generating revenue in April of 2016."
    • "The Company expects annual 2016 operations to be profitable along with a positive EBITDA. The Company expects 2016 revenues to remain consistent with the amounts earned during 2015 until the launch of Nextext, which began generating revenues in April of 2016, and the release of additional modules of Ivrnet Central and SafePay/TelePay; at which time, increased revenues and profits are expected."

Full Year 2015 Financial Snapshot and Comparisons:

Q4 2015 Financial Snapshot and Comparisons: