Exhibit 4.6
RESAAS SERVICES INC.
Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars)
(Unaudited)
RESAAS SERVICES INC.
Interim Consolidated Statements of Financial Position
(Expressed in Canadian dollars)
| March 31, 2015 $ | December 31, 2014 $ | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 4,776,510 | 4,517,137 | ||||||
| Amounts receivable | 26,736 | 41,114 | ||||||
| Prepaid expenses | 26,961 | 19,966 | ||||||
| Due from related parties (Note 9) | – | 176,900 | ||||||
| Total current assets | 4,830,207 | 4,755,117 | ||||||
| Non-current assets | ||||||||
| Property and equipment (Note 5) | 29,238 | 27,304 | ||||||
| Website development costs (Note 6) | 981,863 | 959,656 | ||||||
| Intangible assets (Note 7) | 30,310 | 27,655 | ||||||
| Total non-current assets | 1,041,411 | 1,014,615 | ||||||
| Total assets | 5,871,618 | 5,769,732 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | 254,420 | 138,160 | ||||||
| Obligations under finance lease (Note 8) | 2,086 | 1,987 | ||||||
| Total current liabilities | 256,506 | 140,147 | ||||||
| Obligations under finance lease (Note 8) | 4,350 | 4,910 | ||||||
| Total liabilities | 260,856 | 145,057 | ||||||
| Shareholders’ equity | ||||||||
| Common shares | 17,668,770 | 16,204,493 | ||||||
| Share-based payment reserve | 7,815,894 | 7,862,638 | ||||||
| Deficit | (19,873,902 | ) | (18,442,456 | ) | ||||
| Total shareholders’ equity | 5,610,762 | 5,624,675 | ||||||
| Total liabilities and shareholders’ equity | 5,871,618 | 5,769,732 | ||||||
Going concern (Note 2(c))
Commitments and contingencies (Note 13)
Subsequent events (Note 15)
Approved and authorized for issuance by the Board of Directors on May 29, 2015:
| /s/ “Cory Brandolini” | /s/ “Cam Shippit” | |
| Cory Brandolini, Director | Cam Shippit, Director |
(The accompanying notes are an integral part of these interim consolidated financial statements)
| 1 |
RESAAS SERVICES INC.
Interim Consolidated Statements of Comprehensive Loss
(Expressed in Canadian dollars except share amounts)
(Unaudited)
| Three Months Ended March 31, 2015 $ | Three Months Ended March 31, 2014 (Restated – Note 4) $ | |||||||
| Revenue | 41,049 | – | ||||||
| Expenses | ||||||||
| Amortization | 164,890 | 274,261 | ||||||
| Consulting fees | 38,548 | 42,431 | ||||||
| Filing fees | 10,657 | 7,756 | ||||||
| Foreign exchange loss | 5,564 | 11,377 | ||||||
| General and administrative (Note 9) | 392,567 | 296,608 | ||||||
| Management fees (Note 9) | 247,566 | 65,967 | ||||||
| Promotion and advertising | 142,487 | 203,388 | ||||||
| Professional fees | 338,654 | 78,143 | ||||||
| Stock-based compensation (Notes 9 and 12) | 94,919 | 1,106,962 | ||||||
| Travel | 41,282 | 61,835 | ||||||
| Total operating expenses | 1,477,134 | 2,148,728 | ||||||
| Loss before other income | (1,436,085 | ) | (2,148,728 | ) | ||||
| Other income | ||||||||
| Interest income | 4,639 | 6,150 | ||||||
| Net loss and comprehensive loss for the period | (1,431,446 | ) | (2,142,578 | ) | ||||
| Basic and diluted loss per common share | (0.04 | ) | (0.07 | ) | ||||
| Weighted average number of common shares outstanding | 32,039,866 | 29,439,268 | ||||||
(The accompanying notes are an integral part of these interim consolidated financial statements)
| 2 |
RESAAS SERVICES INC.
Interim Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian dollars except share amounts)
(Unaudited)
| Common Shares | Share-based Payment | Total Shareholders’ | ||||||||||||||||||
| Number | Amount $ | Reserve $ | Deficit $ | Equity $ | ||||||||||||||||
| Balance, December 31, 2013 | 29,381,115 | 11,283,213 | 4,171,583 | (10,602,015 | ) | 4,852,781 | ||||||||||||||
| Issuance of common shares pursuant to the exercise of stock options at $1.00 per share | 48,250 | 70,671 | (22,421 | ) | – | 48,250 | ||||||||||||||
| Issuance of common shares pursuant to the exercise of stock options at $1.55 per share | 80,000 | 212,912 | (88,912 | ) | – | 124,000 | ||||||||||||||
| Fair value of stock options granted | – | – | 1,282,508 | – | 1,282,508 | |||||||||||||||
| Net loss | – | – | – | (2,142,578 | ) | (2,142,578 | ) | |||||||||||||
| Balance, March 31, 2014 (Restated – Note 4) | 29,509,365 | 11,566,796 | 5,342,758 | (12,744,593 | ) | 4,164,961 | ||||||||||||||
| Balance, December 31, 2014 | 31,436,268 | 16,204,493 | 7,862,638 | (18,442,456 | ) | 5,624,675 | ||||||||||||||
| Issuance of common shares pursuant to the exercise of stock options at $1.00 per share | 255,000 | 347,514 | (92,514 | ) | – | 255,000 | ||||||||||||||
| Issuance of common shares pursuant to the exercise of stock options at $1.10 per share | 9,000 | 15,659 | (5,759 | ) | – | 9,900 | ||||||||||||||
| Issuance of common shares pursuant to the exercise of stock options at $1.25 per share | 33,750 | 64,693 | (22,506 | ) | – | 42,187 | ||||||||||||||
| Issuance of common shares pursuant to the exercise of warrants at $1.10 per share | 92,635 | 151,671 | (49,772 | ) | – | 101,899 | ||||||||||||||
| Issuance of common shares pursuant to the exercise of warrants at $1.50 per share | 589,827 | 884,740 | – | – | 884,740 | |||||||||||||||
| Fair value of stock options granted | – | – | 123,807 | – | 123,807 | |||||||||||||||
| Net loss | – | – | – | (1,431,446 | ) | (1,431,446 | ) | |||||||||||||
| Balance, March 31, 2015 | 32,416,480 | 17,668,770 | 7,815,894 | (19,873,902 | ) | 5,610,762 | ||||||||||||||
(The accompanying notes are an integral part of these interim consolidated financial statements)
| 3 |
RESAAS SERVICES INC.
Interim Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
(Unaudited)
| Three Months Ended March 31, 2015 $ | Three Months Ended March 31, 2014 (Restated – Note 4) $ | |||||||
| Operating activities | ||||||||
| Net loss | (1,431,446 | ) | (2,142,578 | ) | ||||
| Items not affecting cash: | ||||||||
| Amortization | 164,890 | 274,261 | ||||||
| Stock-based compensation | 94,919 | 1,106,962 | ||||||
| Changes in non-cash operating working capital: | ||||||||
| Amounts receivable | 14,378 | 16,914 | ||||||
| Prepaid expenses | (6,995 | ) | 14,473 | |||||
| Accounts payable and accrued liabilities | 116,261 | (3,294 | ) | |||||
| Net cash used in operating activities | (1,047,993 | ) | (733,262 | ) | ||||
| Investing activities | ||||||||
| Acquisition of intangible assets | (2,880 | ) | (8,104 | ) | ||||
| Proceeds from redemption of short-term investments | – | 508,477 | ||||||
| Purchase of property and equipment | (5,791 | ) | (1,796 | ) | ||||
| Website development costs | (154,128 | ) | (120,114 | ) | ||||
| Net cash provided by (used in) investing activities | (162,799 | ) | 378,463 | |||||
| Financing activities | ||||||||
| Repayment of finance lease obligations | (461 | ) | – | |||||
| Proceeds from the exercise of options and warrants | 1,293,726 | 172,250 | ||||||
| Due from related parties | 176,900 | – | ||||||
| Net cash provided by financing activities | 1,470,165 | 172,250 | ||||||
| Increase (decrease) in cash and cash equivalents | 259,373 | (182,549 | ) | |||||
| Cash and cash equivalents, beginning of period | 4,517,137 | 3,341,649 | ||||||
| Cash and cash equivalents, end of period | 4,776,510 | 3,159,100 | ||||||
| Cash and cash equivalents is comprised of: | ||||||||
| Amounts held in legal trust account | 80,525 | 15,200 | ||||||
| Cash in bank | 4,645,349 | 1,037,275 | ||||||
| Cashable guaranteed investment certificates | 50,636 | 2,106,625 | ||||||
| Total cash and cash equivalents | 4,776,510 | 3,159,100 | ||||||
| Non-cash investing and financing activities: | ||||||||
| Stock compensation capitalized as website development costs | 28,888 | 175,545 | ||||||
(The accompanying notes are an integral part of these interim consolidated financial statements)
| 4 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
| 1. | Corporate Information |
RESAAS Services Inc. (the “Company”) was incorporated on June 4, 2009 under the Business Corporations Act (British Columbia). The Company is engaged in the development of web and mobile communications software for the real estate industry.The Company’s head office is located at Suite 303 – 55 Water Street, Vancouver, British Columbia, Canada, V6B 1A1.
| 2. | Basis of Presentation |
| (a) | Statement of Compliance and Principles of Consolidation |
These interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including IAS 34,Interim Financial Reporting. The interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2014, which have been prepared in accordance with IFRS as issued by the IASB. The Company uses the same accounting policies and methods of computation as in the annual consolidated financial statements.
These interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, RESAAS USA Inc., a company incorporated in the state of California in 2012, and The Real Estate Social Network Ltd., a company incorporated in the state of Delaware in 2013. All significant intercompany transactions have been eliminated on consolidation.
| (b) | Basis of Measurement |
These interim consolidated financial statements have been prepared on a historical cost basis and are presented in Canadian dollars, which is also the Company’s functional currency.
The preparation of these interim consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the period. These estimates are, by their nature, uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Significant areas of estimation include:
| i) | The useful life and recoverability of long-lived assets: |
| ii) | The inputs used in the valuation of share-based payments: |
| iii) | Recognition of deferred income tax assets: |
Significant areas of judgment include:
| i) | Qualification of costs to capitalize as website development costs: |
| ii) | Application of the going concern assumption: |
| 5 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
| 2. | Basis of Presentation (continued) |
| (c) | Going Concern |
These interim consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at March 31, 2015, the Company has not generated significant revenues, has negative cash flows from operations, and has an accumulated deficit of $19,873,902. The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing. Management is pursuing equity financing. Management is of the opinion that sufficient working capital will be obtained from external financing to meet the Company’s liabilities and commitments as they become due, although there is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company. These factors, among others, create substantial doubt as to the ability of the Company to continue as a going concern.
These interim consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these interim consolidated financial statements.
| 3. | Recent Accounting Pronouncements |
Certain pronouncements were issued by the IASB or the IFRS Interpretations Committee that are mandatory for annual periods beginning after January 1, 2016 or later periods.
The following new IFRSs that have not been early adopted in these interim consolidated financial statements will not have a material effect on the Company’s future results and financial position:
| i) | IFRS 9,Financial Instruments(New; to replace IAS 39 and IFRIC 9) |
| ii) | IFRS 15, “Revenue from Contracts with Customers” |
Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s financial statements.
| 4. | Restatement of Comparatives |
The Company has revised comparative figures to include the capitalization of website development costs that were eligible for capitalization but were not capitalized until the third and fourth quarter of 2014. There was no impact on the results for the year ended December 31, 2014.
| For the Three Months Ended March 31, 2014 | ||||||||||||
| Interim Consolidated Statements of Comprehensive Loss | As Previously Stated $ | Restatement $ | As Adjusted $ | |||||||||
| Expenses | ||||||||||||
| Amortization | 255,782 | 18,479 | 274,261 | |||||||||
| General and administrative | 416,721 | (120,113 | ) | 296,608 | ||||||||
| Stock-based compensation | 1,282,508 | (175,546 | ) | 1,106,962 | ||||||||
| Total operating expenses | 2,425,908 | (277,180 | ) | 2,148,728 | ||||||||
| Net Loss before other income | (2,425,908 | ) | 277,180 | (2,148,728 | ) | |||||||
| Net loss and comprehensive loss for the period | (2,419,758 | ) | 277,180 | (2,142,578 | ) | |||||||
| Basic and diluted loss per common share | (0.08 | ) | 0.01 | (0.07 | ) | |||||||
| 6 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
| 4. | Restatement of Comparatives (continued) |
| For the Three Months Ended March 31, 2014 | ||||||||||||
| Interim Consolidated Statements of Cash Flows | As Previously Stated $ | Restatement $ | As Adjusted $ | |||||||||
| Operating Activities | ||||||||||||
| Net loss | (2,419,758 | ) | 277,180 | (2,142,578 | ) | |||||||
| Amortization | 255,782 | 18,479 | 274,261 | |||||||||
| Stock-based compensation | 1,282,508 | (175,546 | ) | 1,106,962 | ||||||||
| Net cash used in operating activities | (853,376 | ) | 120,114 | (733,262 | ) | |||||||
| Investing Activities | ||||||||||||
| Website development costs | – | (120,114 | ) | (120,114 | ) | |||||||
| Net cash provided by (used in) investing activities | 498,577 | (120,114 | ) | 378,463 | ||||||||
| 5. | Property and Equipment |
| Furniture $ | Computer Equipment Under Finance Lease $ | Computer Equipment $ | Total $ | |||||||||||||
| Cost: | ||||||||||||||||
| Balance, December 31, 2014 | – | 7,144 | 44,216 | 51,360 | ||||||||||||
| Additions | 1,368 | – | 4,423 | 5,791 | ||||||||||||
| Balance, March 31, 2015 | 1,368 | 7,144 | 48,639 | 57,151 | ||||||||||||
| Accumulated amortization: | ||||||||||||||||
| Balance, December 31, 2014 | – | – | 24,056 | 24,056 | ||||||||||||
| Additions | 45 | 968 | 2,844 | 3,857 | ||||||||||||
| Balance, March 31, 2015 | 45 | 968 | 26,900 | 27,913 | ||||||||||||
| Carrying amounts: | ||||||||||||||||
| Balance, December 31, 2014 | – | 7,144 | 20,160 | 27,304 | ||||||||||||
| Balance, March 31, 2015 | 1,323 | 6,176 | 21,739 | 29,238 | ||||||||||||
| 7 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
| 6. | Website Development Costs |
| $ | ||||
| Cost: | ||||
| Balance, December 31, 2014 | 3,229,777 | |||
| Additions | 183,016 | |||
| Balance, March 31, 2015 | 3,412,793 | |||
| Accumulated amortization: | ||||
| Balance, December 31, 2014 | 2,270,121 | |||
| Additions | 160,809 | |||
| Balance, March 31, 2015 | 2,430,930 | |||
| Carrying amounts: | ||||
| Balance, December 31, 2014 | 959,656 | |||
| Balance, March 31, 2015 | 981,863 | |||
| 7. | Intangible Assets |
| Trademarks $ | ||||
| Cost: | ||||
| Balance, December 31, 2014 | 29,164 | |||
| Additions | 2,880 | |||
| Balance, March 31, 2015 | 32,044 | |||
| Accumulated amortization: | ||||
| Balance, December 31, 2014 | 1,509 | |||
| Additions | 225 | |||
| Balance, March 31, 2015 | 1,734 | |||
| Carrying amounts: | ||||
| Balance, December 31, 2014 | 27,655 | |||
| Balance, March 31, 2015 | 30,310 | |||
| 8 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
| 8. | Obligations Under Finance Lease |
On November 28, 2014 and December 11, 2014, the Company entered into two agreements to lease computer equipment for three years each. The computer equipment leases are classified as finance leases. The interest rates underlying the obligations in the finance leases are 18% and 25% per annum.The following is a schedule by years of future minimum lease payments under finance leases together with the present value of the net minimum lease payments as of March 31, 2015:
| Fiscal year ending December 31: | $ | |||
| 2015 | 2,326 | |||
| 2016 | 3,167 | |||
| 2017 | 2,793 | |||
| Net minimum lease payments | 8,286 | |||
| Less: amount representing interest payments | (1,850 | ) | ||
| Present value of net minimum lease payments | 6,436 | |||
| Less: current portion | (2,086 | ) | ||
| Long-term portion | 4,350 | |||
| 9. | Related Party Transactions |
During the three months ended March 31, 2015, the Company was engaged in the following related party transactions:
| a) | As of March 31, 2015, the Company was owed $Nil (December 31, 2014 - $88,500) for loans from the Chief Executive Officer of the Company, which is unsecured, non-interest bearing, and due on demand. The loan was offset by a bonus payment in March 2015 for services rendered. |
| b) | As of March 31, 2015, the Company was owed $Nil (December 31, 2014 - $88,400) for loans from the Chief Financial Officer of the Company, which is unsecured, non-interest bearing, and due on demand. The loan was offset by a bonus payment in March 2015 for services rendered. |
| c) | Key management personnel compensation: |
The following table summarizes the compensation of the Company’s key management:
| Three Months Ended March 31, | ||||||||
| 2015 | 2014 | |||||||
| $ | $ | |||||||
| Management fees | 247,566 | 65,967 | ||||||
| Employee salary and benefits (included in general and administrative) | 24,716 | 33,603 | ||||||
| Share based payments to officers and directors | – | 250,778 | ||||||
| 9 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
| 10. | Share Capital |
Common Shares
The Company is authorized to issue an unlimited number of common shares without par value.
Share transactions during the three months ended March 31, 2015:
| (a) | In January 2015, the Company issued 555,940 common shares for proceeds of $754,275 upon the exercise of stock options and warrants at prices ranging from $1.00 per share to $1.50 per share. .The fair value of the stock options of $78,424 was transferred from share-based payment reserve to common shares upon exercise. |
| (b) | In February 2015, the Company issued 422,272 common shares for proceeds of $537,251 upon the exercise of stock options and warrants at prices ranging from $1.00 per share to $1.50 per share. .The fair value of the stock options and warrants of $90,847 was transferred from share-based payment reserve to common shares upon exercise. |
| (c) | In March 2015, the Company issued 2,000 common shares for proceeds of $2,200 upon the exercise of stock options at prices ranging from $1.10 per share. .The fair value of the stock options of $1,280 was transferred from share-based payment reserve to common shares upon exercise. |
Share transactions during the three months ended March 31, 2014:
| (d) | In January 2014, the Company issued 60,000 common shares for proceeds of $87,500 upon the exercise of stock options at prices ranging from $1.00 per share to $1.55 per share.The fair value of the stock options of $60,319 was transferred from share-based payment reserve to common shares upon exercise. |
| (e) | In February 2014, the Company issued 13,250 common shares for proceeds of $13,250 upon the exercise of stock options at $1.00 per share. The fair value of the stock options of $6,122 was transferred from share-based payment reserve to common shares upon exercise. |
| (f) | In March 2014, the Company issued 55,000 common shares for proceeds of $71,500 upon the exercise of stock options at prices ranging from $1.00 per share to $1.55 per share. The fair value of the stock options of $44,892 was transferred from share-based payment reserve to common shares upon exercise. |
Escrowed Shares
On October 20, 2010, the Company entered into an Escrow Agreement with certain shareholders in which 9,750,001 common shares would be subject to escrow restrictions for a period of 66 months. Under the terms of the Escrow Agreement, 10% of the shares were released from escrow one year after the completion of the Company’s IPO, and a further 10% every 6 months thereafter. During the three months ended March 31, 2015, 975,000 shares were released from escrow. As at March 31, 2015, 2,925,001 shares are held in escrow.
| 10 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
| 11. | Share Purchase Warrants |
The following table summarizes the continuity of share purchase warrants:
Number of Warrants | Weighted Average Exercise Price | |||||||
| $ | ||||||||
| Balance, December 31, 2013 | 717,732 | 1.45 | ||||||
| Issued | 1,570,903 | 3.00 | ||||||
| Exercised | (2,250 | ) | 1.50 | |||||
| Balance, December 31, 2014 | 2,286,385 | 2.51 | ||||||
| Exercised | (682,462 | ) | 1.45 | |||||
| Expired | (33,020 | ) | 1.50 | |||||
| Balance, March 31, 2015 | 1,570,903 | 3.00 | ||||||
The following table summarizes information about warrants outstanding and exercisable at March 31, 2015:
| Warrants Outstanding | Exercise Price $ | Expiry Date | ||||||
| 1,570,903 | 3.00 | January 30, 2016 | ||||||
| 1,570,903 | ||||||||
| 11 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
| 12. | Stock Options |
On March 7, 2014 the Company’s stock option plan was amended and replaced in its entirety. The stock option plan provides for the issuance of stock options to its directors, officers and consultants. The stock options are granted in accordance with the policies of the regulatory authorities at an exercise price equal to or higher than the market price of the Company’s stock, with a maximum term of five years on the date of grant, and are not to exceed 20% of the issued and outstanding common shares of the Company. Vesting terms are determined by the policies of the Canadian Securities Exchange or by the board of directors.
On January 8, 2014, the Company entered into an agreement with a third party for financial public relations services to be provided in the United States during an initial 12 month term for a monthly fee of $5,000. The Company also granted bonus incentive options to purchase 130,000 common shares at a price of $4.98 per share, expiring on January 11, 2017. The options vest as to 50,000 immediately, 15,000 on April 10, 2014, 15,000 on July 10, 2014, and 50,000 on the closing of certain proposed capital-raising transactions.
The following table summarizes information about the stock options.
| Three Months Ended March 31, 2015 | Year Ended December 31, 2014 | ||||||||||||||
Number of | Weighted Average Exercise Price $ |
Number of | Weighted Average Exercise Price $ | |||||||||||||
| Outstanding – beginning of period | 4,492,700 | 1.95 | 3,144,700 | 1.14 | ||||||||||||
| Granted | – | – | 2,150,000 | 2.92 | ||||||||||||
| Expired | (798,950 | ) | 1.11 | (320,000 | ) | 1.76 | ||||||||||
| Exercised | (297,750 | ) | 1.03 | (482,000 | ) | 1.17 | ||||||||||
| Outstanding – end of period | 3,396,000 | 2.22 | 4,492,700 | 1.95 | ||||||||||||
| Exercisable – end of period | 3,226,000 | 2.18 | 4,292,700 | 1.90 | ||||||||||||
| 12 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
12. Stock Options (continued)
The following table summarizes information about stock options outstanding and exercisable as at March 31, 2015.
Exercise | Expiry Date | Number of Options Outstanding | Number of Options Exercisable | Weighted (Years) | ||||||||||
| 1.10 | May 2, 2015 | 156,000 | 156,000 | 0.09 | ||||||||||
| 1.10 | June 13, 2015 | 650,000 | 650,000 | 0.20 | ||||||||||
| 1.25 | September 13, 2015 | 490,000 | 490,000 | 0.45 | ||||||||||
| 4.50 | March 8, 2016 | 360,000 | 360,000 | 0.94 | ||||||||||
| 2.35 | December 23, 2016 | 1,610,000 | 1,490,000 | 1.73 | ||||||||||
| 4.98 | January 11, 2017 | 130,000 | 80,000 | 1.79 | ||||||||||
| 3,396,000 | 3,226,000 | 1.06 | ||||||||||||
The fair value of stock options granted was determined using the Black-Scholes option pricing model. During the three months ended March 31, 2015, the Company did not grant any stock options. During the three months ended March 31, 2015, the Company capitalized $28,888 as website development costs and expensed $94,919 for the vesting of previously granted stock options. During the three months ended March 31, 2014, the Company granted stock options with a fair value of $1,392,235 which will be recognized over the vesting term. During the three months ended March 31, 2014, the Company recognized $1,106,963 of stock-based compensation expense and capitalized $175,545 as website development costs. The weighted average fair value of the options granted during the three months ended March 31, 2014 was $2.58 per option. The weighted average exercise price for stock options exercised was $1.03 (2014 - $1.34). Weighted average assumptions used in calculating the fair value of stock-based compensation expense are as follows:
| 2015 | 2014 | |||||||
| Risk-free rate | – | 0.53 | % | |||||
| Dividend yield | – | 0 | % | |||||
| Volatility | – | 111 | % | |||||
| Expected forfeitures | – | – | ||||||
| Weighted average expected life of the options (years) | – | 2.24 | ||||||
The expected volatility used in the Black-Scholes option pricing model is based on the historical volatility of the Company’s common shares.
| 13 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
| 13. | Commitments and Contingencies |
The Company had no significant commitments or contractual obligations with any parties respecting executive compensation, consulting arrangements, or other matters other than disclosed below. Management services provided are on a month-to-month basis.
| a) | The Company has entered into leases for the provision of facility space until April 30, 2015. The Company’s future minimum lease payments for the premise leases are as follows: |
| Fiscal year ending December 31, 2015 | $ | 7,325 | ||
| Total: | $ | 7,325 |
| b) | The Company has entered into two leases for Company vehicles until October 28, 2018 and September 21, 2019. The Company’s future minimum lease payments for the vehicle leases are as follows: |
| Fiscal year ending December 31, 2015 | $ | 15,161 | ||
| Fiscal year ending December 31, 2016 | 20,214 | |||
| Fiscal year ending December 31, 2017 | 20,214 | |||
| Fiscal year ending December 31, 2018 | 17,393 | |||
| Fiscal year ending December 31, 2019 | 5,954 | |||
| Total: | $ | 78,936 |
| c) | The Company is actively contesting one threatened legal action in the ordinary course of business and believes the ultimate outcome of this action will not have a material adverse impact on the Company’s financial position, results of operations or liquidity. |
| 14. | Financial Instruments and Risk Management |
The Company is exposed in varying degrees to a variety of financial instrument and related risks. Those risks and management’s approach to mitigating those risks are as follows:
| (a) | Fair Values |
| Fair Value Measurements Using | ||||||||||||||||
| Quoted prices in active markets for identical instruments (Level 1) $ | Significant other observable inputs (Level 2) $ | Significant unobservable inputs (Level 3) $ |
Balance, March 31, 2015 $ | |||||||||||||
| Cash and cash equivalents | 4,776,510 | – | – | 4,776,510 | ||||||||||||
| 4,776,510 | – | – | 4,776,510 | |||||||||||||
The fair values of other financial instruments, which include amounts receivable, accounts payable and accrued liabilities approximate their carrying values due to the relatively short-term maturity of these instruments.
| 14 |
RESAAS SERVICES INC.
Notes to the Interim Consolidated Financial Statements
March 31, 2015
(Expressed in Canadian dollars except shares and options)
(Unaudited)
14 Financial Instruments and Risk Management (continued)
| (b) | Credit Risk |
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s exposure to credit risk is in its cash and receivables. Cash is held with major banks in Canada, which are high credit quality financial institutions as determined by rating agencies. Amounts receivable consists of GST refunds which are due from the Government of Canada. The carrying amount of financial assets represents the maximum credit exposure.
| (c) | Currency Risk |
The Company’s functional currency is the Canadian dollar. There is low foreign exchange risk to the Company as the Company primarily operates within Canada.
| (d) | Interest Rate Risk |
The Company’s exposure to interest rate risk relates to its ability to earn interest income on cash balances at variable rates and its short-term term deposits at prescribed market rates. The fair value of the Company’s cash is not significantly affected by changes in short-term interest rates. The income earned from the bank accounts and short-term term deposits is subject to movements in interest rates.
| (e) | Liquidity and Funding Risk |
Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. The Company’s objective in managing liquidity risk is to maintain sufficient readily available capital in order to meet its liquidity requirements. Management maintains sufficient cash to satisfy short-term liabilities in highly liquid investments.
Funding risk is the risk that market conditions will impact the Company’s ability to raise capital through equity markets under acceptable terms and conditions.
| As at March 31, 2015 | Carrying amount $ | Contractual cash flows $ | 1 year or less $ | 1 -5 Years $ | ||||||||||||
| Trade and other payables | 254,420 | 254,420 | 254,420 | - | ||||||||||||
| Obligations under finance lease | 6,436 | 8,286 | 2,326 | 5,960 | ||||||||||||
| 260,856 | 262,706 | 256,746 | 5,960 | |||||||||||||
15. Subsequent Events
| (a) | In April 2015, the Company issued 72,400 common shares for proceeds of $117,390 upon the exercise of stock options at a price of $1.10 per share to $3.00 per share. |
| (b) | In May 2015, the Company issued 154,000 common shares for proceeds of $216,900 upon the exercise of stock options at a price of $1.10 per share to $3.00 per share. |
| (c) | On April 1, 2015, the Company entered into a service agreement for marketing consulting services for an indefinite term in exchange for (i) a fee of US$23,000 per month for the first two months and US$25,000 per month thereafter, (ii) a commission of 15% on all revenue generated from customers introduced by the consultant, and (iii) subject to the agreement continuing in effect for a period of 120 days, the grant of options to purchase 50,000 common shares at a exercise price equal to the closing market price of the Company’s common shares on the date of grant, exercisable for a period of five years, plus the grant of an additional 50,000 options on the same terms for each subsequent 60 day period during which the agreement remains in effect, to a maximum of 150,000 options in total. |
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