A major red flag in their disclosure
See section 10.3 of the original MD&A filed November 11 on page 11. There was no mention whatsoever that the selling and marketing expenses included a restructuring provision of a $414,000 restructuring provision (that was later reversed) Wow!
This is very material and should have been disclosed. Very border line. Awful disclosure that cannot be trusted. Major red flag.
See on SEDAR:
https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00012304 10.3 Operating Expenses Government assistance:
As a result of the pandemic, government has put in place a temporary business support program. Due to the significant decline in revenues, the Corporation is eligible for the ‘Canada Emergency Wage Subsidy’.
For the second quarter ended September 30, 2020, government assistance accounted for in reduction of operating expenses amounted to $0.9 million. For the six-month period ended September 30, 2020, government assistance was $1.5 million. Selling and Marketing: Selling and marketing expenses consist primarily of employee costs including share-based payments, professional fees, advertising and point-of-sale material expenses and attendance at trade shows.
They also include expenses related to motion coding and other marketing expenses.
For the second quarter ended September 30, 2020,
selling and marketing expenses decreased by 56% to $0.9 million (31% of revenues) compared with $2.1 million (32% of revenues) last year. For the six-month period ended September 30, 2020, selling and marketing expenses were $1.5 million (29% of revenues) down 68% from $4.6 million (33% of revenue) year over year… (where is ...
and included a 414 000 non-cash restructuring provision ? Also From the CEO certification also on SEDAR also dated November 11
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
I guess the reasonable diligence was done a little fast when he read the MD&A or he read $4.14 cents not 414 thousand ! He may also have no knowledge. Same reasoning can apply to the CFO certification. And the the audit committee reviewed and the Board approved (standard in any public company. Would be nice to see the minutes)