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AirIQ Announces Profitable Results for Second Quarter in a Row; Revenue Growth of 11%

TORONTO, ONTARIO — (Marketwired) — 11/06/14 — AirIQ Inc. (“AirIQ”) (TSX VENTURE: IQ), a supplier of wireless asset management services, today announced its financial results for the three months and six months ended September 30, 2014.

“The Company is pleased to announce that it achieved profitable results for the second quarter in a row,” said Michael Robb, President and Chief Executive Officer of AirIQ, “positive EBITDAS of $89,403, net income of $51,856 and positive cash flows from operations of $72,751 for the three months ended September 30, 2014. Once again, we are extremely pleased with the results of this quarter, especially since results are traditionally lower during this period,” continued Mr. Robb.

The main highlights of the quarter were as follows (with comparisons made between the current quarter and the same quarter one year ago):

The Company calculates EBITDAS as earnings before interest, taxes, depreciation and amortization, and stock- based compensation.

Unless otherwise noted herein, and except share and per share amounts, all references to dollar amounts from this point forward are in thousands of Canadian dollars.

Business Review

The Company continues to focus on its key strategy elements to build revenues and reduce costs to achieve sustained profitability and positive cash flow and to seek opportunities to form value creating strategic partnerships.

Revenues

Revenues for the three months ended September 30, 2013, increased 11% to $672 from $608 for the three months ended September 30, 2013. Revenues for the six months ended September 30, 2013, increased 11% to $1,349 from $1,212 for the six months ended September 30, 2013. Approximately 69% and 69% of the total revenue for the three and six month periods ended September 31, 2014 respectively, represents recurring revenue from the Company–s airtime customers.

Revenues received from equipment sold in connection with service contracts are recorded as deferred revenue and recognized over the initial term of the service contract.

Sales of hardware units associated with service contracts recorded to deferred revenues were approximately $182 and $426, respectively, during the three months and six months ended September 30, 2014, compared to $109 and $264, respectively, during the three months and six months ended September 30, 2013. Revenues recognized from deferred revenues for the three months and six months ended September 30, 2014 were approximately $149 and $271, respectively, compared to $138 and $279, respectively, during the three months and six months ended September 30, 2013.

Overall, revenues related to service contracts sold in connection with hardware equipment increased by $28 and $53, respectively from $435 and $884, respectively, for the three months and six months ended September 30, 2013 to $463 and $937, respectively, for the three months and six months ended September 30, 2014.

Included in the Company–s revenues are sales of units that were sold without a fixed term service contract of approximately $58 and $133 respectively, during the three months and six months ended September 30, 2014, compared to $34 and $47, respectively, for the three months and six months ended September 30, 2013.

Included in the Company–s reported revenues are miscellaneous parts, repair, warranty and lost unit sales of approximately $2 and $8, respectively, during the three months and six months ended September 30, 2014, compared to $1 and $2, respectively, for the three months and six months ended September 30, 2013.

Gross Profit

Overall, gross profit for the three months ended September 30, 2014 increased by 7% to $417, and 9% to $858 for the six months ended September 30, 2014 compared to $390 and $784 for the three months and six months ended September 30, 2013, respectively.

Equipment gross profits increased by approximately 35% and 37%, respectively, to $89 and $173 respectively, during the three months and six months ended September 30, 2014, from $66 and $126, respectively, for the three months and six months ended September 30, 2013. The increase in gross profit can be primarily attributed to the increased margins related to units sold without fixed term service contracts.

Service contract gross profits increased by approximately 1% and 4%, respectively, to $328 and $685 respectively, for the three months and six months ended September 30, 2014 from $324 and $658, respectively, for the three months and six months ended September 30, 2013.

Expenses and Other Items

Sales and marketing, research and development and general and administrative expenses totalled $333 and $675 respectively, for the three months and six months ended September 30, 2014 compared to $440 and $907, respectively, for the three months and six months ended September 30, 2013.

Overall these expenses were reduced by $107 and $232 respectively, for the three months and six months ended September 30, 2014 when compared to the three months and six months ended September 30, 2013.

Expense reductions for the three months ended September 30, 2014 when compared to the three months ended September 30, 2013 were achieved in the following areas; (a) wages and related expense of approximately $44, (b) consulting fee costs were reduced by $48, (c) audit and legal costs were reduced by $2, and (d) other cost reductions of approximately $18 related primarily to communication costs, facility costs, director fees and stock based compensation. These savings were offset by an increase in computer operating expense of approximately $5.

Expense reductions for the six months ended September 30, 2014 when compared to the six months ended September 30, 2013 were achieved in the following areas; (a) wages and related expense of approximately $99, (b) consulting fee costs were reduced by $96, (c) audit and legal costs were reduced by $4, and (d) other cost reductions of approximately $34 related primarily to communication costs, facility costs, director fees and stock based compensation. These savings were offset by an increase in computer operating expense of approximately $1.

Net Profit/Loss

The Company–s net profit for the three months and six months ended September 30, 2014 was $52 and $106, respectively, or $.0.00 and $0.00 per share, respectively, as compared to a net loss of $74 and $181, respectively, or $0.00 and ($0.01) per share, respectively, for the three months and six months ended September 30, 2013, an improvement of $136 and $287, respectively.

The increase in net profit for the three months ended September 30, 2014 when compared to the three months ended September 30, 2013 can be attributed to improvement in the following areas; a) expense reductions of approximately $107, b) a decrease in depreciation and amortization of approximately $2, and c) increased gross profits of $27. These improvements were offset by an increase in interest expense of $10.

The increase in net profit for the six months ended September 30, 2014 when compared to the six months ended September 30, 2013 can be attributed to improvement in the following areas; a) expense reductions of approximately $232 and, b) increased gross profits of $74. These improvements were offset by a) an increase in depreciation and amortization of approximately $3 and, b) an increase in interest expense of $16.

Financial Statements & MDA

The Company–s unaudited consolidated condensed interim financial statements for the three months and six months ended September 30, 2014 including notes thereto, and Management–s Discussion and Analysis for the same period are being filed with the Canadian securities regulatory authorities on today–s date, and will be available on the Company–s website () and on the System for Electronic Document Analysis and Retrieval (“SEDAR”) website (). Such statements should be read in conjunction with the Company–s consolidated financial statements as at and for the years ended March 31, 2014 and 2013, and accompanying notes. The Company–s financial statements include the accounts of AirIQ and its subsidiaries, AirIQ U.S. Holdings, Inc., AirIQ U.S., Inc., and AirIQ, LLC. All inter-company balances and transactions have been eliminated on consolidation.

About AirIQ

AirIQ currently trades on the TSX Venture Exchange under the symbol IQ. AirIQ–s office is located in Pickering, Ontario, Canada. The Company offers a suite of asset management services that generate recurring revenues from each device deployed. AirIQ delivers services to two primary markets: Commercial Fleets and dealers that service Consumer segments. AirIQ provides vehicle owners with the ability to monitor, manage and protect their mobile assets. Services include: instant vehicle locating, boundary notification, automated inventory reports, maintenance reminders, security alerts and vehicle disabling and unauthorized movement alerts. For additional information on AirIQ or its products and services, please visit the Company–s website at .

Forward-looking Statements

This news release contains forward-looking information based on management–s best estimates and the current operating environment. These forward-looking statements are related to, but not limited to, AirIQ–s operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains statements with words such as “hope”, “goal”, “anticipate”, “believe”, “expect”, “plan” or similar words suggesting future outcomes. These statements are based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including AirIQ–s perception of historical trends, current conditions and expected future developments as well as other factors management believes are appropriate in the circumstances. Such forward-looking statements are as of the date which such statement is made and are subject to a number of known and unknown risks, uncertainties and other factors, which could cause actual results or events to differ materially from future results expressed, anticipated or implied by such forward-looking statements. Such factors include, but are not limited to, changes in market and competition, technological and competitive developments and potential downturns in economic conditions generally. Therefore, actual outcomes may differ materially from those expressed in such forward- looking statements. Forward-looking statements are provided for the purpose of providing information about management–s current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. Other than as may be required by law, AirIQ disclaims any intention or obligation to update or revise any such forward-looking statements, whether as a result of such information, future events or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contacts:
AirIQ Inc.
Michael Robb
President and Chief Executive Officer
(905) 831-6444, Ext. 4371

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