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File: Press Release - Slyce Q3_Sept 29-2016_Final - 1.00 pm.pdf
Slyce Inc. Reports Q3, 2016 Financial Results
CALGARY, CANADA September 29th, 2016 -- Leading visual search and image recognition
company Slyce Inc. (TSX VENTURE:SLC) ("Slyce" or the "Company") today announced its financial
results for the third quarter ended July 31, 2016.
The interim financial statements and Management Discussion and Analysis for the quarter ended
July 31, 2016 are available at www.SEDAR.com.
Business Highlights
Key customer announcements during the nine-month period ended July 31, 2016 include the
following:
dot On November 25, 2015, Slyce announced a new contract with ToysRus, for the provision of
several of Slyce's visual search and digital coupon services.
dot On the same date, Slyce also announced its new and proprietary retail technology solution,
`Slyce Link', that enables retailers to show visually similar products to their customers at highly
strategic points in their online purchasing journeys in order to increase sales and reduce cart
abandonment.
dot On December 8, 2015, Slyce announced a contract with leading specialty fashion retailer,
Nordstrom, to power visual search for mobile commerce.
dot On December 18, 2015, Slyce announced that it had integrated fully automated, 3D search
technology that is now live with online shoe-and-clothing retailer, Zappos.com, to power visual
search for mobile commerce.
dot On March 22, 2016, Slyce announced that it had officially launched visual search technology
with leading US footwear and accessories retailer, Shoe Carnival.
dot On May 16, 2016, Best Buy expanded its relationship with Slyce to introduce 3D search
capabilities, alongside barcode and catalog scanning, into its iOS and Android apps. The visual
search functions were moved to the primary search bar of the app, accessible when a user taps
on the camera icon.
dot On June 22, 2016, Slyce announced that leading apparel retailer Express had contracted to
utilize Slyce's "Universal Scanner" -- including barcode scanning, catalog scanning, and 3D visual
search.
dot On June 28, 2016, Slyce announced that American Eagle Outfitters had contracted to use
Slyce's visual search technology in the retailer's app.
During August 2016, key customer developments included the following:".
dot Urban Outfitters expanded its contract to utilize Slyce's 3D visual search in its "Scan
+ Shop" feature, and moved the location of its scanning features into the search bar of its
Apple app.
dot Home Depot moved its Universal Scanner provided by Slyce out of "Beta" and into
the search bar of its Apple and Android applications.
dot Slyce clients Nordstrom, Express and American Eagle Outfitters all launched
Universal Scanner, adding visual search camera icons to the main screens of their app.
The Corporation continues to expand its pipeline of marque retail clients and is currently contracted
with 22 brands, a few of which are in the onboarding process.
In September 2016, the board was pleased to appoint Ted Mann, formerly President of the
Corporation, as Chief Executive Officer and President.
Financial Highlights
The following table presents selected significant financial data for the current year to date and prior
fiscal year.
As at As at
July 31, 2016 October 31,
(Unaudited) 2015
Selected Financial Information (Audited)
Current assets $1,382,321 $3,977,426
Non-current assets $8,232,156 $19,516,944
Total assets $9,614,477 $23,494,370
Current liabilities $2,014,828 $3,431,114
Non-current liabilities $1,376,066 $737,741
Shareholders' equity $6,223,583 $19,325,515
Total liabilities and shareholders' equity $9,614,477 $23,494,370
Current assets consist of cash, trade receivables, other liquid assets and amounts due from related
parties. Cash and cash equivalents decreased significantly as a result of total operating costs that
were much higher than the total revenues generated by the Corporation.
Non-current assets decreased to $8,232,156 as at July 31, 2016 compared to $19,516,944 as at
October 31, 2015. In addition to amortization of development costs, this decrease resulted primarily
from a one-time, non-cash impairment charge of $10,574,715 recorded on intangible assets during
the quarter ended July 31, 2016.
Liabilities include trade and other payables, loan payable, deferred revenue, deferred consideration
and common shares held in escrow.
The following table presents selected operational data for the three and nine months ended July 31,
2016 and July 31, 2015.
For the three For the three For the nine For the nine
months ended months ended months ended months ended
July 31, 2016 July 31, 2015 July 31, 2016 July 31, 2015
Revenue
Services rendered $ 310,929 $ 435,968 $ 1,573,060 $ 934,277
Other income 14,554 82,855 184,305 96,557
Total revenue 325,483 518,823 1,757,365 1,030,834
Expenses
General and
1,406,180 2,238,536 6,402,199 6,139,421
administrative
Amortization of intangible
716,947 366,110 2,177,796 1,037,405
assets
Share-based payments 48,797 245,025 518,622 1,425,785
Consulting fees 107,318 385,923 488,904 1,298,829
Professional fees 139,945 146,276 1,087,286 632,347
Amortization of property
27,423 38,312 316,225 110,385
and equipment
Interest expense 17,539 - 17,539 -
Business development 33,355 201,506 83,304 622,121
Total expenses 2,497,504 3,621,688 11,091,875 11,266,293
Other expenses
Exchange (gain) loss (1,774) 53,260 (30,119) 43,101
Changes in fair value of
contingent consideration
- - (745,475) -
and commons shares
held in escrow,
Change as
presented a
in deferred - 141,644 (223,001) 321,473
liability
consideration
Impairment of intangible 10,576,489 - 10,576,489 -
assets
Total other expenses 10,574,715 194,904 9,577,894 364,574
Net loss (12,746,736) (3,297,769) (18,912,404) (10,600,033)
Foreign exchange (gain) loss
on translation of foreign 12,826 (79,463) (49,298) 8,768
subsidiaries
Net and comprehensive loss $ (12,733,910) $ (3,218,306) $ (18,961,702) $ (10,608,801)
For the nine-month period ended July 31,2016 revenue increased to $1,573,060 from
$934,277 for the same period last year, an increase of 68 percent. This increase was driven
by onboarding new customers during the period and additional fees derived from existing
customers utilizing more of Slyce's products. For the three months ended July 31,2016, total
revenue was lower by $125,039. This was due to a one-time revenue recognition in the
previous quarter of $150,000 as well as a reclassification of approximately $200,000
between revenue and expenses in the current quarter. Without the reclassification,
"normalized" revenue for the quarter would have been $510,929. Other revenues of
$14,554 for the quarter and $184,305 for the nine months ended July 31,2016 were
primarily comprised of a Scientific Research and Experimental Development Tax Incentive
("SRED") rebate of $140,373, a refund related to leasehold improvements of $38,249 and
interest income.
Total expenses for the nine months ended July 31, 2016 were lower by $174,418 to
$11,091,875. For the quarter ended July 31, 2016, total expenses were lower by $1,124,184
to $2,497,504. Without the reclassification of approximately $200,000 between revenue and
expenses, "normalized" total expenses would have been higher during the quarter to
$2,697,504.
During the quarter ended July 31, 2016, the Corporation conducted impairment testing of its
intangible assets. The testing considered the net present value of estimated future cash
flows derived from the specific assets, taking into account the Company's current strategic
focus, market understanding and corresponding product road map. Those calculations
indicated impairments of $4,141,441 on software and intellectual property and $6,435,048
on goodwill and, as a result, the Corporation recorded a one-time impairment charge of
$10,576,489.
Total comprehensive loss for the nine months ended July 31, 2016 was higher by $8,352,901
to $18,961,702 compared to $10,608,801 for the same period last year. Without the one-
time impairment charge of $10,576,489 "normalized" total comprehensive loss for the nine
months would have been lower by $2,223,588. Total comprehensive loss for the three
months ended July 31, 2016 was higher by $9,515,604 to $12,733,910 compared to
$3,218,306 for the same period last year. Without the one-time impairment charge of
$10,576,489 "normalized" total comprehensive loss for the three months would have been
lower by $1,060,885.
Loss before amortization, share-based payments, depreciation, changes in fair value of
contingent consideration, fair value changes to deferred consideration and impairment of
intangible assets for the nine months ended July 31, 2016 was lower by $1,413,237 to
$6,291,748 compared to $7,704,985 for the same period last year, a decrease of loss by 18
percent. For the three months ended July 31, 2016, it was lower by $1,129,598 to
$1,377,080 compared to $2,506,678 for the same quarter last year, a decrease of loss by 45
percent.
Slyce CEO Ted Mann commented: "Over the last quarter, Slyce cemented its position as the
dominant force in visual search, with far more customers and deployments than any other business
in our space. We also matured quite a bit as a company -- making tough, but necessary, cuts to
reduce our expenses and making careful, strategic decisions to focus 90% of our resources on areas
where we have some product-market fit, and just 10% on new product development."
Conference Call
On September 30, 2016 at 9:00 AM EST, the company will be hosting a live audio conference to
discuss this news. To dial into the call please use the call information below:
Number: 1-888-289-4573
Code: 9683834
The conference call is open to any investor or stakeholder, including shareholders, broker-dealers
and other securities professionals. The call will be recorded and available for review at www.slyce.it.
Slyce will be hosting and moderating a Q&A period on the call. Participants can submit questions for
the call in advance by emailing erika@slyce.it with the words "Investor Question for Conference
Call" in the subject line. Slyce management will endeavour to address as many questions as possible
in the hour allocated to the call.
This press release does not constitute an offer to sell or a solicitation of any offer to buy the
securities in the United States ("US"), in any province or territory of Canada or in any other
jurisdiction. The securities offered have not been and will not be registered under the US
Securities Act of 1933, as amended (the "US Securities Act") or any US state securities laws and
may not be offered or sold in the US absent registration or an applicable exemption from the
registration requirements of the US Securities Act and applicable US state securities laws. There
shall be no sale of the securities in any jurisdiction in which an offer to sell, a solicitation of an
offer to buy or sale would be unlawful.
About Slyce Inc.
Slyce, based in Calgary, Alberta, delivers sophisticated visual search technologies and is currently
focused on enabling a powerful sales channel for major retailers and their customers. Consumers,
wherever they are, can conveniently engage with retailers by taking pictures of desired products
using their mobile devices, thereby initiating the visual search service with near-instant product
recognition capability. The Company delivers its technology both as a white-label visual search
platform and as a suite of consumer mobile apps. Slyce's technology is used by large retail brands
such as Neiman Marcus, Urban Outfitters, JCPenney and Home Depot.
Slyce's business model features multiple revenue streams arising from its visual search platform and
consumer apps.
Slyce is also listed on the Frankfurt exchange trading under (FRANKFURT:06O1)
For image download and further company information, please click for the Slyce Media Kit
For further information and interviews, please contact:
Slyce | Ted Mann, CEO | Ted@slyce.it
READER ADVISORY
Neither the TSX-V nor its Regulation Services Provider (as that term is defined in policies of the
TSX-V) accepts responsibility for the adequacy or accuracy of this release.
Statements in this press release contain forward-looking information. The words "will," "anticipate,"
"believe," "estimate," "expect," "intent," "may," "project," "should," and similar expressions are
intended to be among the statements that identify forward-looking statements. The forward-looking
statements are founded on the basis of expectations and assumptions made by Slyce.
Readers are cautioned that assumptions used in the preparation of such information may prove to be
incorrect. Events or circumstances may cause actual results to differ materially from those predicted,
a result of numerous known and unknown risks, uncertainties, and other factors, many of which are
beyond the control of Slyce.
Slyce does not undertake any obligation to update or revise any forward-looking statements except
as expressly required by applicable securities laws.
None of the information contained on, or connected to, Slyce's website is incorporated by reference
herein.
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