RE: Financials Fiscal 2012 Financial and Operational Highlights
• New Media division revenue for the year ended June 30, 2012 has increased to $747,485 or 157% from $290,584 forthe year ended June 30, 2011.
• The Company completed the acquisition of SaaS for a total purchase price of $25,578,426. With the acquisition the Company owns the underlying technology for the Ortsbo product offerings.
• The Company completed its investment in AIN by converting its $500,000 USD promissory note and investing a further $1,500,000 USD in exchange for an approximately 30% ownership in AIN.
• The Company completed its investment in Shiny Inc. (“Shiny Ads”) by converting its $100,000 promissory note and investing a further $150,000 in exchange for Class A preferred shares and Class A preferred share purchase warrants of Shiny Ads. The investment gives the Company significant influence over Shiny Ads through a seat on the board of directors of Shiny Ads.
• The Company entered into an agreement with Tunezy, Inc. (“Tunezy”) to advance funds in the form of promissory notes receivable that are convertible into common shares of Tunezy. The Company has provided $75,000 to Tunezy. as at June 30, 2012 with additional advances to be provided subject to the meeting of certain performance milestones.As at the date of this MD&A, $100,000 in total has been advanced to Tunezy, in recognition of all milestones being met.
The Company completed its investment in theAudience, Inc. (“theAudience”) by converting its $1,000,000 USD promissory note into preferred shares of theAudience. The Company owns a nominal percentage ownership in theAudience. The Company and theAudience have also entered into a separate binding letter of intent to integrate the Live & Global platform from the Company’s subsidiary Ortsbo Inc. (“Ortsbo”) into theAudience’s social distribution platform, enabling, real-time, multi-lingual translation for certain live events on behalf of theAudience clients and partners. The companies will jointly promote the integrated offering.
• The Company acquired a 25% ownership interest in Lexifone Communications Systems (2010) Ltd. (“Lexifone”) an Israel based developer of proprietary voice translation technology platforms. The Company has the option to acquire additional ownership positions in Lexifone by January 1, 2013 and January 1, 2014.
• The Company advanced Poynt Corporation (“Poynt”) $1,500,000 in the form of a secured loan. Poynt is currently under creditor protection. Poynt is working towards a solution within the bankruptcy and insolvency act, however in the event Poynt enters a receivership scenario, the Company is in the process of determining its best course of action in order to recover the maximum value of the secured loan.
During fiscal 2012 the Company made significant progress under its mandate as a leading technology incubator. The Company
was able to raise significant funds in Fiscal 2011 and invested these funds in strategic technology companies during fiscal 2012
in addition to financing the development of its existing new media technology businesses. All significant investments made in
fiscal 2012 are harmonious with and provide synergies for at least one of the existing new media businesses. From the
investments made in Fiscal 2012, there is not only a long term benefit to the Company from a return on investment via the
investee’s operations or the sale of ownership interests, but also a long term benefit to the Company through synergies between
other new media lines of business and these investees.
As a result of the significant investments in new technologies and its existing new media division in fiscal 2012, the Company
requires significant financing in the near term in order to continue to operate. The Company has a variety of financing options
from multiple sources including both the private and public markets, both in Canada and in the United States. The Company is
aggressively pursuing all options that are in the best interest of the shareholders of the Company. The Company will likely use
more than one source of financing over the next twelve months. In the next few months the Company will use short term debt
financing in addition to private placements in the Canadian public markets to fund operations. In the latter months of the fiscal
year, the Company is anticipating financing through the US public markets. The Company’s primary use of proposed financing
over the next twelve months will be on the continued operations of its existing new media business in order to generate revenues
and continue the path to profitability. The Company does not anticipate further investment into additional companies over the
next twelve months, however in the longer term as a technology incubator, the Company will resume these activities when the
appropriate financing or self-generated cash flows are available.
The Company continues to focus on increasing revenues and commercialization of its core New Media assets and the
monetization of users by expanding relationships with on-line advertising agencies, advertising networks, brands around the
globe as well as new partner programs. The Company is also exploring plans to license technologies as part of the product
commercialization strategy.