2010
ANNUAL REPORT
Intermap Technologies Corporation
President’s Message
Financial information as discussed herein is in U.S. dollars unless otherwise noted.
To our shareholders,
1
I am pleased to formally address the shareholders of Intermap Technologies® since joining the Company
as President and Chief Executive Officer on December 6, 2010 and I thank you for your support during
these uncertain times. As we work through the challenges ahead of us, I am convinced that Intermap has
substantial value and its market opportunity is even greater than I had initially imagined.
Despite larger operating losses than anticipated in 2010, it’s encouraging to note that net cash used in
operations during the year was significantly lower than the operating net loss for the year. In response to lower
revenues during the year, we significantly cut operating expenses – by more than $17 million annually – and
restructured the size of the organization to coincide with 2011 revenue expectations. In terms of the 2011
revenue outlook, contracts in process at year end are valued at approximately $17.0 million, the majority of
which is deliverable during 2011 and recognized as revenue.
Three important changes were required to move the company forward, and we have already started to
implement them. These three changes are to:
• Provide affordable access to more customers through a low-cost delivery approach using cloud-based
web services
• Aggregate the best data available into NEXTMap, allowing for maintenance and recurring revenues
•
Expand the use of channels to get better coverage around the world
In our revised go-to-market strategy, we will aggregate 3D terrain information from third parties into our
database and then disseminate it to our customers through a low-cost web-based delivery mechanism.
This approach will allow us to rapidly and more economically distribute multiple data layers in specific areas
of interest, with high-quality and reduced file sizes. We will also aggressively pursue our mapping services
business, which has been the historical foundation of the Company and will further expand the terrain
information available to our customers.
By implementing this approach, Intermap will be among the first to commercialize broad access
to 3D terrain information by partnering with data providers throughout the world to offer LiDAR,
photogrammetry, satellite, and other geospatial information to the Company’s customers and partners.
Intermap has decades of experience integrating data derived from a number of different sensor
technologies, and we plan to be the go-to company for all types of 3D terrain information.
In conjunction with this strategic shift, we have changed our pricing philosophy to a per-user, per-month
plan through a software-as-a-service (SaaS) model. This is a subscription-based, recurring revenue customer
model that is currently in use for both our existing telecommunications and insurance risk management
customer base. Our goal is to continuously update our 3D terrain database with new types of data to
drive revenue and maintenance fees. This enables us to build a recurring revenue stream, something that
Intermap has not effectively done before in its history.
Change is required to make this strategy work and increase shareholder value, including a new culture, a
new customer- and partner-centric sales and marketing approach, and stakeholders that share this vision.
We now have a strong organization in place with the right leadership focused on executing our new
strategy. On behalf of all of Intermap’s committed employees, I thank our shareholders for their support
during this transformation.
Todd Oseth
President and CEO, Intermap Technologies
2
Management’s Discussion and Analysis
For the year ended December 31, 2010
For purposes of this discussion, “Intermap” or the “Company” refers to Intermap Technologies® Corporation
and its subsidiaries.
This management’s discussion and analysis (MD&A) is provided as of March 7, 2011, and should be read
together with the Company’s audited Consolidated Financial Statements for the years ended December 31,
2010 and 2009, together with the accompanying notes. The results reported herein have been prepared in
accordance with Canadian generally accepted accounting principles (GAAP) and, unless otherwise noted,
are expressed in United States dollars.
Additional information relating to the Company, including the Company’s Annual Information Form (AIF),
can be found on the Company’s website at www.intermap.com and on SEDAR at www.sedar.com.
FORWARD-LOOKING STATEMENTS
In the interest of providing the shareholders and potential investors of Intermap® with information about
the Company and its subsidiaries, including Management’s assessment of Intermap’s and its subsidiaries’
future plans and operations, certain information provided in this MD&A constitutes forward-looking
statements or information (collectively, “forward-looking statements”). Forward-looking statements are
typically identified by words such as “may,” “will,” “should,” “could,” “anticipate,” “expect,” “project,” “estimate,”
“forecast,” “plan,” “intend,” “target,” “believe,” and similar words suggesting future outcomes or statements
regarding an outlook. Although Intermap believes that these forward-looking statements are based upon
assumptions that Intermap believes to be reasonable based on the information available on the date such
statements are made, such statements are not guarantees of future performance, and readers are cautioned
against placing undue reliance on forward-looking statements. By their nature, these statements involve a
variety of assumptions, known and unknown risks and uncertainties, and other factors, which may cause
actual results, levels of activity, and achievements to differ materially from those expressed or implied by
such statements. The forward looking information contained in this MD&A is based on certain assumptions
and analysis by management of the Company in light of its experience and perception of historical trends,
current conditions and expected future developments and other factors that it believes are appropriate.
The material factors and assumptions used to develop the forward-looking statements herein include, but
are not limited to, the following: (i) Intermap will continue to maintain sufficient and effective production
capabilities with respect to the cost to produce the Company’s products; (ii) there will be no significant
reduction in the availability of qualified and cost-effective human resources; (iii) the continued sales success
of Intermap’s products and services; (iv) the continued success of business development activities; (v) the
continued existence and productivity of subsidiary operations; (vi) there will be no significant delays in the
development and commercialization of Intermap products; (vii) new products and services will continue
to be added to the Intermap portfolio; (viii) demand for 3D mapping products will continue to grow in the
foreseeable future; (ix) there will be no significant barriers to the integration of Intermap’s products into
customers’ existing and proposed products; and (x) superior 3D mapping technologies / products do not
develop that would render the Company’s current product offerings obsolete.
Intermap’s forward-looking statements are subject to risks and uncertainties pertaining to, among other
things, revenue fluctuations, loss of key customers, nature of government contracts, breakdown of strategic
alliances, economic conditions, common share price volatility, availability of capital, information technology
security, loss of proprietary information, competing technologies, and international and political
considerations, including but not limited to those risks and uncertainties discussed under the heading “Risk
Factors” in the MD&A, the Company’s most recently filed AIF, and the Company’s other filings with securities
regulators. The impact of any one risk, uncertainty, or factor on a particular forward-looking statement is not
determinable with certainty as these are interdependent, and Intermap’s future course of action depends
on Management’s assessment of all information available at the relevant time. Except to the extent required
by law, Intermap assumes no obligation to publicly update or revise any forward-looking statements made
2010 Annual Report | Management’s Discussion and Analysis
3
in this MD&A, whether as a result of new information, future events, or otherwise. All subsequent forward-
looking statements, whether written or oral, attributable to Intermap or persons acting on the Company’s
behalf, are expressly qualified in their entirety by these cautionary statements.
BUSINESS OVERVIEW
Intermap is a digital mapping company creating uniform, high-resolution 3D digital models of the earth’s
surface. The Company has proactively remapped entire countries and built uniform national databases
called NEXTMap®, consisting of elevation data and orthorectified radar images with high accuracy. Digital
maps are used in a wide range of applications, including, but not limited to geographic information
systems (GIS), engineering, GPS maps, insurance risk assessment, oil and gas, renewable energy, hydrology,
environmental planning, wireless communications, transportation, and 3D visualization. The products are
also used to improve the positional accuracy of airborne and satellite images. Working for private industry,
governments, and individual consumers worldwide, Intermap employs interferometric synthetic aperture
radar (IFSAR) mapping technology, which provides the ability to digitally map large areas accurately and
quickly and acquire data at any time of the day including overcast and dark conditions.
NEXTMap®
The NEXTMap program is included in the Company’s multi-client data library (MCDL), which was built from the
acquisition and processing of elevation data and orthorectified radar images. The NEXTMap datasets include
terrain elevation and imagery data. The Company maintains all ownership rights to the data, and sells licenses
to the data on a non-transferable basis. The program includes NEXTMap® USA and NEXTMap® Europe.
NEXTMap USA, the largest NEXTMap program to date, was completed during the second quarter of 2010. The
program covers an area of nearly 8.0 million square kilometers of the contiguous United States and Hawaii.
The NEXTMap Europe dataset was completed in 2009 and represents 2.5 million square kilometers of area
and includes the 17 countries of Austria, Belgium, Czech Republic, Denmark, England, France, Germany,
Irish Republic, Italy, Luxembourg, Netherlands, Northern Ireland, Portugal, Spain, Scotland, Switzerland,
and Wales. As of December 31, 2010, the Company had invested $81.1 million and $39.3 million into the
NEXTMap USA and NEXTMap Europe datasets, respectively.
In December 2010, a strategic review of the Company’s approach to selling the NEXTMap datasets in the
United States and Europe was undertaken by the new executive management of the Company. Upon
completion of this review, it was determined that the historical pricing strategy of the NEXTMap datasets
required downward adjustment and the Company could no longer afford to invest the resources necessary
to exploit certain previously identified target markets. These changes, coupled with the Company’s history
of losses, led the Company to perform an asset impairment review to determine if the carrying value of
the NEXTMap USA and NEXTMap Europe asset groups were recoverable. The Company determined that
the future expected cash flows of the datasets were insufficient to recover the carrying value of the assets,
resulting in a pre-tax asset impairment charge of $52.8 million. Of this amount, $36.9 million applied
to the NEXTMap USA asset and $15.9 million applied to the NEXTMap Europe asset. Subsequent to the
impairment charges, the net book value of the NEXTMap USA and NEXTMap Europe datasets at December
31, 2010 were $12.9 million and $10.1 million, respectively. The net book value of the NEXTMap USA and
NEXTMap Europe datasets at December 31, 2009 was $56.3 million and $29.0 million, respectively.
Contract Services
The Company’s contract services business typically involves a client requesting digital map data for
a specific location outside of the NEXTMap area of collection. In previous years, this contract services
business has typically been one of the larger sources of revenue for the Company and results primarily from
government funding in the areas of national mapping and national defense. However, in 2010, revenue
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2010 Annual Report | Management’s Discussion and Analysis
from government entities regarding the contract services business. This uncertainty has and is
expected to continue to create volatile revenue period to period.
The contracted amounts and timing of contract awards are the primary reasons for the variation in
from the contract services business accounted for only 30% of total revenue for the year. The Company
believes that revenue from contract services work will grow to higher levels in the immediate future than
the contract services’ financial performance during 2010 when compared with 2009. As of
what was recognized during 2010. The Company has historically experienced uncertainty surrounding
December 31, 2010, there remained approximately $12.9 million in existing signed contract services
the timing, priorities, and amounts of funding from government entities regarding the contract services
work to be performed for which revenue will be recognized throughout 2011. In addition to these
business. This uncertainty has and is expected to continue to create volatile revenue period to period.
existing contracts, the Company expects to receive new contracts during the year from government
The contracted amounts and timing of contract awards are the primary reasons for the variation in the
entities around the world. However, the magnitude and timing of such contracts and the resulting
contract services’ financial performance during 2010 when compared with 2009. As of December 31, 2010,
revenue to be recognized is difficult to accurately predict.
there remained approximately $12.9 million in existing signed contract services work to be performed for
which revenue will be recognized throughout 2011. In addition to these existing contracts, the Company
The growth of revenue in both the contract services business and the licensing of the NEXTMap
expects to receive new contracts during the year from government entities around the world. However,
database remains the primary goal of the Company. With the completion of the NEXTMap
the magnitude and timing of such contracts and the resulting revenue to be recognized is difficult to
accurately predict.
datasets, the Company believes that significant revenue opportunities can develop that would not
otherwise be available without the complete national coverage afforded by the NEXTMap
The growth of revenue in both the contract services business and the licensing of the NEXTMap database
remains the primary goal of the Company. With the completion of the NEXTMap datasets, the Company
programs.
believes that significant revenue opportunities can develop that would not otherwise be available without
See “Liquidity and Capital Resources” regarding the financial condition and cash flows of the
the complete national coverage afforded by the NEXTMap programs.
Company.
See “Liquidity and Capital Resources” regarding the financial condition and cash flows of the Company.
FINANCIAL INFORMATION
FINANCIAL INFORMATION
The following table sets forth selected annual financial information for the periods indicated.
The following table sets forth selected annual financial information for the periods indicated.
Selected Annual Information
Selected Annual Information
US $ millions, except per share data
2010
2009
2008
Revenue:
Contract services
Multi-client data licenses
Total revenue
Impairment on Multi-Client Data Library
Net loss
EPS basic and diluted
Adjusted EBITDA
Assets:
Multi-client data library
Total assets
Total long-term liabilities (including capital
lease obligations)
Revenue
Revenue
$
$
$
$
$
$
$
$
$
4.3
9.7
14.0
(52.8)
(96.8)
(1.71)
(19.5)
23.1
43.7
$
$
$
$
$
$
$
$
20.1
10.2
30.3
-
(25.8)
(0.51)
(6.2)
85.3
126.2
$
$
$
$
$
$
$
$
26.2
10.8
37.0
-
(13.9)
(0.30)
1.3
81.2
144.0
1.5
$
1.6
$
3.1
Consolidated revenue for the year ended December 31, 2010 totaled $14.0 million, compared to
Consolidated revenue for the year ended December 31, 2010 totaled $14.0 million, compared to $30.3
million for the same period in 2009, representing a 54% decrease. As of December 31, 2010, there remained
$30.3 million for the same period in 2009, representing a 54% decrease. As of December 31, 2010,
$17.0 million in revenue from existing contracts to be recognized in future periods ($12.9 million in contract
services and $4.1 million in MCDL license contracts).
Contract services revenue for the year ended December 31, 2010 decreased to $4.3 million from $20.1 million
for the same period in 2009. The decrease was primarily the result of a reduction in revenue from mapping
4
2010 Annual Report | Management’s Discussion and Analysis
5
projects in Southeast Asia where the Company had $17.3 million in revenue during 2009, compared to
$1.0 million in 2010. The remaining contract services revenue for 2010 related primarily to a mapping project
in the United States totaling $2.1 million.
MCDL license revenue for the year ended December 31, 2010 totaled $9.7 million, compared to $10.2 million
for the same period in 2009. The decrease was primarily the result of lower revenue associated with the sale
of data in Asia and from the NEXTMap USA dataset, offset by higher sales from the NEXTMap Europe dataset
in 2010. During 2010, approximately 54% of MCDL license revenue was associated with the NEXTMap Europe
dataset, 19% was associated with the NEXTMap USA dataset, and 27% was associated with the Company’s
Asia dataset. For the same period in 2009, approximately 36% of the MCDL license revenue was associated
with the NEXTMap Europe dataset, 31% was associated with the NEXTMap USA dataset, and 33% was
associated with the Company’s Asia dataset.
World economic difficulties continued to affect the Company’s revenues during 2010. We believe existing
and potential customers have maintained a cautious approach to their businesses, conserving cash by
deferring previously planned projects and re-evaluating their short-term operating budgets. Although the
Company is continuing to see proposal activity, we believe the current challenging economic environment
will continue to impact the Company’s ability to enter into new contract services arrangements and to
monetize the NEXTMap datasets in the foreseeable future.
Operations
Operations expense includes aircraft costs, employee compensation, data processing costs, and third-party
expenses related to the collection, processing, and editing of Intermap’s mapping data.
Gross operations expense (prior to capitalization) for the years ended December 2010 and 2009 was
$15.0 million and $20.9 million, respectively. The decrease in gross operations expense was primarily the
result of the reduction in production operations (see “Personnel and Restructuring Costs”) that reflects the
completion of the NEXTMap Europe and NEXTMap USA programs. Net operations expense for the year
ended December 31, 2010 totaled $10.5 million, compared to $10.0 million for the same period in 2009.
Capitalized costs decreased from $10.9 million in 2009 to $4.5 million in 2010 due to the completion of the
NEXTMap Europe and NEXTMap USA programs.
Research and Development
Research and development (R&D) expense includes engineering personnel and their associated costs. For
the years ended December 31, 2010 and 2009, R&D expense was $2.5 million and $3.6 million, respectively.
The decrease in R&D expense for 2010 resulted from fewer costs incurred on the Company’s NEXTMap
services solutions, including consumer electronics and data products. The R&D costs incurred in 2010
are primarily for both web services development and software development efforts associated with the
continued development of internal data editing and processing tools. The R&D costs incurred during 2009
were primarily attributable to software development efforts associated with the continued development of
internal data editing and processing tools and the expansion of the Company’s NEXTMap services solutions
(including risk management, data products, and consumer electronics applications).
Sales, General and Administrative
Sales, general and administrative (SG&A) expense includes employee compensation, database
infrastructure costs, business development, sales, marketing, finance, administration, human resources,
and facilities. For the year ended December 31, 2010, SG&A expense was $22.2 million, compared to $25.8
million for the same period in 2009. The decrease in SG&A expense for 2010 resulted primarily from a
reduction in personnel-related costs (see “Personnel and Restructuring Costs”) and a reduction in external
consulting and professional services expenses.
6
2010 Annual Report | Management’s Discussion and Analysis
Personnel and Restructuring Costs
Consolidated active employee headcount was 509 (including 330 in Jakarta, Indonesia) at December 31,
2010, a decrease from 714 (including 437 in Jakarta, Indonesia) at December 31, 2009. The decrease was
primarily driven by a decrease in operations personnel by approximately 28%, or 139 full-time personnel.
The decrease in operations personnel resulted from the Company’s completion of the NEXTMap Europe and
NEXTMap USA programs. R&D and SG&A personnel decreased by 30%, or 66 employees, during the year.
Salaries and related personnel expenses for the year ended December 31, 2010 and 2009 were $20.2 million
and $24.4 million, respectively. Salaries and related personnel expenses decreased primarily due to workforce
and salary reductions initiated in the fourth quarter of 2009 and throughout 2010. In September 2010, the
Company initiated further workforce reductions, which resulted in approximately $1.4 million in related
severance and termination costs. On an annualized basis, the net impact on total expenses (after severance-
related costs) of the workforce reductions made in 2010 will be a reduction of approximately $4.6 million of
personnel-related expenses.
In January 2011, the Company made further workforce reductions and expects to incur $845 in related
expenses during the first quarter of 2011. On an annualized basis, the net impact on total expenses
(after severance-related costs) of the workforce reductions made in January 2011 will be a reduction of
approximately $5.5 million of additional personnel-related expenses.
Non-cash compensation expense is included in operating costs and relates to stock options and stock
shares granted to employees and non-employees. Non-cash stock-based compensation for the year ended
Adjusted EBITDA is not a recognized performance measure under GAAP and does not have a
December 31, 2010 and 2009 totaled $1.7 million and $2.2 million, respectively.
standardized meaning prescribed by GAAP. The term EBITDA consists of net income (loss) and
excludes interest, taxes, depreciation, and amortization. Adjusted EBITDA also excludes
Adjusted EBITDA
restructuring costs, stock-based compensation, gain or loss on the disposal of property and
Adjusted EBITDA is not a recognized performance measure under GAAP and does not have a standardized
equipment, gain or loss on foreign currency translation, and impairment of assets. Adjusted
meaning prescribed by GAAP. The term EBITDA consists of net income (loss) and excludes interest,
taxes, depreciation, and amortization. Adjusted EBITDA also excludes restructuring costs, stock-based
EBITDA is included as a supplemental disclosure because Management believes that such
compensation, gain or loss on the disposal of property and equipment, gain or loss on foreign currency
measurement provides a better assessment of the Company’s operations on a continuing basis by
translation, and impairment of assets. Adjusted EBITDA is included as a supplemental disclosure because
eliminating certain non-cash charges and charges that are nonrecurring. The most directly
Management believes that such measurement provides a better assessment of the Company’s operations
on a continuing basis by eliminating certain non-cash charges and charges that are nonrecurring. The most
comparable measure to Adjusted EBITDA calculated in accordance with GAAP is net income
directly comparable measure to Adjusted EBITDA calculated in accordance with GAAP is net income (loss).
(loss). The following is a reconciliation of the Company’s net income (loss) to Adjusted EBITDA.
The following is a reconciliation of the Company’s net income (loss) to Adjusted EBITDA.
US $ millions
Net loss
Depreciation of property and equipment
Amortization of multi-client data library
Amortization of intangible assets
Interest expense (income)
Income tax expense (recovery)
Restructuring costs
Stock-based compensation
Loss on disposal of property and equipment
Loss (gain) on foreign currency translation
Impairment on multi-client data library
2010
2009
2008
$
$
(96.8)
4.6
14.7
0.4
0.1
-
2.5
1.7
0.1
0.4
52.8
$
(25.8)
6.3
10.1
0.4
0.2
0.1
0.7
2.3
(0.1)
(0.4)
-
(13.9)
4.4
6.8
0.4
(0.7)
0.1
-
2.4
0.7
1.1
-
1.3
Adjusted EBITDA
$
(19.5)
$
(6.2)
$
Adjusted EBITDA for the year ended December 31, 2010 was a loss of $19.5 million, compared to a
Adjusted EBITDA for the year ended December 31, 2010 was a loss of $19.5 million, compared to a loss
loss of $6.2 million for the same period in 2009. The increase in the adjusted EBITDA loss for 2010
of $6.2 million for the same period in 2009. The increase in the adjusted EBITDA loss for 2010 is primarily
attributable to a decrease in revenue of $16.4 million as compared to the same period in 2009.
is primarily attributable to a decrease in revenue of $16.4 million as compared to the same period in
2009.
Depreciation of Property and Equipment
Depreciation expense for the years ended December 31, 2010 and 2009 totaled $4.6 million and
$6.3 million, respectively. The decrease in depreciation expense is primarily the result of certain
NEXTMap dedicated assets reaching the end of their useful lives. The capitalization of depreciation
was $0.6 million in 2010, compared to $1.6 million for the same period in 2009. The capitalization
of depreciation expense relates to the creation of the MCDL, and specifically relates to the
dedication of internal resources (i.e., aircraft, radar, and production equipment) for the purpose of
collecting and processing NEXTMap data. The decrease in the capitalization of depreciation is
directly related to the ramp down of production associated with the creation of the NEXTMap
datasets.
Amortization of MCDL
Amortization expense relating to the MCDL for the year ended December 31, 2010 increased to
$14.7 million from $10.1 million for the same period in 2009. The increase in amortization expense
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2010 Annual Report | Management’s Discussion and Analysis
7
Depreciation of Property and Equipment
Depreciation expense for the years ended December 31, 2010 and 2009 totaled $4.6 million and $6.3 million,
respectively. The decrease in depreciation expense is primarily the result of certain NEXTMap dedicated
assets reaching the end of their useful lives. The capitalization of depreciation was $0.6 million in 2010,
compared to $1.6 million for the same period in 2009. The capitalization of depreciation expense relates to
the creation of the MCDL, and specifically relates to the dedication of internal resources (i.e., aircraft, radar,
and production equipment) for the purpose of collecting and processing NEXTMap data. The decrease in the
capitalization of depreciation is directly related to the ramp down of production associated with the creation
of the NEXTMap datasets.
Amortization of MCDL
Amortization expense relating to the MCDL for the year ended December 31, 2010 increased to $14.7 million
from $10.1 million for the same period in 2009. The increase in amortization expense was primarily due to
the expansion of the underlying MCDL asset during 2010 and the application of the Company’s amortization
policy (see “Critical Accounting Policies and Estimates – MCDL”).
Loss (Gain) on the Disposal of Equipment
In June 2010, the Company closed its Ottawa office resulting in the write-off of the associated leasehold
improvements and the disposal of equipment that could not be further utilized. A loss of $72 thousand
relating to the disposal of equipment was recorded. On June 15, 2009, the Company sold one of its aircraft.
Proceeds on the sale of the aircraft totaled $1.0 million and a gain was recognized on the sale of the aircraft
of $119 thousand.
Impairment of Multi-client Data Library
An impairment review was performed to determine if the carrying value of the NEXTMap USA and
NEXTMap Europe asset groups were recoverable. The Company determined that the fair value of the
datasets were insufficient to recover the carrying value of the assets, resulting in a pre-tax asset impairment
charge of $52.8 million (see “NEXTMap”).
Interest Income and Expense
Interest income is generated from investment of cash in only low-yield government-backed securities (see
“Liquidity and Capital Resources”). The investment of these funds earned the Company $8 thousand in
interest income during the year ended December 31, 2010, compared to $24 thousand during the same
period in 2009. The decrease in interest income in 2010 compared to 2009 is the result of a decrease in the
amount of cash available for investment.
Interest expense for the year ended December 31, 2010 totaled $150 thousand, compared to $223 thousand
for the same period in 2009. The decrease in interest expense in 2010 compared to 2009 is due to the
reduction of principal resulting from recurring payments on long-term debt and a term loan being paid in full
on August 9, 2010.
Loss on Foreign Currency Translation
The Company continuously monitors the level of foreign currency assets and liabilities carried on the
balance sheet in an effort to minimize as much of the foreign currency translation exposure as possible.
Steps taken to minimize translation effects have included the movement of cash and cash equivalents
between Canadian dollar, Australian dollar, Euro, and United States dollar currencies. The result is a partial
natural currency hedge for the Company.
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2010 Annual Report | Management’s Discussion and Analysis
During the year ended December 31, 2010, a foreign currency translation loss of $0.3 million was
recognized, compared to a gain of $0.4 million for the same period in 2009. The loss for 2010 was primarily
the result of losses on the amounts receivable balances held in foreign currencies and cash held in Euros as
a result of the strengthening of the United States dollar.
Income Tax
Current income tax expense of $58 thousand was incurred during the year ended December 31, 2010,
compared to $0.2 million during the same period in 2009. This expense relates to taxable income
generated from the Company’s Indonesian, Slovak Republic, United Kingdom, Czech Republic, and
Australian subsidiaries.
During the year ended December 31, 2010, a future income tax recovery of $22 thousand, compared to
$7 thousand income tax expense for the same period in 2009, was recognized as a result of future tax
expense related to the German subsidiary and a future income tax recovery resulting from the amortization
of intangible assets held in the Czech Republic subsidiary, which have no tax basis. The Company did not
recognize any income tax expense on any other operations during the years ended December 31, 2010 and
2009 due to losses incurred in the United States and Canada. The benefit of unused tax losses in Germany
have been recognized in the financial statements as it was determined that the German subsidiary was
more likely than not to be able to realize the benefit from these losses. The benefit of unused tax losses from
all other subsidiaries have not been recognized in the financial statements as the potential benefit has been
offset by a valuation allowance.
Amounts Receivable and Unbilled Revenue
Work is performed on contracts that provide invoicing upon the completion of identified contract
milestones. Revenue on certain of these contracts is recognized using the percentage-of-completion
method of accounting based on the ratio of costs incurred to date over the estimated total costs to
complete the contract. While an effort is made to schedule payments on contracts in accordance with work
performed, the completion of milestones does not always coincide with the costs incurred on a contract,
resulting in revenue being recognized in excess of billings. These amounts are recorded in the balance sheet
as unbilled revenue.
Amounts receivable and unbilled revenue decreased to $5.2 million at December 31, 2010 from $12.6 million
at December 31, 2009. The decrease was primarily due to a collection in January 2010 of cash related to one
large project totaling $6.8 million. These amounts represent 120 days’ sales at December 31, 2010, compared
to 116 days’ sales at December 31, 2009, and reflect specific project billing milestones on current contracts
that were in progress on those dates.
The deferred revenue balance at December 31, 2010 increased by $4.2 million from December 31, 2009.
This increase was primarily due to $4.5 million of payments received from customers on revenue contracts
for which the Company has not yet fulfilled its obligations or which the necessary revenue recognition
criteria has not been met. The revenue associated with these contracts is expected to be recognized during
the first half of 2011.
Work in Process
Work in process generally results from the collection and processing of data for future licensing.
The Company has recorded the costs incurred for this data collection as work in process, and such costs will
be expensed (i) once a contract has been received and the data is delivered; or (ii) if it is determined that
the costs are greater than the net realizable value. Work in process for the year ended December 31, 2010
2010 Annual Report | Management’s Discussion and Analysis
9
decreased to $59 thousand from $2.1 million at December 31, 2009. The decrease is primarily the result of a
$1.8 million write down of previously collected mapping data in a specific region as it was determined that
the recorded costs were greater than the net realizable value. The write down was charged to operations
expense in 2010.
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities generally include trade payables, project-related accruals, and
personnel-related costs. Accounts payable and accrued liabilities increased slightly from $5.9 million in 2009
to $6.0 million in 2010. Accounts payable at December 31, 2010 includes $1.6 million that was converted to a
promissory note during 2010 that defines the payment terms of the outstanding accounts payable balance.
The balance is payable during the first half of 2011. Accrued liabilities at December 31, 2010 include $0.8
million of expenses related to a reduction in work force that occurred in the third quarter of 2010 and $0.3
million related to the closure of the Company’s Ottawa office during 2010. At December 31, 2009, accrued
liabilities include $0.5 million in costs related to a reduction in work force that occurred in the fourth quarter
of 2009.
Assets Held for Sale and Deposit for Sale of Assets
During 2010, the Company committed to sell one of its IFSAR enabled aircraft, which is no longer required
subsequent to the completion of the NEXTMap USA and NEXTMap Europe datasets. The aircraft and IFSAR
radar equipment (including associated processing technology and software tools) have a net book value of
$1.4 million and $0.3 million, respectively. The aircraft and associated IFSAR radar equipment are available
for immediate sale and are presented as assets held for sale at December 31, 2010. The Company received
payments totaling $4.0 million from the purchaser in December 2010, and such payments are presented
as deposit for sale of assets at December 31, 2010, pending delivery of the aircraft and associated radar
equipment to the customer.
Capital Lease Obligations and Long-term Debt
Capital lease obligations and long-term debt totaled $1.4 million at December 31, 2010, compared to
$2.9 million at December 31, 2009. The decrease in capital lease obligations and long-term debt in 2010
are due primarily to the maturing of two outstanding term loans in August 2010. The terms of these loans
called for final payments totaling $0.6 million and such payments were made in August 2010.
Other Long-term Liabilities
Other long-term liabilities totaled $0.5 million at December 31, 2010, compared to $nil at December 31, 2009.
In June 2010, the Company closed an office in Ottawa, Canada, resulting in the recognition of a liability for
future lease payments of $0.8 million. Of the total obligation, $0.5 million was recorded as other long-term
liabilities and $0.3 million was included in accrued liabilities as of December 31, 2010.
QUARTERLY FINANCIAL INFORMATION
Selected Quarterly Information
The following table sets forth selected quarterly financial information for Intermap’s eight most recent fiscal
quarters. This information is unaudited, but reflects all adjustments of a normal, recurring nature that are,
in the opinion of Management, necessary to present a fair statement of Intermap’s consolidated results of
operations for the periods presented. Quarter-to-quarter comparisons of Intermap’s financial results are not
necessarily meaningful and should not be relied on as an indication of future performance.
QUARTERLY FINANCIAL INFORMATION
Selected Quarterly Information
The following table sets forth selected quarterly financial information for Intermap’s eight most
recent fiscal quarters. This information is unaudited, but reflects all adjustments of a normal,
recurring nature that are, in the opinion of Management, necessary to present a fair statement of
Intermap’s consolidated results of operations for the periods presented. Quarter-to-quarter
10
comparisons of Intermap’s financial results are not necessarily meaningful and should not be relied
2010 Annual Report | Management’s Discussion and Analysis
on as an indication of future performance.
US $ millions except per
share data
Revenue:
Contract services
Multi-client data licenses
Total revenue
Depreciation and amortization
Net income (loss)
Net income (loss) per share
basic and diluted
Revenue
Q1
2009
Q2
Q3
Q4
Q1
Q2
Q3
2009
2009
2009
2010
2010
2010
$
$
$
$
4.3
1.2
5.5
3.4
(7.0)
$
$
$
$
3.5
2.7
6.2
4.2
(6.9)
$
$
$
$
7.4
3.0
10.4
4.3
(4.3)
$
$
$
$
4.9
3.3
8.2
4.9
(7.6)
$
$
$
$
1.2
2.3
3.5
4.8
(11.2)
$
$
$
$
1.6
3.7
5.3
5.1
(10.1)
$
$
$
$
0.7
0.9
1.6
4.8
(11.8)
$
$
$
$
Q4
2010
0.8
2.8
3.6
5.1
(63.8)
$
(0.15)
$
(0.14)
$
(0.08)
$
(0.15)
$
(0.21)
$
(0.21)
$
(0.20)
$
(1.13)
For the fourth quarter of 2010, revenue was $3.6 million, compared to $8.2 million for the same period in
Revenue
2009. Contract services revenue decreased 84% in the fourth quarter of 2010 to $0.8 million, compared to
$4.9 million in the same period in 2009. The decrease was primarily due to the recognition of revenue in the
For the fourth quarter of 2010, revenue was $3.6 million, compared to $8.2 million for the same
fourth quarter of 2009 from two large contract services projects in Asia and Germany totaling $1.8 million
period in 2009. Contract services revenue decreased 84% in the fourth quarter of 2010 to $0.8
and $1.2 million, respectively, without any similar-sized projects in the fourth quarter of 2010. MCDL license
million, compared to $4.9 million in the same period in 2009. The decrease was primarily due to
revenue recognized during the fourth quarter of 2010 was $2.8 million, compared to $3.3 million during the
same period in 2009. The decrease in MCDL license revenue was primarily attributable to decreased sales of
the recognition of revenue in the fourth quarter of 2009 from two large contract services projects in
NEXTMap USA data.
Asia and Germany totaling $1.8 million and $1.2 million, respectively, without any similar-sized
projects in the fourth quarter of 2010. MCDL license revenue recognized during the fourth quarter
Operations
of 2010 was $2.8 million, compared to $3.3 million during the same period in 2009. The decrease in
Operations expense totaled $3.8 million for the fourth quarter of 2010 and 2009. Prior to capitalization, gross
operations expense for the fourth quarter of 2010 and 2009 was $4.4 million and $5.5 million, respectively.
MCDL license revenue was primarily attributable to decreased sales of NEXTMap USA data.
The decrease resulted primarily from reduced production and overhead expenses associated with the
Operations
completion of the NEXTMap Europe and NEXTMap USA programs. The decrease in net operations expense
was less than the decrease in gross operations expense due to a reduction in the capitalization of costs
Operations expense totaled $3.8 million for the fourth quarter of 2010 and 2009. Prior to
incurred as the NEXTMap programs progressed to completion. The capitalized costs decreased by $1.0 million
capitalization, gross operations expense for the fourth quarter of 2010 and 2009 was $4.4 million
from the fourth quarter of 2010 compared to the same period in 2009.
and $5.5 million, respectively. The decrease resulted primarily from reduced production and
Research and Development
overhead expenses associated with the completion of the NEXTMap Europe and NEXTMap USA
programs. The decrease in net operations expense was less than the decrease in gross operations
Research and development expense for the quarter ended December 31, 2010 was $0.5 million, compared
with $0.8 million for the same period in 2009. The decrease in R&D expense for 2010 resulted from fewer
expense due to a reduction in the capitalization of costs incurred as the NEXTMap programs
costs incurred on the Company’s NEXTMap services solutions, including consumer electronics and data
progressed to completion. The capitalized costs decreased by $1.0 million from the fourth quarter
products. The R&D costs incurred during the fourth quarter of 2010 were primarily related to web services
of 2010 compared to the same period in 2009.
development and software development efforts associated with the Company’s 3D Roads product. The
R&D costs incurred during the fourth quarter of 2009 were primarily attributable to software development
efforts associated with the continued development of internal data editing and processing tools and the
expansion of the Company’s NEXTMap services solutions (including risk management, data products, and
consumer electronics applications).
11
Sales, General and Administrative
SG&A expense includes employee compensation, database infrastructure costs, business development,
sales, marketing, finance, administration, human resources, and facilities. For the fourth quarter of 2010,
SG&A expense was $5.2 million, compared to $6.2 million for the same period in 2009. The decrease in SG&A
expense for 2010 resulted primarily from a reduction in personnel-related costs and a reduction in external
consulting and professional services. These reductions were offset partially by an increase in rent expense
related to the closure of the Company’s Ottawa, Canada office. The office closure resulted in the recording of
an expense for future lease payments totaling $0.3 million during the fourth quarter of 2010, which is net of
any estimated future sub-lease revenue.
2010 Annual Report | Management’s Discussion and Analysis
11
Depreciation of Property and Equipment
For the fourth quarter of 2010, depreciation expense decreased by approximately $0.5 million, compared
to the same period in 2009. The decrease in depreciation expense is primarily the result of certain NEXTMap
dedicated assets reaching the end of their useful lives. The capitalization of depreciation was $52 thousand
for the fourth quarter of 2010, compared to $0.3 million for the same period in 2009. The capitalization
of depreciation expense relates to the creation of the MCDL, and specifically relates to the dedication
of internal resources (i.e., aircraft, radar, and production equipment) for the purpose of collecting and
processing NEXTMap data.
Amortization of MCDL
Amortization expense relating to the MCDL during the fourth quarter of 2010 increased to $3.9 million from
$3.3 million for the same period in 2009. The increase in amortization expense was primarily due to the
expansion of the underlying MCDL asset during 2010 and the application of the Company’s amortization
policy (see “Critical Accounting Policies and Estimates – MCDL”).
Impairment of Multi-client Data Library
value of the datasets was insufficient to recover the carrying value of the assets, resulting in a pre-
An impairment review was performed to determine if the carrying value of the NEXTMap USA and
NEXTMap Europe dataset assets were recoverable. The Company determined that the fair value of the
tax asset impairment charge of $52.8 million (see “NEXTMap”).
datasets was insufficient to recover the carrying value of the assets, resulting in a pre-tax asset impairment
charge of $52.8 million (see “NEXTMap”).
Interest Income and Expense
Interest income is generated from the investment of cash in only low-yield government-backed
Interest Income and Expense
securities. The investment of these funds earned the Company $1 thousand in interest income
Interest income is generated from the investment of cash in only low-yield government-backed securities.
during the fourth quarter of 2010, compared to $5 thousand during the same period in 2009.
The investment of these funds earned the Company $1 thousand in interest income during the fourth
Interest expense for the fourth quarter of 2010 totaled $27 thousand, compared to $49 thousand for
quarter of 2010, compared to $5 thousand during the same period in 2009. Interest expense for the fourth
quarter of 2010 totaled $27 thousand, compared to $49 thousand for the same period in 2009. The decrease
the same period in 2009. The decrease in interest expense in 2010 compared to 2009 is due to the
in interest expense in 2010 compared to 2009 is due to the reduction of principal resulting from recurring
reduction of principal resulting from recurring payments on long-term debt.
payments on long-term debt.
CONTRACTUAL OBLIGATIONS
CONTRACTUAL OBLIGATIONS
Contractual obligations include (i) operating leases on office locations; (ii) capital leases on
Contractual obligations include (i) operating leases on office locations; (ii) capital leases on computer
equipment and software; and (iii) long-term debt obligations. Principal and interest repayments of these
computer equipment and software; and (iii) long-term debt obligations. Principal and interest
obligations are as follows:
repayments of these obligations are as follows:
Payments due by Period (US $ thousands)
Contractual obligations
Promissory Note
Operating leases
Capital leases
Long-term debt
Total
Total
1,639
4,714
207
1,270
7,830
$
$
Less than 1 year
1,639
$
1,168
163
586
3,556
$
$
$
1 - 3 years
-
2,617
44
684
3,345
$
$
4 - 5 years After 5 years
$
-
929
-
-
929
$
-
-
-
-
-
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY AND CAPITAL RESOURCES
Management continually assesses liquidity in terms of the ability to generate sufficient cash flow to
Management continually assesses liquidity in terms of the ability to generate sufficient cash flow to fund
fund the business. Net cash flow is affected by the following items: (i) operating activities, including
the business. Net cash flow is affected by the following items: (i) operating activities, including the level of
the level of amounts receivable, unbilled receivables, accounts payable, and deferred revenue; (ii)
amounts receivable, unbilled receivables, accounts payable, and deferred revenue; (ii) investing activities,
including the investment in the MCDL and the purchase of property and equipment; and (iii) financing
investing activities, including the investment in the MCDL and the purchase of property and
activities, including debt financing and the issuance of capital stock.
equipment; and (iii) financing activities, including debt financing and the issuance of capital stock.
Cash used in operations during the year ended December 31, 2010 totaled $8.2 million, compared to
cash used in operations of $12.0 million during the same period in 2009. The decrease of total cash
used in operations during 2010 was the result of changes in working capital during 2010,
specifically a decrease in amounts receivable of $8.1 million and an increase in deposits for sale of
assets and deferred revenue totaling $4.4 million.
Net cash generated by financing activities totaled $3.9 million during the year ended December 31,
2010, compared to net cash generated in financing activities totaling $7.5 million during the same
period in 2009. The net cash generated by financing activities during the year ended December 31,
2010 is primarily due to the completion of a share issuance of 8,125,000 shares for total gross
consideration of $6.2 million (C$6.5 million). Cash generated from the share issuance was offset by
cash used in the amounts of $0.7 million relating to securities issuance costs and $1.4 million for
the repayment of long-term debt. Cash generated from financing activities during the year ended
13
12
2010 Annual Report | Management’s Discussion and Analysis
Cash used in operations during the year ended December 31, 2010 totaled $8.2 million, compared to cash
used in operations of $12.0 million during the same period in 2009. The decrease of total cash used in
operations during 2010 was the result of changes in working capital during 2010, specifically a decrease
in amounts receivable of $8.1 million and an increase in deposits for sale of assets and deferred revenue
totaling $4.4 million.
Net cash generated by financing activities totaled $3.9 million during the year ended December 31, 2010,
compared to net cash generated in financing activities totaling $7.5 million during the same period in 2009.
The net cash generated by financing activities during the year ended December 31, 2010 is primarily due to
the completion of a share issuance of 8,125,000 shares for total gross consideration of $6.2 million
(C$6.5 million). Cash generated from the share issuance was offset by cash used in the amounts of $0.7 million
relating to securities issuance costs and $1.4 million for the repayment of long-term debt. Cash generated from
financing activities during the year ended December 31, 2009 is primarily due to the completion of a share
issuance of 5,750,000 units (each unit consists of one Class A common share of the Company and one-half
of one common share purchase warrant) for total gross consideration of $9.5 million (C$11.5 million). Cash
generated from the share issuance was offset by $0.8 million of securities issuance costs and $0.9 million from
the repayment of long-term debt.
Net cash used in investing activities totaled $1.6 million for the year ended December 31, 2010, compared
to $12.9 million during the same period in 2009. Cash used in investing activities during the year ended
December 31, 2010 was primarily for investment in the MCDL of $4.6 million and the purchase of property
and equipment of $1.1 million, compared to investment in the MCDL of $12.6 million and the purchase
of property and equipment of $1.3 million during the same period in 2009. These amounts were offset by
proceeds of $4.0 million and $1.0 million during the years ended December 31, 2010 and 2009, respectively,
generated from the sale of the Company’s aircraft. For the year ended December 31, 2010 compared to the
same period in 2009, investment in the MCDL decreased as the NEXTMap Europe and the NEXTMap USA
datasets neared completion. Following the completion of the NEXTMap datasets, Management expects
capital resources to be limited primarily to property and equipment required to support the Company’s
information technology infrastructure and storage requirements for the MCDL.
The cash position of the Company at December 31, 2010 (cash and cash equivalents) was $4.4 million
compared to $10.4 million at December 31, 2009. Working capital decreased to a negative $3.4 million as of
December 31, 2010 from a positive $18.1 million as of December 31, 2009.
The negative working capital position at December 31, 2010 is primarily driven by deposits for sale of
assets of $4.0 million and deferred revenue of $4.8 million. The deposits for sale of assets resulted from the
receipt of payments for the purchase of an aircraft and radar system in the fourth quarter of 2010 for which
the Company expects to deliver the assets to the purchaser in the second quarter of 2011. At December
31, 2010, $4.5 million of the deferred revenue balance relates to payments received from customers on
contracts for which the Company expects to recognize revenue during the first half of 2011. Management
believes these two current obligations will not negatively impact the Company’s ability to meet financial or
operational obligations during 2011 and the ultimate relief of the obligations, combined with anticipated
improved operating results and / or financing activities, is expected to result in the Company returning to a
positive working capital position during 2011.
During the year ended December 31, 2010, the Company incurred a loss of $96.8 million and had negative
cash flow from operations of $8.2 million. In addition, the Company has an accumulated deficit of $175.3
million and its continuing operations are dependent on its ability to generate future profitable operations,
sell excess capacity assets, or obtain additional financing to fund future operations and, ultimately, generate
positive cash flows from operations.
2010 Annual Report | Management’s Discussion and Analysis
13
The above factors raise significant doubt about the Company’s ability to continue as a going concern.
Management has taken actions to address these issues including several organizational restructurings,
new senior management, sale of excess capacity assets, and a company-wide cost-reduction program.
The Company’s ability to continue as a going concern is dependent on Management’s ability to
successfully generate a profit from operations, sell assets, or raise additional financing. Failure to achieve
one or more of these requirements could have a material adverse effect on the Company’s financial
condition and / or results of operations.
The Company cannot be certain that cash generated from its operations will be sufficient to satisfy its liquidity
requirements and it may need to continue to raise capital by selling additional equity and / or by securing
credit facilities. The Company’s future capital requirements will depend on many factors, including, but not
limited to, the market acceptance of its products and services. No assurance can be given that any such
additional funding will be available or that, if available, it can be obtained on terms favorable to the Company.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Revenue Recognition
Revenue is recognized when (i) persuasive evidence of an arrangement exists; (ii) the significant risks
and rewards of ownership, including managerial involvement have been transferred to the buyer; (iii) the
amount of revenue can be measured reliably; and (iv) costs incurred or to be incurred can be measured
reliably. Billings in excess of revenue are recorded as deferred revenue. Revenue recognized in excess of
billings is recorded as unbilled revenue.
Goods Sold:
Revenue from the sale of MCDL licenses in the ordinary course is measured at the fair value of the
consideration received or receivable.
Fixed-price Contracts:
Revenue from fixed-price contracts is recognized using the percentage-of-completion method, based
on the ratio of costs incurred to estimated final costs. The use of the percentage of completion method
requires estimates to determine the cost to complete each contract. These estimates are reviewed monthly
and adjusted as necessary. Provisions for estimated losses, if any, are recognized in the period in which the
loss is determined. Contract losses are measured in the amount by which the estimated costs of the related
project exceeds the estimated total revenue for the project.
Multiple Component Arrangements:
When a single sales transaction requires the delivery of more than one product or service (multiple
components), the revenue recognition criteria are applied separately to identifiable components. A
component is considered to be separately identifiable if the product or service delivered has stand-alone
value to that customer, and the fair value associated with the product or service can be measured reliably.
The amount recognized as revenue for each component is the fair value of the element in relation to the fair
value of the arrangement as a whole.
MCDL
The Company maintains an MCDL, which results from the acquisition and processing of digital map data.
All ownership rights to this data are retained by the Company, and the data is licensed to customers on
a non-transferable basis. All of the direct costs of acquiring and processing the data are capitalized as an
investment in the MCDL. These costs include direct overhead associated with the acquisition and processing
of the data and the depreciation of the property and equipment used in the production of the data.
14
2010 Annual Report | Management’s Discussion and Analysis
For NEXTMap programs, capitalized costs are amortized based on the percentage of total estimated costs
to total estimated sales, multiplied by actual sales in the period. In the event the percentage changes as a
result of a change in the estimate of total costs and / or total sales, amortization is adjusted accordingly.
Any costs that remain unamortized 18 months after being capitalized are amortized on a monthly basis at
the greater of (i) a straight-line monthly amortization charge over 60 months; and (ii) the calculated charge
based on sales during the period. The amortization period of 60 months represents the minimum estimated
useful life over which benefits from the data are expected to be derived.
The carrying value of the MCDL is reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable through future cash flows. The Company has
determined that the NEXTMap USA and NEXTMap Europe datasets represent separate asset groups for
impairment testing purposes. The Company has identified addressable markets for each of these datasets
and has estimated future MCDL License sales and cash flows within these addressable markets. The forecasts
of estimated MCDL cash flows are reviewed each quarter taking into account economic and market trends,
technical advances, competitive developments, and actual sales versus forecasts. In December 2010, a
strategic review of the Company’s approach to selling the NEXTMap datasets in the United States and Europe
was undertaken by the new executive management of the Company. Upon completion of this review, it was
determined that the historical pricing strategy of the NEXTMap datasets required downward adjustment
and the Company could no longer afford to invest the resources necessary to exploit certain target markets
previously identified. These changes, coupled with the Company’s history of losses, led the Company to
perform an asset impairment review to determine if the carrying value of the NEXTMap USA and NEXTMap
Europe asset groups were recoverable. The Company determined that the future expected cash flows of the
datasets were insufficient to recover the carrying value of the assets, resulting in a pre-tax asset impairment
charge of $52.8 million. Of this amount, $36.9 million applied to the NEXTMap USA asset and $15.9 million
applied to NEXTMap Europe asset. Subsequent to the impairment charges, the net book value of the
NEXTMap USA and NEXTMap Europe datasets at December 31, 2010 were $12.9 million and $10.1 million,
respectively. The net book value of the NEXTMap USA and NEXTMap Europe datasets at December 31, 2009
was $56.3 million and $29.0 million, respectively. The impairment loss is included in impairment of multi-
client data library on the Consolidated Statement of Operations and Consolidated Statement of Cash Flows.
Work In Process
Work in process is valued at the lower of cost and net realizable value. Management reviews the work
in process regularly, and if in the estimation of management the net realizable value of the work in
process is less than cost, a provision is recorded to reduce the carrying value of the work in process, and a
corresponding expense is recognized thereby reducing the net income for the period. In the fourth quarter
of 2010, the Company determined that the costs associated with data totaling $1.8 million were greater
than the net realizable value, resulting in a write down of the work in process, and the write down was
recorded to operations expense in 2010.
NEW ACCOUNTING POLICIES
In December 2009, the Canadian Institute of Chartered Accountants (CICA) issued EIC-175, “Multiple
Deliverable Revenue Arrangements.” This Abstract addresses some aspects of the accounting by a vendor
for arrangements under which it will perform multiple revenue-generating activities. Specifically, the
Abstract addresses how to determine whether an arrangement involving multiple deliverables contains
more than one unit of accounting. The provisions of EIC-175 must be applied on a prospective basis
beginning in the first annual fiscal period commencing on or after January 1, 2011, but early adoption
is permitted. When the period of adoption is not the first reporting period of the fiscal year, the abstract
should be applied retroactively from the beginning of the fiscal year.
2010 Annual Report | Management’s Discussion and Analysis
15
The criteria in the new standard for identifying deliverables in a multiple-element arrangement that
represent separate units of accounting has been changed and entities are no longer required to
have objective and reliable evidence of fair value for each deliverable. The allocation of arrangement
consideration amongst the separate units will now be based on a hierarchy of selling prices that includes
(i) vendor-specific objective evidence (VSOE), if available; (ii) third-party evidence (TPE) of selling price, if
VSOE is unavailable; and (iii) best estimate of the selling price (BESP), if neither VSOE nor TPE is available.
VSOE is generally limited to the price charged when the same or similar product is sold separately. If a
product or service is seldom sold separately, it is unlikely VSOE can be determined. TPE is determined based
on competitor prices for similar deliverables when sold separately. The Company determines BESP for data
licenses by considering multiple factors including, but not limited to, ongoing pricing strategy and policies,
market conditions, and historical pricing practices.
Management believes it is appropriate to adopt EIC-175 early and on a prospective basis since it results in
the measurement and recognition of revenues and cost of sales associated with data sales on a basis that is
consistent with the way that Management measures and monitors the performance of the Company.
Prior to the adoption of EIC-175, the Company applied EIC-142, “Revenue Arrangements with Multiple
Deliverables,” in concluding whether its sales arrangements containing multiple deliverables could be
accounted for as separate units of accounting. The Company reviewed each deliverable to determine
whether they represented separate units of accounting, and reviewed the evidence of fair value for each
unit. The Company previously applied the residual method to determine the arrangement consideration
allocated to delivered MCDL licenses in multi-element sales arrangements in which objective and reliable
evidence of the fair value of all undelivered elements existed.
During the year ended December 31, 2010, the Company entered into licensing agreements for its
MCDL. These MCDL sales also included consulting services and data hosting services in the arrangement.
The Company has applied the recommendations in EIC-175 to these MCDL license arrangements, and
arrangement consideration has been allocated to the various deliverables based on their relative selling
prices, as they were determined to be separate units of accounting. The selling price for contract services
was determined using VSOE, for data hosting services using TPE, and for data licenses using BESP. Generally,
revenues for MCDL sales are recognized on delivery, and for consulting services and hosting services
revenues are recognized as the services are provided. Had EIC-142 been applied, the Company would have
used the residual method to determine the arrangement consideration allocated to data licenses.
The adoption of EIC-175 did not have a significant impact on the amount, pattern, and timing of revenue
recognized during 2010 or 2009. The adoption of the standard may result in revenues being recognized
earlier in future periods as a result of the simplified criteria to be used in determining units of accounting
and the use of the relative selling price method.
FUTURE CHANGES IN ACCOUNTING POLICIES
The conversion from GAAP to International Financial Reporting Standards (IFRS) will be applicable to the
Company’s reporting for the first quarter of 2011, for which the current and comparative information will be
prepared under IFRS.
The Company commenced its IFRS conversion project in 2008. The project consists of three main phases:
project plan and scoping, evaluation and design, and implementation and review.
The Company has completed the first two phases, which include development of a conversion program,
a comprehensive analysis of the major differences between GAAP and IFRS applicable to the Company,
identification of accounting policy alternatives, and a review of the information technology systems and the
impact of the conversion on the business activities and internal control environment.
16
2010 Annual Report | Management’s Discussion and Analysis
The Company has commenced phase three, which consists of an implementation of all differences
between GAAP and IFRS, documentation of processes and controls related to the changes, and preliminary
preparation of the consolidated financial statements and notes.
The Company has determined the differences between the standards, along with preferred accounting
policies under IFRS. The areas affected by the conversion, as well as the impact to the financial statements,
are as follows:
First-time Adoption of International Financial Reporting Standards (IFRS 1) – The adoption of IFRS will require the
application of IFRS 1, which provides guidance of an entity’s initial adoption of IFRS. IFRS 1 generally requires
that an entity apply all IFRS effective at the end of its first IFRS reporting period retrospectively. However, IFRS
1 does not include certain mandatory exceptions and limited optional exemptions in specified areas of certain
standards from this general requirement. The following are the significant optional exemptions available
under IFRS 1 that the Company expects to apply in its first financial statements under IFRS: (i) business
combinations – the Company has elected to not apply IFRS 3, “Business Combinations,” retrospectively to past
business combinations. Accordingly, the Company has not restated business combinations that took place
prior to the transition date; (ii) borrowing costs – the Company has elected to apply IAS 23, “Borrowing Costs,”
prospectively as of the date of transition. Accordingly, the Company has not restated borrowing costs that
were expensed prior to the transition date; (iii) fair value or revaluation as deemed cost – the Company has
elected not to record property, plant, and equipment at fair value at the date of transition and will continue
to use a historical cost basis; and (iv) cumulative translation differences – the Company has elected to set
the previously accumulated cumulative translation account, which was included in accumulated other
comprehensive income, to zero at January 1, 2010 and absorbed the previously accumulated cumulative
translation balance into retained earnings. This exemption has been applied to all subsidiaries. The remaining
optional exemptions are not expected to be significant to the Company’s adoption of IFRS.
Property and Equipment – IFRS requires a “component” approach to classifying assets in which certain classes
of assets may be separated into components and depreciated over separate useful lives. The main assets
identified for further componentization are the Company’s aircraft. The Company has determined that the
property and equipment balance will decrease by $78 thousand as of the transition date as a result of this
approach to classifying assets.
Impairment – IFRS requires property, plant, equipment, intangibles, and goodwill to be assessed for
impairment at the “cash-generating unit” level, rather than the reporting unit level considered by GAAP.
Recognizing that the method to assess impairment is different from GAAP, the Company has evaluated the
carrying value of its MCDL datasets under IFRS and determined that there is no impairment to the assets
as of the transition date. Under GAAP, a two step approach is followed. In the first step the discounted cash
flows are compared to the carrying value of the asset group to determine if there is any impairment. If the
undiscounted cash flows exceed the carrying value then no second step is performed. If the undiscounted
cash flows do not exceed the carrying value of the asset group then the fair value of the asset group is
determined in order to assess the impairment charge. IFRS uses a single approach and the fair value of cash
generating units is determined in order to assess any impairment charge.
Multi-Client Data Library – The Company applied a sales forecast method to the MCDL under GAAP. Under
IFRS the Company will amortize these assets on a straight-line basis over their useful life. Additionally, the
net book value of the MCDL assets will be increased by $2.2 million as of the transition date to retroactively
apply the Company’s amortization policy under IFRS to the MCDL.
Provisions – Recognition and measurement differences exist with respect to thresholds for establishing
liabilities and the determination of the amount of provisions to be recorded. For example, IFRS requires
liabilities to be established as a result of past practice or actions even if no legal obligation exists.
Management has identified restructuring provisions that would have to be recognized earlier under IFRS,
compared to GAAP, which result in an increase in accrued liabilities of $0.7 million as of the transition date.
2010 Annual Report | Management’s Discussion and Analysis
17
Share-based Payments – IFRS requires that awards that vest in installments be measured and accounted
for as though each installment is a separate award with the fair value being recognized over the vesting
period of each installment. As a result, more compensation expense will be recognized under IFRS in the
earlier portion of the vesting period than under GAAP. Additionally, the increase in expense will increase the
Contributed Surplus balance by $1.0 million as of the transition date.
Functional Currency – IFRS requires each entity to determine its functional currency based on the primary
economic environment in which the entity operates. This assessment is made by first evaluating primary
indicators, which include: (i) currency that mainly influences sales prices; (ii) currency that mainly influences
labor, material, and other costs; and (iii) country whose competitive forces and regulations mainly
determine sales prices.
The following table identifies the impact of the transition from GAAP to IFRS as of the transition date of
January 1, 2010:
Property and equipment
Multi-client data library
Accounts payable and accrued liabilities
Contributed surplus
Accumulated other comprehensive income
Deficit
GAAP
1/1/2010
Effect of
Transition to
IFRS
IFRS
1/1/2010
13,380
85,276
(5,916)
(6,882)
(6,194)
78,505
158,169
(78)
2,244
(714)
(976)
6,194
(6,670)
-
13,302
87,520
(6,630)
(7,858)
-
71,835
158,169
A number of financial statement presentation differences exist between GAAP and IFRS, including,
A number of financial statement presentation differences exist between GAAP and IFRS, including, but
but not limited to, the classification of the statement of earnings by nature or function and
not limited to, the classification of the statement of earnings by nature or function and increased footnote
disclosure. The Company will address these presentation differences as it prepares its draft IFRS financial
increased footnote disclosure. The Company will address these presentation differences as it
statements for the first quarter of 2011. The Company has made significant progress in the preparation of
prepares its draft IFRS financial statements for the first quarter of 2011. The Company has made
the draft IFRS financial statements and related footnote disclosures to reflect the revised presentation and
significant progress in the preparation of the draft IFRS financial statements and related footnote
disclosure requirements under IFRS. The IFRS project is on target to meet the changeover date.
disclosures to reflect the revised presentation and disclosure requirements under IFRS.
OUTSTANDING SHARE DATA
The IFRS project is on target to meet the changeover date.
The Company’s authorized capital consists of an unlimited number of Class A common shares without par
value and an unlimited number of Class A participating preferred shares without par value. At the close of
OUTSTANDING SHARE DATA
business on March 7, 2011, 60,853,118 Class A common shares were issued and outstanding. There are no
preferred shares currently issued and outstanding.
The Company’s authorized capital consists of an unlimited number of Class A common shares
without par value and an unlimited number of Class A participating preferred shares without par
As of March 7, 2011, 4,519,800 stock options are outstanding in the Company’s stock option plan with a
weighted average exercise price of C$3.62. In addition, there are 575,000 warrants outstanding that are
value. At the close of business on March 7, 2011, 60,853,118 Class A common shares were issued
exercisable with a weighted average exercise price of C$1.45, and each warrant entitles the holder to
and outstanding. There are no preferred shares currently issued and outstanding.
purchase one Class A common share.
As of March 7, 2011, 4,519,800 stock options are outstanding in the Company’s stock option plan
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS
with a weighted average exercise price of C$3.62. In addition, there are 575,000 warrants
Disclosure Control Risks
outstanding that are exercisable with a weighted average exercise price of C$1.45, and each warrant
Disclosure controls and procedures have been designed to provide reasonable assurance that information
entitles the holder to purchase one Class A common share.
required to be disclosed is accumulated and communicated to Management as appropriate to allow timely
decisions regarding required disclosure. Pursuant to Multilateral Instrument 52-109, the Chief Executive Officer
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS
and Chief Financial Officer have concluded, based on their evaluation of the effectiveness of the disclosure
controls and procedures as at December 31, 2010, that disclosure controls and procedures provide reasonable
Disclosure Control Risks
assurance that material information is made known to them by others within the Company.
Disclosure controls and procedures have been designed to provide reasonable assurance that
information required to be disclosed is accumulated and communicated to Management as
appropriate to allow timely decisions regarding required disclosure. Pursuant to Multilateral
Instrument 52-109, the Chief Executive Officer and Chief Financial Officer have concluded, based
on their evaluation of the effectiveness of the disclosure controls and procedures as at December 31,
2010, that disclosure controls and procedures provide reasonable assurance that material
information is made known to them by others within the Company.
Internal Control Risks
Internal controls over financial reporting have been designed to provide reasonable assurance
regarding the reliability of financial reporting. Management, including the Chief Executive Officer
21
18
2010 Annual Report | Management’s Discussion and Analysis
Internal Control Risks
Internal controls over financial reporting have been designed to provide reasonable assurance regarding
the reliability of financial reporting. Management, including the Chief Executive Officer and Chief Financial
Officer, reviewed and evaluated the design and operating effectiveness of the internal controls over
financial reporting (as defined by Multilateral Instrument 52-109) and concluded that sufficient controls
exist at December 31, 2010 to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with GAAP. There have
been no changes in the design of internal controls over financial reporting that occurred during the year
ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
RISKS AND UNCERTAINTIES
The risks and uncertainties described below are not exhaustive. Additional risks not presently known or
currently deemed immaterial may also impair the Company’s business operation. If any of the events
described in the following business risks actually occur, overall business, operating results, and the financial
condition of the Company could be materially adversely affected.
Revenue Fluctuations
Intermap’s revenue has fluctuated over the years. Mapping projects, the purchase of archived data, and
the purchase of geospatial solutions are all scheduled according to client requirements and the timing of
regulatory and / or budgetary decisions. The commencement or completion of mapping projects within
a particular quarter or year, the timing of regulatory approvals, operating decisions of clients, and the
fixed-cost nature of Intermap’s business, among other factors, may cause the Company’s results to vary
significantly between fiscal years and between quarters in the same fiscal year.
Availability of Capital
The Company cannot be certain that cash generated from its operations will be sufficient to satisfy its liquidity
requirements and it may need to raise capital by selling additional equity and / or by securing credit facilities.
The Company’s future capital requirements will depend on many factors, including, but not limited to, the
market acceptance of its products and services. No assurance can be given that any such additional funding
will be available or that, if available, it can be obtained on terms favorable to the Company.
The Company currently has no commitments for additional working capital funding and therefore its ability
to meet any unexpected liquidity needs is uncertain. If additional funds are raised through the issuance of
equity securities, the Company’s shareholders may experience significant dilution. Furthermore, if additional
financing is not available when required, or is not available on acceptable terms, the Company may be
unable to develop or market its products, take advantage of business opportunities, or may be required to
significantly curtail its business operations.
The Company is uncertain what impact the current volatility in worldwide credit and equity markets may
have on its ability to obtain future financing. Since 2008, there has been unprecedented turmoil in equity
and credit markets, hedge fund closures, and massive market interventions by the United States and
foreign governments. Because of the severity of these market events and because the markets currently
remain volatile, the Company cannot predict what effect these events will have on its ability to obtain
financing in the future, if required.
Nature of Government Contracts
Intermap conducts a significant portion of its business either directly or in cooperation with the United States
government, other governments around the world, and international funding agencies. In many cases, the
2010 Annual Report | Management’s Discussion and Analysis
19
terms of these contracts provide for cancellation at the option of the government or agency at any time.
In addition, many of Intermap’s products and services require government appropriations and regulatory
licenses, permits, and approvals, the timing and receipt of which are not within Intermap’s control. Any of
these factors could have an effect on Intermap’s revenue, earnings, and cash flow.
General Economic Trends
The worldwide economic slowdown and tightening of credit in the financial markets may impact the
business of our customers, which could have an adverse effect on Intermap’s business, financial condition,
or results of operations. Adverse changes in general economic or political conditions in any of the major
countries in which the Company does business could also adversely affect Intermap’s operating results.
Key Customers
During 2010, the Company had five key customers that accounted for 50% of the Company’s total revenue.
In 2009, the Company had one customer that accounted for approximately 55% of the Company’s total
revenue. To the extent that significant customers cancel or delay orders, Intermap’s revenue, earnings, and
cash flow could be materially and adversely affected.
Executive Talent
Intermap is in a repositioning phase in its markets. This repositioning, coupled with the development of
new product lines, web services, and developing applications, requires the retention of executive talent.
The Company will continue to invest in training and leadership development in response to the changes
within the Company to retain talent. Although Intermap has a talented team of experienced executives, it
may not be able to further develop executive talent internally or attract and retain enough executive talent
to effectively manage the anticipated growth and changes within the Company.
Common Share Price Volatility
The market price of the Company’s common shares has fluctuated widely in recent periods and is likely
to continue to be volatile. A number of factors can affect the market price of Intermap’s common stock,
including (i) actual or anticipated variations in operating results; (ii) the low daily trading volume of the
Company’s stock; (iii) announcement of technological innovations or new products by the Company or its
competitors; (iv) competition, including pricing pressures and the potential impact of competitors products
on sales; (v) changing conditions in the digital mapping and related industries; (vi) unexpected production
difficulties; (vii) changes in financial estimates or recommendations by stock market analysts regarding
Intermap or its competitors; (viii) announcements by Intermap or its competitors of acquisitions, strategic
partnerships, or joint ventures; (ix) additions or departures of senior management; and (x) changes in
economic or political conditions.
Additionally, in recent years, the stock market in general and shares of technology companies in
particular have experienced extreme price and volume fluctuations. These fluctuations have often been
unrelated or disproportionate to the operating performance of these technology companies. These broad
market and industry fluctuations may harm the market price of Intermap’s common stock, regardless of
its operating results.
Loss of Proprietary Information
Intermap does not hold patents on the technology used in its operations and relies principally on trade
secrets, know-how, expertise, experience, and the marketing ability of its personnel to remain competitive.
Although Intermap requires all employees, consultants, and third parties to agree to keep its proprietary
information confidential, no assurance can be given that the steps taken by Intermap will be effective in
deterring misappropriation of its technologies. Additionally, no assurance can be given that employees
20
2010 Annual Report | Management’s Discussion and Analysis
or consultants will not challenge the legitimacy or scope of their confidentiality obligations, or that third
parties, in time, could not independently develop and deploy equivalent or superior technologies.
Information Technology Security
The success of the NEXTMap programs has resulted in the NEXTMap database becoming the single most
valuable asset of the Company. While Intermap has invested in database management, information
technology security, firewalls, and offsite duplicate storage, there is a risk of a loss of data through
unauthorized access or a customer violating the terms of the Company’s end user licensing agreements and
distributing unauthorized copies of its data. Intermap has, and will continue to, invest in both legal resources
to strengthen its licensing agreements with its customers and in overall information technology protection.
Breakdown of Strategic Alliances
Intermap has fostered a number of key alliances over the past several years and intends to enter into new
alliances in the future. The Company believes these new alliances will help enable access to significant
scalable markets that would not otherwise be accessible in a timely manner. The breakdown or termination
of some or all of those alliances could have a material impact on the Company. At this time, the Company is
not aware of any material issues in its strategic relationships. Should any one of these companies be unable
to continue its alliance with Intermap, or otherwise choose to dissolve the relationship, the Company would
seek to replace the connection with other entities, but there is no guarantee such replacement would occur.
New Competing Technologies
It is possible that commercially available satellite images could, in the future, match the image resolution
offered by the Company’s IFSAR technology. However, the Company believes that the technology to
perform three-dimensional radar imaging from space at 1-meter resolution with postings every 5 meters
is considered to be three or more years away. In any event, Intermap is developing modifications in its
data collection capabilities to improve the performance of its IFSAR technology. Although there are only
a few direct Intermap competitors currently, the industry is characterized by rapid technological progress.
Intermap’s ability to continue to develop and introduce new products and services, or incorporate
enhancements to existing products and services, may require significant additional research and
development expenditures and investments in equipment.
Another approach to production of digital elevation models is the use of auto correlation software to
analyze common points in two or more optical images of the same area taken from different viewing angles.
Essentially this is the same principle that is used by technicians as they extract elevation points using stereo
photogrammetric techniques, but in this case it is automated using computer software image matching
algorithms. This process is well known and has been used with limited success over small areas. Advances
in computing power, coupled with massive storage solutions, may make this technology useful over larger
areas in the future, and if so, could represent a significant competing technology.
Any required additional financing needed by the Company to remain competitive with these other
technologies may not be available or, if available, may not be on terms satisfactory to the Company.
Exporting Products – Political Considerations
Intermap’s data collection systems contain technology that is classified as a defense article under the
International Traffic and Arms Regulations. All mapping efforts undertaken outside the United States,
therefore, constitute a temporary export of a defense article, requiring prior written approval by
the United States Department of State for each country within which mapping operations are to be
performed. The Company does not currently anticipate that requirements for export permits will have
a material impact on the Company’s operations, although either government policy or government
2010 Annual Report | Management’s Discussion and Analysis
21
relations with select foreign countries may change to the point of affecting the Company’s operational
opportunities. The data produced by Intermap’s IFSAR system falls under Department of Commerce
regulations and is virtually unrestricted.
Foreign Operations
A significant portion of Intermap’s revenue is expected to come from customers outside of the United States
and is therefore subject to additional risks, including foreign currency exchange rate fluctuations, agreements
that may be difficult to enforce, receivables difficult to collect through a foreign country’s legal system, and
the imposition of foreign-country-imposed withholding taxes or other foreign taxes. Intermap relies on
contract prepayments or letters of credit to secure payment from certain of its customers when deemed
necessary. The Company has in the past secured export credit insurance on certain of its international
receivables, which greatly reduces the commercial and political risks of operating outside of North America.
Political Instability
Intermap understands that not every region enjoys the political stability that is taken for granted in
North America. Developments in recent years in the Middle East and Asia illustrate this clearly. Political or
significant instability in a region where Intermap is conducting data collection activities, or where Intermap
has clients, could adversely impact Intermap’s business.
Regulatory Approvals
The development and application of certain of the Company’s products requires the approval of applicable
regulatory authorities. A failure to obtain such approval on a timely basis, or material conditions imposed by
such authority in connection with the approval, would materially affect the prospects of the Company.
Aircraft/Radar Lost or Damaged
Although the Company believes that the probability of one of the Company’s aircraft or radar sustaining
significant damage or being lost in its entirety is extremely low, such damage or loss could occur. Now that the
data collection associated with the Company’s NEXTMap USA and NEXTMap Europe programs is complete,
the Company is expected to have available to it, for data collection purposes, one additional aircraft at any
given time. The risk to the Company of loss from the damage of an aircraft is therefore considered to be
minimal. In the event that a radar mapping system is lost in its entirety through the destruction of the aircraft,
the Company would take approximately six to nine months to replace the lost equipment, if required.
Global Positioning System (“GPS”) Failure
GPS satellites have been available to the commercial market for many years. The continued unrestricted
access to the signals produced by these GPS satellites is a requirement in the collection of the Company’s
IFSAR data. A loss of GPS would have such a global impact that it is believed that controlling authorities
would almost certainly make another system available to GPS receivers in relatively short order.
Force Majeure
The Company’s projects may be adversely affected by risks outside the control of the Company including
labor unrest, civil disorder, war, subversive activities or sabotage, fires, floods, explosions or other
catastrophes, epidemics, or quarantine restrictions.
Additional Information
Additional risk factors may be detailed in the Company’s Annual Information Form, which can be found on
the Company’s website at www.intermap.com and on SEDAR at www.sedar.com.
22
Management’s Report
The accompanying financial statements of Intermap Technologies Corporation and all the information
in this annual report are the responsibility of the Company‘s management. The consolidated financial
statements have been prepared by management in accordance with generally accepted accounting
principles. Management has prepared the financial information presented elsewhere in this annual report
and has ensured that it is consistent with the financial statements.
Management maintains appropriate systems of internal control that provide reasonable assurance that
assets are adequately safeguarded and that the financial reports are sufficiently well-maintained for the
timely preparation of the consolidated financial statements.
The Audit Committee members, all of whom are non-management directors, are appointed by the
Board of Directors. The Committee has reviewed these statements with the Auditors and management.
The Board of Directors has approved the financial statements of the Company, which are contained in
this report.
Todd Oseth
President & Chief Executive Officer
Richard L. Mohr
Senior Vice President & Chief Financial Officer
Auditors’ Report to the Shareholders
23
We have audited the accompanying consolidated financial statements of Intermap Technologies Corporation,
which comprise the consolidated balance sheets as at December 31, 2010 and December 31, 2009, the
consolidated statements of operations, comprehensive loss and deficit and cash flows for the years then
ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Canadian generally accepted accounting principles, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards
require that we comply with ethical requirements and plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on our judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error. In making those risk assessments, we consider internal control relevant to the Corporation’s
preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Corporation’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements.
Opinion
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a
basis for our audit opinion.
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of Intermap Technologies Corporation as at December 31, 2010 and
Opinion
December 31, 2009, and its consolidated results of operations and its consolidated cash flows for the
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated
years then ended in accordance with Canadian generally accepted accounting principles.
financial position of Intermap Technologies Corporation as at December 31, 2010 and December 31, 2009,
and its consolidated results of operations and its consolidated cash flows for the years then ended in
accordance with Canadian generally accepted accounting principles.
Emphasis of Matter
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 1 to the consolidated financial statements which
describes that for the year ended December 31, 2010 the Company incurred a net loss of $96,872,000, had
negative cash flow from operations of $8,160,000 and as at December 31, 2010 has an accumulated deficit
of $175,377,000. These conditions, along with other matters described in Note 1, indicate the existence of a
material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern.
Without qualifying our opinion, we draw attention to Note 1 to the consolidated financial statements
which describes that for the year ended December 31, 2010 the Company incurred a net loss of
$96,872,000, had negative cash flow from operations of $8,160,000 and as at December 31, 2010 has an
accumulated deficit of $175,377,000. These conditions, along with other matters described in Note 1,
indicate the existence of a material uncertainty which may cast significant doubt on the Company’s ability
to continue as a going concern.
Chartered Accountants, Licensed Public Accountants
Chartered Accountants, Licensed Public Accountants
March 3, 2010
March 3, 2010
Ottawa, Canada
Ottawa, Canada
24
Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETS
(In thousands of United States dollars)
(In thousands of United States dollars)
Assets
Current assets:
Cash and cash equivalents
Amounts receivable
Unbilled revenue
Work in process
Prepaid expenses
Assets held for sale (Note 5)
Property and equipment (Note 6)
Multi-client data library (Note 7)
Intangible assets (Note 8)
Future income taxes (Note 13)
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities (Note 9)
Current portion of deferred lease inducements
Deferred revenue
Deposit for sale of assets (Note 5)
Income taxes payable
Current portion of obligations under capital lease (Note 10)
Current portion of long-term debt (Note 11)
Deferred lease inducements
Other long-term liabilities (Note 15)
Obligations under capital lease (Note 10)
Long-term debt (Note 11)
Future income taxes (Note 13)
Shareholders' equity:
Share capital (Note 12)
Contributed surplus (Note 12(c))
Deficit
Accumulated other comprehensive income
Going concern (Note 1)
Commitments (Note 14)
Subsequent event (Note 15)
December 31,
2010
December 31,
2009
$
$
$
4,356
4,156
1,016
59
1,039
1,700
12,326
7,766
23,049
488
5
43,634
5,889
123
4,873
4,000
50
151
527
15,613
286
531
41
658
93
17,222
187,253
8,342
(175,377)
6,194
26,412
$
$
$
10,355
12,270
343
2,057
1,481
-
26,506
13,380
85,276
909
136
126,207
5,916
171
674
-
42
229
1,383
8,415
129
-
130
1,121
218
10,013
181,623
6,882
(78,505)
6,194
116,194
$
43,634
$
126,207
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
On behalf of the Board:
On behalf of the Board:
Larry G. Garberding
Director
Donald R. Gardner
Director
2010 Annual Report | Consolidated Financial Statements
25
INTERMAP TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE LOSS AND DEFICIT
Consolidated Statements of Operations, Comprehensive Loss and Deficit
(In thousands of United States dollars, except per share information)
(In thousands of United States dollars, except per share information)
For the Years Ended December 31,
2010
2009
Revenue:
Contract services
Multi-client data licenses
Operating costs:
Operations
Research and development
Sales, general and administrative
Restructuring costs (Note 15)
Depreciation of property and equipment
Amortization of multi-client data library
Amortization of intangible assets
Loss (gain) on disposal of equipment
Impairment of multi-client data library
Loss before interest, foreign
exchange and income taxes
Interest expense, net
(Loss) gain on foreign currency translation
Loss before income taxes
Income tax expense (recovery):
Current
Future
Net loss and comprehensive loss
Deficit, beginning of period
Deficit, end of period
Basic and diluted loss per share
Weighted average number of Class A
$
$
$
4,280
9,652
13,932
10,511
2,486
22,173
2,541
4,577
14,702
421
72
52,762
110,245
(96,313)
(142)
(354)
(96,809)
57
6
63
(96,872)
(78,505)
(175,377)
(1.71)
$
$
$
20,143
10,164
30,307
9,404
3,643
25,772
673
6,302
10,074
422
(119)
-
56,171
(25,864)
(199)
372
(25,691)
156
(7)
149
(25,840)
(52,665)
(78,505)
(0.51)
common shares - basic and diluted (Note 12(d))
56,502,778
50,342,816
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
26
2010 Annual Report | Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of United States dollars)
(In thousands of United States dollars)
For the Years Ended December 31,
2010
2009
Cash flows (used in) provided by:
Operations:
Net loss
Items not involving cash and cash equivalents:
Depreciation of property and equipment
Amortization of multi-client data library
Impairment of multi-client data library
Amortization of intangible assets
Stock-based compensation
Loss (gain) on disposal of equipment
Amortization of deferred lease inducements
Future income taxes
Change in non-cash operating working capital
Financing:
Proceeds from issuance of common shares
Securities issuance costs
Repayment of obligations under capital lease
Repayment of long-term debt
Investments:
Purchase of property and equipment
Investment in multi-client data library
Proceeds from sale of equipment
Effect of foreign exchange on cash
$
(96,872)
$
(25,840)
4,577
14,702
52,762
421
1,685
72
(279)
6
14,766
(8,160)
6,157
(725)
(167)
(1,390)
3,875
(1,015)
(4,606)
4,019
(1,602)
(112)
6,302
10,074
-
422
2,247
(119)
(240)
(7)
(4,800)
(11,961)
9,540
(841)
(342)
(882)
7,475
(1,288)
(12,627)
1,039
(12,876)
470
Decrease in cash and cash equivalents
(5,999)
(16,892)
Cash and cash equivalents, beginning of period
10,355
27,247
Cash and cash equivalents, end of period
Supplemental cash flow information:
Cash paid for interest expense
Cash paid for income taxes
$
$
$
4,356
$
10,355
140
154
$
$
220
96
Cash and cash equivalents include deposits with financial institutions that can be withdrawn without
Cash and cash equivalents include deposits with financial institutions that can be withdrawn without prior notice or penalty.
prior notice or penalty.
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
27
(In thousands of United States dollars, except per share information)
Intermap Technologies® Corporation (the Company) is incorporated under the laws of Alberta, Canada.
Intermap® is a digital mapping company creating uniform high-resolution 3D digital models of the earth’s
surface. The Company is mapping entire countries and building a uniform national database, called
NEXTMap®, consisting of elevation data and orthorectified radar images.
1. Going concern:
These financial statements have been prepared assuming the Company will continue as a going concern.
The going concern basis of presentation assumes the Company will continue in operation for the foreseeable
future and be able to realize its assets and discharge its liabilities and commitments in the normal course
of business. During the year ended December 31, 2010, the Company incurred a loss of $96,872, and had
negative cash flow from operations of $8,160. In addition, the Company has an accumulated deficit of
$175,377, and its continuing operations are dependent on its ability to generate future profitable operations,
sell excess capacity assets, or obtain additional financing to fund future operations, and ultimately, generate
positive cash flows from operations.
The above factors raise significant doubt about the Company’s ability to continue as a going concern.
Management has taken actions to address these issues including an organizational restructuring, sale of
excess capacity assets, a company-wide cost reduction program, and a revised approach to pricing and
selling the Company’s products and services. The Company’s ability to continue as a going concern is
dependent on Management’s ability to successfully generate a profit from operations, sell assets, or obtain
additional financing. Failure to achieve one or more of these requirements could have a material adverse
effect on the Company’s financial condition and / or results of operations.
The Company cannot be certain that cash generated from its operations will be sufficient to satisfy its liquidity
requirements and it may need to continue to raise capital by selling additional equity and / or by securing
credit facilities. The Company’s future capital requirements will depend on many factors, including, but not
limited to, the market acceptance of its products and services. No assurance can be given that any such
additional funding will be available or that, if available, it can be obtained on terms favorable to the Company.
The financial statements do not reflect adjustments that would be necessary if the going concern assumption
was not appropriate. If the going concern basis was not appropriate for these financial statements, then
adjustments would be necessary in the carrying value of assets and liabilities, the reported revenues and
expenses, and the balance sheet classifications used.
2. Summary of significant accounting policies:
a. Basis of consolidation:
The accompanying consolidated financial statements include the accounts of the Company and its wholly
owned subsidiaries, Intermap Technologies Inc. and Intermap Federal Services Inc. (both U.S. corporations);
Intermap Technologies GmbH (a German corporation); Intermap Technologies UK Limited (a U.K. corporation);
Intermap Technologies PTY Ltd (an Australian corporation); Intermap Technologies s.r.o. (a Czech Republic
corporation); Intermap Technologies s.r.o. (a Slovak Republic corporation); a 90% owned subsidiary,
PT ExsaMap Asia (an Indonesian corporation); and a 49.9% owned joint venture, PASCOMap LLC.
The PASCOMap joint venture was dissolved in December of 2010 (see Note 4).
b. Use of estimates:
Preparing financial statements in conformity with Canadian generally accepted accounting principles
requires Management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the
reported amounts of revenue and expenses during the period. Actual results could differ from these estimates.
Significant management estimates are found in the impairment of and useful lives of long-lived assets, net
realizable value of work in process, and in the estimated costs to complete contracts accounted for under the
percentage-of-completion method.
28
2010 Annual Report | Notes to Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
c. Work in Process:
Year ended December 31, 2010
(d) Property and equipment:
Work in process is measured at the lower of cost or net realizable value. When work in process is sold,
the carrying amount of the work in process is recognized as an expense in the period in which the
related revenue is recognized. The amount of any write-down of work in process to net realizable value
is recognized as an expense in the period in which the write-down or loss occurs. During the year ended
December 31, 2010, the Company recognized a write-down of work in process of $1,869 relating to
previously collected mapping data in a specific region as it was determined that the recorded costs were
greater than the net realizable value.
Property and equipment are recorded at cost. Expenditures for maintenance and repairs are
d. Property and equipment:
expensed when incurred. The cost of aircraft overhauls are capitalized and depreciated over the
Property and equipment are recorded at cost. Expenditures for maintenance and repairs are expensed
period until the next overhaul. Depreciation is provided on the straight-line basis over the
when incurred. The cost of aircraft overhauls are capitalized and depreciated over the period until the
useful lives of the assets at the following annual rates:
next overhaul. Depreciation is provided on the straight-line basis over the useful lives of the assets at the
following annual rates:
Page 3
Assets
Rate
10%
Aircraft
33%
Mapping equipment and software
20%
Radar equipment
20%
Furniture and fixtures
Automobiles
20%
Leasehold improvements Shorter of useful life or term of lease
Assets under construction are not depreciated until available for use by the Company.
Assets under construction are not depreciated until available for use by the Company.
(e) Multi-client data library (MCDL):
e. Multi-client data library (MCDL):
The Company maintains a MCDL, which results from the acquisition and processing of digital
The Company maintains a MCDL, which results from the acquisition and processing of digital map data.
map data. All ownership rights to this data are retained by the Company, and the data is
All ownership rights to this data are retained by the Company, and the data is licensed to customers on
a non-transferable basis. All of the direct costs of acquiring and processing the data are capitalized as an
licensed to customers on a non-transferable basis. All of the direct costs of acquiring and
investment in the MCDL. These costs include direct overhead associated with the acquisition and processing
processing the data are capitalized as an investment in the MCDL. These costs include direct
of the data and the depreciation of the property and equipment used in the production of the data.
overhead associated with the acquisition and processing of the data and the depreciation of the
MCDL capitalized costs are amortized based on the percentage of total estimated costs to total estimated
property and equipment used in the production of the data.
sales, multiplied by actual sales in the period. In the event the percentage changes as a result of a change in
the estimate of total costs and / or total sales, amortization is adjusted accordingly.
MCDL capitalized costs are amortized based on the percentage of total estimated costs to total
estimated sales, multiplied by actual sales in the period. In the event the percentage changes as a
Any costs which remain unamortized 18 months after being capitalized are amortized on a monthly basis at
result of a change in the estimate of total costs and / or total sales, amortization is adjusted
the greater of (i) a straight-line monthly amortization charge over 60 months; and (ii) the calculated charge
based on sales during the period. The amortization period of 60 months represents the minimum estimated
accordingly.
useful life over which benefits from the data are expected to be derived.
Any costs which remain unamortized 18 months after being capitalized are amortized on a
The carrying value of the MCDL is reviewed for impairment whenever events or changes in circumstances
monthly basis at the greater of (i) a straight-line monthly amortization charge over 60 months;
indicate that the carrying amount may not be recoverable. An impairment adjustment of $52,762 has been
and (ii) the calculated charge based on sales during the period. The amortization period of 60
recorded as of December 31, 2010 to the MCDL (see Note 7).
months represents the minimum estimated useful life over which benefits from the data are
Intangible assets:
f.
expected to be derived.
Intangible assets represent assets acquired in a business combination. All intangible assets held by the
Company are amortized on a straight-line basis over their estimated useful life of five years. The amortization
method and estimate of the useful life of intangible assets are reviewed annually.
2010 Annual Report | Notes to Consolidated Financial Statements
29
g. Impairment of long-lived assets:
Long-lived assets, including property and equipment, MCDL, and intangible assets, are grouped at the
lowest level of independent cash flows and are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Negative historical
financial results, reduced revenue forecasts, and the Company’s ability to fund future product development
activities are some of the indicators the Company uses in evaluating whether impairment may exist. The
Company also makes assessments as to whether current revenue declines based on market and economic
conditions are an indication of the expected long-term value realization of the long-lived assets.
Recoverability is measured by a comparison of the carrying amount of the asset to the estimated future
cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated
future cash flows, an impairment charge is recognized as the amount by which the carrying value of the
asset exceeds its fair value.
h. Leases:
Leases are classified as either capital or operating in nature. Capital leases are those that substantially
transfer the benefits and risks of ownership to the lessee. Assets acquired under capital leases are
depreciated at the same rates as those described in Note 2(d). Obligations recorded under capital leases
are reduced by the principal portion of lease payments. The imputed interest portion of lease payments is
charged to expense.
i. Assets held for sale:
Assets held for sale represent those assets for which the Company has commited to a plan to (i) sell the asset;
(ii) are available for immediate sale; (iii) have actively sought to locate a buyer; and (iv) the sale is expected
to be completed within one year. These assets are being marketed for a price that is reasonable in relation
to the assets current fair value. Assets classified as held for sale are measured at the lower of their carrying
amount or fair value less cost to sell and are not amortized while classified as held for sale. Interest and other
expenses attributable to the liabilities of a disposal group classified as held for sale continue to be accrued.
j. Deferred lease inducements:
Deferred lease inducements represent the unamortized cost of lease inducements on certain of the
Company’s leased commercial office space. Amortization is provided on a straight-line basis over the term
of the lease and recognized as a reduction in rent expense.
k. Foreign currency translation:
The measurement currency of the Company and its subsidiaries is the United States dollar. Integrated
foreign operations and foreign denominated assets and liabilities of the Company are translated using the
temporal method. Under this method, monetary assets and liabilities are translated at the prevailing rates
of exchange, non-monetary assets and liabilities are translated at historic exchange rates, and revenue and
expense items are translated at prevailing average exchange rates during the year. Exchange gains and
losses are included in the statement of operations.
l.
Income taxes:
Income taxes are accounted for under the asset and liability method of accounting for income taxes.
Under the asset and liability method, future tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities, and their respective tax bases. Future tax assets and liabilities are measured using
enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability
settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the
period that substantive enactment or enactment occurs.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Page 7
value of stock-based payments to non-employees is periodically re-measured until counterparty
performance is complete, and any change therein is recognized over the period and in the same
manner as if the Company had paid cash instead of paying with or using equity instruments.
Upon exercise of a stock option, share capital is recorded as the sum of the cash proceeds
received and the related amount of contributed surplus.
(p) Loss per share:
The basic loss per share is computed by dividing net loss by the weighted average shares
outstanding during the reporting period. Diluted loss per share is computed similar to basic loss
per share, except the weighted average shares outstanding are increased to include additional
shares from the assumed exercise of stock options and warrants, if dilutive. The number of
additional shares for stock options and warrants is calculated by assuming outstanding stock
options and warrants were exercised and the proceeds from such exercises were used to acquire
shares of common stock at the average market price during the year.
(q) Financial instruments:
Financial assets and financial liabilities are initially recognized at fair value and their subsequent
measurement is dependent on their classification. The following is a summary of the
classification the Company has applied to each of its significant categories of financial
instruments outstanding:
Financial instrument:
Cash equivalents
Amounts receivable
Unbilled revenue
Long-term debt
Other long-term liabilities
Deposit for sale of assets
Accounts payable and accrued liabilities
Classification:
Held to maturity
Loans and receivables
Loans and receivables
Other liabilities
Other liabilities
Other liabilities
Other liabilities
Held-for-trading (“HFT”)
The Company has not designated any non-derivative financial assets as HFT, nor has it
designated any non-derivative financial liabilities as HFT.
Available-for-sale (“AFS”)
The Company has not designated any financial assets as AFS.
30
2010 Annual Report | Notes to Consolidated Financial Statements
m. Revenue recognition:
Revenue is recognized when (i) persuasive evidence of an arrangement exists; (ii) the significant risks
and rewards of ownership, including managerial involvement have been transferred to the buyer; (iii) the
amount of revenue can be measured reliably; and (iv) costs incurred or to be incurred can be measured
reliably. Billings in excess of revenue are recorded as deferred revenue. Revenue recognized in excess of
billings is recorded as unbilled revenue.
Goods Sold:
Revenue from the sale of MCDL licenses in the ordinary course is measured at the fair value of the
consideration received or receivable.
Fixed-price Contracts:
Revenue from fixed-price contracts is recognized using the percentage-of-completion method, based
on the ratio of costs incurred to estimated final costs. The use of the percentage of completion method
requires estimates to determine the cost to complete each contract. These estimates are reviewed monthly
and adjusted as necessary. Provisions for estimated losses, if any, are recognized in the period in which the
loss is determined. Contract losses are measured in the amount by which the estimated costs of the related
project exceed the estimated total revenue for the project.
Multiple Component Arrangements:
When a single sales transaction requires the delivery of more than one product or service (multiple
components), the revenue recognition criteria are applied separately to identifiable components. A
component is considered to be separately identifiable if the product or service delivered has stand-alone
value to that customer and the fair value associated with the product or service can be measured reliably.
The amount recognized as revenue for each component is the fair value of the element in relation to the fair
value of the arrangement as a whole.
n. Research and development:
Research costs are expensed as incurred. Development costs are expensed in the year incurred unless
Management believes a development project meets the generally accepted accounting criteria for deferral
and amortization. Funding received in respect of research and development agreements is recorded as a
reduction of research and development expenses.
o. Stock-based compensation:
The Company has a stock-based compensation plan which is described in Note 12(g). The Company
accounts for all stock-based awards to employees and non-employees using the fair value based method.
Under the fair value based method, stock-based payments to non-employees are measured at the fair value
of the consideration received, the fair value of the equity instrument issued, or liabilities incurred, whichever
is more reliably measurable. The fair value of stock-based payments to non-employees is periodically
re-measured until counterparty performance is complete, and any change therein is recognized over the
period and in the same manner as if the Company had paid cash instead of paying with or using equity
instruments. Upon exercise of a stock option, share capital is recorded as the sum of the cash proceeds
received and the related amount of contributed surplus.
p. Loss per share:
The basic loss per share is computed by dividing net loss by the weighted average shares outstanding
during the reporting period. Diluted loss per share is computed similar to basic loss per share, except the
weighted average shares outstanding are increased to include additional shares from the assumed exercise
of stock options and warrants, if dilutive. The number of additional shares for stock options and warrants is
calculated by assuming outstanding stock options and warrants were exercised and the proceeds from such
exercises were used to acquire shares of common stock at the average market price during the year.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Page 7
value of stock-based payments to non-employees is periodically re-measured until counterparty
performance is complete, and any change therein is recognized over the period and in the same
manner as if the Company had paid cash instead of paying with or using equity instruments.
Upon exercise of a stock option, share capital is recorded as the sum of the cash proceeds
received and the related amount of contributed surplus.
(p) Loss per share:
The basic loss per share is computed by dividing net loss by the weighted average shares
outstanding during the reporting period. Diluted loss per share is computed similar to basic loss
per share, except the weighted average shares outstanding are increased to include additional
shares from the assumed exercise of stock options and warrants, if dilutive. The number of
additional shares for stock options and warrants is calculated by assuming outstanding stock
options and warrants were exercised and the proceeds from such exercises were used to acquire
2010 Annual Report | Notes to Consolidated Financial Statements
31
shares of common stock at the average market price during the year.
(q) Financial instruments:
Financial assets and financial liabilities are initially recognized at fair value and their subsequent
q. Financial instruments:
measurement is dependent on their classification. The following is a summary of the
classification the Company has applied to each of its significant categories of financial
Financial assets and financial liabilities are initially recognized at fair value and their subsequent
measurement is dependent on their classification. The following is a summary of the classification the
Company has applied to each of its significant categories of financial instruments outstanding:
instruments outstanding:
Financial instrument:
Cash equivalents
Amounts receivable
Unbilled revenue
Accounts payable and accrued liabilities
Long-term debt
Other long-term liabilities
Deposit for sale of assets
Classification:
Held to maturity
Loans and receivables
Loans and receivables
Other liabilities
Other liabilities
Other liabilities
Other liabilities
Held-for-trading (“HFT”)
The Company has not designated any non-derivative financial assets as HFT, nor has it
Held-for-trading (“HFT”)
The Company has not designated any non-derivative financial assets as HFT, nor has it designated any non-
derivative financial liabilities as HFT.
designated any non-derivative financial liabilities as HFT.
Available-for-sale (“AFS”)
Available-for-sale (“AFS”)
The Company has not designated any financial assets as AFS.
The Company has not designated any financial assets as AFS.
Held-to-maturity (“HTM”)
HTM financial assets are non-derivative financial assets with fixed or determinable payments and a fixed
maturity, other than loans and receivables; the Company has the positive intention and ability to hold to
maturity. These financial assets are measured at amortized cost, using the effective interest rate method.
The short-term deposits classified as HTM financial assets are recorded as cash and cash equivalents on the
accompanying balance sheet. Interest earned on these instruments is included in interest income.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments. Loans and
receivables are recorded at amortized cost, using the effective interest rate method. The instruments classified
as loans and receivables are recorded as amounts receivable on the accompanying balance sheet.
Other liabilities
This includes all financial liabilities that are not required to be designated by the Company as held for
trading upon initial recognition. Other liabilities are recorded at amortized cost, using the effective interest
rate method. The instruments classified as other liabilities include accounts payable and accrued liabilities,
other long-term liabilities, deposit for sale of assets, and long-term debt, and are recorded as such on the
accompanying balance sheet.
r. Derivatives:
As of December 31, 2010, the Company had one derivative instrument, resulting from a written put option
held by a non-controlling investor in the Company’s Indonesian subsidiary, P.T. ExsaMap Asia. The Company is
required to recognize a financial liability for the present value of the redemption amount of the put instrument
held by the minority interest holder. The present value of the redemption amount at December 31, 2010 is
approximately $21. However, based on terms set out in the agreement between the Company and the non-
controlling investor, the Company had provided the investor with an advance of $21on this redemption amount.
As such, the Company has offset the financial liability against the advance on its consolidated balance sheet.
32
2010 Annual Report | Notes to Consolidated Financial Statements
s. Comprehensive income (loss):
All exchange differences resulting from the Company’s adoption of the Unites States dollar as its reporting
currency, effective January 1, 2005, were recorded in the cumulative translation account, which now forms
part of accumulated other comprehensive income within the Company’s shareholders’ equity. The Company
did not recognize any changes in fair value of available-for-sale financial assets or any self-sustaining
subsidiaries in other comprehensive income during the period.
t. Joint venture:
The Company uses the proportionate consolidation method to account for its interest in PASCOMap LLC,
as there is joint control over the related economic activity. The Company determines joint control when
there is existence of a contractual agreement to share continuing power with other participating parties to
determine strategic operating, investing, and financing activities of the joint venture.
u. New accounting policies:
In December 2009, the Canadian Institute of Chartered Accountants (CICA) issued EIC-175, “Multiple
Deliverable Revenue Arrangements.” This Abstract addresses some aspects of the accounting by a vendor
for arrangements under which it will perform multiple revenue-generating activities. Specifically, the
Abstract addresses how to determine whether an arrangement involving multiple deliverables contains
more than one unit of accounting. The provisions of EIC-175 must be applied beginning in the first annual
fiscal period commencing on or after January 1, 2011, but early adoption is permitted.
When the period of adoption is not the first reporting period of the fiscal year, the abstract should be
applied retroactively from the beginning of the fiscal year.
The criteria in the new standard for identifying deliverables in a multiple-element arrangement that
represent separate units of accounting has been changed and entities are no longer required to
have objective and reliable evidence of fair value for each deliverable. The allocation of arrangement
consideration amongst the separate units will now be based on a hierarchy of selling prices which includes
(i) vendor specific objective evidence (VSOE), if available; (ii) third-party evidence (TPE) of selling price if
VSOE is unavailable; and (iii) best estimate of the selling price (BESP) if neither VSOE nor TPE is available.
VSOE is generally limited to the price charged when the same or similar product is sold separately. If a
product or service is seldom sold separately, it is unlikely VSOE can be determined. TPE is determined based
on competitor prices for similar deliverables when sold separately. The Company determines BESP for data
licenses by considering multiple factors including, but not limited to, ongoing pricing strategy and policies,
market conditions, and historical pricing practices.
Management believes it is appropriate to adopt EIC-175 early since it results in the measurement and
recognition of revenues and cost of sales associated with data sales on a basis that is consistent with the
way that Management measures and monitors the performance of the Company.
Prior to the adoption of EIC-175, the Company applied EIC-142, “Revenue Arrangements with Multiple
Deliverables,” in concluding whether its sales arrangements containing multiple deliverables could be
accounted for as separate units of accounting. The Company reviewed each deliverable to determine
whether they represented separate units of accounting and reviewed the evidence of fair value for each
unit. The Company previously applied the residual method to determine the arrangement consideration
allocated to delivered MCDL licenses in multi-element sales arrangements where objective and reliable
evidence of the fair value of all undelivered elements existed.
During the year ended December 31, 2010, the Company entered into licensing agreements for its MCDL
that also included consulting services and hosting services in the arrangement. The Company has applied
the recommendations in EIC-175 to these MCDL license sales and arrangement consideration has been
allocated to the various deliverables based on their relative selling prices, as they were determined to be
2010 Annual Report | Notes to Consolidated Financial Statements
33
separate units of accounting. The selling price for contract services was determined using VSOE, for hosting
services using TPE, and for data licenses BESP was used. Generally, revenues for MCDL sales are recognized
on delivery and for consulting services and hosting services revenues are recognized as the services are
provided. Had EIC-142 been applied, the Company would have used the residual method to determine the
arrangement consideration allocated to data licenses.
The adoption of EIC-175 did not have a significant impact on the amount, pattern, and timing of revenue
recognized during 2009. The adoption of the standard may result in revenues being recognized earlier in
future periods as a result of the simplified criteria to be used in determining units of accounting and the use
of the relative selling price method.
3. Future accounting standards:
The conversion from GAAP to International Financial Reporting Standards (IFRS) will be applicable to the
Company’s reporting for the first quarter of 2011, for which the current and comparative information will be
prepared under IFRS. The Company is on schedule to meet the required reporting date.
4.
Joint venture:
During 2008, the Company entered into a joint venture agreement with PASCO Corporation. The joint
venture, PASCOMap LLC, was 49.9% owned by the Company and 50.1% owned by PASCO Corporation and
was formed to develop, market, and license digital elevation model data using radargrammetry technology
and satellite radar data. The joint venture was dissolved in December 2010. As of December 31, 2010,
amounts included in the Company’s consolidated financial statements related to PASCOMap LLC were cash
of $nil (2009 – $19), accounts payable of $nil (2009 – $56) and operating cost of $14 (2009 – $39). As of
December 31, 2010, there are no material commitments or contingencies related to the joint venture.
5. Asset held for sale:
During 2010, the Company committed to sell one of its IFSAR-enabled aircraft, which is no longer required
subsequent to the completion of the NEXTMap USA and NEXTMap Europe datasets. The aircraft and IFSAR
radar equipment have a net book value of $1,354 and $346, respectively. The aircraft and associated IFSAR
radar equipment (including associated processing technology and software tools) are available for immediate
sale and are presented within current assets as assets held for sale on the December 31, 2010 consolidated
balance sheet. The Company received payments totaling $4,000 from the purchaser in December 2010, and
such payments are presented in the December 31, 2010 consolidated balance sheet within current liabilities as
deposit for sale of assets, pending delivery of the aircraft and associated radar equipment. The assets held for
sale were determined to have a fair value (less estimated costs to sell) in excess of the carrying value, and are
therefore recorded at book value as of December 31, 2010.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
6. Property and equipment:
December 31, 2010
Aircraft
Mapping equipment and software
Radar equipment
Furniture and fixtures
Automobiles
Leasehold improvements
Assets held under capital leases:
Mapping equipment and software
Assets under construction:
Mapping equipment and software
Page 12
Cost
Accumulated
depreciation
Net book
value
$
$
10,824
19,508
6,486
587
99
1,468
1,504
$
7,337
16,665
5,747
545
64
1,068
1,315
3,487
2,843
739
42
35
400
189
31
$ 40,507 $ 32,741 $ 7,766
31
-
December 31, 2009
Aircraft
Mapping equipment and software
$
Radar equipment
Furniture and fixtures
Automobiles
Leasehold improvements
Assets held under capital leases:
Mapping equipment and software
Assets under construction:
Mapping equipment and software
Cost
Accumulated
depreciation
Net book
value
13,543
22,409
12,403
587
99
1,228
1,880
391
$
$
7,819
17,484
10,868
500
44
918
1,527
-
5,724
4,925
1,535
87
55
310
353
391
$ 52,540
$ 39,160 $ 13,380
During the year ended December 31, 2010, property and equipment was acquired at an aggregate
cost of $1,015 (year ended December 31, 2009 – $1,288). The Company also received $370 (year
ended December 31, 2009 – $100) in leasehold improvements that were paid for by the landlord in
connection with the signing of a new lease on the Calgary, Canada facility.
During the year ended December 31, 2010, the Company received $12 in proceeds from the sale of
equipment. The equipment had a net book value of $6, and the Company incurred $8 of costs to
accommodate the sale. The Company disposed of equipment and leasehold improvements in
connection with the closure of the Ottawa office with a cost of $4,366 and accumulated depreciation
of $4,281. The Company received $7 in proceeds.
7. Multi-client data library:
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Page 12
December 31, 2010
Aircraft
Mapping equipment and software
$
Cost
10,824
19,508
$
7,337
$
16,665
Accumulated
depreciation
Net book
value
Radar equipment
Furniture and fixtures
Automobiles
Leasehold improvements
Assets held under capital leases:
2010 Annual Report | Notes to Consolidated Financial Statements
Assets under construction:
Mapping equipment and software
Mapping equipment and software
6,486
587
99
1,468
1,504
31
5,747
545
64
1,068
1,315
34
31
$ 40,507 $ 32,741 $ 7,766
-
3,487
2,843
739
42
35
400
189
December 31, 2009
Aircraft
Mapping equipment and software
Radar equipment
Furniture and fixtures
Automobiles
Leasehold improvements
Assets held under capital leases:
Mapping equipment and software
Assets under construction:
Mapping equipment and software
Cost
Accumulated
depreciation
Net book
value
$
$
13,543
22,409
12,403
587
99
1,228
1,880
$
7,819
17,484
10,868
500
44
918
1,527
5,724
4,925
1,535
87
55
310
353
391
$ 52,540
391
$ 39,160 $ 13,380
-
During the year ended December 31, 2010, property and equipment was acquired at an aggregate
During the year ended December 31, 2010, property and equipment was acquired at an aggregate cost of
$1,015 (year ended December 31, 2009 – $1,288). The Company also received $370 (year ended December 31,
cost of $1,015 (year ended December 31, 2009 – $1,288). The Company also received $370 (year
2009 – $100) in leasehold improvements that were paid for by the landlord in connection with the signing of a
ended December 31, 2009 – $100) in leasehold improvements that were paid for by the landlord in
new lease on the Calgary, Canada facility.
connection with the signing of a new lease on the Calgary, Canada facility.
INTERMAP TECHNOLOGIES CORPORATION
During the year ended December 31, 2010, the Company received $12 in proceeds from the sale of
Notes to Consolidated Financial Statements
equipment. The equipment had a net book value of $6, and the Company incurred $8 of costs to
During the year ended December 31, 2010, the Company received $12 in proceeds from the sale of
(In thousands of United States dollars, except per share information)
accommodate the sale. The Company disposed of equipment and leasehold improvements in connection
equipment. The equipment had a net book value of $6, and the Company incurred $8 of costs to
with the closure of the Ottawa office with a cost of $4,366 and accumulated depreciation of $4,281.
The Company received $7 in proceeds.
accommodate the sale. The Company disposed of equipment and leasehold improvements in
Year ended December 31, 2010
Page 13
connection with the closure of the Ottawa office with a cost of $4,366 and accumulated depreciation
7. Multi-client data library:
of $4,281. The Company received $7 in proceeds.
December 31,
2010
December 31,
2009
Cost:
Balance, beginning of year
Add:
Direct costs and overhead
Capitalized depreciation
Impairment charge
7. Multi-client data library:
Balance, end of year
Accumulated amortization
$
115,093
$
100,899
4,606
631
(52,762)
67,568
(44,519)
12,627
1,567
-
115,093
(29,817)
$
23,049
$
85,276
In December of 2010, a strategic review of the Company’s approach to selling the NEXTMap
In December of 2010, a strategic review of the Company’s approach to selling the NEXTMap datasets in
datasets in the United States and Europe was undertaken by the new executive management of the
the United States and Europe was undertaken by the new executive management of the Company. Upon
completion of this review, it was determined that the historical pricing strategy of the NEXTMap datasets
Company. Upon completion of this review, it was determined that the historical pricing strategy of
required downward adjustment and the Company could no longer afford to invest the resources necessary
the NEXTMap datasets required downward adjustment and the Company could no longer afford to
to exploit certain target markets previously identified. As a result, an impairment review was performed to
invest the resources necessary to exploit certain target markets previously identified. As a result, an
determine if the carrying value of the NEXTMap USA and NEXTMap Europe asset groups were recoverable.
The fair value of the NEXTMap datasets was determined using the respective estimated discounted future
impairment review was performed to determine if the carrying value of the NEXTMap USA and
cash flows produced by the datasets. The cash flows were discounted at a rate commensurate with the risk
NEXTMap Europe asset groups were recoverable. The fair value of the NEXTMap datasets was
associated with the cash flows and assets. The Company determined that the future estimated cash flows
determined using the respective estimated discounted future cash flows produced by the datasets.
of the datasets were insufficient to recover the carrying value of the assets, resulting in a pre-tax asset
impairment charge of $52,762. The impairment loss is included in impairment of multi-client data library on
The cash flows were discounted at a rate commensurate with the risk associated with the cash flows
the Consolidated Statement of Operations and Consolidated Statement of Cash Flows. The following table
and assets. The Company determined that the future estimated cash flows of the datasets were
outlines the charges associated with the impairment for the period ended December 31, 2010:
insufficient to recover the carrying value of the assets, resulting in a pre-tax asset impairment charge
of $52,762. The impairment loss is included in impairment of multi-client data library on the
Consolidated Statement of Operations and Consolidated Statement of Cash Flows. The following
table outlines the charges associated with the impairment for the period ended December 31, 2010:
Historical Accumulated
Cost
Amortization
Impairment
2010
Fair Value at
December 31
NEXTMap USA
NEXTMap Europe
$
$
81,064
39,266
120,330
$
$
(31,249)
$
(36,870)
$
(13,270)
(15,892)
(44,519)
$
(52,762)
$
12,945
10,104
23,049
8.
Intangible assets:
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Page 13
Balance, beginning of year
$
115,093
$
100,899
Cost:
Add:
Direct costs and overhead
Capitalized depreciation
Impairment charge
Balance, end of year
Accumulated amortization
December 31,
December 31,
2010
2009
4,606
631
(52,762)
67,568
(44,519)
12,627
1,567
-
115,093
(29,817)
$
23,049
$
85,276
In December of 2010, a strategic review of the Company’s approach to selling the NEXTMap
datasets in the United States and Europe was undertaken by the new executive management of the
Company. Upon completion of this review, it was determined that the historical pricing strategy of
the NEXTMap datasets required downward adjustment and the Company could no longer afford to
invest the resources necessary to exploit certain target markets previously identified. As a result, an
impairment review was performed to determine if the carrying value of the NEXTMap USA and
NEXTMap Europe asset groups were recoverable. The fair value of the NEXTMap datasets was
determined using the respective estimated discounted future cash flows produced by the datasets.
The cash flows were discounted at a rate commensurate with the risk associated with the cash flows
and assets. The Company determined that the future estimated cash flows of the datasets were
insufficient to recover the carrying value of the assets, resulting in a pre-tax asset impairment charge
of $52,762. The impairment loss is included in impairment of multi-client data library on the
2010 Annual Report | Notes to Consolidated Financial Statements
Consolidated Statement of Operations and Consolidated Statement of Cash Flows. The following
35
table outlines the charges associated with the impairment for the period ended December 31, 2010:
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
Year ended December 31, 2010
(In thousands of United States dollars, except per share information)
$
Historical Accumulated
Amortization
Fair Value at
December 31
2010
Impairment
Cost
$
$
81,064
39,266
120,330
$
(31,249)
(13,270)
(44,519)
$
(36,870)
(15,892)
(52,762)
$
$
Cost
Accumulated
amortization
12,945
10,104
23,049
Net book
value
Page 14
Page 14
NEXTMap USA
NEXTMap Europe
Year ended December 31, 2010
$
December 31, 2010
8.
Intangible assets:
8.
Technology
Intangible assets:
Customer relationships
December 31, 2010
Contracts
Technology
Customer relationships
Contracts
December 31, 2009
Technology
Customer relationships
December 31, 2009
Contracts
Cost
$ 1,747 $ 1,342 $ 405
Net book
Accumulated
233 179 54
value
amortization
126 97 29
$ 2,106 $ 1,618 $ 488
$ 1,747 $ 1,342 $ 405
233 179 54
126 97 29
$ 2,106 $ 1,618 $ 488
Accumulated
amortization
Net book
value
Cost
Technology
Customer relationships
Contracts
At December 31, 2010, accounts payable and accrued liabilities include a promissory note with a
$ 1,747 $ 992 $ 755
Net book
233 133 100
value
126 72 54
$ 2,106 $ 1,197 $ 909
$ 1,747 $ 992 $ 755
233 133 100
126 72 54
$ 2,106 $ 1,197 $ 909
Accumulated
amortization
9. Accounts payable and accrued liabilities:
Cost
9. Accounts payable and accrued liabilities:
service provider that defines the payment terms of an outstanding accounts payable balance. The
9. Accounts payable and accrued liabilities:
At December 31, 2010, accounts payable and accrued liabilities include a promissory note with a
note bears interest at 4% per annum and is secured by an aircraft owned by the Company. The
At December 31, 2010, accounts payable and accrued liabilities include a promissory note with a service
service provider that defines the payment terms of an outstanding accounts payable balance. The
payment terms of the note are designated as a percentage of the proceeds received under a specified
provider that defines the payment terms of an outstanding accounts payable balance. The note bears
note bears interest at 4% per annum and is secured by an aircraft owned by the Company. The
mapping services contract during 2011. The principal balance of the promissory note at December
interest at 4% per annum and is secured by an aircraft owned by the Company. The payment terms of the
note are designated as a percentage of the proceeds received under a specified mapping services contract
payment terms of the note are designated as a percentage of the proceeds received under a specified
31, 2010 was $1,639 (2009 – nil).
during 2011. The principal balance of the promissory note at December 31, 2010 was $1,639 (2009 – nil).
mapping services contract during 2011. The principal balance of the promissory note at December
10. Obligations under capital lease:
10. Obligations under capital lease:
31, 2010 was $1,639 (2009 – nil).
Future minimum capital lease payments as of December 31 are:
Future minimum capital lease payments as of December 31 are:
10. Obligations under capital lease:
Twelve months ended December 31:
Future minimum capital lease payments as of December 31 are:
2010
2011
Twelve months ended December 31:
2012
$
2013
2010
Total minimum lease payments
2011
Less amount representing interest (at rates ranging from
2012
approximately 3.3% to 17.0%)
2013
Total minimum lease payments
Present value of minimum lease payments
Less amount representing interest (at rates ranging from
Less current portion of obligations under capital lease
approximately 3.3% to 17.0%)
$
$
2010
-
2010
163
31
13
-
207
163
31
(15)
13
207
192
2009
237
2009
132
-
-
237
369
132
-
(10)
-
369
359
$
(151)
(15)
(229)
(10)
359
$ 130
(229)
Present value of minimum lease payments
$ 41
192
Less current portion of obligations under capital lease
In July 2010, the Company entered into a capital lease to finance the purchase of $74 of data storage.
In July 2010, the Company entered into a capital lease to finance the purchase of $74 of data storage. The
$ 130
The lease bears interest at an implicit rate of 17.0% and is secured by the underlying assets.
lease bears interest at an implicit rate of 17.0% and is secured by the underlying assets.
In July 2010, the Company entered into a capital lease to finance the purchase of $74 of data storage.
$ 41
(151)
The lease bears interest at an implicit rate of 17.0% and is secured by the underlying assets.
11. Long-term debt:
11. Long-term debt:
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
2010 Annual Report | Notes to Consolidated Financial Statements
36
Year ended December 31, 2010
11. Long-term debt:
Bank term loan (a)
Term loans (b)
Less current portion
Bank term loan (a)
Term loans (b)
December 31,
2010
December 31,
2009
$
$
$
1,185
-
December 31,
1,185
2010
(527)
1,185
658
-
$
$
$
1,589
915
December 31,
2,504
2009
(1,383)
1,589
1,121
915
Page 15
Page 15
In December 2007, the Company obtained a term loan from a Canadian bank in the amount of
(a)
Less current portion
$2,522 ($2,500 CDN). The loan is repayable in monthly installments of $42 ($40 CDN) over a term
(1,383)
(527)
$
658
$
1,121
1,185
2,504
of 60 months maturing on February 28, 2013. The loan bears interest at 6.25% and is secured by a
In December 2007, the Company obtained a term loan from a Canadian bank in the amount of
In January 2008, the Company obtained a term loan from a Canadian financing company in
general security agreement. An aircraft owned by the Company is listed as the primary collateral
(a) In December 2007, the Company obtained a term loan from a Canadian bank in the amount of $2,522
(a)
($2,500 CDN). The loan is repayable in monthly installments of $42 ($40 CDN) over a term of 60 months
under the general security agreement.
$2,522 ($2,500 CDN). The loan is repayable in monthly installments of $42 ($40 CDN) over a term
maturing on February 28, 2013. The loan bears interest at 6.25% and is secured by a general security
of 60 months maturing on February 28, 2013. The loan bears interest at 6.25% and is secured by a
agreement. An aircraft owned by the Company is listed as the primary collateral under the general
In January 2008, the Company obtained a term loan from a Canadian financing company in
(b)
security agreement.
general security agreement. An aircraft owned by the Company is listed as the primary collateral
the amount of $605. The loan was repayable in monthly installments of principal and interest of $21
(b) In January 2008, the Company obtained a term loan from a Canadian financing company in the amount
under the general security agreement.
over a term of 31 months and matured on August 9, 2010. The loan carried an interest rate of 7.86%
of $605. The loan was repayable in monthly installments of principal and interest of $21 over a term of
and was secured by a general security agreement. The loan was paid in full on August 9, 2010.
(b)
31 months and matured on August 9, 2010. The loan carried an interest rate of 7.86% and was secured
by a general security agreement. The loan was paid in full on August 9, 2010.
the amount of $605. The loan was repayable in monthly installments of principal and interest of $21
In August 2005, the Company obtained a term loan from a Canadian financing company in the
over a term of 31 months and matured on August 9, 2010. The loan carried an interest rate of 7.86%
In August 2005, the Company obtained a term loan from a Canadian financing company in the amount of
amount of $1,715. The loan was repayable in monthly installments of principal and interest of $25
$1,715. The loan was repayable in monthly installments of principal and interest of $25 over a term of 60
and was secured by a general security agreement. The loan was paid in full on August 9, 2010.
over a term of 60 months and matured on August 9, 2010, at which point the remaining balance of
months and matured on August 9, 2010, at which point the remaining balance of $578 was due. The loan
$578 was due. The loan carried an interest rate of 6.5% and was secured by a general security
carried an interest rate of 6.5% and was secured by a general security agreement. The loan was paid in full
In August 2005, the Company obtained a term loan from a Canadian financing company in the
on August 13, 2010.
agreement. The loan was paid in full on August 13, 2010.
amount of $1,715. The loan was repayable in monthly installments of principal and interest of $25
Principal repayments of long-term debt are as follows:
over a term of 60 months and matured on August 9, 2010, at which point the remaining balance of
Principal repayments of long-term debt are as follows:
$578 was due. The loan carried an interest rate of 6.5% and was secured by a general security
Twelve months ended December 31,
agreement. The loan was paid in full on August 13, 2010.
2011
2012
2013
Principal repayments of long-term debt are as follows:
Twelve months ended December 31,
2011
12. Share capital:
2012
2013
a. Authorized:
$
$
$
$
527
561
97
1,185
527
561
97
1,185
The authorized share capital of the Company consists of an unlimited number of Class A common shares
and an unlimited number of Class A participating preferred shares. There are no Class A participating
preferred shares outstanding.
12. Share capital:
12. Share capital:
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
(a) Authorized:
Page 16
The authorized share capital of the Company consists of an unlimited number of Class A common
shares and an unlimited number of Class A participating preferred shares. There are no Class A
2010 Annual Report | Notes to Consolidated Financial Statements
37
participating preferred shares outstanding.
(b)
b. Issued:
Issued:
Class A common shares
Shares
Amount
Shares
Amount
December 31, 2010
Number of
December 31, 2009
Number of
Balance, beginning of period
Stock-based compensation
Issuance of shares
Issuance costs
Balance, end of period
$
52,432,037
239,470
8,125,000
-
181,623
198
6,157
(725)
60,796,507 $ 187,253
$
46,188,713
493,324
5,750,000
-
172,288
813
9,540
(1,018)
52,432,037 $ 181,623
On October 1, 2010, 136,770 Class A common shares were issued to employees of the Company as
On October 1, 2010, 136,770 Class A common shares were issued to employees of the Company as
compensation for services. Compensation expense of $98 for these Class A common shares has
compensation for services. Compensation expense of $98 for these Class A common shares has been
been included in sales, general and administrative expenses (see Note 12(e)).
included in sales, general and administrative expenses (see Note 12(e)).
On July 6, 2010, the Company issued on a bought deal basis 8,125,000 Class A common shares at a
On July 6, 2010, the Company issued on a bought deal basis 8,125,000 Class A common shares at a price of
$0.80 CDN per Class A common share, representing gross proceeds to the Company of $6,157 ($6,500 CDN).
price of $0.80 CDN per Class A common share, representing gross proceeds to the Company of
In connection with the share issuance, the Company issued a compensation option to its underwriters
$6,157 ($6,500 CDN). In connection with the share issuance, the Company issued a compensation
entitling them to purchase an aggregate of 500,000 Class A common shares at a price of $0.80 CDN per
Class A common share at any time for a period of 12 months following the closing of the offering.
option to its underwriters entitling them to purchase an aggregate of 500,000 Class A common
The Company recorded non-cash issuance costs related to these awards based on the fair value of the
shares at a price of $0.80 CDN per Class A common share at any time for a period of 12 months
award at the date of the closing of $110, bringing total costs of the issuance to $725.
following the closing of the offering. The Company recorded non-cash issuance costs related to
On June 30, 2010, 102,700 Class A common shares were issued to non-employee directors of the Company
these awards based on the fair value of the award at the date of the closing of $110, bringing total
as compensation for services. Compensation expense for these Class A common shares has been included
costs of the issuance to $725.
in sales, general and administrative expenses (see Note 12(e)).
On June 4, 2009, 73,338 Class A common shares were issued to non-employee directors of the Company as
On June 30, 2010, 102,700 Class A common shares were issued to non-employee directors of the
compensation for services. Compensation expense for these Class A common shares has been included in
Company as compensation for services. Compensation expense for these Class A common shares
sales, general and administrative expenses (see Note 12(e)).
has been included in sales, general and administrative expenses (see Note 12(e)).
On May 15, 2009, 419,986 Class A common shares were issued to employees of the Company as
compensation for services provided in 2008 following shareholder approval on May 12, 2009.
On June 4, 2009, 73,338 Class A common shares were issued to non-employee directors of the
Company as compensation for services. Compensation expense for these Class A common shares
On April 27, 2009, the Company issued, on a bought deal basis, 5,000,000 units (Units) at a price of $2.00
CDN per unit, representing gross proceeds of $8,200 ($10,000 CDN). Each unit consisted of one Class A
has been included in sales, general and administrative expenses (see Note 12(e)).
common share of the Company and one-half of one common share purchase warrant (Warrant). Each whole
Warrant will be exercisable at a price of $3.00 CDN per Class A common share for a period of one year after
On May 15, 2009, 419,986 Class A common shares were issued to employees of the Company as
the closing date. The warrants expired on April 27, 2010 unexercised. The Company paid the underwriters
compensation for services provided in 2008 following shareholder approval on May 12, 2009.
a cash commission equal to 5.5% or $451 ($550 CDN) of the gross proceeds of the offering, and incurred
additional transaction-related fees of $310 ($368 CDN).
In connection with the April 27, 2009 share issuance, the Company issued a compensation option to its
underwriters, entitling them to purchase an aggregate of 250,000 Class A common shares, at a price of
$2.00 CDN per Class A common share, at any time for a period of 12 months following the closing of the
offering. The Company recorded non-cash issuance costs related to these awards based on the fair value of
the award at the date of the closing of $177 ($217 CDN). The warrants expired on April 27, 2010 unexercised.
In connection with the April 27, 2009 share issuance, the Company granted the underwriters an over-
allotment option to purchase up to an additional 750,000 Units, resulting in the issuance of an additional
750,000 Class A common shares for gross proceeds of $1,340 ($1,500 CDN) on May 26, 2009. The Company
recorded additional commission and transaction fees of $80 ($83 CDN) related to this issuance.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Page 17
On April 27, 2009, the Company issued, on a bought deal basis, 5,000,000 units (Units) at a price of
$2.00 CDN per unit, representing gross proceeds of $8,200 ($10,000 CDN). Each unit consisted of
one Class A common share of the Company and one-half of one common share purchase warrant
(Warrant). Each whole Warrant will be exercisable at a price of $3.00 CDN per Class A common
share for a period of one year after the closing date. The warrants expired on April 27, 2010
unexercised. The Company paid the underwriters a cash commission equal to 5.5% or $451 ($550
CDN) of the gross proceeds of the offering, and incurred additional transaction-related fees of $310
($368 CDN).
In connection with the April 27, 2009 share issuance, the Company issued a compensation option
to its underwriters, entitling them to purchase an aggregate of 250,000 Class A common shares, at a
price of $2.00 CDN per Class A common share, at any time for a period of 12 months following the
closing of the offering. The Company recorded non-cash issuance costs related to these awards
based on the fair value of the award at the date of the closing of $177 ($217 CDN). The warrants
expired on April 27, 2010 unexercised.
In connection with the April 27, 2009 share issuance, the Company granted the underwriters an
over-allotment option to purchase up to an additional 750,000 Units, resulting in the issuance of an
38
additional 750,000 Class A common shares for gross proceeds of $1,340 ($1,500 CDN) on May 26,
2010 Annual Report | Notes to Consolidated Financial Statements
2009. The Company recorded additional commission and transaction fees of $80 ($83 CDN) related
to this issuance.
(c) Contributed surplus:
c. Contributed surplus:
December 31,
2010
December 31,
2009
Balance, beginning of period
Stock-based compensation related to stock
options and warrants
Stock options issued to securities agent
Balance, end of period
$
$
6,882
$
1,350
110
8,342
$
4,590
2,115
177
6,882
(d) Loss per share:
d. Loss per share:
The calculation of the loss per share is based on the weighted average number of Class A common
The calculation of the loss per share is based on the weighted average number of Class A common shares
outstanding. Where the impact of the exercise of options or warrants is anti-dilutive, they are not included
shares outstanding. Where the impact of the exercise of options or warrants is anti-dilutive, they are
in the calculation of diluted loss per share. The Company has incurred a net loss for each period presented
not included in the calculation of diluted loss per share. The Company has incurred a net loss for
and the inclusion of outstanding options and warrants in the loss per share calculation are considered to be
anti-dilutive and are therefore not included in the calculation.
each period presented and the inclusion of outstanding options and warrants in the loss per share
calculation are considered to be anti-dilutive and are therefore not included in the calculation.
The underlying Class A common shares pertaining to the outstanding 3,844,800 stock options and 575,000
warrants could potentially dilute earnings.
e. Director’s share compensation plan:
The Company has a director’s share compensation plan allowing for the issuance of up to 200,000 shares
of the Company’s Class A common shares to non-employee directors of the Company as part of their
annual compensation. At the Annual General and Special Meeting of the Shareholders on May 10, 2010, the
amended share compensation plan was approved to increase the maximum number of Class A common
shares of the Corporation issuable there under from 200,000 to 400,000 of the issued and outstanding
Class A common shares of the Corporation. As of December 31, 2010, 115,872 Class A common shares
remain available under the plan. Compensation expense for issued shares is included in sales, general and
administrative expense.
f. Employee share compensation plan:
The Company established an employee share compensation plan to compensate employees for services
performed. The plan was approved by the shareholders of the Company at the Annual General Meeting on
May 12, 2009. The plan permits the issuance of up to 1,500,000 shares of the Company’s Class A common
shares to employees. As of December 31, 2010, 943,244 Class A common shares remain available for
issuance under the plan. Compensation expense for issued shares is included in operating costs.
g. Stock option plan:
The Company established a stock option plan to provide long-term incentives to attract, motivate, and
retain certain key employees, officers, directors, and consultants providing services to the Company. The
plan permits the granting of options to purchase up to 10% of the outstanding Class A common shares of
the Company. As of December 31, 2010, 6,079,651 Class A common shares were authorized under the plan,
of which 575,000 warrants (See Note 12(i)) and 3,844,800 stock options are issued and outstanding and
2,159,851 options remain available for issuance. Under the plan, no one individual shall be granted an option
which exceeds 5% of the issued and outstanding Class A common shares of the Company. In addition, the
exercise price of each option shall not be less than the market price of the Company’s Class A common shares
on the date of grant. The options are exercisable for a period of not greater than six years, and generally vest
over a period of one to four years, with the first vesting occurring on the one-year anniversary of the date of
the grant. Directors’ options generally vest on the date of the grant and expire on the fifth anniversary of the
date of such grant.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Page 19
grant. Directors’ options generally vest on the date of the grant and expire on the fifth anniversary
2010 Annual Report | Notes to Consolidated Financial Statements
39
of the date of such grant.
The following table summarizes information regarding stock options outstanding at December 31,
The following table summarizes information regarding stock options outstanding at December 31, 2010:
2010:
December 31, 2010
December 31, 2009
Weighted
average
exercise
under option price (CDN)
Number of
shares
Number of
shares
under option
Weighted
average
exercise
price (CDN)
Options outstanding, beginning of period
Granted
Expired
Forfeitures
Options outstanding, end of period
4,135,217
677,000
(337,942)
(629,475)
3,844,800
$
$
4.42
0.76
5.39
2.64
3.98
3,232,086
1,149,800
(246,669)
-
4,135,217
$
$
5.25
1.97
3.96
-
4.42
Options exercisable, end of period
2,686,275
$ 4.93
1,953,042 $ 5.61
Exercise
Price
(CDN$)
Options
outstanding
Weighted average
remaining
contractual life
Options
exercisable
450,000
75,000
261,750
76,000
25,000
636,800
110,000
3,750
85,000
170,000
406,000
60,000
18,750
20,000
1,431,750
INTERMAP TECHNOLOGIES CORPORATION
15,000
Notes to Consolidated Financial Statements
3,844,800
(In thousands of United States dollars, except per share information)
5.92 years
4.83 years
3.92 years
5.04 years
4.58 years
4.92 years
4.83 years
3.83 years
3.67 years
3.37 years
2.17 years
2.42 years
0.33 years
2.67 years
1.33 years
2.67 years
3.16 years
0
75,000
142,500
10,000
6,250
370,400
27,500
3,750
85,000
110,000
330,375
45,000
18,750
15,000
1,431,750
15,000
2,686,275
0.50
0.66
1.49
1.60
1.78
1.84
2.36
2.90
2.98
4.16
5.75
5.95
6.04
6.20
6.30
6.59
Year ended December 31, 2010
For the twelve months ended December 31, 2010, 677,000 options (2009 – 1,149,800) were granted.
For the twelve months ended December 31, 2010, 677,000 options (2009 – 1,149,800) were granted. The per
The per share weighted-average fair value of the options granted during the twelve months ended
share weighted-average fair value of the options granted during the twelve months ended December 31,
December 31, 2010, was $0.48 (2009 – $1.23), determined using the Black-Scholes option pricing
2010, was $0.48 (2009 – $1.23), determined using the Black-Scholes option pricing model on the date of grant
with the following assumptions: expected dividend yield 0% (2009 – 0%), risk-free interest rate of ranging from
model on the date of grant with the following assumptions: expected dividend yield 0% (2009 – 0%),
2.37% to 3.07% (2009 – 1.06% to 2.76%), volatilities ranging from 69.1% to 70.3% (2009 – 68.9% to 106.49%),
risk-free interest rate of ranging from 2.37% to 3.07% (2009 – 1.06% to 2.76%), volatilities ranging
and an expected life of five to six years (2009 – six years).
(h) Non-cash compensation expense:
from 69.1% to 70.3% (2009 – 68.9% to 106.49%), and an expected life of five to six years (2009 – six
h. Non-cash compensation expense:
years).
Non-cash compensation expense has been included in operating costs with respect to stock options
Non-cash compensation expense has been included in operating costs with respect to stock options and
and stock shares granted to employees and non-employees as follows:
stock shares granted to employees and non-employees as follows:
Page 20
December 31,
Employees
Non-employees
Non-cash compensation
2010
1,476
209
1,685
$
$
2009
2,115
132
2,247
$
$
(i) Class A common share purchase warrants:
A summary of the status of Class A common share purchase warrants is as follows:
Balance, beginning of year
3,200,000 75,000
Issued
Expired
Balance, end of year
December 31,
2010
(unaudited)
December 31,
2009
500,000 3,150,000
(3,125,000) (25,000)
575,000 3,200,000
Each warrant entitles its holder to one Class A common share upon payment of an exercise price
ranging from $0.80 CDN to $7.75 CDN (2009 – $1.90 CDN to $7.75CDN), with a weighted average
exercise price of $1.45 CDN (2009 – $2.99 CDN). The outstanding warrants expire as follows:
50,000 on February 22, 2011; 500,000 on July 6, 2011; and 25,000 on May 15, 2012. The per share
fair value of the warrants issued during the 12 months ended December 31, 2010 was $0.23 CDN
(2009 – $0.98 CDN) on the date of grant, determined using the Black-Sholes option pricing model
with the following assumptions: expected dividend yield 0%, risk free interest rate of 2.41% (2009 –
1.06% to 2.76%), volatility of 70.2% (2009 – 68.9% to 106.4%), and an expected life of one year
(2009 – one to six years).
(j) Restricted Shares:
The Company is committed to the issuance of 450,000 restricted shares to key executives under
terms subject to the Board of Directors approval. The instruments are expected to be issued in 2011.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Page 20
(h) Non-cash compensation expense:
Non-cash compensation expense has been included in operating costs with respect to stock options
and stock shares granted to employees and non-employees as follows:
December 31,
2010
40
Employees
2010 Annual Report | Notes to Consolidated Financial Statements
Non-employees
$
1,476
209
Non-cash compensation
$
1,685
2009
2,115
132
2,247
$
$
(i) Class A common share purchase warrants:
i. Class A common share purchase warrants:
A summary of the status of Class A common share purchase warrants is as follows:
A summary of the status of Class A common share purchase warrants is as follows:
December 31,
2010
(unaudited)
December 31,
2009
Balance, beginning of year
3,200,000 75,000
Issued
Expired
Balance, end of year
500,000 3,150,000
(3,125,000) (25,000)
575,000 3,200,000
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Each warrant entitles its holder to one Class A common share upon payment of an exercise price
Each warrant entitles its holder to one Class A common share upon payment of an exercise price ranging
ranging from $0.80 CDN to $7.75 CDN (2009 – $1.90 CDN to $7.75CDN), with a weighted average
from $0.80 CDN to $7.75 CDN (2009 – $1.90 CDN to $7.75CDN), with a weighted average exercise price
exercise price of $1.45 CDN (2009 – $2.99 CDN). The outstanding warrants expire as follows:
of $1.45 CDN (2009 – $2.99 CDN). The outstanding warrants expire as follows: 50,000 on February 22,
2011; 500,000 on July 6, 2011; and 25,000 on May 15, 2012. The per share fair value of the warrants issued
50,000 on February 22, 2011; 500,000 on July 6, 2011; and 25,000 on May 15, 2012. The per share
during the 12 months ended December 31, 2010 was $0.23 CDN (2009 – $0.98 CDN) on the date of grant,
fair value of the warrants issued during the 12 months ended December 31, 2010 was $0.23 CDN
determined using the Black-Sholes option pricing model with the following assumptions: expected
(2009 – $0.98 CDN) on the date of grant, determined using the Black-Sholes option pricing model
dividend yield 0%, risk free interest rate of 2.41% (2009 – 1.06% to 2.76%), volatility of 70.2% (2009 – 68.9%
Page 21
to 106.4%), and an expected life of one year (2009 – one to six years).
with the following assumptions: expected dividend yield 0%, risk free interest rate of 2.41% (2009 –
Year ended December 31, 2010
1.06% to 2.76%), volatility of 70.2% (2009 – 68.9% to 106.4%), and an expected life of one year
j. Restricted Shares:
13. Income taxes:
(2009 – one to six years).
The Company is committed to the issuance of 450,000 restricted shares to key executives under terms
subject to the Board of Directors approval. The instruments are expected to be issued in 2011.
(j) Restricted Shares:
13. Income taxes:
Future income taxes reflect the impact of temporary differences between amounts of assets and
The Company is committed to the issuance of 450,000 restricted shares to key executives under
Future income taxes reflect the impact of temporary differences between amounts of assets and liabilities
liabilities for financial reporting purposes and such amounts as measured by tax laws. The tax
terms subject to the Board of Directors approval. The instruments are expected to be issued in 2011.
for financial reporting purposes and such amounts as measured by tax laws. The tax effects of temporary
effects of temporary differences that give rise to significant portions of the future tax asset and
differences that give rise to significant portions of the future tax asset and future tax liability at December 31,
future tax liability at December 31, 2010 and December 31, 2009 are as follows:
2010 and December 31, 2009 are as follows:
Future tax asset:
Tax effect of loss carryforwards
Tax effect of amounts deductible for tax purposes in
excess of amounts deductible for accounting purposes
Tax effect of unrealized foreign exchange losses
Tax effect of scientific research expenditures
Future tax asset
Less valuation allowance
Net future tax asset
Future tax liability:
Tax effect of amounts deductible for accounting purposes
in excess of amounts deductible for tax purposes
Future tax liability
Net future tax liability
December 31,
2010
December 31,
2009
$
40,081
$
28,116
18,403
943
1,601
61,028
(60,073)
955
1,122
943
1,529
31,710
(27,369)
4,341
(1,043)
(1,043)
(4,423)
(4,423)
$
(88)
$
(82)
The differences in the amounts deductible for tax and accounting purposes relate primarily to
differences in the values of property and equipment on these bases.
The recognition of intangible assets from an acquisition in 2007 resulted in a temporary difference
between the assigned value for book purposes and the tax basis of the intangible assets. The carrying
values of the intangible assets were grossed up, and a future tax liability of $505 was recorded to
reflect this temporary difference. The future tax liability is utilized over a period of five years
(consistent with the amortization of intangible assets) as future income tax recovery.
A valuation allowance is provided when it is more likely than not that some or all of the future tax
asset will not be realized. The Company has established a valuation allowance for the future tax
asset due to the uncertainty of future Company earnings.
2010 Annual Report | Notes to Consolidated Financial Statements
41
The differences in the amounts deductible for tax and accounting purposes relate primarily to differences in
the values of property and equipment on these bases.
The recognition of intangible assets from an acquisition in 2007 resulted in a temporary difference between
the assigned value for book purposes and the tax basis of the intangible assets. The carrying values of the
intangible assets were grossed up, and a future tax liability of $505 was recorded to reflect this temporary
difference. The future tax liability is utilized over a period of five years (consistent with the amortization of
intangible assets) as future income tax recovery.
INTERMAP TECHNOLOGIES CORPORATION
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Year ended December 31, 2010
A valuation allowance is provided when it is more likely than not that some or all of the future tax asset
will not be realized. The Company has established a valuation allowance for the future tax asset due to the
uncertainty of future Company earnings.
Page 22
Page 22
At December 31, 2010 approximately $125,003 of loss carry forwards and $1,599 of tax credits were
At December 31, 2010 approximately $125,003 of loss carry forwards and $1,599 of tax credits were
At December 31, 2010 approximately $125,003 of loss carry forwards and $1,599 of tax credits were
available in various jurisdictions. A summary of losses by year of expiry is as follows:
available in various jurisdictions. A summary of losses by year of expiry is as follows:
available in various jurisdictions. A summary of losses by year of expiry is as follows:
2014
2014
2015
2015
2018
2018
2020-2030
2020-2030
$
$
$
$
1,612
1,612
2,808
2,808
3,135
3,135
117,448
117,448
125,003
125,003
Income tax expense varies from the amount that would be computed by applying the basic federal
Income tax expense varies from the amount that would be computed by applying the basic federal
Income tax expense varies from the amount that would be computed by applying the basic federal and
and provincial income tax rates to the net loss before taxes as follows:
and provincial income tax rates to the net loss before taxes as follows:
provincial income tax rates to the net loss before taxes as follows:
December 31,
December 31,
Tax rate
Tax rate
2010
2010
28.6%
28.6%
2009
2009
32.0%
32.0%
Expected Canadian income tax (recovery) expense
Expected Canadian income tax (recovery) expense
$
$
(27,680)
(27,680)
$
$
(8,221)
(8,221)
Decrease resulting from:
Decrease resulting from:
Change in valuation allowance
Change in valuation allowance
Change in Canadian statutory rate
Change in Canadian statutory rate
Difference between Canadian statutory
Difference between Canadian statutory
rate and those applicable to U.S.
rate and those applicable to U.S.
and other foreign subsidiaries
and other foreign subsidiaries
Security issuance costs
Security issuance costs
Non-deductible expenses and
Non-deductible expenses and
non-taxable income
non-taxable income
Foreign exchange
Foreign exchange
Impact of US$ functional currency tax
Impact of US$ functional currency tax
reporting election
reporting election
Adjustment for prior years income
Adjustment for prior years income
tax matters
tax matters
Expiry of tax losses
Expiry of tax losses
Other
Other
14. Commitments:
14. Commitments:
32,746
32,746
922
922
(6,142)
(6,142)
(173)
(173)
50
50
(20)
(20)
-
-
360
360
-
-
-
-
63
63
$
$
8,722
8,722
2,020
2,020
(861)
(861)
(269)
(269)
465
465
(111)
(111)
(2,218)
(2,218)
485
485
270
270
(133)
(133)
149
149
$
$
The Company has commitments related to operating leases for office space and equipment which
The Company has commitments related to operating leases for office space and equipment which
require the following payments for each year ending December 31:
require the following payments for each year ending December 31:
2011
2011
2012
2012
2013
2013
2014
2014
2015
2015
2016
2016
15. Restructuring:
15. Restructuring:
$
$
$
$
1,168
1,168
856
856
974
974
787
787
554
554
375
375
4,714
4,714
In September 2010, the Company announced and completed an organizational restructuring. Total
In September 2010, the Company announced and completed an organizational restructuring. Total
employee headcount was decreased by 17%, including a significant reduction at the executive level.
employee headcount was decreased by 17%, including a significant reduction at the executive level.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Page 22
At December 31, 2010 approximately $125,003 of loss carry forwards and $1,599 of tax credits were
available in various jurisdictions. A summary of losses by year of expiry is as follows:
Income tax expense varies from the amount that would be computed by applying the basic federal
and provincial income tax rates to the net loss before taxes as follows:
Expected Canadian income tax (recovery) expense
$
(27,680)
$
(8,221)
2014
2015
2018
2020-2030
December 31,
Tax rate
Decrease resulting from:
Change in valuation allowance
Change in Canadian statutory rate
Difference between Canadian statutory
rate and those applicable to U.S.
and other foreign subsidiaries
Security issuance costs
Non-deductible expenses and
non-taxable income
Foreign exchange
Impact of US$ functional currency tax
reporting election
Adjustment for prior years income
tax matters
42
2010 Annual Report | Notes to Consolidated Financial Statements
Expiry of tax losses
Other
$
$
1,612
2,808
3,135
117,448
$
125,003
2010
28.6%
2009
32.0%
32,746
922
(6,142)
(173)
50
(20)
-
360
-
-
63
$
8,722
2,020
(861)
(269)
465
(111)
(2,218)
485
270
(133)
149
14. Commitments:
14. Commitments:
The Company has commitments related to operating leases for office space and equipment which
The Company has commitments related to operating leases for office space and equipment which require
require the following payments for each year ending December 31:
the following payments for each year ending December 31:
INTERMAP TECHNOLOGIES CORPORATION
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
(In thousands of United States dollars, except per share information)
$
2011
2012
2013
2014
2015
2016
Year ended December 31, 2010
Year ended December 31, 2010
1,168
856
974
787
554
375
4,714
$
Page 23
Page 23
15. Restructuring:
The restructuring followed the Company’s completion of the NEXTMap Europe and NEXTMap
15. Restructuring:
The restructuring followed the Company’s completion of the NEXTMap Europe and NEXTMap
USA datasets, and supports the Company’s effort to lower overall operating expenses and preserve
In September 2010, the Company announced and completed an organizational restructuring. Total
USA datasets, and supports the Company’s effort to lower overall operating expenses and preserve
In September 2010, the Company announced and completed an organizational restructuring. Total
cash.
employee headcount was decreased by 17%, including a significant reduction at the executive level. The
cash.
restructuring followed the Company’s completion of the NEXTMap Europe and NEXTMap USA datasets, and
employee headcount was decreased by 17%, including a significant reduction at the executive level.
In the fourth quarter of 2009, a previous restructuring occurred to reduce the capacity of data
supports the Company’s effort to lower overall operating expenses and preserve cash.
In the fourth quarter of 2009, a previous restructuring occurred to reduce the capacity of data
collection and production operations. This restructuring program included workforce reductions
In the fourth quarter of 2009, a previous restructuring occurred to reduce the capacity of data collection
collection and production operations. This restructuring program included workforce reductions
and the closure of the Ottawa, Canada facility. The Company incurred additional restructuring
and production operations. This restructuring program included workforce reductions and the closure
and the closure of the Ottawa, Canada facility. The Company incurred additional restructuring
of the Ottawa, Canada facility. The Company incurred additional restructuring costs in connection with a
costs in connection with a further reduction of data collection and production operations personnel
costs in connection with a further reduction of data collection and production operations personnel
further reduction of data collection and production operations personnel in January 2010 as a continuation
in January 2010 as a continuation of the 2009 actions.
of the 2009 actions.
in January 2010 as a continuation of the 2009 actions.
A summary of the cost related to both restructuring events is as follows:
A summary of the cost related to both restructuring events is as follows:
A summary of the cost related to both restructuring events is as follows:
Amounts incurred in 2009
Amounts incurred in 2009
Amounts incurred in 2010
Amounts incurred in 2010
Total
Total
Workforce
Workforce
Reduction
Reduction
673
673
1,421
1,421
2,094
2,094
$
$
$
$
$
$
$
$
Excess
Excess
Facility
Facility
-
-
1,120
1,120
1,120
1,120
$
$
$
$
Total
Total
673
673
2,541
2,541
3,214
3,214
At December 31, 2010, the accrued liability associated with the restructuring and other related
At December 31, 2010, the accrued liability associated with the restructuring and other related
At December 31, 2010, the accrued liability associated with the restructuring and other related charges
charges consisted of the following:
charges consisted of the following:
consisted of the following:
Balance at December 31, 2009
Balance at December 31, 2009
Charges
Charges
Payments
Payments
Total liablity at December 31, 2010
Total liablity at December 31, 2010
Accrued liability
Accrued liability
Other long-term liability
Other long-term liability
$
$
$
$
Workforce
Workforce
Reduction
Reduction
442
442
1,421
1,421
(1,035)
(1,035)
828
828
765
765
63
63
$
$
$
$
Excess
Excess
Facility
Facility
-
-
1,120
1,120
(308)
(308)
812
812
344
344
468
468
$
$
$
$
Total
Total
442
442
2,541
2,541
(1,343)
(1,343)
1,640
1,640
1,109
1,109
531
531
The workforce reduction accrual of $0.8 million will be paid in installments through September
The workforce reduction accrual of $0.8 million will be paid in installments through September
The workforce reduction accrual of $0.8 million will be paid in installments through September 2012.
2012. The excess facility accrual will be relieved by November 2013. Total restructuring related
The excess facility accrual will be relieved by November 2013. Total restructuring related costs of $2,541
2012. The excess facility accrual will be relieved by November 2013. Total restructuring related
have been recorded in operating costs for the twelve months ended December 31, 2010 (year ended
costs of $2,541 have been recorded in operating costs for the twelve months ended December 31,
costs of $2,541 have been recorded in operating costs for the twelve months ended December 31,
December 31, 2009 – $673).
2010 (year ended December 31, 2009 – $673).
2010 (year ended December 31, 2009 – $673).
The Company announced further workforce reductions in January 2011 and expects to incur $845 in related
The Company announced further workforce reductions in January 2011 and expects to incur $845
restructuring costs during the first quarter of 2011.
The Company announced further workforce reductions in January 2011 and expects to incur $845
in related restructuring costs during the first quarter of 2011.
in related restructuring costs during the first quarter of 2011.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
INTERMAP TECHNOLOGIES CORPORATION
(In thousands of United States dollars, except per share information)
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Year ended December 31, 2010
2010 Annual Report | Notes to Consolidated Financial Statements
Page 24
Page 24
Page 24
43
16. Segmented information:
16. Segmented information:
16. Segmented information:
The operations of the Company are in one industry segment: digital mapping and related services.
16. Segmented information:
The operations of the Company are in one industry segment: digital mapping and related services.
The operations of the Company are in one industry segment: digital mapping and related services.
Geographic segments of revenue are as follows:
The operations of the Company are in one industry segment: digital mapping and related services.
Geographic segments of revenue are as follows:
Geographic segments of revenue are as follows:
Geographic segments of revenue are as follows:
Year Ended December 31,
$
Year Ended December 31,
United States of America
Year Ended December 31,
Asia/Pacific
Europe
United States of America
Australia
Asia/Pacific
United States of America
Europe
Asia/Pacific
Australia
Europe
Property and equipment of the Company are located as follows:
Australia
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Contract
Services
2010
Contract
Services
Contract
2010
Services
2,352
2010
59
1,123
2,352
746
59
2,352
4,280
1,123
59
746
1,123
4,280
746
4,280
Data
Licenses
2010
Data
Licenses
Data
2010
Licenses
1,853
2010
2,631
5,168
1,853
-
2,631
1,853
9,652
5,168
2,631
-
5,168
9,652
-
9,652
Contract
Services
2009
Contract
Services
Contract
2009
Services
594
2009
17,293
783
594
1,473
17,293
594
20,143
783
17,293
1,473
783
20,143
1,473
20,143
$
$
$
$
$
$
Data
Licenses
2009
Data
Licenses
Data
2009
Licenses
3,141
2009
3,385
3,638
3,141
-
3,385
3,141
10,164
3,638
3,385
-
3,638
10,164
-
10,164
$
$
$
$
$
$
$
$
$
$
2009
1,638
2009
10,686
2009
882
1,638
174
1,638
10,686
13,380
10,686
882
882
174
13,380
174
13,380
Property and equipment of the Company are located as follows:
2010
December 31,
Property and equipment of the Company are located as follows:
Property and equipment of the Company are located as follows:
Canada
748
2010
December 31,
United States of America
6,520
2010
December 31,
Asia/Pacific
418
Canada
748
Europe
80
Canada
United States of America
748
6,520
7,766
United States of America
Asia/Pacific
6,520
418
Asia/Pacific
Europe
418
80
The multi-client data library is located in the United States of America, the intangible assets are
Europe
7,766
80
7,766
$
$
located in the Czech Republic, and the assets held for sale are located in the United States of
The multi-client data library is located in the United States of America, the intangible assets are
The multi-client data library is located in the United States of America, the intangible assets are
America.
located in the Czech Republic, and the assets held for sale are located in the United States of
The multi-client data library is located in the United States of America, the intangible assets are located in
located in the Czech Republic, and the assets held for sale are located in the United States of
America.
the Czech Republic, and the assets held for sale are located in the United States of America.
A summary of sales to major customers that exceeded 10% of total sales during each period are as
America.
follows:
A summary of sales to major customers that exceeded 10% of total sales during each period are as follows:
A summary of sales to major customers that exceeded 10% of total sales during each period are as
A summary of sales to major customers that exceeded 10% of total sales during each period are as
follows:
Year Ended December 31,
follows:
Customer A
Year Ended December 31,
Customer B
Year Ended December 31,
Customer C
Customer A
Customer D
Customer B
Customer A
Customer E
Customer C
Customer B
Customer D
Customer C
Customer E
Customer D
Customer E
17. Fair values and financial risk management:
The Company has exposure to the following risks from its use of financial instruments: credit risk,
The Company has exposure to the following risks from its use of financial instruments: credit risk, market
market risk, and liquidity risk. Management, the Board of Directors, and the Audit Committee
The Company has exposure to the following risks from its use of financial instruments: credit risk,
risk, and liquidity risk. Management, the Board of Directors, and the Audit Committee monitor risk
The Company has exposure to the following risks from its use of financial instruments: credit risk,
management activities and review the adequacy of such activities.
monitor risk management activities and review the adequacy of such activities.
market risk, and liquidity risk. Management, the Board of Directors, and the Audit Committee
market risk, and liquidity risk. Management, the Board of Directors, and the Audit Committee
monitor risk management activities and review the adequacy of such activities.
a. Credit risk
monitor risk management activities and review the adequacy of such activities.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. Such risks arise principally from certain financial assets held by the
Company consisting of outstanding trade receivables and investment securities.
-
2009
-
2009
37
-
64
-
-
16,572
37
-
16,673
64
37
16,572
64
16,673
16,572
16,673
2,080
2010
1,752
2010
1,267
2,080
1,120
1,752
2,080
692
1,267
1,752
6,911
1,120
1,267
692
1,120
6,911
692
6,911
2009
2010
$
$
$
$
$
$
$
$
$
$
$
$
17. Fair values and financial risk management:
17. Fair values and financial risk management:
17. Fair values and financial risk management:
The maximum exposure to credit risk of the Company at period end is the carrying value of these
financial assets.
i. Trade receivables
Provisions for doubtful accounts are made on a customer-by-customer basis. All write downs against
receivables are recorded within sales, general and administrative expense in the statement of operations.
The Company is exposed to credit-related losses on sales to customers outside North America due to
potentially higher risks of collectability.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
(In thousands of United States dollars, except per share information)
Notes to Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Year ended December 31, 2010
(a) Credit risk
(a) Credit risk
(a) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a
financial instrument fails to meet its contractual obligations. Such risks arise principally from
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a
certain financial assets held by the Company consisting of outstanding trade receivables and
financial instrument fails to meet its contractual obligations. Such risks arise principally from
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a
investment securities.
certain financial assets held by the Company consisting of outstanding trade receivables and
financial instrument fails to meet its contractual obligations. Such risks arise principally from
investment securities.
certain financial assets held by the Company consisting of outstanding trade receivables and
The maximum exposure to credit risk of the Company at period end is the carrying value of
investment securities.
these financial assets.
The maximum exposure to credit risk of the Company at period end is the carrying value of
The maximum exposure to credit risk of the Company at period end is the carrying value of
these financial assets.
i. Trade receivables
these financial assets.
i. Trade receivables
Provisions for doubtful accounts are made on a customer-by-customer basis. All write downs
Page 25
Page 25
Page 25
i. Trade receivables
2010 Annual Report | Notes to Consolidated Financial Statements
against receivables are recorded within sales, general and administrative expense in the
Provisions for doubtful accounts are made on a customer-by-customer basis. All write downs
statement of operations. The Company is exposed to credit-related losses on sales to customers
against receivables are recorded within sales, general and administrative expense in the
Provisions for doubtful accounts are made on a customer-by-customer basis. All write downs
outside North America due to potentially higher risks of collectability.
statement of operations. The Company is exposed to credit-related losses on sales to customers
against receivables are recorded within sales, general and administrative expense in the
Amounts receivable as of December 31, 2010 and December 31, 2009 are composed of:
outside North America due to potentially higher risks of collectability.
statement of operations. The Company is exposed to credit-related losses on sales to customers
Amounts receivable as of December 31, 2010 and December 31, 2009 are composed of:
outside North America due to potentially higher risks of collectability.
December 31,
2010
Amounts receivable as of December 31, 2010 and December 31, 2009 are composed of:
2009
44
December 31,
Trade amounts receivable
Amounts receivable as of December 31, 2010 and December 31, 2009 are composed of:
Employee receivables
December 31,
Trade amounts receivable
Other miscellaneous receivables
Employee receivables
$
Trade amounts receivable
$
Other miscellaneous receivables
Employee receivables
Trade amounts receivable by geography are composed of:
$
Other miscellaneous receivables
Trade amounts receivable by geography are composed of:
December 31,
Trade amounts receivable by geography are composed of:
$
2009
11,982
51
2009
11,982
237
51
12,270
11,982
237
51
12,270
237
2009
12,270
2010
3,991
23
2010
3,991
142
23
4,156
3,991
142
23
4,156
142
2010
4,156
$
$
$
$
$
$
$
$
$
$
$
$
$
December 31,
2010
Trade amounts receivable by geography are composed of:
United States of America
166
$
Asia/Pacific
2,284
2010
December 31,
United States of America
166
Europe
1,541
Asia/Pacific
2,284
3,991
United States of America
166
Europe
1,541
Asia/Pacific
2,284
An aging of the Company’s trade amounts receivable are as follows:
3,991
Europe
1,541
2010
December 31,
An aging of the Company’s trade amounts receivable are as follows:
3,991
An aging of the Company’s trade amounts receivable are as follows:
2010
December 31,
An aging of the Company’s trade amounts receivable are as follows:
Current
1,968
31-60 days
768
2010
December 31,
Current
1,968
61-90 days
73
31-60 days
768
Over 91 days
1,182
Current
1,968
61-90 days
73
3,991
31-60 days
768
Over 91 days
1,182
61-90 days
73
3,991
As of December 31, 2010, $1,255 of trade amounts receivable (2009 - $2,497) were past due of
Over 91 days
1,182
2009
9,068
417
2009
9,068
1,208
417
1,289
9,068
1,208
11,982
417
1,289
1,208
11,982
1,289
2009
8,863
2,550
2009
8,863
569
2,550
11,982
8,863
569
2,550
11,982
569
2009
11,982
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
which $277 was deemed uncollectible and fully reserved.
As of December 31, 2010, $1,255 of trade amounts receivable (2009 - $2,497) were past due of
3,991
11,982
$
which $277 was deemed uncollectible and fully reserved.
As of December 31, 2010, $1,255 of trade amounts receivable (2009 - $2,497) were past due of
As of December 31, 2010, $1,255 of trade amounts receivable (2009 - $2,497) were past due of which
which $277 was deemed uncollectible and fully reserved.
$277 was deemed uncollectible and fully reserved.
ii. Investments in securities
The Company manages its credit risk surrounding cash and cash equivalents by dealing solely with
what Management believes to be reputable banks and financial institutions, and limiting the allocation
of excess funds into financial instruments that Management believes to be highly liquid, low-risk
investments. At December 31, 2010, the Company’s cash and cash equivalents include $3,750 of money
market investments in short-term treasury bills with a United States bank (year ended December 31, 2009
– $5,441). The remaining balance at December 31, 2010 is held in cash at banks within the United States,
Canada, Europe, Asia, and Australia to facilitate the payment of operations in those jurisdictions.
b. Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will
affect the Company’s income or the value of its holding of financial instruments.
i. Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risk from various currencies,
primarily the Canadian dollar, Euro, British pound, Indonesian rupiah, Czech Republic koruna, and
Australian dollar. Foreign exchange risk arises from sales and purchase transactions as well as recognized
financial assets and liabilities that are denominated in a currency other than the United States dollar,
which is the functional currency of the Company and its subsidiaries.
2010 Annual Report | Notes to Consolidated Financial Statements
45
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
The Company’s primary objective in managing its foreign exchange risk is to preserve sales values
and cash flows and reduce variations in performance. Although Management monitors exposure
to such fluctuations, it does not employ any external hedging strategies to counteract the foreign
Year ended December 31, 2010
currency fluctuations.
The balances in foreign currencies at December 31, 2010 are as follows:
Page 27
INTERMAP TECHNOLOGIES CORPORATION
Indonesian
Notes to Consolidated Financial Statements
Rupiah
(In thousands of United States dollars, except per share information)
Czech
Republic
Koruna
Canadian
Dollar
British
Pound
(in USD)
Euro
Australian
Dollar
$
(39)
120
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(1,122)
(In thousands of United States dollars, except per share information)
(201)
(140)
(585)
(62)
$
Year ended December 31, 2010
Cash and cash equivalents
Amounts receivable
Accounts payable
and accrued liabilities
Bank, term loans, and
capital leases
Year ended December 31, 2010
The balances in foreign currencies at December 31, 2009 are as follows:
(181)
(2,226)
1,067
(24)
$
$
$
$
$
293
1,359
(1,185)
2
36
31
79
11
9
$
$
$
$
-
-
-
37
5
(8)
Page 28
-
-
$
(30)
Czech
Republic
Koruna
34
Page 28
Australian
Dollar
Indonesian
Rupiah
The balances in foreign currencies at December 31, 2009 are as follows:
The balances in foreign currencies at December 31, 2009 are as follows:
$
$
Canadian
Dollar
British
Pound
(in USD)
Euro
$
$
1,902
45
356
1,982
20
74
Canadian
Dollar
(914)
Euro
(489)
British
Pound
Indonesian
Rupiah
(158)
(44)
$
12
32
197
238
$
1,409
-
Australian
Dollar
(193)
Czech
Republic
Koruna
(338)
(in USD)
Cash and cash equivalents
Amounts receivable
Accounts payable
and accrued liabilities
Bank, term loans, and
Cash and cash equivalents
capital leases
Amounts receivable
Accounts payable
and accrued liabilities
Bank, term loans, and
capital leases
$
$
(1,605)
1,902
45
(572)
$
(914)
356
-
1,982
$
(489)
$
$
20
-
74
1,849
$
50
$
$
12
-
32
(114)
$
197
-
238
$
97
$
1,409
-
-
1,216
(193)
(44)
(158)
(338)
The carrying values of cash and cash equivalents, amounts receivable, accounts payable, and
-
accrued liabilities approximate their fair value given their relatively short period to maturity.
50
The carrying value of long-term debt and obligations under capital lease approximates their fair
(1,605)
1,849
1,216
(572)
(114)
97
$
$
$
$
$
$
-
-
-
-
debt and obligations under capital lease.
The Company is exposed to currency risks primarily from the fluctuation of future cash flows of
value, as current market rates available to the Company are similar to those on the long-term
The carrying values of cash and cash equivalents, amounts receivable, accounts payable, and
The carrying values of cash and cash equivalents, amounts receivable, accounts payable, and accrued
accrued liabilities approximate their fair value given their relatively short period to maturity.
liabilities approximate their fair value given their relatively short period to maturity. The carrying value
The carrying value of long-term debt and obligations under capital lease approximates their fair
of long-term debt and obligations under capital lease approximates their fair value, as current market
rates available to the Company are similar to those on the long-term debt and obligations under
value, as current market rates available to the Company are similar to those on the long-term
its Canadian-dollar-denominated long-term debt and obligations under capital lease due to
capital lease.
debt and obligations under capital lease.
changes in foreign exchange rates.
The Company is exposed to currency risks primarily from the fluctuation of future cash flows of its
The Company is exposed to currency risks primarily from the fluctuation of future cash flows of
Canadian-dollar-denominated long-term debt and obligations under capital lease due to changes in
Based on the net exposures at December 31, 2010 and 2009, and assuming that all other
foreign exchange rates.
its Canadian-dollar-denominated long-term debt and obligations under capital lease due to
variables remain constant, a 10% depreciation or appreciation of the United States dollar
against the following currencies would result in an increase / (decrease) in net earnings by the
changes in foreign exchange rates.
Based on the net exposures at December 31, 2010 and 2009, and assuming that all other variables
remain constant, a 10% depreciation or appreciation of the United States dollar against the following
Based on the net exposures at December 31, 2010 and 2009, and assuming that all other
currencies would result in an increase / (decrease) in net earnings by the amounts shown below:
variables remain constant, a 10% depreciation or appreciation of the United States dollar
December 31, 2010
against the following currencies would result in an increase / (decrease) in net earnings by the
amounts shown below:
amounts shown below:
(in USD)
Canadian
Dollar
Euro
British
Pound
Indonesian
Rupiah
Czech
Republic
Koruna
Australian
Dollar
December 31, 2010
United States dollar:
Depreciates 10%
Appreciates 10%
(in USD)
$
223
(223)
Canadian
Dollar
$
Euro
(107)
107
$
British
Pound
$
2
Indonesian
(2)
Rupiah
18
(18)
$
Czech
Republic
Koruna
$
3
Australian
(3)
Dollar
(3)
3
December 31, 2009
(in USD)
United States dollar:
Depreciates 10%
Appreciates 10%
$
$
223
Canadian
(223)
Dollar
$
(107)
107
Euro
$
2
British
(2)
Pound
18
$
Indonesian
(18)
Rupiah
Czech
3
$
Republic
(3)
Koruna
(3)
Australian
3
Dollar
$
57
$
(185)
$
(5)
$
11
Czech
$
(10)
$
Canadian
(57)
Dollar
185
British
Indonesian
Republic
Australian
(11)
10
5
Euro
Pound
Rupiah
Koruna
Dollar
(122)
122
December 31, 2009
United States dollar:
Depreciates 10%
Appreciates 10%
(in USD)
ii.
Interest rate risk
United States dollar:
ii.
Interest rate risk
Depreciates 10%
Appreciates 10%
$
57
$
(185)
$
(5)
$
11
$
(10)
$
(57)
185
5
(11)
10
(122)
122
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Page 28
The balances in foreign currencies at December 31, 2009 are as follows:
(in USD)
Canadian
British
Indonesian
Republic
Australian
Dollar
Euro
Pound
Rupiah
Koruna
Dollar
Cash and cash equivalents
$
1,902
$
356
$
45
1,982
$
20
74
$
12
32
197
238
$
1,409
Czech
Amounts receivable
Accounts payable
and accrued liabilities
Bank, term loans, and
capital leases
(914)
(489)
(44)
(158)
(338)
(193)
(1,605)
-
-
-
-
$
(572)
$
1,849
$
50
$
(114)
$
97
$
1,216
-
-
The carrying values of cash and cash equivalents, amounts receivable, accounts payable, and
accrued liabilities approximate their fair value given their relatively short period to maturity.
The carrying value of long-term debt and obligations under capital lease approximates their fair
value, as current market rates available to the Company are similar to those on the long-term
debt and obligations under capital lease.
The Company is exposed to currency risks primarily from the fluctuation of future cash flows of
its Canadian-dollar-denominated long-term debt and obligations under capital lease due to
changes in foreign exchange rates.
Based on the net exposures at December 31, 2010 and 2009, and assuming that all other
variables remain constant, a 10% depreciation or appreciation of the United States dollar
against the following currencies would result in an increase / (decrease) in net earnings by the
amounts shown below:
December 31, 2010
46
Indonesian
Rupiah
2010 Annual Report | Notes to Consolidated Financial Statements
Canadian
Dollar
British
Pound
(in USD)
Euro
Czech
Republic
Koruna
Australian
Dollar
United States dollar:
Depreciates 10%
Appreciates 10%
December 31, 2009
(in USD)
United States dollar:
Depreciates 10%
Appreciates 10%
$
$
223
(223)
$
(107)
107
$
2
(2)
$
18
(18)
$
3
(3)
(3)
3
Canadian
Dollar
Euro
British
Pound
Indonesian
Rupiah
Czech
Republic
Koruna
Australian
Dollar
$
$
57
(57)
$
(185)
185
$
(5)
5
$
11
(11)
$
(10)
10
(122)
122
Interest rate risk
ii. Interest rate risk
ii.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.
Financial assets and financial liabilities with variable interest rates expose the Company to cash
flow interest rate risk. The Company’s cash and cash equivalents include short-term highly liquid
investments that earn interest at market rates. The Company does not have any debt instruments
outstanding with variable interest rates at December 31, 2010.
Financial liabilities that bear interest at fixed rates are subject to fair value interest rate risk. No currency
hedging relationships have been established for the related monthly interest and principle payments.
The Company manages its interest rate risk by minimizing financing costs on its borrowings and
maximizing interest income earned on excess funds while maintaining the liquidity necessary to
conduct operations on a day-to-day basis.
c. Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
The Company manages its liquidity risk by evaluating working capital availability and forecasting cash flows
from operations and anticipated investing and financing activities. At December 31, 2010, the Company
has a cash and cash equivalent balance of $4,356 (year ended December 31, 2009 – $10,355) and working
capital of negative $3,350 (year ended December 31, 2009 – $18,091). All of the Company’s financial
liabilities, other than the promissory note included with accounts payable and accrued liabilities, long-term
debt and obligations under capital lease, have a contractual maturity of less than 45 days.
Year ended December 31, 2010
The following are the contractual maturities of the undiscounted cash flows of financial liabilities as of
December 31, 2010:
Page 30
Accounts payable
and accrued liabilities
Obliations under
capital leases
Long-term debt
Other long-term liabilities
Payment due:
In less than
3 months
Between 3
months and
6 months
Between 6
months and
1 year
Between 1
year and 2
years
Between 2
years and 5
years
$
4,518
$
1,434
$
-
$
-
$
-
The
52
147
-
52
147
-
60
293
-
31
586
313
$
4,717
$
1,633
$
353
$
930
$
13
98
218
329
following are the contractual maturities of the undiscounted cash flows of financial liabilities as
of December 31, 2009:
and accrued liabilities
$
5,916
$
-
$
-
$
-
$
-
Payment due:
In less than
3 months
Between 3
months and
6 months
Between 6
months and
1 year
Between 1
year and 2
years
Between 2
years and 5
years
80
278
63
278
94
948
132
555
$
6,274
$
341
$
1,042
$
687
$
-
647
647
Accounts payable
Obliations under
capital leases
Long-term debt
(d) Fair values
The carrying values of cash and cash equivalents, amounts receivable, unbilled revenue,
accounts payable, accrued liabilities, other long-term liabilities, and deposit for sale of assets
approximate their fair value given their relatively short period to maturity. The carrying value
of long-term debt and obligations under capital lease approximates their fair value, as current
market rates available to the Company are similar to those on the long-term debt and
obligations under capital lease.
Financial instruments recorded at fair value on the Consolidated Balance Sheet are classified
using a fair value hierarchy that reflects the significance of the inputs used in making the
measurements. The fair value hierarchy has the following levels:
Level 1 – valuations based on quoted prices (unadjusted) in active markets for identical assets or
liabilities;
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Year ended December 31, 2010
Page 30
and accrued liabilities
$
4,518
$
1,434
$
-
$
-
$
-
Payment due:
Between 3
Between 6
Between 1
Between 2
In less than
months and
months and
year and 2
years and 5
3 months
6 months
1 year
years
years
52
52
60
31
13
The
Accounts payable
Obliations under
capital leases
Long-term debt
Other long-term liabilities
2010 Annual Report | Notes to Consolidated Financial Statements
47
147
-
147
-
293
-
586
313
98
218
$
4,717
$
1,633
$
353
$
930
$
329
following are the contractual maturities of the undiscounted cash flows of financial liabilities as
The following are the contractual maturities of the undiscounted cash flows of financial liabilities as of
of December 31, 2009:
December 31, 2009:
Payment due:
In less than
3 months
Between 3
months and
6 months
Between 6
months and
1 year
Between 1
year and 2
years
Between 2
years and 5
years
$
5,916
$
-
$
-
$
-
$
-
80
278
63
278
94
948
132
555
$
6,274
$
341
$
1,042
$
687
$
-
647
647
Accounts payable
and accrued liabilities
Obliations under
capital leases
Long-term debt
(d) Fair values
d. Fair values
The carrying values of cash and cash equivalents, amounts receivable, unbilled revenue, accounts payable,
The carrying values of cash and cash equivalents, amounts receivable, unbilled revenue,
accrued liabilities, other long-term liabilities, and deposit for sale of assets approximate their fair value given
accounts payable, accrued liabilities, other long-term liabilities, and deposit for sale of assets
their relatively short period to maturity. The carrying value of long-term debt and obligations under capital
approximate their fair value given their relatively short period to maturity. The carrying value
lease approximates their fair value, as current market rates available to the Company are similar to those on
the long-term debt and obligations under capital lease.
of long-term debt and obligations under capital lease approximates their fair value, as current
market rates available to the Company are similar to those on the long-term debt and
Financial instruments recorded at fair value on the Consolidated Balance Sheet are classified using a fair
value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value
obligations under capital lease.
hierarchy has the following levels:
Financial instruments recorded at fair value on the Consolidated Balance Sheet are classified
Level 1 – valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
using a fair value hierarchy that reflects the significance of the inputs used in making the
Level 2 – valuation techniques based on inputs other than quoted prices included in Level 1 that are
measurements. The fair value hierarchy has the following levels:
observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices;
Level 1 – valuations based on quoted prices (unadjusted) in active markets for identical assets or
Level 3 – valuation techniques using inputs for the asset or liability that are not based on observable market
data (unobservable inputs).
liabilities;
The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial
instrument is classified to the lowest level of the hierarchy for which a significant input has been considered
in measuring fair value.
There are no financial instruments measured at fair value other than cash which is classified as Level 1.
During the year, there have been no transfers of amounts between any categories. There are no items
classified in Level 2 or Level 3 as of December 31, 2010.
18. Capital risk management:
The Company’s objectives when managing capital are to safeguard its assets while at the same time
maintaining investor, creditor, and market confidence, and to sustain future development of the business.
The Company includes shareholders’ equity and long-term debt in the definition of capital. To maintain
or adjust the capital structure, the Company may issue new shares, issue new debt with different
characteristics, acquire or dispose of assets, or adjust the amount of cash and short-term investment
balances held.
48
2010 Annual Report | Notes to Consolidated Financial Statements
The Company has established a budgeting and planning process with a focus on cash, working capital,
and operational expenditures and continuously assesses its capital structure in light of current economic
conditions and changes in the Company’s short-term and long-term plans. Neither the Company nor any of
its subsidiaries are subject to externally imposed capital requirements.
19. Presentation:
Certain 2009 comparative figures have been reclassified to conform to the financial statement presentation
for 2010.
Corporate Information
49
Offices
Canadian Corporate Office
Intermap Technologies Corp.
#1200, 555 - 4th Ave. S.W.
Calgary, Alberta
Canada
Phone: (403) 266-0900
Fax: (403) 265-0499
Denver Worldwide Headquarters
Intermap Technologies, Inc.
8310 South Valley Highway,
Suite 400
Englewood, CO 80112-5847
United States
Phone: (303) 708-0955
Fax: (303) 708-0952
Intermap Technologies GmbH
Heimeranstrasse 35
80339 Muenchen
Germany
Phone: +49 (0) 89 3090799-0
Fax: +49 (0) 89 3090799-19
P.T. ExsaMap Asia
Plaza City View - 2nd Floor
Jl. Kemang Timur No.22
Pejaten Barat, Jakarta
Selatan 12510
Phone: +62 21 719 3808
Fax: +62 21 719 3818
Intermap Technologies s.r.o.
Novodvorska 1010/14
142 00 Prague 4
Czech Republic
Phone: +420 261 341 411
Fax +420 261 341 414
Transfer Agent
Computershare Trust
Company of Canada
600, 530 - 8th Avenue S.W.
Calgary, Alberta T2P 3S8
Canada
Auditors
KPMG LLP
160 Elgin Street
Suite 2000
Ottawa, ON K2P 3S8
Canada
Stock Exchange
Board of Directors
Todd A. Oseth
President and & CEO
Intermap Technologies
Colorado, USA
Brian L. Bullock
Chairman
Intermap Technologies
Colorado, USA
Larry G. Garberding
Lead Director
Retired
Executive Vice President & CFO
DTE Energy Company
Intermap stock is listed on the Toronto
stock exchange under the symbol “IMP.”
Officers and Key Personnel
Donald R. Gardner
Chief Executive Officer
Canadian Spirit Resources Inc.
Alberta, Canada
Todd A. Oseth
President & CEO
Richard L. Mohr
Senior Vice President & CFO
Howard J. Nellor
Retired
President & CEO
Peerless Systems
Florida, USA
David Cunningham
Senior Vice President, Sales & Marketing
Keith Tennant
Vice President, Engineering
Jerald S. Howe
Senior Vice President & General Counsel
TASC
Virginia, USA
Terry J. Owen
President & CEO
Hammerstone Corporation
Alberta, Canada
Intermap Technologies
8310 South Valley Highway, Suite 400
Englewood, Colorado 80112-5847
United States
Phone: +1 (303) 708-0955
+1 (303) 708-0952
Fax:
info@intermap.com
E-mail:
www.Intermap.com
Web:
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