Exhibit 99.2
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended March 31, 2015 and 2014
(Expressed in US dollars)
1
Norsat International Inc. |
Condensed Interim Consolidated Financial Statements of Financial Position |
(Expressed in US dollars - Unaudited) |
Notes | March 31, 2015 | December 31, 2014 | |||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 5,357,535 | $ | 5,513,733 | |||
Trade and other receivables | 6,755,995 | 7,570,110 | |||||
Inventories | 10,307,092 | 10,120,374 | |||||
Prepaid expenses and other | 472,843 | 426,093 | |||||
Current assets | 22,893,465 | 23,630,310 | |||||
Non-current assets | |||||||
Property and equipment, net | 757,399 | 855,978 | |||||
Intangible assets, net | 5,775,281 | 6,360,336 | |||||
Goodwill | 4,399,040 | 4,736,470 | |||||
Long-term prepaid expenses and other | 9,340 | 9,340 | |||||
Deferred income tax assets | 4,900,000 | 4,900,000 | |||||
Non-current assets | 15,841,060 | 16,862,124 | |||||
Total assets | $ | 38,734,525 | $ | 40,492,434 | |||
LIABILITIES | |||||||
Current liabilities | |||||||
Trade and other payables | $ | 2,175,276 | $ | 2,831,911 | |||
Accrued liabilities | 2,051,413 | 2,601,163 | |||||
Provisions | 932,619 | 766,371 | |||||
Taxes payable | 53,970 | 120,038 | |||||
Deferred revenue | 1,660,980 | 1,169,816 | |||||
Current liabilities before acquisition loan | 6,874,258 | 7,489,299 | |||||
Acquisition loan | 7 | 1,295,203 | 2,371,266 | ||||
Current liabilities | 8,169,461 | 9,860,565 | |||||
Non-current liabilities | |||||||
Long-term deferred revenue | 39,191 | 18,426 | |||||
Deferred income tax liabilities | 1,471,572 | 1,629,001 | |||||
Non-current liabilities | 1,510,763 | 1,647,427 | |||||
Total liabilities | 9,680,224 | 11,507,992 | |||||
SHAREHOLDERS' EQUITY | |||||||
Issued capital | 39,850,648 | 39,850,648 | |||||
Treasury shares | (326,527 | ) | (326,527 | ) | |||
Contributed surplus | 4,425,729 | 4,371,778 | |||||
Accumulated other comprehensive loss | (3,577,742 | ) | (3,033,963 | ) | |||
Deficit | (11,317,807 | ) | (11,877,494 | ) | |||
Total shareholders' equity | 29,054,301 | 28,984,442 | |||||
Total liabilities and shareholders' equity | $ | 38,734,525 | $ | 40,492,434 |
See accompanying notes to the unaudited condensed interim consolidated financial statements.
Approved by the Board and authorized for issue on May 5, 2015
“ Fabio Doninelli” | “ James Topham” |
Board of Director | Board of Director |
2
Norsat International Inc. |
Condensed Interim Consolidated Financial Statements of Earnings and Comprehensive Income |
(Expressed in US dollars - Unaudited) |
Three months ended March 31 | |||||||
Notes | 2015 | 2014 | |||||
Revenue | 10 | $ | 8,410,325 | $ | 9,117,705 | ||
Cost of sales | 4 | 5,052,482 | 5,354,183 | ||||
Gross profit | 3,357,843 | 3,763,522 | |||||
Expenses: | |||||||
Selling and distributing expenses | 4 | 1,266,993 | 1,303,717 | ||||
General and administrative expenses | 4 | 993,318 | 859,282 | ||||
Product development expenses, gross | 4 | 758,776 | 695,437 | ||||
Less: Government contributions | 4 | (331,024 | ) | (386,991 | ) | ||
Total expenses | 2,688,063 | 2,471,445 | |||||
Earnings before other expenses/(income) | 669,780 | 1,292,077 | |||||
Impairment of property and equipment | 31,139 | - | |||||
Interest and bank charges | 35,398 | 52,615 | |||||
Loss/(gain) on foreign exchange | 177,749 | (867,492 | ) | ||||
Earnings before income taxes | 425,494 | 2,106,954 | |||||
Current income tax recovery | (66,068 | ) | - | ||||
Deferred income tax recovery | (68,125 | ) | (69,792 | ) | |||
Net earnings | $ | 559,687 | $ | 2,176,746 | |||
Other comprehensive (loss)/ income | |||||||
Exchange differences on translation of operations in currencies other than US Dollars | (543,779 | ) | (1,293,702 | ) | |||
Total comprehensive income | $ | 15,908 | $ | 883,044 | |||
Net earnings per share | |||||||
Basic earnings per share | 9 | $ | 0.10 | $ | 0.38 | ||
Diluted earnings per share | 9 | $ | 0.10 | $ | 0.38 | ||
Weighted average number of shares outstanding | |||||||
Basic | 9 | 5,766,177 | 5,767,435 | ||||
Diluted | 9 | 5,788,977 | 5,770,991 |
See accompanying notes to the unaudited condensed interim consolidated financial statements.
3
Norsat International Inc. |
Condensed Interim Consolidated Financial Statements of Changes in Shareholders’ Equity |
(Expressed in US dollars - Unaudited) |
Accumulated | |||||||||||||||||||
other | Total | ||||||||||||||||||
Issued | Treasury | Contributed | comprehensive | shareholders' | |||||||||||||||
Notes | capital | shares | surplus | loss | Deficit | equity | |||||||||||||
As at January 1, 2015 | $ | 39,850,648 | $ | (326,527 | ) | $ | 4,371,778 | $ | (3,033,963 | ) | $ | (11,877,494 | ) | $ | 28,984,442 | ||||
Net earnings for the period | - | - | - | - | 559,687 | 559,687 | |||||||||||||
Other comprehensive income | - | - | - | (543,779 | ) | - | (543,779 | ) | |||||||||||
Total | 39,850,648 | (326,527 | ) | 4,371,778 | (3,577,742 | ) | (11,317,807 | ) | 29,000,350 | ||||||||||
Share-based payments | 8 | - | - | 53,951 | - | - | 53,951 | ||||||||||||
As at March 31, 2015 | $ | 39,850,648 | $ | (326,527 | ) | $ | 4,425,729 | $ | (3,577,742 | ) | $ | (11,317,807 | ) | $ | 29,054,301 | ||||
Accumulated | |||||||||||||||||||
other | Total | ||||||||||||||||||
Issued | Treasury | Contributed | comprehensive | shareholders' | |||||||||||||||
capital | shares | surplus | loss | Deficit | equity | ||||||||||||||
As at January 1, 2014 | $ | 39,850,648 | $ | (318,255 | ) | $ | 4,278,843 | $ | (1,315,478 | ) | $ | (16,072,249 | ) | $ | 26,423,509 | ||||
Net earnings for the period | - | - | - | - | 2,176,746 | 2,176,746 | |||||||||||||
Other comprehensive income | - | - | - | (1,293,702 | ) | - | (1,293,702 | ) | |||||||||||
Total | 39,850,648 | (318,255 | ) | 4,278,843 | (2,609,180 | ) | (13,895,503 | ) | 27,306,553 | ||||||||||
Share-based payments | 8 | - | - | 55,032 | - | - | 55,032 | ||||||||||||
As at March 31, 2014 | $ | 39,850,648 | $ | (318,255 | ) | $ | 4,333,875 | $ | (2,609,180 | ) | $ | (13,895,503 | ) | $ | 27,361,585 |
See accompanying notes to the unaudited condensed interim consolidated financial statements.
4
Norsat International Inc. |
Condensed Interim Consolidated Financial Statements of Cash Flows |
(Expressed in US dollars - Unaudited) |
Three months ended March 31 | |||||||
Notes | 2015 | 2014 | |||||
Cash and cash equivalents provided by/ (used in) | |||||||
Operating activities: | |||||||
Net earnings for the period | $ | 559,687 | $ | 2,176,746 | |||
Income taxes paid | - | (80,572 | ) | ||||
Non-cash adjustments to reconcile net earnings to net cash flows: | |||||||
Depreciation and amortization | 328,049 | 319,432 | |||||
Impairment of property and equipment | 31,139 | - | |||||
Realized and unrealized foreign exchange loss/ (gain) | 177,748 | (867,492 | ) | ||||
Loan acquisition cost amortization | 2,262 | 6,786 | |||||
Current income tax recovery | (66,068 | ) | - | ||||
Deferred income tax recovery | (68,125 | ) | (69,792 | ) | |||
Share-based payments | 53,951 | 55,032 | |||||
Government contribution | (331,024 | ) | (386,991 | ) | |||
Changes in non-cash working capital | 12 | (911,428 | ) | (1,528,635 | ) | ||
Net cash flows used in operating actitivies | (223,809 | ) | (375,486 | ) | |||
Investing activities: | |||||||
Purchase of intangible assets, property and equipment | (56,095 | ) | (110,431 | ) | |||
Proceeds from government contributions for acquisition of property and equipment | - | 26,551 | |||||
Net cash flows used in investing activities | (56,095 | ) | (83,880 | ) | |||
Financing activities: | |||||||
Repayment of acquisition loan | 7 | (980,000 | ) | (480,000 | ) | ||
Proceeds from government contributions | 5 | 763,484 | 456,121 | ||||
Net cash flows used in financing activities | (216,516 | ) | (23,879 | ) | |||
Effect of foreign currency translation on cash and cash equivalents | 340,221 | 76,764 | |||||
Decrease in cash and cash equivalents | (156,199 | ) | (406,481 | ) | |||
Cash and cash equivalents, beginning of period | 5,513,733 | 3,272,595 | |||||
Cash and cash equivalents, end of period | $ | 5,357,534 | $ | 2,866,114 |
Supplemental cash flow and other disclosures (Note 12)
See accompanying notes to the unaudited condensed interim consolidated financial statements.
5
Norsat International Inc. |
Notes to the Condensed Interim Consolidated Financial Statements |
Three months ended March 31, 2015 and 2014 |
(Expressed in US dollars - Unaudited) |
1. | Basis of Preparation |
Statement of compliance
These unaudited condensed interim consolidated financial statements for the three months ended March 31, 2015, including comparatives, have been prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting”. They do not include all of the information required in annual financial statements in accordance with International Financial Reporting Standards (“IFRS”), and should be read in conjunction with the Company’s 2014 annual audited consolidated financial statements which have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”).
The unaudited condensed interim consolidated financial statements for the three months ended March 31, 2015 have been approved and authorized for issue by the board of directors on May 5, 2015.
These unaudited condensed interim consolidated financial statements are presented in United States Dollars (‘USD’), except when otherwise indicated.
Seasonal fluctuations
Quarterly results from the Company’s two business segments fluctuate from quarter to quarter due to seasonal influences on sales volumes. In the Company’s Land Mobile Radio (“Sinclair Technologies”) segment, the first and second quarters are historically the strongest, as most of Sinclair’s customers build inventories as they commence installation in the spring and winter seasons. In the Satellite Communications segment, the third and fourth quarters are typically the strongest, as these are traditionally the periods when military sales occur. The timing of contract awards also creates significant fluctuations in the Company’s quarterly results as some large contracts represent a significant share of sales for a given quarter. The timing of these orders is unpredictable.
2. | Significant Accounting Policies |
The unaudited condensed interim consolidated financial statements have been prepared using accounting policies consistent with those used in the preparation of the audited consolidated financial statements as at December 31, 2014.
3. | Significant Management Judgments and Estimation Uncertainty |
The preparation of unaudited condensed interim consolidated financial statements in conformity with IFRS requires the Company’s management to undertake a number of judgments, estimates and assumptions that affect amounts reported in the unaudited condensed interim consolidated financial statements and notes thereto. Actual amounts may ultimately differ from these estimates.
The judgments, estimates and assumptions applied in the unaudited condensed interim consolidated financial statements, including key sources of estimation uncertainty were the same as those applied in the
Company’s last annual audited consolidated financial statements for the year ended December 31, 2014.
6
Norsat International Inc. |
Notes to the Condensed Interim Consolidated Financial Statements |
Three months ended March 31, 2015 and 2014 |
(Expressed in US dollars - Unaudited) |
4. | Cost of Sales and Expenses |
Three months ended March 31 | ||||||
2015 | 2014 | |||||
Cost of Sales | ||||||
Direct cost of sales | $ | 5,028,729 | $ | 5,333,202 | ||
Depreciation and amortization | 23,753 | 20,981 | ||||
$ | 5,052,482 | $ | 5,354,183 | |||
Selling and distributing expenses | ||||||
Direct expenses | $ | 1,105,167 | $ | 1,120,058 | ||
Depreciation and amortization | 161,826 | 183,659 | ||||
Less: Government contribution (Note 5) | - | - | ||||
$ | 1,266,993 | $ | 1,303,717 | |||
General and administrative expenses | ||||||
Direct expenses | $ | 1,058,587 | $ | 951,845 | ||
Capitalized to inventory/transfer to cost of sales | (156,062 | ) | (126,357 | ) | ||
Depreciation and amortization | 90,793 | 33,794 | ||||
Less: Government contribution (Note 5) | - | - | ||||
$ | 993,318 | $ | 859,282 | |||
Product development expenses, net | ||||||
Direct expenses | $ | 707,099 | $ | 614,439 | ||
Depreciation and amortization | 51,677 | 80,998 | ||||
758,776 | 695,437 | |||||
Less: Government contribution (Note 5) | (331,024 | ) | (386,991 | ) | ||
$ | 427,752 | $ | 308,446 | |||
Supplementary information: | ||||||
Short-term employee benefits | $ | 1,868,767 | $ | 2,874,130 |
Short-term employee benefits include wages, salaries, bonus, sales commissions, social security contributions, extended health premiums, Medical Services Plan payments, Registered Retirement Savings Plan contributions and vacation accrual.
5. | Government Contributions |
a.)Strategic Aerospace & Defense Initiative (“SADI I”)
As at March 31, 2015, the Company has calculated the SADI I repayment amount to be nil as the 2015 year to date gross business revenue as at March 31, 2015 did not meet the criteria for repayment pursuant to the repayment terms of the SADI I agreement and the Company’s accounting policy relating to SADI repayment.
b.)Strategic Aerospace & Defense Initiative (“SADI II”)
For the three months ended March 31, 2015, the Company has recorded $331,024 (March 31, 2014 -$386,991) as a reduction to product development expenses related to SADI II in the Condensed Interim
7
Norsat International Inc. |
Notes to the Condensed Interim Consolidated Financial Statements |
Three months ended March 31, 2015 and 2014 |
(Expressed in US dollars - Unaudited) |
Consolidated Statements of Earnings and Comprehensive Income and $nil (March 31, 2014 - $26,561) as a reduction to property and equipment costs related to SADI II.
As at March 31, 2015, the Company has recorded $3,618,157, or Cdn$3,953,860 of the maximum funding amount of Cdn$13,270,265 under SADI II.
As at March 31, 2015, eligible costs related to SADI II of $160,636 (December 31, 2014 - $593,097) was included in trade and other receivables.
For the three months ended March 31, 2015, total cash received under SADI II was $763,484 (March 31, 2014 - $456,121)
As at March 31, 2015, the Company did not accrue any liability for repayment relating to SADI II as the amount to be repaid cannot yet be determined since the repayment amount is contingent on 2018 financial results compared to those achieved in 2017.
6. | Operating Line of Credit |
During the three months ended March 31, 2015, the Company renewed its existing credit facilities with HSBC Bank Canada (the “Bank”) where the demand operating line of credit available to the Company has been amended to Cdn$3.50 million compared to US$3.25 million previously. All terms of interests and covenants remain unchanged. Together with the Company’s existing facility with HSBC Bank USA of US$0.5 million, the Company has total credit facilities of approximately $3.26 million (December 31, 2014 $3.66 million). As at March 31, 2015, the Company had drawn $0.21 million of the $3.26 million operating line of credit for a standby letter of credit of a significant sales contract.
7. | Acquisition Loan |
For the three months ended March 31, 2015, the Company made principal repayments totaling $980,000 (March 31, 2014 - $480,000) against the acquisition loan. As at March 31, 2015, the Company’s combined weighted average interest rate was 2.53% (December 31, 2014 – 2.77%)
8. | Issued Capital |
Share Consolidation
On January 16, 2015, the Company consolidated its outstanding common shares on the basis of one new common share for every ten existing common shares. As no fractional common shares were issued in connection with the share consolidation and any fractional shares that resulted from the share consolidation were rounded to the nearest whole number, the 58,316,532 pre-consolidation common shares issued and outstanding as at December 31, 2014 were being reduced to 5,831,658 common shares on a post-consolidated basis.
Total shares issued and outstanding as at March 31, 2015 and December 31, 2014 were 5,831,658 at $39,850,648.
These consolidated interim financial statements reflect the share capital consolidation and earnings per share on a retroactive basis. The following sections reflect the effects of the share capital consolidation on the number of common shares, options and restricted share units.
8
Norsat International Inc. |
Notes to the Condensed Interim Consolidated Financial Statements |
Three months ended March 31, 2015 and 2014 |
(Expressed in US dollars - Unaudited) |
Share Purchase Option Plan
During the three months ended March 31, 2015, a total of 26,352 stock purchase options were granted at an average weighted exercise price of Cdn$6.84 and a fair value of Cdn$2.23, of which 4,642 were granted to senior management.
During the three months ended March 31, 2014, a total of 28,716 stock purchase options were granted at an exercise price of Cdn$5.30 and a fair value of Cdn$1.90, of which 16,014 stock purchase options were granted to senior management and directors at the same average price and fair value.
Options typically vest in 2 years and expire 5 years from the grant date.
Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models may not necessarily provide a reliable measure of the fair value of the Company’s share purchase options. The weighted average assumptions used to estimate the fair value of options granted during the three months ended March 31, 2015 and 2014 were:
Three months ended March 31 | ||||
2015 | 2014 | |||
Risk free interest rate | 0.53% | 1.33% | ||
Expected life | 3.1 years | 3.1 years | ||
Vesting period | 2 years | 2 years | ||
Expected volatility | 47% | 50% | ||
Expected dividends | Nil | Nil | ||
Average fair value | Cdn$2.20 | Cdn$1.90 | ||
Forfeiture rate | 18% | 18% |
The exercise price of all share purchase options granted during the period are equal to the closing market price at the grant date. The Company calculates share based payment from the vesting of stock options using the Black Scholes Option Pricing Model with assumptions noted above and records related compensation expense as follows for the three months ended March 31, 2015 and 2014:
Three months ended March 31 | |||||
2015 | 2014 | ||||
Share-based payments - options | $ | 13,628 | $ | 14,992 |
Share purchase options outstanding as at March 31, 2015 were as follows:
Share purchase options outstanding | Number of options | Weighted average | |||
exercise price Cdn$ | |||||
Balance, December 31, 2014 | 214,162 | $ | 5.80 | ||
Granted | 26,352 | 6.84 | |||
Expired | (1,600 | ) | 6.90 | ||
Forfeited | (1,454 | ) | 5.09 | ||
Balance, March 31, 2015 | 237,460 | $ | 5.95 |
9
Norsat International Inc. |
Notes to the Condensed Interim Consolidated Financial Statements |
Three months ended March 31, 2015 and 2014 |
(Expressed in US dollars - Unaudited) |
The following table summarizes information pertaining to the Company’s share purchase options outstanding at March 31, 2015:
Options outstanding | Options exercisable | |||||
Range of | Number of | Weighted average | Weighted | Number of | Weighted | |
exercise prices | options | remaining contractual | average | options | average | |
Cdn$ | outstanding | life(years) | exercise price | exercisable | exercise price | |
Cdn$ | Cdn$ | |||||
$0 to $4.99 | 39,200 | 1.80 | 4.80 | 36,700 | 4.80 | |
$5.00 to $9.99 | 196,760 | 2.73 | 6.27 | 119,824 | 6.56 | |
237,460 | 2.58 | 6.01 | 156,524 | 6.15 |
Restricted Share Unit (“RSU”) Plan
The Company charged the following share-based payments to operating expenses in connection with the Company’s RSU plan, with a corresponding increase in contributed surplus:
Three months ended March 31 | |||||
2015 | 2014 | ||||
Share-based payments - RSUs | $ | 40,323 | $ | 40,040 |
RSUs outstanding as at December 31, 2014 and March 31, 2015 are as follows:
No. of units | ||
Balance, December 31, 2014 | 72,554 | |
Granted | - | |
Vested | - | |
Forfeited | (451 | ) |
Balance, March 31, 2015 | 72,103 |
10
Norsat International Inc. |
Notes to the Condensed Interim Consolidated Financial Statements |
Three months ended March 31, 2015 and 2014 |
(Expressed in US dollars - Unaudited) |
9. | Earning per Share |
The reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations was as follows for the three months ended March 31, 2015 and 2014:
Three months ended March 31 | |||||
2015 | 2014 | ||||
Numerator | |||||
Net earnings from continuing operations | $ | 559,687 | $ | 2,176,746 | |
Denominator: | |||||
Weighted average number of shares outstanding used to compute basic EPS | 5,766,177 | 5,767,435 | |||
Dilution from exercise of stock options | 22,800 | 3,556 | |||
Weighted average number of shares outstanding used to compute diluted EPS | 5,788,977 | 5,770,991 | |||
Net earnings per share | |||||
Basic | $ | 0.10 | $ | 0.38 | |
Diluted | $ | 0.10 | $ | 0.38 |
The calculation of assumed exercise of stock options includes the effect of the dilutive options. Where their effect was anti-dilutive because their exercise prices were higher than the average market price of the Company’s common shares at the end of the periods shown in the table, assumed exercise of those particular stock options were not included.
10. | Income Taxes |
During the three months ended March 31, 2015, the Company commenced an orderly windup of Norsat S.A. Accordingly the approximately $11,010,000 (CHF10,700,00) of loss carryforward that have not been recorded in the consolidated financial statements relating to Norsat S.A. will expire upon wind-up of Norsat S.A.
11. | Segmented Information |
Commencing in 2015, the Company combined its Satellite Solutions and Microwave Products segments into one reportable segment, Satellite Communications, after considering how decisions are made about resource allocation and performance assessment.
The Company’s business operates primarily through two operating segments – Land Mobile Radio (“Sinclair Technologies”) and Satellite Communications.
The two reportable segments are managed and monitored together with operating results reviewed by the Company’s chief operating decision makers on a combined basis. The two reporting segments are strategic business units that offer different products and services. They are managed separately because each business is in a different stage in its life cycle and they require different marketing strategies.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies as described in the annual audited consolidated financial statements for the year ended December 31, 2014.
11
Norsat International Inc. |
Notes to the Condensed Interim Consolidated Financial Statements |
Three months ended March 31, 2015 and 2014 |
(Expressed in US dollars - Unaudited) |
The following tables set forth sales and gross profit information by operating segments for the three months ended March 31, 2015 and 2014.
Three months ended March 31 | |||||
2015 | 2014 | ||||
Sales to external customers | |||||
Sinclair Technologies | $ | 4,644,798 | $ | 5,619,184 | |
Satellite Communications | 3,765,527 | 3,498,521 | |||
$ | 8,410,325 | $ | 9,117,705 | ||
Gross Profit | |||||
Sinclair Technologies | $ | 2,005,639 | $ | 2,247,815 | |
Satellite Communications | 1,352,204 | 1,515,707 | |||
$ | 3,357,843 | $ | 3,763,522 |
Assets related to Sinclair Technologies and Satellite Communication can be clearly identified and attributable to its operations.
Sinclair Technologies | Satellite | Consolidated | |||||
Communications | |||||||
As at March 31, 2015 | |||||||
Total assets related to operations | $ | 22,372,035 | $ | 16,362,490 | $ | 38,734,525 | |
Property and equipment, net | 303,510 | 453,889 | 757,399 | ||||
Intangible assets, net | 5,643,407 | 131,874 | 5,775,281 | ||||
As at December 31, 2014 | |||||||
Total assets related to operations | $ | 23,378,479 | $ | 17,113,955 | $ | 40,492,434 | |
Property and equipment, net | 326,688 | 529,290 | 855,978 | ||||
Intangible assets, net | 6,231,942 | 128,394 | 6,360,336 |
The company generated revenues from external customers located in the following geographic locations:
Three months ended March 31 | |||||
2015 | 2014 | ||||
United States | $ | 4,885,804 | $ | 5,171,999 | |
Canada | 1,303,327 | 1,661,520 | |||
Europe and other | 2,221,194 | 2,284,186 | |||
$ | 8,410,325 | $ | 9,117,705 |
Substantially all of the Company’s property and equipment, intangible assets and goodwill are located in Canada.
Customer Concentration:
For the three months ended March 31, 2015, no customer individually represented 10% or more of total consolidated revenue.
12
Norsat International Inc. |
Notes to the Condensed Interim Consolidated Financial Statements |
Three months ended March 31, 2015 and 2014 |
(Expressed in US dollars - Unaudited) |
Three months ended March 31 | ||||||
2015 | 2014 | |||||
Change in non-cash operating working capital: | ||||||
Trade and other receivables | $ | 3,703 | $ | (816,447 | ) | |
Inventories | (505,624 | ) | (288,961 | ) | ||
Prepaid expenses and other | (62,396 | ) | 159,048 | |||
Accounts payable and accrued liabilities | (1,025,288 | ) | (304,783 | ) | ||
Provisions | 166,248 | (158,214 | ) | |||
Deferred revenue | 511,929 | (119,278 | ) | |||
$ | (911,428 | ) | $ | (1,528,635 | ) | |
Supplementary information: | ||||||
Interest paid | $ | 14,505 | $ | 33,132 |
13. | Related Party Transactions |
The following table discloses the compensation amount of key management personnel in the ordinary course of their employment recognized as an expense during the reporting periods. Key management personnel include the Company’s President and Chief Executive Officer, Chief Financial Officer and General Manager.
Three months ended March 31 | |||||
2015 | 2014 | ||||
Short-term employee benefits | $ | 261,326 | $ | 281,443 | |
Share-based payments | 25,221 | 33,885 | |||
Total | $ | 286,547 | $ | 315,328 |
13
Norsat International Inc. |
Notes to the Condensed Interim Consolidated Financial Statements |
Three months ended March 31, 2015 and 2014 |
(Expressed in US dollars - Unaudited) |
14. | Commitments and Contingencies |
Future minimum payments at March 31, 2015 under loan commitments, purchasing commitments and operating lease obligations for each of the next five calendar years are approximately as follows:
Acquisition loan | Inventory purchase | Operating lease | |||||||
obligations | obligations | Total | |||||||
Remaining 2015 | $ | 1,295,203 | $ | 6,888,023 | $ | 545,365 | $ | 8,728,591 | |
2016 | - | 30,884 | 677,203 | 708,087 | |||||
2017 | - | - | 176,649 | 176,649 | |||||
2018 | - | - | - | - | |||||
2019 | - | - | - | - | |||||
$ | 1,295,203 | $ | 6,918,907 | $ | 1,399,217 | $ | 9,613,327 |
The Company has operating lease commitments extending to June 2017. The Company also enters into purchase commitments, including inventory purchase obligations in the normal course of business as disclosed above. In addition, the Company is required to make contingent repayment of SADI I government contributions pursuant to the repayment term of the agreement. As at March 31 2015, the Company did not accrue any liability for repayment as the amount cannot yet be determined (Note 5).
Legal Proceedings
From time to time the Company may enter into legal proceedings relating to certain potential claims. It is impossible at this time for the Company to predict with any certainty the outcome of any such claims. However, management is of the opinion, based on legal assessment and information available, that it is unlikely that any liability would be material in relation to the Company’s consolidated financial position.
15. | Comparative Figures |
Certain figures in the prior year consolidated financial statements have been adjusted to reflect the ten to one share capital consolidation as noted in Note 8, notably number of shares, earnings per share, and number of options and RSUs outstanding.
14