News Release
Hit Technologies loses $495,692 in Q3
2017-05-30 19:16 ET - News Release
Mr. Brooks Bergreen reports
HIT TECHNOLOGIES REPORTS THIRD QUARTER FISCAL 2017 RESULTS
Hit Technologies Inc. is releasing its third quarter (Q3 2017) financial and operating results for the quarter and nine months ended March 31, 2017, prepared in accordance with international financial reporting standards (IFRS).
SELECTED QUARTER AND YEAR-TO-DATE INFORMATION Q3 fiscal 2017 Q3 fiscal 2016 Nine months to Nine months to March 31, 2017 March 31, 2016 Revenue $147,459 $365,749 $599,510 $1,457,231 Percentage increase over prior year -60% -59% Gross margin Gross margin percentage 30% 37% 34% 31% Operating expenses (excluding non-cash and cost of sales) $447,826 $716,731 $1,371,202 $2,803,600 Percentage change over prior year -38% -51% Adjusted EBITDA (loss) $(426,830) $(562,747) $(1,211,661) $(2,344,409) Percentage change over prior year -24% -48% Net (loss) per share, basic $(0.01) $(0.02) $(0.02) $(0.06) March 31, 2017 June 30, 2016 Cash and cash equivalents $268,661 $368,018 Inventory $412,339 $471,436 Net working capital $64,980 $328,939 Total assets $1,356,109 $1,663,854 Accounts payable and accrued liabilities $775,169 $760,730 Total liabilities $1,686,000 $861,156
"We are pleased to report that despite our reduced spend levels, and the resulting decrease in current period sales, we have launched the new HITCASE PRO 7," said Brooks Bergreen, Chairman and CEO of HITCASE. "We ran a successful KickStarter campaign for the HITCASE PRO 7 launch and have exceeded our funding target, which we believe is a good indication of the quality of our completely re-designed flagship offering. With our tighter budget, we are laser focused on producing the best cases on the planet, and reviewers are agreeing with us - such as the Cult of Mac who said 'it's the best waterproof case I've ever tested'. Our new HITCASE SHIELD and soon to be launched HITCASE PRO 7 have already had a great response from customers and media. We are proud of these new designs and believe we are a standout in the market with both products and our evolving ecosystem."
Continued Mr. Bergreen, "Strategically, we believe that by designing our best possible product suite and conducting limited production and sales runs to capture important market feedback, we can position HITCASE to win the support of a large U.S. retailer for a formal re-launch program. With our iPhone 7 launching in June 2017, new product lineup transition is complete, and we are now looking forward to turning up our sales channels to position us for broader distribution in the coming fall and winter season. We expect to accomplish this through our partnership with Crowd & Company, an accomplished group of former Lifeproof executives, who have successfully positioned us for opportunities with proven big-box U.S. retailers. Importantly, we are executing on this against a backdrop of reduced development and marketing costs, and by focusing where we have the best return on our investment to minimize our capital requirements."
Operational Summary for Q3 Fiscal 2017 include:
- Generated sales of $147,459 in Q3 F2017, down 60% from $365,749 in Q3 Fiscal 2016. The decline reflects the Company's reduced spending on sales, marketing and distribution, and to intentionally keeping production runs limited until the full product line for iPhone 7 is completed.
- -- Gross margin of $43,679 in Q3 F2017 was down from $136,299 generated in Q3 of last year due to decreased sales. The gross margin percent decreased to 30% compared to 37% last year.
- -- During the quarter, the Company reduced operating expenditures (excluding non-cash items and cost of sales) to $447,829, a 38% reduction from Q3 F2016. The Company continues to look for additional opportunities to realize further reductions while maintaining its ability to continue its product development and to pursue the support of a large partner to re-launch the product-line;
- -- Reported an Adjusted EBITDA loss of $426,830 for Q3 F2017, a 24% reduction from $562,747 in Q3 F2016;
- -- Closed the quarter with working capital of $64,980 including cash and cash equivalents of $268,661 and inventory of $412,339 at March 31, 2017.
- -- The Company completed private placements of secured convertible debentures and Units for gross proceeds of $362,000 in the quarter. Subsequent to March 31, 2017, the Company closed an additional private placement of secured convertible debentures for gross proceeds of $330,000.
- -- Subsequent to quarter end, completed the new HITCASE PRO design for iPhone 7 and 7+, and launched the product via a successful "crowdfunding" campaign with shipments beginning in June 2017. The Company's "crowdfunding" campaign exceeded its $50,000 targeted funding.
- -- Announced a partnership with Crowd & Company for sales and marketing initiatives. Crowd & Company executives have extensive experience in marketing and selling protective iPhone cases to large US retailers, having successfully launched a protective iPhone case line by the name of Lifeproof in 2011. With completion of the HITCASE PRO-7, Crowd & Company has been successful at generating interest from large U.S. based retailers for the full HITCASE line-up.
Non-IFRS Measures
Adjusted EBITDA is a non-IFRS measure and management defines this metric as the loss and comprehensive loss under IFRS, adjusted by adding back interest, taxes, amortization, and other non-cash expenses. Please review the reconciliation of Adjusted EBITDA to net income (loss) in the Company's MD&A for the corresponding period.
This press release should be read in conjunction with our unaudited interim Consolidated Financial Statements for the three months ended December 31, 2016 and the accompanying Management Discussion and Analysis, which can be found on SEDAR at www.sedar.com and on the Company's website https://www.hitcase.com/invest.
About HIT Technologies Inc.
HIT Technologies, Inc. (TSX VENTURE: HIT) develops and markets a portfolio of products that transform Apple iPhones into high-performing, weather- and shock-resistant video cameras. Both its, flagship product, HITCASE PRO and its newer SNAP allows users to easily capture action photo and video content hands-free, using a variety of HIT Technologies' patented Railslide{A ™} mounts that attach to virtually any surface. Swappable lenses and accessories provide a variety of perspectives otherwise unattainable while participating in adventure sports. HIT Technologies is headquartered in Vancouver, British Columbia, Canada and trades on the TSX Venture Exchange. For more information about HITCASE, visit www.HITCASE.com. Search #hitcase on Instagram to see some of the amazing images created by HITCASE customers.
Statements of Operations and Comprehensive Loss For the quarter and nine months ended March 31, 2017 & 2016 (Unaudited) (Expressed in Canadian dollars) Quarter ended March 31 Nine months ended 2017 2016 2017 2016 Revenue 147,459 365,749 599,510 1,457,231 Cost of sales 103,780 229,450 394,462 1,004,218 43,679 136,299 205,048 453,013 30% 37% 34% 31% Expenses Depreciation 37,170 49,347 138,848 158,394 Share based compensation 31,693 49,804 111,304 222,003 General and administrative 311,666 414,852 893,569 1,396,854 Research and development 17,842 56,580 63,897 224,629 Selling and marketing 118,319 245,299 413,736 1,182,117 516,689 815,882 1,621,354 3,183,997 Loss before other income (expenses) (473,010) (679,583) (1,416,307) (2,730,984) Other income (expenses) Finance costs (25,753) (2,819) (40,251) (4,375) Foreign exchange loss 3,071 20,504 (5,256) 10,553 (22,682) 17,685 (45,507) 6,178 Loss and comprehensive loss for the period (495,692) (661,898) (1,461,813) (2,724,806) Basic and diluted loss per share (0.01) (0.02) (0.02) (0.06)
We seek Safe Harbor.
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