UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of September 30, 2018
Commission File Number 333-98397
Lingo Media Corporation
(Translation of registrant's name into English)
151 Bloor Street West, Suite 703, Toronto, Ontario Canada M5S 1S4
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes ☐ No ☒
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-________________.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized.
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LINGO MEDIA CORPORATION |
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Date: November 29, 2018 |
By: |
/s/ Michael Kraft |
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Michael Kraft President and CEO |
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LINGO MEDIA CORPORATION
Condensed Consolidated Interim Financial Statements
For the nine-month period ended September 30, 2018
LINGO MEDIA CORPORATION
Condensed Consolidated Interim Financial Statements
As at September 30, 2018
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated interim financial statements of Lingo Media Corporation have been prepared by and are the responsibility of the Company's management. These unaudited condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") and reflect Management’s best estimates and judgements based on information currently available. The Company's independent auditor has not performed a review of these financial statements in accordance with standards established for a review of interim financial statements by an entity's auditor.
LINGO MEDIA CORPORATION
Condensed Consolidated Interim Financial Statements
As at September 30, 2018
Contents |
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Condensed Consolidated Interim Financial Statements |
Page |
Balance Sheets |
3 |
Statements of Comprehensive Income (Loss) |
4 |
Statements of Changes in Equity |
5 |
Statements of Cash Flows |
6 |
Notes to the Financial Statements |
7-16 |
LINGO MEDIA CORPORATION
Condensed Consolidated Interim Balance Sheets
As at September 30, 2018 and December 31, 2017
(Unaudited, expressed in Canadian Dollars, unless otherwise stated)
Notes
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September 30, 2018 |
December 31, 2017 |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
$ | 118,689 | $ | 327,434 | ||||||||
Accounts and grants receivable |
5 | 1,117,294 | 970,467 | |||||||||
Prepaid and other receivables |
116,904 | 205,482 | ||||||||||
1,352,887 | 1,503,383 | |||||||||||
Non-Current Assets |
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Property and equipment |
6 | 31,994 | 30,689 | |||||||||
Intangibles |
7 | - | - | |||||||||
TOTAL ASSETS |
$ | 1,384,881 | $ | 1,534,072 | ||||||||
EQUITY AND LIABILITIES |
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Current Liabilities |
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Accounts payable |
17 | $ | 604,181 | $ | 488,636 | |||||||
Accrued liabilities |
17 | 143,546 | 155,156 | |||||||||
Lease inducement |
27,875 | 36,526 | ||||||||||
Loans payable |
8 | 195,000 | 300,000 | |||||||||
TOTAL LIABILITIES |
$ | 970,602 | $ | 980,318 | ||||||||
Equity |
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Share capital |
9 | $ | 21,914,722 | $ | 21,914,722 | |||||||
Share-based payment reserve |
10 | 3,880,217 | 3,792,678 | |||||||||
Accumulated other comprehensive income |
(307,026 | ) | (303,447 | ) | ||||||||
Deficit |
(25,073 634 | ) | (24,850,199 | ) | ||||||||
TOTAL EQUITY |
$ | 414,279 | $ | 553,754 | ||||||||
TOTAL EQUITY AND LIABILITIES |
$ | 1,384,881 | $ | 1,534,072 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
These condensed consolidated interim financial statements are authorized for issue by the Board of Directors on November 29, 2018.
/s/ Michael Kraft |
/s/ Martin Bernhotlz |
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Director |
Director |
LINGO MEDIA CORPORATION
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
For the three and nine-month ended September 30, 2018 and 2017
(Unaudited, expressed in Canadian Dollars, unless otherwise stated)
Notes |
For the three months ended September 30 |
For the nine months ended September 30 |
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2018 |
2017 |
2018 |
2017 |
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Revenue |
$ | 186,518 | $ | 354,914 | $ | 1,227,032 | $ | 2,021,806 | ||||||||||||
Expenses |
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Selling, general and administrative expenses |
303,739 | 290,963 | 928,363 | 881,020 | ||||||||||||||||
Amortization – intangibles |
7 | - | 370,993 | - | 972,667 | |||||||||||||||
Bad debt (recovery) |
(150,340 | ) | - | (293,379 | ) | - | ||||||||||||||
Direct costs |
73,979 | 42,124 | 167,185 | 153,841 | ||||||||||||||||
Development costs |
69,864 | - | 407,300 | - | ||||||||||||||||
Share-based payment |
14,468 | 34,839 | 87,539 | 65,560 | ||||||||||||||||
Depreciation – property and equipment |
6 | 1,544 | 1,916 | 4,761 | 4,725 | |||||||||||||||
Total Expenses |
313,254 | 740,835 | 1,301,769 | 2,077,813 | ||||||||||||||||
Profit / (Loss) from Operations |
(126,736 | ) | (385,921 | ) | (74,737 | ) | (56,007 | ) | ||||||||||||
Net Finance Charges |
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Interest expense |
4,108 | 9,687 | 43,032 | 31,524 | ||||||||||||||||
Foreign exchange (gain) / loss |
14,968 | 77,418 | (48,988 | ) | 195,572 | |||||||||||||||
Profit / (Loss) before Tax |
(145,812 | ) | (473,026 | ) | (68,781 | ) | (283,103 | ) | ||||||||||||
Income and Other Tax Expense |
10,738 | 1,787 | 154,654 | 144,643 | ||||||||||||||||
Net Profit / (Loss) for the Period |
(156,550 | ) | (474,813 | ) | (223,435 | ) | (427,746 | ) | ||||||||||||
Other Comprehensive Income |
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Exchange differences on translating foreign operations gain / (loss) |
(4,215 | ) | (819 | ) | (3,579 | ) | (1,767 | ) | ||||||||||||
Total Comprehensive Income / (Loss), Net of Tax |
$ | (160,765 | ) | $ | (475,632 | ) | $ | (227,014 | ) | $ | (429,513 | ) | ||||||||
Earnings /(Loss) per Share |
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Basic |
$ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||
Diluted |
$ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||
Weighted Average Number of Common Shares Outstanding |
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Basic |
35,529,132 | 35,529,132 | 35,529,132 | 35,529,132 | ||||||||||||||||
Diluted |
35,529,132 | 35,529,132 | 35,529,132 | 35,529,132 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
LINGO MEDIA CORPORATION
Condensed Consolidated Interim Statements of Changes in Equity
For the nine-months ended September 30, 2018 and 2017
(Unaudited, expressed in Canadian Dollars, unless otherwise stated)
Issued Share Capital |
Share- Based Reserves |
Accumulated Other Comprehensive Income |
Deficit |
Total Equity |
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No. of Shares |
Amount |
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Balance as at January 1, 2017 |
35,529,192 | $ | 21,914,722 | $ | 3,421,165 | $ | (302,037 | ) | $ | (18,588,817 | ) | $ | 6,445,033 | |||||||||||
Loss for the period |
- | - | - | - | (427,746 | ) | (427,746 | ) | ||||||||||||||||
Other comprehensive loss |
- | - | - | (1,767 | ) | - | (1,767 | ) | ||||||||||||||||
Share based payments charged to operations |
- | - | 65,560 | - | - | 65,560 | ||||||||||||||||||
Balance as at September 30, 2017 |
35,529,192 | $ | 21,914,722 | $ | 3,486,725 | $ | (303,804 | ) | $ | (19,016,563 | ) | $ | 6,081,080 | |||||||||||
Loss for the period |
- | - | - | - | (5,833,636 | ) | (5,833,636 | ) | ||||||||||||||||
Other comprehensive income |
- | - | - | 357 | - | 357 | ||||||||||||||||||
Share-based payments charged to operations |
- | - | 305,953 | - | - | 305,953 | ||||||||||||||||||
Balance as at December 31, 2017 |
35,529,192 | $ | 21,914,722 | $ | 3,792,678 | $ | (303,447 | ) | $ | (24,850,199 | ) | $ | 553,754 | |||||||||||
Loss for the period |
- | - | - | - | (223,435 | ) | (223,435 | ) | ||||||||||||||||
Other comprehensive income |
- | - | - | (3,579 | ) | - | (3,579 | ) | ||||||||||||||||
Share-based payments charged to operations |
- | - | 87,539 | - | - | 87,539 | ||||||||||||||||||
Balance as at September 30, 2018 |
35,529,192 | $ | 21,914,722 | $ | 3,880,217 | $ | (307,026 | ) | $ | (25,073,634 | ) | $ | 414,279 |
No preference shares were issued at September 30, 2018.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
LINGO MEDIA CORPORATION
Condensed Consolidated Interim Statements of Cash Flows
For the three and nine-month ended September 30, 2018 and 2017
(Unaudited, expressed in Canadian Dollars, unless otherwise stated)
For the three months ended September 30 |
For the nine months ended September 30 |
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2018 |
2017 |
2018 |
2017 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Income / (Loss) for the period |
$ | (156,550 | ) | $ | (474,813 | ) | $ | (223,435 | ) | $ | (427,746 | ) | ||||
Adjustments to Net Profit for Non-Cash Items: |
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Depreciation / amortization – intangibles |
- | 370,993 | - | 972,667 | ||||||||||||
Share-based payment |
14,468 | 34,839 | 87,539 | 65,560 | ||||||||||||
Unrealized foreign exchange (gain)/loss |
1,570 | 15,184 | (3,606 | ) | (1,680 | ) | ||||||||||
Depreciation – property and equipment |
1,544 | 1,916 | 4,761 | 4,725 | ||||||||||||
Lease inducement |
(8,651 | ) | (18,872 | ) | (8,651 | ) | (18,872 | ) | ||||||||
Operating Income/(Loss) before Working Capital Changes |
(147,619 | ) | (70,753 | ) | (143,392 | ) | 594,654 | |||||||||
Working Capital Adjustments: |
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(Increase)/decrease in accounts and grants receivable |
(43,451 | ) | 139,525 | (146,827 | ) | 880,627 | ||||||||||
(Increase)/decrease in prepaid and other receivables |
(32,336 | ) | (4,076 | ) | 88,578 | 427,011 | ||||||||||
Increase/(decrease) in accounts payable |
55,731 | 108,513 | 115,545 | 96,777 | ||||||||||||
Increase/(decrease) in accrued liabilities |
52,640 | 27,580 | (11,610 | ) | (66,072 | ) | ||||||||||
Cash Generated from/(used in) Operations |
(115,035 | ) | 200,789 | (97,706 | ) | 1,932,997 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
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Investment in intangibles |
- | (149,581 | ) | - | (1,740,001 | ) | ||||||||||
Net liability assumed through acquisition |
- | (80,819 | ) | - | (80,819 | ) | ||||||||||
Purchase of property and equipment |
(6,039 | ) | (9,247 | ) | (6,039 | ) | (9,923 | ) | ||||||||
Net Cash Flows Generated from / (used in) Investing Activities |
(6,039 | ) | (239,647 | ) | (6,039 | ) | (1,830,743 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from loans |
- | 300,000 | 420,000 | 985,000 | ||||||||||||
Repayment of loans payable |
- | (300,000 | ) | (525,000 | ) | (1,135,000 | ) | |||||||||
Net Cash Flows Generated from/(used in) Financing Activities |
- | - | (105,000 | ) | (150,000 | ) | ||||||||||
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS |
(121,074 | ) | (38,858 | ) | (208,745 | ) | (47,746 | ) | ||||||||
Cash and Cash Equivalents at the Beginning of the Period |
239,763 | 75,415 | 327,434 | 84,303 | ||||||||||||
Cash and Cash Equivalents at the End of the Period |
$ | 118,689 | $ | 36,557 | $ | 118,689 | $ | 36,557 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
LINGO MEDIA CORPORATION
Notes to Condensed Consolidated Interim Financial Statements
For the period ended September 30, 2018
(Unaudited - See Notice to Reader)
1. |
CORPORATE INFORMATION |
Lingo Media Corporation (“Lingo Media” or the “Company”) is a publicly listed company incorporated in Canada with limited liability under the legislation of the Province of Ontario and its shares are listed on the TSX Venture Exchange and quoted on the OTC Marketplace. The consolidated financial statements of the Company as at and for the period ended September 30, 2018 comprise the Company and its wholly owned subsidiaries: Lingo Learning Inc., ELL Technologies Ltd., ELL Technologies Limited, Vizualize Technologies Corporation, Speak2Me Inc., Parlo Corporation and Lingo Group Limited (the “Group”).
Lingo Media is a global provider of best-in-class digital and print-based English language learning solutions that is ‘Changing the way the world learns English’. The Company provides online and print-based solutions through its two distinct business units: ELL Technologies Ltd. (“ELL Technologies”) and Lingo Learning Inc. (“Lingo Learning”). ELL Technologies is a global English language learning multi-media and online training company. Lingo Learning is a print-based publisher of English language learning school programs in China.
The head office, principal address and registered and records office of the Company is located at 151 Bloor Street West, Suite 703, Toronto, Ontario, Canada, M5S 1S4. |
2. |
BASIS OF PREPARATION |
2.1 | Statement of compliance | |
These condensed consolidated interim financial statements are unaudited and have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ (“IAS 34”) using accounting policies consistent with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).
These condensed consolidated interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The Company has incurred significant losses recurring over the years. This raises the doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon raising additional financing through share issuance or debt borrowing or through cash flow generated from sales contracts and distribution agreements. There are no assurances that the Company will be successful in achieving these goals.
The condensed consolidated interim financial statements for the period ended September 30, 2018 were approved and authorized by the Board of Directors on November 29, 2018. |
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2.2 | Basis of measurement | |
These condensed consolidated interim financial statements have been prepared on the historical cost basis except as provided in note 4. The comparative figures presented in these consolidated financial statements are in accordance with the same accounting policies. |
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2.3 | Basis of consolidation | |
The consolidated financial statements comprise the financial statements of the Company and its wholly owned subsidiaries controlled by the Company (the “Group”) as at September 30, 2018. Control exists when the Company is exposed to, or has the rights to variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity. |
LINGO MEDIA CORPORATION
Notes to Condensed Consolidated Interim Financial Statements
For the period ended September 30, 2018
(Unaudited - See Notice to Reader)
2. | BASIS OF PREPRATION (Cont’d) | |
2.3 | Basis of consolidation (Cont’d) |
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All inter-group balances, transactions, unrealized gains and losses resulting from inter-group transactions and dividends are eliminated in full. | ||
2.4 | Functional and presentation currency | |
The functional currency is the currency of the primary economic environment in which the entity operates and has been determined for each entity within the Group. These consolidated financial statements are presented in Canadian Dollars, which is the Company’s functional currency. The functional currency of ELL Technologies Limited and Lingo Group Limited are United States Dollar (“USD”). All other subsidiaries’ functional currency is Canadian Dollar (“CAD”).
The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, “The Effects of Changes in Foreign Exchange Rates”.
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3. |
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS | |
The preparation of the Company’s condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies, reported amounts of assets, liabilities and contingent liabilities, revenues and expenses at the date of the consolidated financial statements and during the reporting period.
Estimates and assumptions are continuously evaluated and are based on management’s historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.
Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements is included in the following notes: |
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Determination of functional currency |
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Determination of allowance for doubtful accounts |
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Determination of the recoverability of the carrying value of intangibles and goodwill |
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Recognition of internally developed intangibles |
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Determination and recognition of long-term revenue contracts |
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Recognition of government grant and grant receivable |
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Recognition of deferred tax assets |
● |
Valuation of share-based payments |
● |
Recognition of provisions and contingent liabilities |
LINGO MEDIA CORPORATION
Notes to Condensed Consolidated Interim Financial Statements
For the period ended September 30, 2018
(Unaudited - See Notice to Reader)
4. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The accounting policies applied by the Company in these Condensed Consolidated Interim Financial Statements are the same as those applied by the Company in its Consolidated Financial Statements for the year ended December 31, 2017, except the following:
New Standards Adopted in Current Year
IFRS 2 ‘Share-based Payment’ was issued by the IASB in June 2016. These amendments provide clarification on how to account for certain types of share-based transaction. The amendments are effective for the annual period beginning on or after January 1, 2018. The adoption of this amendment did not have a material impact on the Company’s condensed interim consolidated financial statements.
IFRS 9 ‘Financial Instruments: Classification and Measurement’, introduces new requirements for the classification and measurement of financial instruments, a single forward-looking expected loss impairment model and a substantially reformed approach to hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. The adoption of this amendment did not have a material impact on the Company’s condensed interim consolidated financial statements.
IFRS 15 ‘Revenue from Contracts with Customers’ was issued by the IASB in June 2014. The objective of IFRS 15 is to provide a single, comprehensive revenue recognition model for all contracts with customers. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. It also contains new disclosure requirements. Under IFRS 15, revenue from the sale of licenses would be recognized at a point in time when control over the products has been transferred to the customer. The Company transfers control and satisfied its performance obligation upon delivery and acceptance by the customer, which is consistent with the Company’s current revenue recognition policy under IAS 18. IFRS 15 is effective for the Company on January 1, 2018. The adoption of this amendment did not have a material impact on the Company’s condensed interim consolidated financial statements. The disaggregated revenue has been disclosed in Note 15.
5. |
ACCOUNTS AND GRANTS RECEIVABLE |
Accounts and grants receivable consist of:
September 30, 2018 |
December 31, 2017 |
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Trade receivable |
$ | 944,809 | $ | 947,911 | ||||
Grants receivable |
172,485 | 22,556 | ||||||
$ | 1,117,294 | $ | 970,467 |
6. |
PROPERTY AND EQUIPMENT |
Cost, January 1, 2017 |
$ | 80,713 | ||
Additions |
9,923 | |||
Effect of foreign exchange |
(942 | ) | ||
Cost, September 30, 2017 |
$ | 89,694 | ||
Additions |
- | |||
Effect of foreign exchange |
93 | |||
Cost, December 31, 2017 |
$ | 89,787 | ||
Additions |
6,039 | |||
Effect of foreign exchange |
326 | |||
Cost, September 30, 2018 |
96,152 |
LINGO MEDIA CORPORATION
Notes to Condensed Consolidated Interim Financial Statements
For the period ended September 30, 2018
(Unaudited - See Notice to Reader)
6. |
PROPERTY AND EQUIPMENT (Cont’d) |
Accumulated depreciation, January 1, 2017 |
$ | 53,225 | ||
Charge for the period |
4,725 | |||
Effect of foreign exchange |
(855 | ) | ||
Accumulated depreciation, September 30, 2017 |
$ | 57,095 | ||
Charge for the period |
1,919 | |||
Effect of foreign exchange |
84 | |||
Accumulated depreciation, December 31, 2017 |
$ | 59,098 | ||
Charge for the period |
4,761 | |||
Effect of foreign exchange |
299 | |||
Accumulated depreciation, September 30, 2018 |
$ | 64,158 | ||
Net book value, January 1, 2017 |
$ | 27,488 | ||
Net book value, September 30, 2017 |
$ | 32,517 | ||
Net book value, December 31, 2017 |
$ | 30,689 | ||
Net book value, September 30, 2018 |
$ | 31,994 |
7. |
INTANGIBLES |
Software and Web Development |
Content Platform |
Content Development |
Total |
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Cost, January 1, 2017 |
$ | 9,239,087 | $ | 1,477,112 | $ | 2,474,020 | $ | 13,190,219 | ||||||||
Additions |
590,542 | - | 1,149,459 | 1,740,001 | ||||||||||||
Cost, September 30, 2017 |
$ | 9,829,629 | $ | 1,477,112 | $ | 3,623,479 | $ | 14,930,220 | ||||||||
Impairment |
(590,542 | ) | - | (1,149,459 | ) | (1,740,001 | ) | |||||||||
Cost, December 31, 2017 |
9,239,087 | 1,477,112 | 2,474,020 | 13,190,219 | ||||||||||||
Cost, September 30, 2018 |
$ | 9,239,088 | $ | 1,477,112 | $ | 2,474,020 | $ | 13,190,219 | ||||||||
Accumulated depreciation, January 1, 2017 |
$ | 8,229,946 | $ | 1,477,112 | $ | 483,152 | $ | 10,190,210 | ||||||||
Charge for the period |
522,315 | - | 450,352 | 972,667 | ||||||||||||
Accumulated depreciation, September 30, 2017 |
$ | 8,752,261 | $ | 1,477,112 | $ | 933,504 | $ | 11,162,877 | ||||||||
Charge for the period |
34,809 | - | 44,452 | 79,261 | ||||||||||||
Impairment |
452,018 | - | 1,496,063 | 1,948,081 | ||||||||||||
Accumulated depreciation, December 31, 2017 |
9,239,088 | 1,477,112 | 2,474,019 | 13,190,219 | ||||||||||||
Accumulated depreciation, September 30, 2018 |
$ | 9,239,088 | $ | 1,477,112 | $ | 2,474,019 | $ | 13,190,219 | ||||||||
Net book value, December 31, 2017 |
$ | - | $ | - | $ | - | $ | - | ||||||||
Net book value, September 30, 2018 |
$ | - | $ | - | $ | - | $ | - |
LINGO MEDIA CORPORATION
Notes to Condensed Consolidated Interim Financial Statements
For the period ended September 30, 2018
(Unaudited - See Notice to Reader)
7. | INTANGIBLES (Cont’d) |
The Company began commercial production and sale of its services and products during 2009. In 2018, the Company continued to maintain and upgrade its ELL Technologies’ suite of products and invested $xx (2017 - $1,740,001). The ELL Technologies’ suite of products includes five different products, each designed to suit the needs of different demographic groups. The Company has started the commercial production and sale of three of the five products.
The Company previously capitalized all development costs related to its software web development, content platform, and content development through to December 31, 2016. During the year ended December 31, 2017, there was uncertainty with respect to feasibility and profitability of the projects due to sales not achieving forecasted levels and a resulting decline in expected future cash flows from their intended use. Consequently, the benefit of these development costs may not be realized as soon as previously expected and, as such, the costs incurred during the year ended December 31, 2017 and the period ended September 30, 2018 were expensed rather than capitalized as they did not meet the criteria for capitalization.
8. |
LOANS PAYABLE |
September 30 2018 |
December 31 2017 |
|||||||
Loans payable, interest bearing at 12% per annum with monthly interest payments, due on demand (i) |
$ | 195,000 | $ | 300,000 | ||||
$ | 195,000 | $ | 300,000 |
(i) |
The Company received an unsecured short-term loan during the period. Included in loans payable are loans amounting to $90,000 (2017 – $Nil) from related parties as disclosed in Note 17. |
9. |
SHARE CAPITAL |
Authorized Unlimited number of preference shares with no par value Unlimited number of common shares with no par value |
10. |
SHARE-BASED PAYMENTS |
In December 2017, the Company amended its stock option plan (the “2017 Plan”). The 2017 Plan was established to provide an incentive to management (officers), employees, directors and consultants of the Company and its subsidiaries. The maximum number of shares which may be reserved for issuance under the 2017 Plan is limited to 7,105,838 shares less the number of shares reserved for issuance pursuant to options granted under the 1996 Plan, the 2000 Plan, the 2005 Plan, the 2009 Plan and the 2011 Plan, provided that the Board of Directors of the Company has the right, from time to time, to increase such number subject to the approval of the relevant exchange on which the shares are listed and the approval of the shareholders of the Company.
The maximum number of common shares that may be reserved for issuance to any one person under the 2017 Plan is 5% of the common shares outstanding at the time of the grant (calculated on a non-diluted basis) less the number of shares reserved for issuance to such person under any option to purchase common shares of the Company granted as a compensation or incentive mechanism.
LINGO MEDIA CORPORATION
Notes to Condensed Consolidated Interim Financial Statements
For the period ended September 30, 2018
(Unaudited - See Notice to Reader)
10. |
SHARE-BASED PAYMENTS (Cont’d) |
The exercise price of each option cannot be less than the market price of the shares on the day immediately preceding the day of the grant less any permitted discount. The exercise period of the options granted cannot exceed 10 years. Options granted under the 2017 Plan do not have any required vesting provisions. However, the Board of Directors of the Company may, from time to time, amend or revise the terms of the 2017 Plan or may terminate it at any time.
The following summarizes the options outstanding:
Number of Options |
Weighted Average Exercise Price |
Weighted Average Remaining Contract Life (Yrs) |
||||||||||
Outstanding as at January 1, 2017 |
2,045,835 | $ | 0.18 | 0.86 | ||||||||
Granted |
1,972,000 | 0.39 | ||||||||||
Expired |
(938,335 | ) | 0.62 | |||||||||
Outstanding as at September 30, 2017 |
3,079,500 | $ | 0.20 | |||||||||
Granted |
2,040,000 | 0.20 | ||||||||||
Expired |
(1,110,750 | ) | 0.18 | |||||||||
Forfeited |
(9,750 | ) | 0.13 | |||||||||
Outstanding as at December 31, 2017 |
3,999,000 | $ | 0.21 | 2.77 | ||||||||
Forfeited |
(113,000 | ) | 0.23 | |||||||||
Outstanding as at September 30, 2018 |
3,886,000 | $ | 0.21 | 2.51 |
Options exercisable as at September 30, 2017 |
1,451,570 | $ | 0.19 | |||||
Options exercisable as at December 31, 2017 |
2,577,000 | $ | 0.21 | |||||
Options exercisable as at September 30, 2018 |
3,549,125 | $ | 0.21 |
The weighted average remaining contractual life for the stock options outstanding as at September 30, 2018 was years 1.97 (2017 – 1.30 years, 2016 – 1.38 years). The range of exercise prices for the stock options outstanding as at September 30, 2018 was $0.20 - $0.23 (2017 - $0.13-$0.24, 2016 - $0.13-$0.77). The weighted average grant-date fair value of options granted to management, employees, directors and consultants has been estimated at $0.12 (2017 - $0.0762, 2016 - $0.2641) using the Black-Scholes option-pricing model. The estimated fair value of the options granted is expensed immediately.
The vesting periods on the options granted in 2017 are as follows, 1,995,000 options are vested immediately upon issuance, 185,000 stock options will vest upon achievements of non-market conditions, 1,832,000 stock options was vesting quarterly over 3 years, three months after grant date. In 2016, the vesting periods on the options granted was nine months after grant date. In 2015, the vesting periods on the options granted was immediate.
The pricing model assumed the weighted average risk free interest rates of 1.39% (2017 – 0.85%, 2016 – 0.44%) weighted average expected dividend yields of Nil (2017 – Nil, 2016 – Nil), the weighted average expected common stock price volatility (based on historical trading) of 97% (2017 – 48%, 2016 – 58%), a forfeiture rate of zero, a weighted average stock price of $0.21, a weighted average exercise price of $0.21, and a weighted average expected life of 3 years (2017 – 3 years, 2016 – 2.58 years), which were estimated based on past experience with options and option contract specifics.
LINGO MEDIA CORPORATION
Notes to Condensed Consolidated Interim Financial Statements
For the period ended September 30, 2018
(Unaudited - See Notice to Reader)
11. |
INCOME TAX |
Income tax expense is accrued upon recognition of revenue and is withheld at source on remittances from China.
12. |
GOVERNMENT GRANTS |
Included as a reduction of selling, general and administrative expenses are government grants of $182,077 (2017 - $172,088), relating to the Company's publishing and software projects. At the end of the period, $172,485 (2017 - $166,399) is included in accounts and grants receivable.
One government grant for the print-based ELL segment is repayable in the event that the segment’s annual net income for each of the previous two years exceeds 15% of revenue. During the year, the conditions for the repayment of grants did not arise and no liability was recorded.
One grant, relating to the Company’s “Development of Comprehensive, Interactive Phonetic English Learning Solution” project, is repayable semi-annually at a royalty rate of 2.5% per year’s gross sales derived from this project until 100% of the grant is repaid.
13. |
FINANCIAL INSTRUMENTS |
a. |
Fair values |
The carrying value of cash and accounts and grants receivable, approximates its fair value due to the liquidity of these instruments. The carrying value of accounts payables and accrued liabilities and loans payables approximates its fair value due to the requirement to extinguish the liabilities on demand.
b. |
Financial risk management objectives and policies |
The financial risk arising from the Company’s operations are currency risk and liquidity risk. These risks arise from the normal course of operations and all transactions undertaken are to support the Group’s ability to continue as a going concern. The risks associated with these financial instruments and the policies on how to mitigate these risks.
Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. The Company’s Management oversees these risks. The Board of Directors reviews and agrees on policies for managing each of these risks.
c. |
Foreign currency risk |
The Company operates internationally and is exposed to foreign exchange risk as certain expenditures are denominated in non-Canadian Dollar currencies.
The Company has been exposed to this fluctuation and has not implemented a program against these foreign exchange fluctuations.
LINGO MEDIA CORPORATION
Notes to Condensed Consolidated Interim Financial Statements
For the period ended September 30, 2018
(Unaudited - See Notice to Reader)
13. |
FINANCIAL INSTRUMENTS (Cont’d) |
A 10% strengthening of the US Dollar against the Canadian Dollar would have increased the net equity approximately by $35,457 (2017 - $123,717) due to reduction in the value of net liability balance. A 10% of weakening of the US Dollar against the Canadian Dollar at September 30, 2018 would have had the equal but opposite effect. The significant financial instruments of the Company, their carrying values and the exposure to other denominated monetary assets and liabilities, as of September 30, 2018 are as follows:
US Denominated |
||||
Cash |
$ | 71,818 | ||
Accounts receivable |
730,740 | |||
Accounts payable |
56,298 |
d. |
Liquidity risk |
The Company manages its liquidity risk by preparing and monitoring forecasts of cash expenditures to ensure that it will have sufficient liquidity to meet liabilities when due. The Company’s accounts payable and accrued liabilities generally have maturities of less than 90 days. At September 30, 2018, the Company had cash of $118,689, accounts and grants receivable of $1,117,294 and prepaid and other receivables of $116,904 to settle current liabilities of $970,602.
e. |
Credit Risk |
Credit risk refers to the risk that one party to a financial instrument will cause a financial loss for the counterparty by failing to discharge an obligation. The Company is primarily exposed to credit risk through accounts receivable. The maximum credit risk exposure is limited to the reported amounts of these financial assets. Credit risk is managed by ongoing review of the amount and aging of accounts receivable balances. As at September 30, 2018, the Company has outstanding trade receivables of $944,809. An allowance for doubtful accounts is taken on accounts receivable if the account has not been collected after a predetermined period of time as determined by the contract and collectability is offset to other operating expenses. The Company deposits its cash with high credit quality financial institutions, with the majority deposited within Canadian Tier 1 Banks.
14. |
CAPITAL MANAGEMENT |
The Company’s primary objectives when managing capital are to (a) safeguard the Company’s ability to develop, market, distribute and sell English language learning products, and (b) provide a sound capital structure for raising capital at a reasonable cost for the funding of ongoing development of its products and new growth initiatives. The Board of Directors does not establish quantitative capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.
The Company includes equity, comprised of issued share capital, warrants, share-based payments reserve and deficit, in the definition of capital. The Company is dependent on cash flow from co-publishing and distribution agreements and external financing to fund its activities. In order to carry out planned development of its products and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts as needed. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There has been no change to the Company’s capital management in 2018 or 2017.
15. |
SEGMENTED INFORMATION |
The Company operates two distinct reportable business segments as follows:
Print-based English Language Learning: Lingo Learning is a print-based publisher of English language learning textbook programs in China. It earns significantly higher royalties from Licensing Sales compared to Finished Product Sales.
LINGO MEDIA CORPORATION
Notes to Condensed Consolidated Interim Financial Statements
For the period ended September 30, 2018
(Unaudited - See Notice to Reader)
15. |
SEGMENTED INFORMATION (Cont’d) |
Online English Language Learning: ELL Technologies is a global web-based educational technology (“EdTech”) English language learning training and assessment company. It earns training revenue by developing and hosting online English language learning solutions for its customers, both off the shelf and customized solutions.
The company reports an aggregate revenue number that incorporates all revenues generated from print-based and online-based segments. The revenue of print-based is the royalty income from People’s Education & Audio Visual Press. The revenue of online-based is from licensing revenue to the Company’s online English Education programs.
Transactions between operating segments are recorded at the exchange amount and eliminated upon consolidation.
Segmented Information (Before Other Financial Items Below)
September 30, 2018 |
Online English Language Learning |
Print-Based English Language Learning |
Total |
|||||||||
Segmented assets |
$ | 260,098 | $ | 1,124,783 | $ | 1,384,881 | ||||||
Segmented liabilities |
237,912 | 732,691 | 970,603 | |||||||||
Segmented revenue |
297,022 | 930,010 | 1,227,032 | |||||||||
Segmented direct costs |
98,870 | 68,315 | 167,185 | |||||||||
Segmented selling, general & administrative |
608,826 | 319,537 | 928,363 | |||||||||
Segmented profit / (loss) |
(533,255 | ) | 391,403 | (141,852 | ) |
September 30, 2017 |
Online English Language Learning |
Print-Based English Language Learning |
Total |
|||||||||
Segmented assets |
$ | 5,473,679 | $ | 1,200,393 | $ | 6,674,072 | ||||||
Segmented liabilities |
250,512 | 342,480 | 592,992 | |||||||||
Segmented revenue |
1,066,887 | 954,919 | 2,021,806 | |||||||||
Segmented direct costs |
86,703 | 67,138 | 153,841 | |||||||||
Segmented selling, general & administrative |
450,733 | 430,287 | 881,020 | |||||||||
Segmented intangible amortization |
972,667 | - | 972,667 | |||||||||
Segmented other expense |
532 | 148,392 | 149,368 | |||||||||
Segmented income (loss) |
(444,192 | ) | 309,102 | (135,090 | ) | |||||||
Segmented intangible addition |
1,740,001 | - | 1,740,001 |
Other Financial Items |
2018 |
2017 |
||||||
Online English Language Learning segmented income (loss) |
$ | (533,255 | ) | $ | (444,192 | ) | ||
Print-Based English Language Learning segmented income |
391,403 | 309,102 | ||||||
Foreign exchange |
48,988 | (195,572 | ) | |||||
Interest expense and other financial expense |
(43,032 | ) | (31,524 | ) | ||||
Share-based payment |
(87,539 | ) | (65,560 | ) | ||||
Other comprehensive income (loss) |
(3,579 | ) | (1,767 | ) | ||||
Total Comprehensive Income |
$ | (227,014 | ) | $ | (429,513 | ) |
LINGO MEDIA CORPORATION
Notes to Condensed Consolidated Interim Financial Statements
For the period ended September 30, 2018
(Unaudited - See Notice to Reader)
15. |
SEGMENTED INFORMATION (Cont’d) |
Revenue by Geographic Region |
2018 |
2017 |
2016 |
||||||||||
Latin America |
$ | 240,695 | $ | 1,000,845 | $ | 835,943 | ||||||
China |
952,090 | 968,805 | 1,553,718 | |||||||||
Other |
34,247 | 52,156 | 69,251 | |||||||||
$ | 1,227,032 | $ | 2,021,806 | $ | 2,458,912 |
Identifiable Assets by Geographic Region
2018 |
2017 |
2016 |
||||||||||
Canada |
$ | 1,378,026 | $ | 6,674,072 | $ | 6,948,988 | ||||||
China |
6,855 | - | 7,262 | |||||||||
$ | 1,384,881 | $ | 6,674,072 | $ | 6,956,250 |
16. |
SUPPLEMENTAL CASH FLOW INFORMATION |
2018 |
2017 |
2016 |
||||||||||
Income taxes and other taxes paid |
$ | 154,654 | $ | 144,643 | $ | 157,249 | ||||||
Interest paid |
$ | 43,032 | $ | 31,524 | $ | 22,786 |
17. |
RELATED PARTY BALANCES AND TRANSACTIONS |
During the period, the Company had the following transactions with related parties, made in the normal course of operations, and accounted for at an amount of consideration established and agreed to by the Company and related parties.
(a) |
For the nine-month period ended September 30, 2018, the Company charged $153,766 (2017 - $31,687) to corporations with directors or officer in common for rent, administration, office charges and telecommunications. |
(b) |
Key management compensation for the nine-month period ended September 30, 2018 was $250,197 (2017 – $247,500) and is reflected as consulting fees paid to corporations owned by a director and officers of the Company. $247,500 of the management compensation is included in accounts payable. |
(c) |
At September 30, 2018, the Company had loans payable due to two corporations controlled by directors and officers of the Company in the amount of $195,000 (2017 - $nil) bearing interest at 12% per annum. Interest expense paid related to these loans is $15,682 (2017 - $16,050). |
16
Exhibit 1
|
Trading Symbols (TSX-V: LM; OTC: LMDCF; FSE: LIMA)
151 Bloor St West Suite 703 Toronto, Ontario Canada M5S 1S4 Tel: 416.927.7000 Fax: 416.927.1222 www.lingomedia.com |
Lingo Media Corporation
Form 51 – 102 F1
Management Discussion & Analysis
Third Quarter Ended September 30, 2018
November 29, 2018
MANAGEMENT DISCUSSION & ANALYSIS
FOR THE PERIOD ENDED SEPTEMBER 30, 2018
Notice to Reader
The following Management Discussion & Analysis ("MD&A") of Lingo Media Corporation’s (the "Company" or "Lingo Media") financial condition and results of operations, prepared as of November 29, 2018, should be read in conjunction with the Company's Condensed Consolidated Interim Financial Statements and accompanying Notes for the period ended September 30, 2018 and 2017, which have been prepared in accordance with International Financial Reporting Standards are incorporated by reference herein and form an integral part of this MD&A. All dollar amounts are in Canadian Dollars unless stated otherwise. These documents can be found on the SEDAR website www.sedar.com.
Our MD&A is intended to enable readers to gain an understanding of Lingo Media’s current results and financial position. To do so, we provide information and analysis comparing the results of operations and financial position for the current period to those of the preceding comparable three-month period. We also provide analysis and commentary that we believe is required to assess the Company's future prospects. Accordingly, certain sections of this report contain forward-looking statements that are based on current plans and expectations. These forward-looking statements are affected by risks and uncertainties that are discussed in this document and that could have a material impact on future prospects. Readers are cautioned that actual results could vary.
|
Cautions Regarding Forward-Looking Statements
This MD&A contains certain forward-looking statements, which reflect management’s expectations regarding the Company’s results of operations, performance, growth, and business prospects and opportunities.
Statements about the Company’s future plans and intentions, results, levels of activity, performance, goals or achievements or other future events constitute forward-looking statements. Wherever possible, words such as "may," "will," "should," "could," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," or "potential" or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. These statements reflect management’s current beliefs and are based on information currently available to management as at the date hereof.
Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this MD&A are based upon what management believes to be reasonable assumptions, the Company cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this MD&A, and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including: general economic and market segment conditions, competitor activity, product capability and acceptance, international risk and currency exchange rates and technology changes. More detailed assessment of the risks that could cause actual results to materially differ than current expectations is contained in the "Quantitative and Qualitative Disclosures of Market Risk" section of this MD&A.
|
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 2 |
Summary Description of Lingo Media
Lingo Media (“Lingo Media,” the “Company,” “we” or ”us”) is an EdTech company that is ‘Changing the way the world learns Languages’ through the combination of education with technology. The Company is focused on online and print-based technologies and solutions through its two subsidiaries: Lingo Learning Inc. (Lingo Learning”) and ELL Technologies Ltd. (“ELL Technologies”). Through its two distinct business units, Lingo Media develops, markets and supports a suite of English language learning solutions consisting of web-based software licensing subscriptions, online and professional services, audio practice tools and multi-platform applications. The Company continues to operate its legacy textbook publishing business from which it collects recurring royalty revenues.
Lingo Media’s two distinct business units include ELL Technologies and Lingo Learning. ELL Technologies is a web-based educational technology (“EdTech”) English language learning training and assessment company that creates innovative Software-as-a-Service eLearning solutions. Lingo Learning is a print-based publisher of English language learning textbook programs in China. The Company has formed successful relationships with key government and industry organizations, establishing a strong presence in China’s education market of more than 500 million students. Lingo Media is extending its global reach, with an initial market expansion into Latin America and continues to expand its product offerings and technology applications.
Lingo Media has undertaken a business transition which began to gather momentum in 2015. The Company has continued to invest in language learning and leverage its industry expertise to expand into more scalable education-technology. Recent product initiatives have allowed us to expand the breadth of our language learning product offerings and reinforced the belief that the web-based EdTech learning segment continues to present a significant opportunity for long-term value creation.
Lingo Media continues to focus on software and content development to address market needs within the international government, academic and corporate training sectors.
Q3 2018 Operational Highlights
● |
Online English Language Learning: |
✓ |
completed the development of ELL Technologies’ online Spanish course |
✓ |
initiated the development of a teacher methodology program |
✓ |
launched a new version of the learning management system, including migration of its courses to the new platform. |
✓ |
closed sales contract with Focus Your Mind, a network of training centers in LATAM that consists of more than 32 centers and a 120,000 universe of students. |
✓ |
entered into a distribution agreement with WARP Worldwide to market, distribute, and sell ELL Technologies’ full product suite of English language learning products and programs in China |
✓ |
closed sales contract with Unidades Technologicas de Santander in Colombia, secured through distribution partner, e-Training SAS |
Our strategy continues to transition more and more of our business to online subscriptions and digital downloads that enable learners to bring your own device (“BYOD”) and beyond paper-based textbook publishing. Our signing of the commercial agreement with iTEP International LLC is a testament to our commitment to this approach, as well as further validation of the ability of our program suite and course offerings to efficiently and effectively improve learning outcomes. We believe that these online subscription formats provide customers with an overall greater learning experience, the flexibility to use our products on multiple platforms (i.e. beyond desktops to tablets and mobile extensions) and is a more economical and relevant way for us to deliver our products to customers. Furthermore, our ability to configure our extensive library of lessons enables us to offer a more customizable solution to our clients without incurring the costs associated with a customized solution.
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 3 |
Online English Language Learning
ELL Technologies, acquired in 2010, now offers over 2,000 hours of interactive learning through a number of product offerings that include Winnie’s World, English Academy, Scholar, Campus, English for Success, Master and Business in addition to offering custom solutions. ELL Technologies is primarily marketed in Latin America through a network of distributors and earns its revenues from licensing and subscription fees from its suite of web-based EdTech language learning products and applications.
ELL Technologies had an extensive existing product line which required substantial revisions in the technology platform and user interface. Over the past four years, our development team has engineered an eLearning platform and has been introducing new products to the market since the beginning of 2015, integrating cutting-edge technologies, solutions, content and pedagogy.
ELL Technologies’ high-tech, easy to implement eLearning software-as-a-Service solutions have positioned the Company to teach the world English. As a result of ongoing investment into product development, we are able to provide learners of all ages and levels of English proficiency with a platform to further their language learning development. See our “Correlation Table” below:
The horizontal axis contains our product information and correlates to the vertical axis which contains the ages and levels of proficiency that the product has been designed for.
All of our products have been designed for our proprietary learning management system which completes the suite of products and allows ELL Technologies to market and sell to academic institutions, governments and corporations. Educators who license the platform will be able to easily create, convert, edit, and arrange lessons and courses as they see fit.
Formative assessments and data gathering functionality allows us to adapt and improve content. Based on that data, we are able to program iterations to address specific problem areas and to make learning more accessible, efficient and measurable. Built for learners, by learners, we empower educators and allow them to easily transition from pure classroom paper-based teaching to the online world.
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 4 |
Print-Based English Language Learning
The Company continues to maintain its legacy textbook publishing business through Lingo Learning, a print-based publisher of English language learning programs in China since 2001. Lingo Learning has an established presence in China’s education market of over 300 million students. To date, it has co-published more than 635 million units from its library of program titles.
Revenue Recognition Policy
Lingo Learning earns royalty revenues from its key customer, People’s Education Press and People’s Education & Audio Visual Press (collectively “PEP”), who are China’s State Ministry of Education’s publishing arm, on the following basis:
● |
Finished Product Sales – PEP prints and sells Lingo Learning’s English language training programs to provincial distributors in China; and |
● |
Licensing Sales – PEP licenses Lingo Learning’s English language training programs to provincial publishers who then print and sell the programs to provincial distributors in China. |
Lingo Learning earns significantly higher royalties from Licensing Sales compared to Finished Product Sales.
In accordance with the co-publishing agreements between PEP and Lingo Learning, PEP pays to Lingo Learning a royalty on sales of textbooks and supplemental products called Finished Product Sales. In addition, PEP pays to Lingo Learning a percentage of their royalties earned on actual revenues called Licensing Sales. PEP provides Lingo Learning with sales reconciliations on a semi-annual basis, as their reporting systems are not able to provide quarterly sales information. Revenue is recognized upon the confirmation of such sales and when collectability is reasonably assured.
Royalty revenues from PEP’s audiovisual-based products are recognized quarterly upon the confirmation of sales, and when collectability is reasonably assured. Royalty revenues are not subject to right of return or product warranties. Revenue from the sale of published and supplemental products is recognized upon delivery and when the risk of ownership is transferred and collectability is reasonably assured.
ELL Technologies has now fully-integrated Parlo and Speak2Me into its offerings, and it earns training revenue by developing and hosting online English language learning solutions for its customers, both off the shelf and customized solutions. Revenue is recognized upon delivery of the online courses to the end client through its distributor and when collectability is reasonably assured.
When the outcome of a contract cannot be reliably estimated, all contract related costs are expensed and revenues are recognized only to the extent that those costs are recoverable. When the uncertainties that prevented reliable estimation of the outcome of a contract no longer exist, contract revenue and expenses are recognized using the percentage of completion method.
On January 1, 2018, the Company adopted on a fully retrospective basis the new rules under IFRS 15 which specifies how and when an entity should recognize revenue as well as requiring such entities to provide users of financial statements with more informative disclosures. The retroactive adoption of IFRS 15 will have no material impact to the consolidated financial statements.
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 5 |
Overall Performance
During the three-month period ended September 30, 2018, Lingo Media recorded revenues of $186,518 as compared to $354,914 in 2017. Net loss was $156,550 as compared to a net loss of $474,813 in 2017. Total comprehensive loss was $160,765 as compared to $475,632 in 2017. At the same time, the Company’s selling general and administrative costs was $303,739 compared to $290,963 in 2017. Lingo Media recorded share-based payments of $14,468 as compared to $34,839 in 2017.
The Company previously capitalized all development costs related to its software web development, content platform, and content development through to December 31, 2016. During the year ended December 31, 2017, there was uncertainty with respect to feasibility and profitability of the projects due to sales not achieving forecast levels and a resulting decline in expected future cash flows from their intended use. Consequently, the benefit of these development costs may not be realized as soon as previously expected and, as such, the costs incurred during the quarter ended September 30, 2018 were expensed rather than capitalized as they did not meet the criteria for capitalization.
In addition, cash used in operations during the period was $115,035 as compared to $200,788 cash generated in 2017 same period.
Online English Language Learning
ELL Technologies earned revenue from its portfolio of products of $134,647 for the three months period ended September 30, 2018, compared to $343,529 in 2017. The decrease in revenue is a result of extended sales cycles in securing contracts and time shifting of the sales pipeline.
Print-Based English Language Learning
Lingo Media earned royalty revenue of $51,872 in the third quarter of 2018 compared to $11,385 in 2017 from People’s Education Press and People’s Education & Audio Visual Press (“PEP AV”). This revenue consists of royalties generated through licensing sales from provincial distributors as a result of Lingo Media and PEP AV’s local marketing and training initiatives.
Market Trends and Business Uncertainties
Lingo Media believes that the global market trends in English language learning are strong and will continue to grow at a rapid pace. Developing countries around the world, specifically in Latin America and Asia are expanding their mandates for the teaching of English amongst students, young professionals and adults.
The British Council suggests that there are 1.6 Billion people learning English globally. English language learning products and services are currently a US$56.3 Billion global market notes Ambient Insight.
GlobalEnglish forecasts the global eLearning market to grow to $37.6 billion by 2020, while experiencing exponential growth to reach $325 billion worldwide by 2025.
Markets and Markets forecasts the global EdTech market to grow from US$43.27 Billion in 2015 to US$93.76 Billion to 2019, or at a CAGR or 16.72%.
Latin American Region
The Inter-American Dialogue recently noted that while ELL programs exist in various forms throughout the Latin American region, there are three key factors that these programs must address to be successful: ensuring continuity, developing a strong monitoring and evaluation framework that informs adaptation, and addressing the lack of sufficient quality teachers. Students attending English language training (“ELT”) classes in Latin America accounted for approximately 14 per cent of worldwide revenues, or US$321-million in 2017. Growth has been very rapid in the Latin American region and represents a particularly strong opportunity moving forward relative to other geographic regions.
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 6 |
Asia-Pacific Region
Technavio forecasts the English language training (ELT) market in China to be worth $75 billion by 2022, growing at a CAGR of 22%. The growth of the ELT market in China is driven by more people desiring to learn English, the adaptation of smartphones, increasing levels of disposable income, and the inherent advantages of online education. Technavio also notes that 49% of the growth in the global digital English language learning market will come from the Asia-Pacific region.
Lingo Media is positioned to take advantage of the market opportunity for teaching English in Latin America and Asia, with its scalable digital language learning technology and solutions. Although the market outlook remains positive, there can be no assurance that this trend will continue or that the Company will benefit from this trend.
General Financial Condition
As at September 30, 2018 Lingo Media had working capital of $417,275 compared to $1,760,701 as at September 30, 2017. Total comprehensive loss for the three-month period ended September 30, 2018 was $157,769 compared to $475,632 for the period ended September 30, 2017.
Financial Highlights – for the Third Quarter Ended September 30, 2018
2018 |
2017 |
2016 |
||||||||||
Revenue | ||||||||||||
Print-Based English Language Learning | $ | 51,872 | $ | 11,385 | $ | 46,778 | ||||||
Online English Language Learning |
134,647 | 343,529 | 105,879 | |||||||||
186,518 | 354,914 | 152,657 | ||||||||||
Net Loss for the Period |
(156,550 | ) | (474,813 | ) | (581,710 | ) | ||||||
Total Comprehensive Loss |
(160,765 | ) | (475,632 | ) | (563,241 | ) | ||||||
Loss per Share |
$ | (0.00 | ) | $ | (0.01 | ) | $ | ((0.02 | ) | |||
Total Assets |
1,384,881 | 6,674,072 | 6,956,250 | |||||||||
Working Capital |
382,285 | 1,760,701 | 3,435,273 | |||||||||
Cash Provided (Used in) Operations |
$ | (115,035 | ) | $ | 200,788 | $ | ( 806,881 | ) |
The Company had cash on hand as at September 30, 2018 of $118,689 (2017 - $36,557) and continues to rely on its revenues from its recurring royalty stream, its online English language learning services, and future debt and/or equity financings to fund its operations.
Results of Operations
During the quarter, Lingo Media earned $134,647 in online licensing sales revenue as compared to $343,529 in 2017. The decrease in revenue is a result of extended sales cycles in securing contracts and time shifting of the sales pipeline.
Revenues from Print-Based English language learning for the quarter were $51,872 compared to $11,385 in 2017. Direct costs associated with publishing revenue are relatively modest and has been consistent throughout the years. The Company continues to maintain its relationship with PEP and is investing in the development of its existing and new programs and marketing activities to maintain and increase its royalty revenues.
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 7 |
Selling, General and Administrative
Selling, general and administrative expenses were $303,739 compared to $290,963 in 2017. Selling, general and administrative expenses for the two segments are segregated below.
(i) |
Print-Based English Language Learning |
Selling, general and administrative cost for print-based publishing decreased from $149,953 in 2017 to $116,944 in 2018 primarily due to the decrease in consulting fees and salaries and premises expense. The following is a breakdown of selling, general and administrative costs directly related to print-based English language learning:
For the Quarter Ended September 30, 2018 |
2018 |
2017 |
||||||
Sales, marketing & administration |
$ | 20,604 | $ | 10,190 | ||||
Consulting fees and salaries |
90,147 | 122,066 | ||||||
Travel |
13,222 | 5,157 | ||||||
Premises |
19,414 | 34,914 | ||||||
Shareholder services |
19,960 | 22,401 | ||||||
Professional fees |
17,351 | 14,084 | ||||||
Less: Grants |
(63,755 | ) | (58,859 | ) | ||||
$ | 116,943 | $ | 149,953 |
(ii) |
Online English Language Learning |
Selling, general and administrative costs related to online English language learning was $186,796 for the period compared to $141,010 in 2017. Selling, general and administrative costs, consulting fees and salaries for this business unit increased in 2018 as compared to 2017.
For the Quarter Ended September 30, 2018 |
2018 |
2017 |
||||||
Sales, marketing & administration |
$ | 38,744 | $ | 42,438 | ||||
Consulting fees and salaries |
108,451 | 70,000 | ||||||
Travel |
1,272 | 2,419 | ||||||
Premises |
12,000 | 12,000 | ||||||
Shareholder services |
6,207 | 8,228 | ||||||
Professional Fees |
30,122 | 5,925 | ||||||
$ | 186,796 | $ | 141,010 | |||||
Total Selling, General and Administrative Expenses | $ | 303,739 | $ | 290,963 |
Development Costs
The Company began commercial production and sale of its services and products during 2009. In 2018, the Company continued to focus on the maintenance of its ELL Technologies’ suite of products and invested $69,864 (2017 - $149,581) during three-month period ended September 30, 2018. The ELL Technologies’ suite of products includes five different products, each designed to suit the needs of different demographic groups. Although the full suite of product is not yet complete, the Company has started the commercial production and sale of three of these products.
The Company previously capitalized all development costs related to its software web development, content platform, and content development through to December 31, 2016. During the year ended December 31, 2017, there was uncertainty with respect to feasibility and profitability of the projects due to sales not achieving forecast levels and a resulting decline in expected future cash flows from their intended use. Consequently, the benefit of these development costs may not be realized as soon as previously expected and, as such, the costs incurred during the quarter ended September 30, 2018 were expensed rather than capitalized as they did not meet the criteria for capitalization.
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 8 |
Net Loss
Total comprehensive loss for the Company was $160,765 for the period ended September 30, 2018 as compared to a comprehensive loss of $475,632 in 2017. These losses can be attributed to the two operating segments and other financial expenses as shown below:
Online ELL |
2018 |
2017 |
||||||
Revenue |
$ | 134,647 | $ | 343,529 | ||||
Expenses: |
||||||||
Direct costs |
47,838 | 20,900 | ||||||
General & administrative |
186,796 | 141,010 | ||||||
Bad debt (recovery) |
(150,340 | ) | - | |||||
Amortization of property & equipment |
247 | 579 | ||||||
Amortization of development costs |
- | 370,993 | ||||||
Development cost |
69,864 | - | ||||||
Income taxes and other taxes |
2,554 | 67 | ||||||
$ | 156,959 | $ | 533,549 | |||||
Segmented Profit / (Loss) - Online ELL |
$ | (22,312 | ) | $ | (190,020 | ) | ||
Print-Based ELL |
||||||||
Revenue |
$ | 51,872 | $ | 11,385 | ||||
Expenses: |
||||||||
Direct costs |
26,141 | 21,224 | ||||||
General & administrative |
116,944 | 149,953 | ||||||
Amortization of property & equipment |
1,297 | 1,337 | ||||||
Income taxes and other taxes |
8,184 | 1,720 | ||||||
$ | 152,566 | $ | 174,234 | |||||
Segmented Profit / (Loss) – Print-Based ELL |
$ | (100,694 | ) | $ | (162,849 | ) | ||
Other |
||||||||
Foreign exchange |
$ | (14,968 | ) | $ | (77,418 | ) | ||
Interest and other financial expenses |
(4,108 | ) | (9,687 | ) | ||||
Share based payment |
(14,468 | ) | (34,839 | ) | ||||
Other comprehensive income (loss) |
(4,215 | ) | (819 | ) | ||||
(37,759 | ) | (122,763 | ) | |||||
Total Comprehensive Income/(Loss) |
$ | (160,765 | ) | $ | (475,632 | ) |
Foreign Exchange
The Company recorded foreign exchange loss of $14,968 as compared to $77,418 in 2017, relating to the Company's currency risk through its activities denominated in foreign currencies as the Company is exposed to foreign exchange risk as a significant portion of its revenue and expenses are denominated in Chinese Renminbi and US Dollars.
Share-Based Payments
The Company amortizes share-based payments with a corresponding increase to the contributed surplus account. During the period, the Company recorded an expense of $14,468 compared to $34,839 during 2017.
Net Loss for the Period
The Company reported a net loss of $145,812 for the period as compared to a comprehensive loss of $474,813 in 2017.
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 9 |
Total Comprehensive Loss
The total comprehensive loss is calculated after the application of exchange differences on translating foreign operations gain/(loss). The Company reported a total comprehensive loss of $160,765 for the period ended September 30, 2018, as compared to a comprehensive loss of $475,632 in 2017.
Summary of Quarterly Results
Q4-17 |
Q1-18 |
Q2-18 |
Q3-18 |
|||||||||||||
Revenue |
$ | 754,962 | $ | 80,335 | $ | 960,159 | $ | 186,518 | ||||||||
Income / (Loss) Before Taxes and Other Comprehensive Income |
(5,663,320 | ) | (536,836 | ) | 613,867 | (145,813 | ) | |||||||||
Total Comprehensive Income / (Loss) |
(5,833,279 | ) | (544,311 | ) | 478,062 | (160,765 | ) | |||||||||
Income / (Loss) per Basic and Diluted Share |
$ | (0.18 | ) | $ | (0.02 | ) | $ | 0.00 | $ | (0.00 | ) |
Q4-16 |
Q1-17 |
Q2-17 |
Q3-17 |
|||||||||||||
Revenue |
$ | 736,309 | $ | 597,977 | $ | 1,068,915 | $ | 354,914 | ||||||||
Income / (Loss) Before Taxes and Other Comprehensive Income |
2,353 | 9,864 | 43,122 | (473,026 | ) | |||||||||||
Total Comprehensive Income (Loss) |
(48,446 | ) | 3,727 | 42,392 | (475,632 | ) | ||||||||||
Income / (Loss) per Basic and Diluted Share |
$ | (0.00 | ) | $ | 0.00 | $ | 0.00 | $ | (0.013 | ) |
Liquidity and Capital Resources
As at September 30, 2018, the Company had cash of $118,689 compared to $36,557 in 2017. Accounts and grants receivable of $1,117,294 were outstanding at the end of the period compared to $2,164,301 in 2017. With 74% of the receivables from PEP and the balance due from ELL customers with a 90 - 180 days collection cycle, the Company does not anticipate an effect on its liquidity. Total current assets amounted to $1,352,887 (2017 - $2,353,693) with current liabilities of $970,602 (2017 - $592,992) resulting in working capital of $382,285 (2017 - $1,760,701).
Lingo Learning receives government grants based on certain eligibility criteria for publishing industry development in Canada and for international marketing support. These government grants are recorded as a reduction of general and administrative expenses to offset direct expenditure funded by the grant. The Company receives these grants throughout the year. The grant is applied based on Lingo Learning meeting certain eligibility requirements. The Company has relied on obtaining these grants for its operations and has been successful at securing them in the past, but it cannot be assured of obtaining these grants in the future.
Lingo Media has access to working capital through equity financings or debt financings, if required to finance its growth plans and expansion into new international markets. The Company has been successful in raising sufficient working capital in the past.
Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet finance arrangements.
Contractual Obligations
Future minimum lease payments under operating leases for premises and equipment are as follows:
2018 |
$ | 54,760 | ||
2019 |
226,913 | |||
2020 |
202,705 | |||
2021 |
41,525 |
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 10 |
Transactions with Related Parties
The Company’s key management includes Michael Kraft, President & CEO, Gali Bar-Ziv, COO, Khurram Qureshi, CFO in addition to Board Directors and the Secretary of the Board.
The Company had the following transactions with related parties, made in the normal course of operations, and accounted for at an amount of consideration established and agreed to by the Company and related parties.
The Company charged $44,049 (2017 - $15,828, 2016 - $11,957) to corporations with directors or officer in common for rent, administration, office charges and telecommunications.
Key management compensation for the quarter was $85,197 (2017 – $82,500, 2016 – $97,500) and is reflected as consulting fees paid to corporations owned by a director and officers of the Company. $82,500 of the management compensation is included in accounts payable.
At September 30, 2018, the Company had loans payable due to corporations controlled by directors and officers of the Company in the amount of $195,000 (2017 - $Nil) bearing interest at 12% per annum. Interest expense related to these loans is $2,722 (2017 - $16,050).
Additional Disclosure
Intangibles
Software and Web Development |
Content Platform |
Content Development |
Total |
|||||||||||||
Cost, January 1, 2017 |
$ | 9,239,087 | $ | 1,477,112 | $ | 2,474,020 | $ | 13,190,219 | ||||||||
Additions |
590,542 | - | 1,149,459 | 1,740,001 | ||||||||||||
Cost, September 30, 2017 |
$ | 9,829,629 | $ | 1,477,112 | $ | 3,623,479 | $ | 14,930,220 | ||||||||
Impairment |
(590,542 | ) | - | (1,149,459 | ) | (1,740,001 | ) | |||||||||
Cost, December 31, 2017 |
9,239,087 | 1,477,112 | 2,474,020 | 13,190,219 | ||||||||||||
Cost, September 30, 2018 |
$ | 9,239,088 | $ | 1,477,112 | $ | 2,474,020 | $ | 3,190,219 | ||||||||
Accumulated depreciation, January 1, 2017 |
$ | 8,229,946 | $ | 1,477,112 | $ | 483,152 | $ | 10,190,210 | ||||||||
Charge for the period |
522,315 | - | 450,352 | 972,667 | ||||||||||||
Accumulated depreciation, September 30, 2017 |
$ | 8,752,261 | $ | 1,477,112 | $ | 933,504 | $ | 11,162,877 | ||||||||
Charge for the period |
34,809 | - | 44,452 | 79,261 | ||||||||||||
Impairment |
452,018 | - | 1,496,063 | 1,948,081 | ||||||||||||
Accumulated depreciation, December 31, 2017 |
9,239,088 | 1,477,112 | 2,474,019 | 13,190,219 | ||||||||||||
Accumulated depreciation, September 30, 2018 |
$ | 9,239,088 | $ | 1,477,112 | $ | 2,474,019 | $ | 13,190,219 | ||||||||
Net book value, December 31, 2017 |
$ | - | $ | - | $ | - | $ | - | ||||||||
Net book value, September 30, 2018 |
$ | - | $ | - | $ | - | $ | - |
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 11 |
The Company previously capitalized all development costs related to its software web development, content platform, and content development through to December 31, 2016. During the year ended December 31, 2017, there was uncertainty with respect to feasibility and profitability of the projects due to sales not achieving forecasted levels and a resulting decline in expected future cash flows from their intended use. Consequently, the benefit of these development costs may not be realized as soon as previously expected and, as such, the costs incurred during the year ended September 30, 2018 were expensed rather than capitalized as they did not meet the criteria for capitalization.
Property and Equipment
Cost, January 1, 2017 |
$ | 80,713 | ||
Additions |
9,923 | |||
Effect of foreign exchange |
(942 | ) | ||
Cost, September 30, 2017 |
$ | 89,694 | ||
Additions |
- | |||
Effect of foreign exchange |
93 | |||
Cost, December 31, 2017 |
$ | 89,787 | ||
Additions |
6,039 | |||
Effect of foreign exchange |
326 | |||
Cost, September 31, 2018 |
$ | 96,152 | ||
Accumulated depreciation, January 1, 2017 |
$ | 53,225 | ||
Charge for the period |
4,725 | |||
Effect of foreign exchange |
(855 | ) | ||
Accumulated depreciation, September 30, 2017 |
$ | 57,095 | ||
Charge for the period |
1,919 | |||
Effect of foreign exchange |
84 | |||
Accumulated depreciation, December 31, 2017 |
$ | 59,098 | ||
Charge for the period |
4,761 | |||
Effect of foreign exchange |
299 | |||
Accumulated depreciation, September 30, 2018 |
$ | 64,158 | ||
Net book value, January 1, 2017 |
$ | 27,488 | ||
Net book value, September 30, 2017 |
$ | 32,517 | ||
Net book value, December 31, 2017 |
$ | 30,689 | ||
Net book value, September 30, 2018 |
$ | 31,994 |
Risk Factors
Business Risk and Uncertainties
We are subject to a number of risks and uncertainties that can significantly affect our business, financial condition and future financial performance, as described below. In particular, there remain significant uncertainties in capital markets impacting the availability of equity financing. While these uncertainties in capital markets do not have a direct impact on our ability to carry out our business, the Company may be impacted should it become more difficult to gain access to capital when and if needed. These risks and uncertainties are not necessarily the only risks the Company faces. Additional risks and uncertainties that are presently unknown to the Company may adversely affect our business.
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 12 |
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s monetary assets and liabilities denominated in currencies other than Canadian and the Company’s net investments in foreign subsidiaries.
The Company operates internationally and is exposed to foreign exchange risk as certain expenditures are denominated in non-Canadian Dollar currencies.
The company has been exposed to this fluctuation and has not implemented a program against these foreign exchange fluctuations.
A 10% strengthening of the US Dollar against the Canadian Dollar would have increased the net equity approximately by $35,457 (2017 - $123,717) due to reduction in the value of net liability balance. A 10% of weakening of the US Dollar against the Canadian Dollar at September 30, 2018 would have had the equal but opposite effect. The significant financial instruments of the Company, their carrying values and the exposure to other denominated monetary assets and liabilities, as of September 30, 2018 are as follows:
US Denominated |
||||
Cash |
71,818 | |||
Accounts receivable |
730,740 | |||
Accounts payable |
56,298 |
Liquidity Risk
The Company manages its liquidity risk by preparing and monitoring forecasts of cash expenditures to ensure that it will have sufficient liquidity to meet liabilities when due. The Company’s accounts payable and accrued liabilities generally have maturities of less than 90 days. At September 30, 2018, the Company had cash of $118,689, accounts and grants receivable of $1,117,294 and prepaid and other receivables of $116,904 to settle current liabilities of $970,602.
Credit Risk
Credit risk refers to the risk that one party to a financial instrument will cause a financial loss for the counterparty by failing to discharge an obligation. The Company is primarily exposed to credit risk through accounts receivable. The maximum credit risk exposure is limited to the reported amounts of these financial assets. Credit risk is managed by ongoing review of the amount and aging of accounts receivable balances. As at September 30, 2018, the Company has outstanding trade receivables of $944,809 An allowance for doubtful accounts is taken on accounts receivable if the account has not been collected after a predetermined period of time as determined by the contract and collectability is offset to other operating expenses. The Company deposits its cash with high credit quality financial institutions, with the majority deposited within Canadian Tier 1 Banks.
Retention or Maintenance of Key Personnel
Although Lingo Media’s management has made efforts to align the interests of key employees with the Company by, among other things, granting equity interests to its operations personnel with vesting schedules tied to continued employment, there is no assurance that Lingo Media can attract or retain key personnel in a timely manner as the need arises. Failure to have adequate personnel may materially compromise the ability of the Company to operate its business.
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 13 |
Disclosure of Outstanding Share Data
As of November 29, 2018, the followings are outstanding:
Common Shares – 35,529,192
Warrants – Nil
Stock Options – 3,886,000
Approval
The Directors of Lingo Media have approved the disclosure contained in this MD&A.
Additional Information
Additional information relating to the Company can be found on SEDAR at www.sedar.com.
Lingo Media Corporation (TSX-V: LM; OTC: LMDCF; FSE: LIMA) Management Discussion & Analysis | 14 |
Exhibit 99.1
Form 52-109FV2
Certification of interim filings
venture issuer basic certificate
I, MICHAEL KRAFT, Chief Executive Officer of LINGO MEDIA CORPORATION certify the following:
1. |
Review: I have reviewed the interim financial report and interim MD&A (together, the “Interim Filings”) of LINGO MEDIA CORPORATION (the “Issuer”) for the interim period ended SEPTEMBER 30, 2018. |
2. |
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. |
3. |
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date: November 29, 2018
/s/ “Michael Kraft” Michael Kraft Chief Executive Officer |
note to reader |
|
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of |
|
i) |
controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the Issuer in its annual filings, Interim Filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
ii) |
a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Issuer's GAAP. |
The Issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture Issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. |
Exhibit 99.2
Form 52-109FV2
Certification of interim filings
venture issuer basic certificate
I, KHURRAM QURESHI, Chief Financial Officer of LINGO MEDIA CORPORATION certify the following:
1. |
Review: I have reviewed the interim financial report and interim MD&A (together, the “Interim Filings”) of LINGO MEDIA CORPORATION (the “Issuer”) for the interim period ended SEPTEMBER 30, 2018. |
2. |
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. |
3. |
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date: November 29, 2018
/s/ “Khurram Qureshi” Khurram Qureshi Chief Financial Officer |
note to reader | |
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of | |
i) | controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the Issuer in its annual filings, Interim Filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Issuer's GAAP. |
The Issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture Issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. |
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