2017
ANNUAL REPORT
Intermap Technologies Corporation
Corporate Information
OFFICES
Canadian Corporate Office
Intermap Technologies Corp.
840–6th Avenue SW
Suite 200
Calgary, AB T2P 3E5
Canada
Phone: (403) 266-0900
Fax: (403) 265-0499
Denver Worldwide Headquarters
Intermap Technologies, Inc.
8310 South Valley Highway
Suite 400
Englewood, CO 80112-5809
United States
Phone: (303) 708-0955
Fax: (303) 708-0952
BOARD OF DIRECTORS
Partick A. Blott
Chairman and CEO
New York, New York, USA
Philippe Frappier
Director
Toronto, Ontario, Canada
TRANSFER AGENT
Computershare Trust
Company of Canada
600, 530 - 8th Avenue S.W.
Calgary, Alberta T2P 3S8
Canada
AUDITORS
KPMG LLP
150 Elgin Street
Suite 1800
Ottawa, ON K2P 2P8
Canada
P.T. ExsaMap Asia
Wisma Anugraha - 2nd Floor
Jl. Taman Kemang No.32B
Jakarta, Selatan 12510
Indonesia
Phone: +62 021 719 3808
Fax: +62 021 719 3818
Intermap Technologies s.r.o.
Zelený pruh 95/97
140 00 Prague 4
Czech Republic
Phone: +420 261 341 411
Fax +420 261 341 414
Andrew P. Hines
Director and Corporate Secretary
Westfield, New Jersey, USA
Michael R. Zapata
Director
New York, New York, USA
STOCK EXCHANGE
INTERMAP STOCK IS LISTED
ON THE TORONTO STOCK
EXCHANGE UNDER THE
SYMBOL “IMP”
OFFICERS AND KEY PERSONNEL
Patrick A. Blott
Chairman and CEO
Jennifer S. Bakken
Exceutive Vice President and CFO
Management’s Discussion and Analysis
1
For the year ended December 31, 2017
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 February 21, 2018 and should be
read together with the Company’s audited Consolidated Financial Statements and the accompanying
notes for the years ended December 31, 2017 and 2016. The results reported herein have been prepared
in accordance with International Financial Reporting Standards (IFRS) 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 Web site 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 Technologies® Corporation
(“Intermap” or the “Company”) 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 expressions suggesting future outcomes, and includes statements that actions, events, or
conditions “may,” “would,” “could,” or “will” be taken or occur in the future. These forward-looking statements
may be based on assumptions that the Company 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 development 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) there will be adequate liquidity available to the Company to carry
out its operations; (ii) payments on material contracts will occur within a reasonable period of time after
contract completion; (iii) the continued sales success of Intermap’s products and services; (iv) the continued
success of business development activities; (v) there will be no significant delays in the development
and commercialization of the Company’s products; (vi) the Company will continue to maintain sufficient
and effective production and software development capabilities to compete on the attributes and cost
of its products; (vii) there will be no significant reduction in the availability of qualified and cost-effective
human resources; (viii) the continued existence and productivity of subsidiary operations; (ix) demand for
geospatial related products and services will continue to grow in the foreseeable future; (x) there will be no
significant barriers to the integration of the Company’s products and services into customers’ applications;
(xi) the Company will be able to maintain compliance with applicable contractual and regulatory
obligations and requirements, and (xii) superior 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, cash available to fund operations, availability of capital, revenue fluctuations, nature of
government contracts, economic conditions, loss of key customers, retention and availability of executive
2
talent, competing technologies, common share price volatility, loss of proprietary information, software
functionality, internet and system infrastructure functionality, information technology security, breakdown
of strategic alliances, and international and political considerations, including but not limited to those risks
and uncertainties discussed under the heading “Risk Factors” in this MD&A 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 the Company’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, the Company assumes no obligation to publicly update or revise any forward-
looking statements made 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 the Company or
persons acting on the Company’s behalf, are expressly qualified in their entirety by these cautionary
statements.
BUSINESS OVERVIEW
Intermap is a global geospatial information company, creating a wide variety of geospatial solutions and
analytics for its customers. Intermap is a premier worldwide provider of geospatial data solutions.
Intermap currently generates revenue from three primary business activities, comprised of i) data
acquisition and collection, using proprietary radar sensor technologies, ii) value-added data products
and services, which leverage the Company’s proprietary NEXTMap® database, together with proprietary
software and fusion technologies, and iii) commercial applications and solutions, including a webstore and
software sales targeting selected industry verticals that rely on accurate high resolution elevation data.
These geospatial solutions are used in a wide range of applications including, but not limited to, location-
based information, risk assessment, geographic information systems (GIS), engineering, utilities, global
positioning systems (GPS) maps, oil and gas, renewable energy, hydrology, environmental planning, land
management, wireless communications, transportation, advertising, and 3D visualization.
Intermap has the ability to create its own digital 3D geospatial data using its proprietary multi-frequency
radar mounted in Learjet aircraft. Intermap’s radar-based technology allows it to collect data at any time
of the day, including under conditions such as cloud and tree cover, or darkness, which are conditions that
limit most competitive technologies. The Company’s proprietary radar also enables data to be collected
over larger areas, at higher collection speeds, and at accuracy levels that are difficult to achieve with
competitive technologies.
In addition to data collection, the Company is a world leader in data fusion, analytics, and orthorectification,
and has decades of experience aggregating data derived from a number of different sensor technologies
and data sources. The Company processes raw digital elevation and image data from its own and other
sources to create three high resolution geospatial datasets that provide a ground-true foundation layer
upon which accurate value-added products and services can be developed. The three high resolution data
sets include digital surface models (DSM), digital terrain models (DTM), and orthorectified radar images
(ORI). These datasets are further augmented with additional elevation and resolution data layers, and
served to customers by web service to create other value-added products, such as viewsheds, line of sight
maps, and orthorectified mosaic tiles.
Unlike many geospatial companies, because of its unique acquisition and processing capability, Intermap
retains exclusive ownership of its high resolution NEXTMap® database, which covers the entire globe.
Intermap’s NEXTMap database, together with third party data and our in-house analytics team, provide
a variety of applications and geospatial solutions for its customers. The NEXTMap database contains
a fusion of proprietary multi-frequency radar imagery and data, including unique Interferometric
Synthetic Aperture Radar (IFSAR)-derived data, proprietary data models, and purchased third-party data,
collected from multiple commodity sensor technologies, such as light detection and ranging (LiDAR),
2017 Annual Report | Management’s Discussion and Analysis 3
photogrammetry, satellite, and other available sources. The NEXTMap database also includes proprietary
information developed by our analytical teams such as 3D city models, census data, real-time traffic, 3D
road vectors, outdoor advertising assets, weather related hazards, points of interest, cellular towers, flood
models and wildfire models.
The Company generates revenue by licensing its geospatial products using its proprietary data, analytics,
and applications for specific industries.
FINANCIAL INFORMATION
The following table sets forth selected financial information for the periods indicated.
Selected Annual Information
U.S. $ millions, except per share data
2017
2016
2015
Revenue:
Acquisition services
Value-added data
Software and solutions
Total revenue
Operating income (loss)
$
14.9
2.8
1.6
$
3.5
2.2
1.3
$
3.8
3.8
1.0
$
19.3
$
7.0
$
8.6
$
1.3
$
(9.5)
$
(9.2)
Change in fair value of derivative instruments
$
0.1
$
1.9
$
(2.6)
Financing costs
Net loss
EPS basic and diluted (1)
Adjusted EBITDA
Assets:
$
(2.5)
$
(10.1)
$
(6.7)
$
(1.2)
$
(15.3)
$
(18.1)
$
(0.08)
$
(1.33)
$
(1.66)
$
3.5
$
(7.2)
$
(7.6)
Cash and cash eqivalents, amounts receivable, unbilled revenue
$
6.9
$
7.2
$
3.1
Total assets
Liabilities:
$
11.8
$
9.0
$
5.3
Long-term liabilities (including finance lease obligations)
$
26.8
$
22.2
$
7.8
Total liabilities
$
33.8
$
33.6
$
27.7
(1) Amounts have been adjusted following the rights offering and share consolidation that occurred during 2017.
Revenue
Consolidated revenue for the year ended December 31, 2017 totaled $19.3 million, compared to $7.0
million for the same period in 2016, representing a 174% increase. Approximately 65% of consolidated
revenue was generated outside the United States, compared to 33% for the same period in 2016.
Acquisition services revenue for the year ended December 31, 2017 totaled $14.9 million, compared to
$3.5 million for the same period in 2016. The increase is due to new data acquisition contracts using our
upgraded, high resolution, multi-frequency radar system, without similar sized contracts in the prior year.
Value-added data revenue for the year ended December 31, 2017 was $2.8 million, an increase from the
same period in 2016 which totaled $2.2 million. The increase primarily resulted from recurring service
contracts that reflect growing global demand for our advanced data processing.
Software and solutions revenue increased for the year ended December 31, 2017 to $1.6 million from $1.3
million for the same period in 2016. During 2017, the software and solutions customer base grew consistent
with management expectations.
4
2017 Annual Report | Management’s Discussion and Analysis
4
Classification of Operating Costs
The composition of the operating costs classification on the Consolidated Statements of Profit and Loss and
Other Comprehensive Income is as follows:
U.S. $ millions
Personnel
Purchased services & materials
Facilities and other expenses
Travel
Personnel
2017
2016
$
$
8.5
5.4
0.6
2.3
16.8
9.4
3.3
0.3
1.8
14.8
$
$
Personnel expense includes direct labor, employee compensation, employee benefits, and commissions.
Personnel expense for the years ended December 31, 2017 and 2016, totaled $8.5 million and $9.4 million,
respectively. The 9% year-over-year decrease in personnel expense is primarily due to the organizational
restructuring initiated in 2016 and continued into 2017 which was designed to focus the Company’s
resources on its core business.
During 2017, the Company notified certain individual employees of its intent to discontinue their
employment. The Company incurred $0.2 million in restructuring charges as a result of these reductions.
The Company incurred $0.9 million in restructuring charges during 2016 by discontinuing employment for
certain individual employees, including executive management.
Non-cash compensation expense is included in operating costs and relates to the Company’s long-term
incentive plan, share options, and shares granted to employees and non-employees. Non-cash share-based
compensation for the years ended December 31, 2017 and 2016, remained unchanged at $0.3 million for
each year.
Purchased Services and Materials
)
Purchased services and materials (PS&M) includes (i) aircraft and radar related costs, including jet fuel; (ii)
professional and consulting costs; (iii) third-party support services related to the collection, processing and
editing of the Company’s airborne radar data collection activities; (iv) third-party data collection activities
(i.e. LiDAR, satellite imagery, air photo, etc.); and (v) third-party software expenses (including maintenance
and support).
For the years ended December 31, 2017 and 2016, PS&M expense was $5.4 million and $3.3 million,
respectively. The increase is due to increased expenses for the incremental acquisition services projects.
Facilities and Other Expenses
For the years ended December 31, 2017 and 2016, facilities and other expenses were $0.6 million and $0.3
million, respectively. The increase was due to non-recurring payments to advisors supporting the corporate
restructuring, offset by a decrease in rent expenses and general office overhead expenses during 2017.
Travel
For the years ended December 31, 2017 and 2016, travel expense was $2.3 million and $1.8 million,
5
respectively. The increase is due to travel incurred on the acquisition services projects.
2017 Annual Report | Management’s Discussion and Analysis
5
Adjusted EBITDA
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is not a
recognized performance measure under IFRS. The term EBITDA consists of net income (loss) and
excludes interest (financing costs), taxes, and depreciation. Adjusted EBITDA also excludes share-based
compensation, change in fair value of derivative instruments, restructuring costs and related non-recurring
payments supporting the corporate restructuring, and gain or loss on foreign currency translation. Adjusted
EBITDA is included as a supplemental disclosure because 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 or gains that are nonrecurring. The most directly comparable measure to
Adjusted EBITDA calculated in accordance with IFRS is net income (loss). The following is a reconciliation of
the Company’s net loss to Adjusted EBITDA.
U.S. $ millions
Net loss
Financing costs
Income tax recovery
Depreciation of property and equipment
EBITDA
Non-recurring payments
Change in value of derivative instruments
Restructuring costs
Share-based compensation
Loss on foreign currency translation
Adjusted EBITDA
2017
2016
$
(1.2)
2.5
(0.1)
0.9
$
(15.3)
10.1
(2.4)
0.8
$
2.1
$
(6.8)
0.8
(0.1)
0.2
0.3
0.2
0.2
(1.9)
0.9
0.3
0.1
$
3.5
$
(7.2)
Adjusted EBITDA for the year ended December 31, 2017 was positive $3.5 million, compared to negative
$7.2 million for the same period in 2016. The increase in adjusted EBITDA is primarily attributable to an
increase in revenue and the restructuring of operating costs.
Financing Costs
Financing costs for the year ended December 31, 2017 totaled $2.5 million, compared to $10.1 million for
the same period in 2016. The decrease in year-over-year financing costs is attributable to the February
2015 note payable that was significantly discounted at inception and matured in February 2016, resulting
in financing costs of $5.8 million being recognized in early 2016. The $2.5 million of financing costs
recognized during the year ended December 31, 2017 related to the accretion of the notes payable that
were restructured in December 2016.
Depreciation of Property and Equipment
Depreciation expense for the years ended December 31, 2017 and 2016 was $0.9 million and $0.8 million,
respectively. The increase was due to placing the upgraded radar system into service during the third
quarter of 2017.
7
Derivative Instruments
The Company has issued non-broker warrants that are considered to be derivative liabilities as the warrants
are exercisable in a currency (Canadian dollar) other than the Company’s functional currency (United States
dollar). Accordingly, the warrants are measured at fair value at each reporting date, with changes in fair
value included in the consolidated statement of profit and loss and other comprehensive income for the
applicable reporting period. During the years ended December 31, 2017 and 2016, the change in the fair
value of derivative instruments was a gain of $0.1 million and a gain of $1.9 million, respectively.
2017 Annual Report | Management’s Discussion and Analysis
6
See Selected Quarterly Information for the change recognized each reporting period.
Gain (Loss) on Foreign Currency Translation
The Company continuously monitors the level of foreign currency assets and liabilities carried on its
consolidated balance sheet in an effort to minimize as much of the foreign currency translation exposure as
possible. The difference between any amounts incurred in one currency and settled in a different currency is
recognized as a gain or loss in the period it is settled.
During the year ended December 31, 2017, a foreign currency translation loss of $214 thousand was
recorded, compared to a loss of $105 thousand for the same period in 2016.
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 consolidated
balance sheets as unbilled revenue.
Amounts receivable and unbilled revenue increased from $0.6 million at December 31, 2016, to $0.7
million at December 31, 2017. Trade amounts receivable due in the current period represent 99% and
93% of total amounts receivable at December 31, 2017 and 2016, respectively. Trade amounts receivable
aged greater than 90 days relate to historically slow paying, but reliable customers. The Company reviews
the amounts receivable aging monthly and monitors the payment status of each invoice. The Company
also communicates with slow paying or delinquent customers on a regular basis regarding the schedule
of future payments. At the balance sheet date, $Nil has been reserved as uncollectible as all amounts
receivable balances greater than 90 days are considered to be collectible.
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities generally include trade payables, project-related accruals,
personnel-related costs, and interest on outstanding debt obligations. Accounts payable and accrued
liabilities increased to $4.0 million at December 31, 2017, from $3.6 million at December 31, 2016.
U.S. $ millions
Accounts payable
Accrued liablities
December 31,
2017
December 31,
2016
$
$
1.9
2.1
4.0
2.3
1.3
3.6
$
$
The accounts payable balance decreased from $2.3 million at December 31, 2016 to $1.9 million at
December 31, 2017 due to the timing of trade payables payments. The accrued liabilities balance increased
to $2.1 million at December 31, 2017 from $1.3 million at December 31, 2016. The increase is due primarily
to unbilled costs associated with the radar system upgrade and personnel related accruals.
Notes Payable
The notes payable balance of $26.5 million at December 31, 2017 reflects the debt restructuring that
occurred during the fourth quarter of 2016 and the first quarter of 2017 as follows:
10
2017 Annual Report | Management’s Discussion and Analysis
7
•
•
During the fourth quarter of 2016, the Company restructured the outstanding notes (July 8, 2016
note for $2.0 million and September 15, 2016 note for $25.8 million), which resulted in the extension
of the maturity date to September 1, 2020 and the elimination of the interest. The restructuring also
included the elimination of a 17.5% royalty agreement. The fair value of the notes at December 31,
2017 reflected in the balance sheet is $24.0 million, and is subject to prepayment provisions if the
Company builds excess cash; if the Company’s aggregate cash and cash equivalents balance exceeds
$10.0 million at the end of any calendar quarter, 50% of the balance greater than $10.0 million must be
applied to reduce debt against the outstanding notes payable.
During the first quarter of 2017, $2.9 million of proceeds from a Rights Offering was used to partially
repay a $6.0 million Bridge Loan, received on December 14, 2016. The balance of the Bridge Loan was
converted into a non-interest bearing note payable due September 1, 2020. The fair value of the note
payable at December 31, 2017 was $2.5 million, following the recognition of a $0.7 million gain on the
modification of the Bridge Loan, which was credited to contributed surplus. Additionally, the note is
subject to the same prepayment provisions as the Company’s other debt, should the Company build
excess cash; if the Company’s aggregate cash and cash equivalents balance exceeds $10.0 million
at the end of any calendar quarter, 50% of the balance greater than $10.0 million must be pre-paid
against the outstanding notes payable. (See Note 7(a) to the Consolidated Financial Statements for
further discussion of the terms of the notes and Rights Offering).
The notes payable balance of $27.7 million at December 31, 2016 reflects the debt restructuring that
occurred during 2016 as follows:
•
•
•
•
During the first quarter of 2016, the February 23, 2015 note for $7.3 million and related accrued interest
of $1.8 million were consolidated into a new note payable dated March 3, 2016 totaling $9.1 million;
simple interest payable at maturity at an annual rate of 15%. Additionally, effective interest of $7.3
million from a 17.5% royalty on net revenues, which is a component of the February 23, 2015 financing,
was included in Notes Payable as it was considered a perpetual debt instrument with a floating interest
rate. Effective December 14, 2016, the royalty payment requirements were eliminated.
During the second quarter of 2016, the debt financing that occurred on January 14, 2015 for $0.5
million and accrued interest of $0.1 million was paid to the holder. Also, three debt financings that
occurred during 2015 (the April 2, 2015 financing in the amount of $1.5 million; simple interest payable
at maturity at an annual rate of 20%, the April 28, 2015 financing in the amount of $2.5 million; simple
interest payable at maturity at an annual rate of 20%, and the July 13, 2015 financing in the amount
of $3.0 million; simple interest payable at maturity at an annual rate of 15%) were consolidated into a
new note payable dated April 12, 2016 totaling $13.2 million; simple interest payable at maturity at an
annual rate of 15%.
During the third quarter of 2016, the Company issued two notes. The first debt financing occurred on
July 8, 2016 for $2.0 million; simple interest payable at maturity at an annual rate of 15%. Two debt
financings that occurred during the first and second quarter of 2016 (the March 2, 2016 financing in
the amount of $9.1 million; simple interest payable at maturity at an annual rate of 15%, and the April
12, 2016 financing in the amount of $13.2 million; simple interest payable at maturity at an annual rate
of 15%) plus related accrued interest of $1.5 million and an additional $2.0 million debt financing were
consolidated into a new note payable dated September 15, 2016 totaling $25.8 million; simple interest
payable at maturity at an annual rate of 15%.
During the fourth quarter of 2016, the Company restructured the current outstanding notes (the July
8, 2016 note for $2.0 million and the September 15, 2016 note for $25.8 million), which resulted in
the extension of the maturity date to September 1, 2020 and the elimination of all interest and cash
sweep requirements. The restructuring also included the elimination of the 17.5% royalty agreement
2017 Annual Report | Management’s Discussion and Analysis 8
(See Note 7(a) to the Consolidated Financial Statements for further discussion of the terms of the
notes). Additionally, the Company received a $6.0 million Bridge Loan on December 14, 2016. The loan
is payable on the earlier of March 31, 2017 or the completion of the Rights Offering, which closed on
March 30, 2017. All of the proceeds of the Rights Offering were used to pay down the Bridge Loan, and
any amounts outstanding after the Rights Offering were converted into a term loan due September
1, 2020. The Bridge Loan was non-interest bearing. Each of the December 2016 notes is subject to
prepayment provisions as described above.
Project Financing
The project financing balance at December 31, 2017 increased slightly to $1.5 million from $1.4 million at
December 31, 2016. The increase is due to accrued interest.
Unearned Revenue and Deposits
The unearned revenue balance at December 31, 2017 increased to $1.6 million from $0.5 million at
December 31, 2016. This balance consists of payments received from customers for contracts that are in
progress and have not yet fulfilled the necessary revenue recognition criteria.
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.
U.S. $ millions, except per
share data
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Total revenue
Depreciation
Financing costs
Change in fair value of
derivative intruments
$
1.4
$
0.9
$
3.3
$
1.4
$
2.6
$
4.5
$
6.3
$
5.9
$
0.2
$
0.2
$
0.2
$
0.2
$
0.2
$
0.1
$
0.3
$
0.3
$
6.6
$
1.0
$
1.4
$
1.1
$
0.7
$
0.6
$
0.6
$
0.6
$
(0.1)
$
(0.7)
$
(0.6)
$
(0.5)
$
(0.1)
$
-
$
-
$
-
Operating income (loss)
$
(2.7)
$
(3.5)
$
(1.0)
$
(2.3)
$
(1.5)
$
(0.2)
$
1.8
Net income (loss)
$
(9.3)
$
(3.8)
$
(2.0)
$
(0.2)
$
(1.9)
$
(0.9)
$
1.1
$
1.2
$
0.5
Net income (loss) per share
- basic and diluted (1)
$
(0.81)
$
(0.33)
$
(0.17)
$
(0.02)
$
(0.13)
$
(0.06)
$
0.07
$
0.04
Adjusted EBITDA
$
(2.3)
$
(3.3)
$
(0.8)
$
(0.8)
$
(0.8)
$
0.3
$
2.1
$
1.9
(1) Amounts have been adjusted following the rights offering and share consolidation that occurred during 2017.
Revenue
Consolidated revenue for the fourth quarter of 2017 totaled $5.9 million, compared to $1.4 million for
the same period in 2016, representing a 297% increase. Approximately 79% of consolidated revenue was
generated outside the United States during the fourth quarter of 2017, compared to 29% for the same
period in 2016.
Acquisition services revenue for the quarter ended December 31, 2017 totaled $4.6 million, compared to
$0.8 million for the same period in 2016. The increase is due to new data acquisition contracts using our
upgraded, high resolution, multi-frequency radar system.
12
2017 Annual Report | Management’s Discussion and Analysis
9
Value-added data revenue for the quarter ended December 31, 2017 was $0.8 million, an increase from
the same period in 2016 which totaled $0.4 million. The increase primarily resulted from recurring service
contracts that reflect growing global demand for our advanced data processing.
Software and solutions revenue increased for the quarter ended December 31, 2017 to $0.5 million from
$0.2 million for the same period in 2016. During the fourth quarter of 2017, the software and solutions
customer base grew consistent with management expectations.
Personnel
Personnel expense for the three-month periods ended December 31, 2017 and 2016, totaled $2.5 million
and $1.7 million, respectively. The increase in personnel expense is primarily due to bonuses earned by
employees during the fourth quarter of 2017 with no corresponding expense in 2016.
Non-cash share-based compensation for the quarters ended December 31, 2017 and 2016, remained
unchanged at $0.1 million for each quarter.
Purchased Services and Materials
For the three-month periods ended December 31, 2017 and 2016, PS&M expense was $1.2 million and $0.1
million, respectively. The increase is directly related to direct costs associated with the increase in acquisition
services revenue.
Facilities and Other Expenses
For the three-month periods ended December 31, 2017 and 2016, facilities and other expenses were
$0.5 million and $0.7 million, respectively. The decrease was due the timing of the payments to advisors
supporting the corporate restructuring.
Travel
For the quarters ended December 31, 2017 and 2016, travel expense was $0.1 million for both periods.
CONTRACTUAL OBLIGATIONS
Contractual obligations include (i) operating leases on office locations; (ii) notes payable; and (iii) finance
leases on computer equipment and software. Principal and interest repayments of these obligations are as
follows:
Payments due by Period (US $ thousands)
Contractual obligations
Operating leases
Notes payable
Project financing
Finance leases
Total
Total
$
1,101
33,914
1,494
27
36,536
$
$
1 - 3 years
614
33,914
191
15
34,734
$
4 - 5 years After 5 years
-
$
-
-
-
$
-
-
$
-
-
-
$
-
Less than 1 year
487
$
-
1,303
12
1,802
$
13
2017 Annual Report | Management’s Discussion and Analysis
10
LIQUIDITY AND CAPITAL RESOURCES
Management continually assesses liquidity in terms of the ability to generate sufficient cash flow to fund
the business. Net cash flow is affected by the following items: (i) operating activities, including the level
of amounts receivable, unbilled receivables, accounts payable, accrued liabilities and unearned revenue
and deposits; (ii) investing activities, including the purchase of property and equipment; and (iii) financing
activities, including debt financing and the issuance of capital stock.
Cash provided by operations during the year ended December 31, 2017 totaled $3.5 million, compared to
cash used in operations of $8.1 million during the same period in 2016. The year-over-year increase in cash
provided of $12.1 million is due primarily to the increase in revenue and unearned revenue.
Net cash used in investing activities totaled $3.5 million for the year ended December 31, 2017, compared
to $0.3 million during the same period in 2016. Net cash used in investing activities in 2017 related to the
purchase of computer related equipment and radar system upgrades. Net cash used in investing activities
in 2016 related to the purchase of computer related equipment.
Net cash used in financing activities totaled $0.2 million for the year ended December 31, 2017 compared
to net cash generated from financing activities of $14.9 million during the same period in 2016. The net
cash used during the year ended December 31, 2017 resulted from $164 thousand of issuance costs and
the repayment of finance leases of $56 thousand. The net cash generated during the year ended December
31, 2016 resulted from the closing of a debt financing totaling $15.0 million and $0.8 million restricted cash
adjustment, offset by $0.2 million of issuance costs, repayment of long term debt and finance leases of $0.1
million, and repayment of a notes payable of $0.6 million.
The cash position of the Company at December 31, 2017 was $6.4 million, compared to $6.5 million at
December 31, 2016. Working capital improved to positive $0.3 million as of December 31, 2017, from
negative $3.8 million as of December 31, 2016, primarily due to the reduction of $5.9 million of current
portion of notes payable, offset by an increase in unearned revenue of $1.1 million.
During the year ended December 31, 2017, the Company generated operating income of $1.3 million,
incurred positive adjusted EBITDA of $3.5 million, and positive cash flow from operations of $3.5 million.
Revenue for the year ended December 31, 2017 was $19.3 million, which represents a $12.3 million
increase in revenue from the same period in 2016. At December 31, 2017, the Company has a shareholders’
deficiency of $22.0 million that was generated by prior years’ accumulated losses.
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 unearned revenue. Revenue recognized in excess of
billings is recorded as unbilled revenue.
Goods Sold
Revenue from the sale of data licenses in the ordinary course of business is measured at the fair value of the
consideration received or receivable.
Software Subscriptions
Revenue from software sold on a subscription basis is recognized straight-line over the term of the
agreement.
2017 Annual Report | Management’s Discussion and Analysis 11
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 contract 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.
Data Library (NEXTMap)
The Company maintains a data library, which is the result of the acquisition and processing of digital
map data. Ownership rights to this data are typically retained by the Company and the data is licensed
to customers. Although the carrying value of the data library at December 31, 2017 is $Nil, management
believes the asset generates significant value to the Company and the solutions it provides. In accordance
with IFRS, the Company will review each reporting period for indications that an adjustment to the carrying
value may be necessary.
Use of Estimates
Preparing financial statements in conformity with IFRS requires management to make judgments, estimates
and assumptions that affect the application of accounting policies and 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.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a
material adjustment within the next financial year include the following:
Depreciation and amortization rates
In calculating the depreciation and amortization expense, management is required to make estimates of
the expected useful lives of property and equipment and intangible assets.
Amounts receivable
The Company uses historical trends and performs specific account assessments when determining the
allowance for doubtful accounts. These accounting estimates are in respect to the amounts receivable line
item in the Company’s consolidated balance sheet. At December 31, 2017, amounts receivable represented
4% of total assets.
The estimate of the Company’s allowance for doubtful accounts could change from period to period due to
the allowance being a function of the balance and composition of amounts receivable.
2017 Annual Report | Management’s Discussion and Analysis 12
Share-based compensation
The Company uses the Black-Scholes option-pricing model to determine the grant date fair value of share-
based compensation. The following assumptions are used in the model: dividend yield; expected volatility;
risk-free interest rate; expected option life; and fair value.
Changes to assumptions used to determine the grant date fair value of share-based compensation awards
can affect the amounts recognized in the consolidated financial statements.
Derivative financial instruments
The Company has determined that its functional currency is the United States dollar and has issued (i) non-
broker warrants, and (ii) debt with a conversion option denominated in a currency other than its functional
currency. The Company measures the cost of the derivative financial instruments by reference to the fair
value of the instruments at the date at which they are granted and revalues them at each reporting date. In
determining the fair value of the non-broker warrants, the Company used the Black-Scholes option pricing
model with the following assumptions: average volatility rate; market price at the reporting date; risk-free
interest rate; the remaining expected life of the warrant; and an exchange rate at the reporting date. The
inputs used in the Black-Scholes model are taken from observable markets. Any impact reported has no net
effect on cash flows or the operating results of the Company.
Provisions
A provision is recognized, if as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. If the future settlement were to adversely differ from management’s
expectations, the Company could incur either an additional expense or reversal of the expense previously
recorded.
Compound financial instruments
The Company has issued compound financial instruments which comprise convertible notes denominated
in United States dollars that can be converted to share capital at the option of the holder. The valuation and
accounting for the notes is complex and requires the application of management estimates and judgments
with respect to the determination of appropriate valuation models, certain assumptions applied within
such valuation models, and certain aspects of the accounting method applied on initial recognition.
Notes Payable
The Company has issued long-term promissory notes with no stated interest obligation. The valuation
and accounting for the zero-interest notes is complex and requires the application of management
estimates and judgments with respect to the determination of appropriate valuation method applied on
initial recognition. The assumptions and models used for estimating fair value of the note transactions are
disclosed in Note 7(a) to the Consolidated Financial Statements.
Revenue
Changes to the assumptions used to measure revenue could impact the amount of revenue recognized in
the consolidated financial statements.
2017 Annual Report | Management’s Discussion and Analysis 13
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
The Company adopted the following new accounting standards and amendments which are effective for
the Company’s interim and annual consolidated financial statements commencing January 1, 2017.
Amendments to IAS 7, Statement of Cash Flows
In January 2016, the IASB issued amendments to IAS 7. These amendments require entities to provide
disclosures that help users of the financial statements to better understand changes in liabilities that
arise from financing activities, including both changes arising from cash flow and non-cash changes. The
Company adopted the amendments to IAS 7 in its financial statements for the annual period beginning on
January 1, 2017. To meet the disclosure requirement, the Company provided a reconciliation of the opening
and closing balances of liabilities arising from financing activities (See Note 7 to the Consolidated Financial
Statements).
Amendments to IAS 12, Income Taxes
In January 2016, the IASB issued amendments to IAS 12. The amendments clarify the accounting for
deferred tax assets for unrealized losses on debt instruments measured at fair value. These amendments
are to be applied retrospectively for annual periods beginning on or after January 1, 2017. The Company
adopted the amendments to IAS 12 in its financial statements for the annual period beginning on January
1, 2017. The adoption of these amendments did not have a material impact on the consolidated financial
statements.
FUTURE ACCOUNTING STANDARDS AND INTERPRETATIONS
The IASB and International Financial Reporting Interpretations Committee (IFRIC) issued the following
standards that have not been applied in preparing these Consolidated Financial Statements, as their
effective dates fall within annual periods beginning after the current reporting period.
IFRS 9, Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9, bringing together the classification and
measurement, impairment and hedge accounting phases of the project to replace IAS 39, Financial
Instruments: Recognition and Measurement. This standard simplifies the classification of a financial asset
as either at amortized cost or at fair value as opposed to the multiple classifications which were permitted
under IAS 39. This standard also requires the use of a single impairment method as opposed to the multiple
methods in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments
in the context of its business model and the contractual cash flow characteristics of the financial assets.
The standard also adds guidance on the classification and measurement of financial liabilities. IFRS 9 is to
be applied retrospectively for annual periods beginning on or after January 1, 2018. Early application is
permitted. The Company does not expect the adoption of this standard will have a material impact on the
consolidated financial statements.
IFRS 15, Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15, which provides a single, principles-based five-step model for revenue
recognition to be applied to all customer contracts, and requires enhanced disclosures. The standard also
provides guidance relating to recognition of customer acquisition costs. In April 2016, the IASB issued
Clarifications to IFRS 15 in relation to the identification of performance obligations, principal versus
agent considerations, as well as licensing application guidance. This standard will be effective January 1,
2018 and allows early adoption. The two permitted transition methods under the new standard are the
full retrospective method, in which case the standard would be applied to each prior reporting period
presented, or the modified retrospective method, in which case the cumulative effect of applying the
standard would be recognized at the date of initial application.
2017 Annual Report | Management’s Discussion and Analysis 14
The Company is finalizing its assessment of the impact of the adoption of this new revenue standard on the
consolidated financial statements and related disclosures. Based on the results of the evaluation performed
to date, the Company has not identified any changes which will have a material impact on the consolidated
financial statements. Similarly, the Company has not identified any significant impact on the business
processes, controls and systems. The Company will need to provide expanded disclosures relating to the
nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers.
The Company is in the process of finalizing the documentation of the accounting policies and has adopted
the new standard effective January 1, 2018 using the modified retrospective approach.
IFRS 16, Leases
In January 2016, the International Accounting Standards Board issued IFRS 16, Leases, which specifies how
to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model,
requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less
or the underlying asset has a low value. Consistent with its predecessor, IAS 17, the new lease standard
continues to require lessors to classify leases as operating or finance. IFRS 16 is to be applied retrospectively
for annual periods beginning on or after January 1, 2019. Earlier application is permitted if IFRS 15 Revenue
from contract with customers has also been applied. The Company does not intend to adopt this standard
early and is currently evaluating the impact of adopting this standard. The Company does expect the
adoption of this standard to increase assets and liabilities as it will be required to record a right-of-use asset
and a corresponding liability in the consolidated financial statements.
OUTSTANDING SHARE DATA
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
business on February 21, 2018, 16,396,289 Class A common shares were issued and outstanding. There are
no preferred shares currently issued and outstanding.
As of February 21, 2018, potential dilutive securities include (i) 1,391,454 outstanding share options in the
Company’s share option plan with a weighted average exercise price of C$1.08, and (ii) 1,632,366 warrants
outstanding with a weighted average exercise price of USD$0.87. Each option and warrant entitles the
holder to purchase one Class A common share. Directors of the Company purchased an aggregate of
458,908 warrants from an arm’s length holder of such warrants in January 2017. The warrants were subject
to adjustment and resulted in 546,456 warrants currently being held by current Directors of the Company
following the Rights Offering that was completed on March 30, 2017.
INTERNAL CONTROLS AND DISCLOSURE CONTROLS AND PROCEDURES
Internal Control over Financial Reporting
The Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officer have
designed, or have caused to be designed under their supervision, internal control over financial reporting
as defined under National Instrument 52-109 – Certification of Disclosure in Issuer’s Annual and Interim
Filings, to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with IFRS. The Company’s Chairman and Chief
Executive Officer and the Company’s Chief Financial Officer have evaluated, or caused to be evaluated
under their supervision, the effectiveness of the Company’s internal control over financial reporting and
have determined, based on the criteria established by the Committee of Sponsoring Organizations of the
Treadway Commission (2013) and on this evaluation, that such internal controls over financial reporting
were effective at December 31, 2017.
2017 Annual Report | Management’s Discussion and Analysis 15
Changes in Internal Control over Financial Reporting
There have been no significant changes in the design of internal control over financial reporting that
occurred during the year ended December 31, 2017, that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting.
Disclosure Controls and Procedures
The Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officer have
designed, or have caused to be designed under their supervision, disclosure controls and procedures to
provide reasonable assurance that material information relating to the Company has been made known to
them and that information required to be disclosed in the Company’s annual filings, interim filings or other
reports filed by it or submitted by it under securities legislation is recorded, processed, summarized and
reported within the time periods specified by applicable securities legislation. The Company’s Chairman and
Chief Executive Officer and the Company’s Chief Financial Officer have evaluated, or caused to be evaluated
under their supervision, the effectiveness of the Company’s disclosure controls and procedures and have
determined, based on that evaluation, that such disclosure controls and procedures were effective at
December 31, 2017.
RISKS AND UNCERTAINTIES
The risks and uncertainties described below are not exhaustive. Additional risks not presently known
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.
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.
Revenue Fluctuations
Intermap’s revenue has fluctuated over the years. Acquisition services projects, the purchase of value
added data, and the purchase of software and solutions by the Company’s customers are all scheduled per
customer requirements and the timing of regulatory and/or budgetary decisions. The commencement or
completion of acquisition 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.
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 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.
2017 Annual Report | Management’s Discussion and Analysis 16
Project Finance Facilities
Intermap’s contracts may include significant down payments and the commencement of work under such
contracts may be dependent on the finalization of a third-party project finance facility to provide for the
down payment and progress payments under the terms of the contract. While the Company expects that
such financing facilities will be finalized in a reasonable period of time from the date of contract completion,
Intermap is typically not a party to the financing facility negotiations and both finalization and timing of the
financing facility is therefore outside of the Company’s control. No assurance can be given that any required
financing facility will ultimately be completed subsequent to contract finalization.
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. If deemed necessary, the Company could secure export credit insurance on certain of its
international receivables, which greatly reduces the commercial and political risks of operating outside of
North America.
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 2017, the Company had two key customers that accounted for 77% of total revenue. During 2016,
50% of the revenue was attributable to one key customer. 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 focused on aligning its resources with its acquisition services, value added data and software
and solutions revenue opportunities. This realignment requires the retention of executive talent. The
Company will continue to invest in training and leadership development 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.
Competing Technologies
With respect to the Company’s software applications, several direct and indirect competitors are currently
in the market with product offerings that could be considered at least partially competitive to Intermap’s
products. These potential competitors vary in size and could have greater technical and/or financial
resources than the Company, to develop and market their products. The financial performance of the
Company may be adversely affected by such competition. Additionally, no assurances can be given that
additional direct competitors to the Company may not be formed or that the Company may not lose some
or all of its contracts with existing or future customers, thereby decreasing its ability to compete. Also,
existing and future customers may have, or may develop, in-house solutions that could take the place of
the Company’s software applications. Any adverse change in the business relationships with the Company’s
customers or partners could have a material adverse impact on the Company’s software applications
business and its future prospects.
2017 Annual Report | Management’s Discussion and Analysis 17
With respect to the Company’s radar data acquisition business, it is possible that commercially available
satellite images could, in the future, match or come close to the image resolution offered by the Company’s
radar technology. Intermap continues to evaluate its data collection capabilities and look for improvements
to the performance of its radar 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
support infrastructure.
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.
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 geospatial 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, (x) changes in economic
or political conditions (xi) the selling of significant holdings by large investors, and (xii) the financing terms
of existing large debt holders of the Company.
Loss of Proprietary Information
Intermap does not currently 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 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.
Software Functionality
Defects in the Company’s software applications, delays in delivery, and failures or mistakes in the Company’s
software code could materially harm the Company’s business, including customer relationships and
operating results.
Internet and System Infrastructure Functionality
The end customers of the Company’s software applications depend on internet service providers, online
service providers and the Company’s infrastructure for access to the software applications the Company
provides to its customers. These services are subject to service outages and delays due to system failures,
2017 Annual Report | Management’s Discussion and Analysis 18
stability or interruption. As a result, the Company may not be able to meet a satisfactory level of service
as agreed to with its customers, which could have a material adverse effect on the Company’s business,
revenues, operating results and financial condition.
Information Technology Security
The Company’s software applications are dependent on its ability to protect its computer equipment
and the information stored in its data centers against damage that may be caused by fire, power loss,
telecommunication failures, unauthorized intrusion, computer viruses, disabling devices and other similar
events. A failure in the Company’s production systems or a disaster or other event affecting production
systems or business operations, both internally and externally, could result in a disruption to the Company’s
software services. Such a disruption could also impact the Company’s reputation and cause it to lose
customers, revenue, face litigation, or necessitate customer service/repair work that would involve
substantial costs and could ultimately have a material impact on the Company.
Intermap’s geospatial database has become a valuable asset to 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.
Cybersecurity
The Company’s software applications and geospatial database are dependent upon protection against
damage or loss that may be caused by a cyberattack. Loss or theft of the Company’s geospatial database
could result in lost revenue or the ability of a competitor to provide competing software solutions. A hostile
Denial of Service (DoS) action could disrupt the Company’s software services. Such a disruption could
impact the Company’s reputation and cause it to lose customers, revenue, face litigation, or necessitate
customer service/repair work that would involve substantial costs and could ultimately have a material
impact on the Company.
Intermap has invested in database management, information technology security, and firewalls to mitigate
the risk of loss or theft of the Company’s data. Further investments have been made to prevent DoS
activities, including the use of Microsoft’s Azure environment and the security it offers, and improvements
to the software services’ defenses against such attacks.
The Company undertakes periodic reviews of its information technology infrastructure and security policies
using the SANS CIS Critical Security Controls as a framework. The areas of focus for review pertain to user
and system authentication and access; internal network configuration and security; data storage resiliency
and security; and hosted application access security. These periodic reviews serve to proactively shore up
areas of vulnerability and ensure policies are effective and enforced. However, the risk cannot be eliminated
entirely, and the Company has invested in insurance to mitigate loss in the event of a cyberattack.
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.
2017 Annual Report | Management’s Discussion and Analysis 19
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 relations with select
foreign countries may change to the point of affecting the Company’s operational opportunities. The
data produced by Intermap’s IFSAR radar 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.
Environmental Regulation
Changes in environmental regulation could have an adverse effect on the Company’s airborne data
acquisition services business. For example, requirements for cleaner burning aircraft fuel could result in
increased costs which could impact the Company’s pricing model for acquisition services projects. The
complexity and breadth of environmental and climate change related issues make it extremely difficult to
predict the potential impact on the Company. Compliance with environmental regulation can be costly,
and non-compliance can result in fines, penalties and loss of licenses.
Political Instability
Intermap understands that not every region enjoys the political stability that is taken for granted in North
America. 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. The
Company expects 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, it
would take the Company approximately six to nine months to replace the lost equipment, if required.
2017 Annual Report | Management’s Discussion and Analysis 20
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.
Information Openly Available to the Public
The Company accesses information available to the public via the Internet and may incorporate portions
of such information into its products. If a source of public information determined that the Company was
profiting from free information, there is risk it could seek compensation.
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 Web site at www.intermap.com and on SEDAR at www.sedar.com.
2017 Annual Report | Management’s Discussion and Analysis 21
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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 International Financial Reporting
Standards, as issued by the International Accounting Standards Board, using best estimates and judgments,
where appropriate. 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.
Patrick A. Blott
Chairman of the Board and
Chief Executive Officer
Jennifer S. Bakken
Executive Vice President and
Chief Financial Officer
23
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24
Independent Auditors’ Report
TO THE SHAREHOLDERS OF INTERMAP TECHNOLOGIES CORPORATION
We have audited the accompanying consolidated financial statements of Intermap Technologies
Corporation, which comprise the consolidated balance sheets as at December 31, 2017 and December
31, 2016, the consolidated statements of profit and loss and other comprehensive income, changes in
shareholders’ deficiency 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 International Financial Reporting Standards, 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
Opinion
entity’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
In our opinion, the consolidated financial statements present fairly, in all material respects, the
the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
consolidated financial position of Intermap Technologies Corporation as at December 31, 2010 and
accounting policies used and the reasonableness of accounting estimates made by management, as well as
December 31, 2009, and its consolidated results of operations and its consolidated cash flows for the
evaluating the overall presentation of the consolidated financial statements.
years then ended in accordance with Canadian generally accepted accounting principles.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a
Emphasis of Matter
basis for our audit opinion.
Without qualifying our opinion, we draw attention to Note 1 to the consolidated financial statements
Opinion
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
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated
accumulated deficit of $175,377,000. These conditions, along with other matters described in Note 1,
financial position of Intermap Technologies Corporation as at December 31, 2017 and December 31, 2016,
indicate the existence of a material uncertainty which may cast significant doubt on the Company’s ability
and its consolidated financial performance and its consolidated cash flows for the years then ended in
to continue as a going concern.
accordance with International Financial Reporting Standards.
Chartered Accountants, Licensed Public Accountants
Chartered Professional Accountants, Licensed Public Accountants
Ottawa, Canada
March 3, 2010
February 21, 2018
Ottawa, Canada
25
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26
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
Amounts receivable
Unbilled revenue
Prepaid expenses
Property and equipment (Note 5)
Liabilities and Shareholders' Deficiency
Current liabilities:
Accounts payable and accrued liabilities (Note 6)
Current portion of notes payable (Note 7(a))
Current portion of project financing (Note 7(b))
Current portion of deferred lease inducements
Unearned revenue
Warrant liability (Note 12)
Income taxes payable
Obligations under finance leases
Current portion of other long-term liabilities (Note 11(h))
Long-term notes payable (Note 7(a))
Long-term project financing (Note 7(b))
Deferred lease inducements
Obligations under finance leases
Shareholders' deficiency:
Share capital (Note 11(b))
Accumulated other comprehensive income
Contributed surplus (Note 11(c))
Deficit
Commitments (Note 14)
Subsequent event (Note 19)
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
December 31,
2017
December 31,
2016
$
6,363
521
65
359
7,308
$
6,527
600
30
409
7,566
$
4,460
11,768
$
1,457
9,023
$
4,011
-
1,303
30
1,604
-
2
10
-
6,960
26,496
191
120
14
33,781
199,634
(143)
25,242
(246,746)
(22,013)
$
3,555
5,864
1,214
24
469
137
3
49
100
11,415
21,837
168
133
24
33,577
196,686
(146)
24,497
(245,591)
(24,554)
$
11,768
$
9,023
On behalf of the Board:
(Signed) Patrick A. Blott
Patrick A. Blott
Chairman and CEO
On behalf of the Board:
(Signed) Andrew P. Hines
Andrew P. Hines
Director and Corporate Secretary
27
INTERMAP TECHNOLOGIES CORPORATION
Consolidated Statements of Profit and Loss and Other Comprehensive Income
CONSOLIDATED STATEMENTS OF PROFIT AND LOSS AND OTHER
(In thousands of United States dollars, except per share information)
COMPREHENSIVE INCOME
(In thousands of United States dollars, except per share information)
For the years ended December 31,
2017
2016
Revenue (Note 9)
Expenses:
Operating costs (Note 10(a))
Restructuring costs (Note 10(b))
Depreciation of property and equipment
Operating income (loss)
Gain on disposal of equipment
Change in fair value of derivative instruments (Note 12)
Financing costs (Note 10(c))
Financing income
Loss on foreign currency translation
Loss before income taxes
Income tax expense (Note 13):
Current
Deferred
Net loss for the period
Other comprehensive loss:
$
19,304
$
7,049
16,828
244
924
17,996
1,308
3
137
(2,538)
-
(214)
(1,304)
(51)
200
149
14,781
941
837
16,559
(9,510)
-
1,948
(10,069)
7
(105)
(17,729)
(14)
2,458
2,444
$
(1,155)
$
(15,285)
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences
3
(44)
Comprehensive loss for the period
$
(1,152)
$
(15,329)
Basic and diluted loss per share
$
(0.08)
$
(1.33)
Weighted average number of Class A common
shares - basic and diluted (Note 11(d))
15,182,474
11,517,236
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
2017 Annual Report | Consolidated Financial Statements
28
INTERMAP TECHNOLOGIES CORPORATION
Consolidated Statements of Changes in Shareholders’ Deficiency
(In thousands of United States dollars)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIENCY
(In thousands of United States dollars)
Share
Capital
Contributed
Surplus
Accumulated
Other
Comprehensive
Income
Deficit
Total
Balance at December 31, 2015
$
196,409
$
11,578
$
(102)
$
(230,306)
$
(22,421)
Comprehensive loss for the period
Gain on modification of debt (Note 7(a))
Deferred tax effect of notes payable
Share-based compensation
Exercise of options
-
-
-
174
103
-
15,063
(2,458)
359
(45)
(44)
-
-
-
-
(15,285)
-
-
-
-
(15,329)
15,063
(2,458)
533
58
Balance at December 31, 2016
$
196,686
$
24,497
$
(146)
$
(245,591)
$
(24,554)
Comprehensive income (loss) for the period
Rights offering (Note 11(b))
Issuance costs (Note 11(b))
Gain on modification of debt (Note 7(a))
Deferred tax effect of notes payable
LTIP issuance
Share-based compensation
-
2,890
(164)
-
-
162
60
-
-
-
746
(200)
(115)
314
3
-
-
-
-
-
-
(1,155)
-
-
-
-
-
-
(1,152)
2,890
(164)
746
(200)
47
374
Balance at December 31, 2017
$
199,634
$
25,242
$
(143)
$
(246,746)
$
(22,013)
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
2017 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,
2017
2016
29
Operating activities:
Net loss for the period
Adjusted for the following non-cash items:
Depreciation of property and equipment
Share-based compensation expense
(Gain) loss on disposal of equipment
Amortization of deferred lease inducements
Deferred taxes
Change in fair value of derivative instruments
Financing costs
Current income tax expense
Interest paid
Income tax paid
Changes in working capital:
Amounts receivable
Other assets
Accounts payable and accrued liabilities
Unearned revenue
Gain on foreign currency translation
Cash flows provided by (used in) operating activities
Investing activities:
Purchase of property and equipment
Proceeds from sale of equipment
Cash flows used in investing activities
Financing activities:
Proceeds from issuance of common shares
Proceeds from notes payable
Repayment of notes payable
Share issuance costs
Movement from restricted cash
Repayment of obligations under finance lease
Cash flows (used in) provided by financing activities
Effect of foreign exchange on cash
Increase (decrease) in cash
Cash, beginning of period
Cash, end of period
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
$
(1,155)
$
(15,285)
924
281
(3)
26
(200)
(137)
2,538
51
(7)
(52)
89
15
99
1,135
(107)
3,497
(3,471)
3
(3,468)
2,890
-
(2,890)
(164)
-
(56)
(220)
27
(164)
6,527
837
289
-
(113)
(2,458)
(1,948)
10,069
14
(18)
(16)
1,679
(133)
(917)
2
(65)
(8,063)
(305)
1
(304)
-
15,000
(617)
(168)
801
(120)
14,896
(2)
6,527
-
$
6,363
$
6,527
2017 Annual Report | Consolidated Financial Statements
30
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
1. Reporting entity:
Intermap Technologies ® Corporation (the Company) is incorporated under the laws of Alberta, Canada.
The head office of Intermap is located at 8310 South Valley Highway, Suite 400, Englewood, Colorado, USA
80112. Its registered office is located at 400, 3rd Avenue SW, Suite 3700, Calgary, Alberta, Canada T2P 4H2.
Intermap is a global location-based geospatial information company, creating a wide variety of geospatial
solutions and analytics for its customers. Intermap’s geospatial solutions and analytics can be used in
a wide range of applications including, but not limited to, location-based information, geospatial risk
assessment, geographic information systems, engineering, utilities, global positioning systems maps, oil
and gas, renewable energy, hydrology, environmental planning, wireless communications, transportation,
advertising, and 3D visualization.
2. Basis of preparation:
a. Statement of compliance:
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The
significant accounting policies are summarized in Note 3.
The policies applied in these consolidated financial statements are based on IFRS issued and
effective as of February 21, 2018, the date the Board of Directors approved the consolidated financial
statements.
b. Comparative information:
These consolidated financial statements correct the presentation of the deferred tax asset and deferred
tax liability at December 31, 2016. The December 31, 2016 deferred tax asset should have been
presented net of the deferred tax liability. The correction of this error decreased the amounts reported
for deferred tax asset and deferred tax liability by $2,458. This adjustment is not considered to be
material to the financial statements.
c. Measurement basis:
The consolidated financial statements have been prepared mainly on the historical cost basis. Other
measurement bases used are described in the applicable notes.
d. Use of estimates:
Preparing consolidated financial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and reported
amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the
consolidated financial statements, and the reported amounts of revenue and expenses during the
period. Actual results could differ from these estimates.
Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
estimates are recognized in the period in which the estimates are reviewed and in any future periods
affected.
Information about critical judgments in applying accounting policies that have the most significant
effect on the amounts recognized in the consolidated financial statements is included in Note 7(a) –
Notes Payable.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in
a material adjustment within the next financial year include the following:
31
i. Depreciation and amortization rates:
In calculating the depreciation and amortization expense, management is required to make
estimates of the expected useful lives of property and equipment.
ii. Amounts receivable:
The Company uses historical trends and performs specific account assessments when
determining the allowance for doubtful accounts. These accounting estimates are in respect to
the amounts receivable line item in the Company’s consolidated balance sheet. At December 31,
2017, amounts receivable represented 4% of total assets.
The estimate of the Company’s allowance for doubtful accounts could change from period
to period due to the allowance being a function of the balance and composition of amounts
receivable.
iii. Share-based compensation:
The Company uses the Black-Scholes option-pricing model to determine the grant date fair value
of share-based compensation. The following assumptions are used in the model: dividend yield;
expected volatility; risk-free interest rate; expected option life; and fair value.
Changes to assumptions used to determine the grant date fair value of share-based compensation
awards can affect the amounts recognized in the consolidated financial statements.
iv. Derivative financial instruments:
The Company has determined that its functional currency is the United States dollar and has
issued (i) non-broker warrants, and (ii) debt with a conversion option denominated in a currency
other than its functional currency. The Company measures the cost of the derivative financial
instruments by reference to the fair value of the instruments at the date at which they are
granted and revalues them at each reporting date. In determining the fair value of the non-
broker warrants, the Company used the Black-Scholes option pricing model with the following
assumptions: average volatility rate; market price at the reporting date; risk-free interest rate; the
remaining expected life of the warrant; and an exchange rate at the reporting date. The inputs
used in the Black-Scholes model are taken from observable markets.
v. Provisions:
A provision is recognized, if because of a past event, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation. If the future settlement were to
adversely differ from management’s expectations, the Company could incur either an additional
expense or reversal of the expense previously recorded (see Note 3(f)).
vi. Compound financial instruments:
The Company has issued compound financial instruments which comprise promissory notes
denominated in United States dollars that include detachable purchase warrants denominated
in both United States dollars and Canadian dollars which can be converted to share capital at
the option of the holder. The valuation and accounting for the notes is complex and requires
the application of management estimates and judgments with respect to the determination of
appropriate valuation models, certain assumptions applied within such valuation models, and
certain aspects of the accounting method applied on initial recognition.
2017 Annual Report | Consolidated Financial Statements 32
vii. Notes payable:
The Company has issued long-term promissory notes with no stated interest obligation. The
valuation and accounting for the zero-interest notes is complex and requires the application
of management estimates and judgments with respect to the determination of appropriate
valuation method applied on initial recognition. The assumptions and models used for estimating
fair value of the note transactions are disclosed in Note 7.
viii. Revenue:
Changes to the assumptions used to measure revenue could impact the amount of revenue
recognized in the consolidated financial statements (see Note 3(i)).
e. Functional and presentation currency:
These consolidated financial statements are presented in United States dollars, which is the Company’s
functional currency. All financial information presented in United States dollars has been rounded to
the nearest thousand.
f.
Foreign currency translation:
Items included in the financial statements of each of the Company’s subsidiaries are measured using
the currency of the primary economic environment in which the entity operates (the functional
currency). Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transaction. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation of monetary assets and liabilities not
denominated in the functional currency of an entity are recognized in net loss for the period.
Assets and liabilities of entities with functional currencies other than United States dollars are
translated at the period end rates of exchange, and the results of their operations are translated
at exchange rates prevailing at the dates of transactions. The resulting translation adjustments are
included in accumulated other comprehensive income in shareholders’ equity.
3. Summary of significant accounting policies:
a. Consolidation:
The accompanying consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries, Intermap Technologies Inc. (a U.S. corporation); Intermap Technologies PTY
Ltd (an Australian corporation); Intermap Technologies s.r.o. (a Czech Republic corporation); and a 90%
owned subsidiary, PT ExsaMap Asia (an Indonesian corporation). A new subsidiary, Intermap Insurance
Solutions Inc. (a U.S. corporation), was formed on January 1, 2018.
With respect to PT ExsaMap Asia (a 90% owned subsidiary), the non-controlling shareholder owns a
written put option for which the Company has recognized as a liability in the consolidated financial
statements in accordance with IAS 32, Financial Instruments: Presentation. The Company has elected
to use the anticipated acquisition method to account for the arrangement, in which the recognition
of the liability implies that the interests subject to the put option are deemed to have already been
acquired, even though legally they are still non-controlling interests. Therefore, PT ExsaMap Asia is
presented in the consolidated financial statements as fully owned by the Company for accounting
purposes, and profits and losses attributable to the holder of the non-controlling interest subject to the
put option are presented as attributable to the owners of the parent and not as attributable to those
non-controlling shareholders.
Inter-company balances and transactions, and any unrealized income and expenses arising from intra-
group transactions, are eliminated in preparing the consolidated financial statements. The accounting
policies of all subsidiaries are consistent with the Company’s policies.
2017 Annual Report | Consolidated Financial Statements INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
33
For the years ended December 31, 2017 and 2016
Page 6
b. Cash:
Cash includes unrestricted cash balances.
c. Work in process:
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. Net realizable value is the estimated selling price in the ordinary course
of business, less the estimated costs of completing and selling expenses. 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.
d. Property and equipment:
Property and equipment are measured at cost less accumulated depreciation. Cost includes
expenditures that are directly attributable to the acquisition of the asset. The cost of aircraft overhauls
is capitalized and depreciated over the period until the next overhaul. When parts of an item of
property and equipment have different useful lives, they are accounted for as separate items.
Depreciation is calculated over the depreciable amount which is the cost of an asset, less its residual
value. Depreciation is provided on the straight-line basis over the following useful lives of the assets:
Assets
Aircraft
Aircraft engines
Mapping equipment - hardware and software
Radar equipment
Furniture and fixtures
Leasehold improvements
Years
10
7
3
5
5
Shorter of useful life or term of lease
Depreciation methods, useful lives and residual values are reviewed at each financial year end and
adjusted, if appropriate.
Assets under construction are not depreciated until available for use by the Company. Expenditures for
maintenance and repairs are expensed when incurred.
The cost of replacing an item of property and equipment is recognized in the carrying amount of
the item if it is probable that the future economic benefits embodied within the part will flow to
the Company, and its cost can be measured reliably. The carrying amount of the replaced part is
derecognized. The costs of the day-to-day servicing of property and equipment are recognized in profit
or loss as incurred.
Gains and losses on disposal of property and equipment are determined by comparing the proceeds
from disposal with the carrying amount, and are recognized net of costs associated with the disposal
within other income in net loss for the period.
e.
Leases:
Leases are classified as either finance or operating in nature. Management exercises judgment
to determine whether substantially all the risks and rewards incidental to ownership have been
transferred to the Company.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. Payments under an operating lease (net of any incentives received
from the lessor) are recognized in net loss on a straight-line basis over the period of the lease.
Finance leases are those that substantially transfer the benefits and risks of ownership to the lessee.
2017 Annual Report | Consolidated Financial Statements
34
Assets acquired under finance leases are measured at the lower of the present value of the minimum
lease payments or the fair value of the leased asset at the inception of the lease. Subsequent to
initial recognition, the asset is accounted for in accordance with the accounting policy applicable to
that asset. Obligations recorded under finance leases are reduced by the principal portion of lease
payments. The imputed interest portion of lease payments is charged to finance costs.
f.
Provisions:
A provision is recognized, if as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects the current market assessments of the time value of money and the
risks specific to the liability. The unwinding of the discount is recognized as finance cost.
i.
Restructuring:
A provision for restructuring is recognized when the Company has approved a detailed and formal
restructuring plan, and the restructuring either has commenced or has been announced publicly.
Future operating losses are not provided for.
ii. Onerous contracts:
A provision for onerous contracts is recognized when the expected benefits to be derived by the
Company from a contract are lower than the unavoidable cost of meeting its obligations under
the contract. The provision is measured at the present value of the lower of the expected cost
of terminating the contract and the expected net cost of continuing with the contract. Before a
provision is established, the Company recognizes any impairment loss on the assets associated
with the contract.
g. 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 the straight-line basis over the
term of the lease and recognized as a reduction in rent expense.
h.
Income taxes:
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in
profit or loss except to the extent that it relates to a business combination, or items recognized directly
in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using
tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognized for the following temporary differences: the initial recognition of assets
or liabilities in a transaction that is not a business combination and that affects neither accounting
nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled
entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition,
deferred tax is not recognized for taxable temporary differences arising on the initial recognition
of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by
the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to
offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority
2017 Annual Report | Consolidated Financial Statements 35
on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred
tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be available against which they can be utilized.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realized.
i.
Revenue recognition:
Revenue is recognized when (i) persuasive evidence of an arrangement exists; (ii) the significant risks
and rewards of ownership 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 unearned revenue. Revenue recognized in excess of billings is recorded as
unbilled revenue.
i. Goods sold:
Revenue from the sale of data in the ordinary course is measured at the fair value of the
consideration received or receivable.
ii. Software subscriptions:
Revenue from software applications sold on a subscription basis is recognized straight-line over
the term of the agreement.
iii. 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. The
stage of completion is determined by costs incurred and labor hours worked in comparison to
total expected costs and hours. 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.
iv. 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. The consideration is allocated to deliverables
based on their relative fair values. The fair value of each component is determined using vendor
specific objective evidence, third party evidence of selling price, or estimated selling price.
j.
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 specified criteria for deferral and amortization.
k. Share-based compensation:
The grant date fair value of equity-settled share-based payment awards granted to employees is
recognized as an employee expense, with a corresponding increase in equity, over the period the
employees unconditionally become entitled to the awards. The amount recognized as an expense
is adjusted to reflect the number of awards for which the related service and non-market vesting
conditions are expected to be met, such that the amount ultimately recognized as an expense is based
2017 Annual Report | Consolidated Financial Statements 36
on the number of awards that do meet the related service and non-market performance conditions
at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair
value of the share-based payment is measured to reflect such conditions and there is no true-up for
differences between expected and actual outcomes.
Share-based payment arrangements in which the Company receives goods or services as consideration
for its own equity instruments are accounted for as equity-settled share-based payment transactions,
regardless of how the equity instruments are obtained by the Company.
The grant date fair value of the equity-settled portion of the LTIP is recognized as an employee
expense, with a corresponding increase in equity, over the service period, and the liability is re-
measured at each reporting date. The fair value of the optional settlement portion of the LTIP is
recognized as an employee expense, with a corresponding increase in liabilities, over the service
period, and is re-measured to the current fair value at each reporting date.
l.
Earnings per share:
The basic earnings per share is computed by dividing net earnings (loss) by the weighted average
number of common shares outstanding during the reporting period. Diluted earnings per share is
computed similar to basic earnings per share, except the weighted average number of common shares
outstanding are increased to include additional shares from the assumed exercise of share options and
warrants, if dilutive.
m. Financial instruments:
i. Non-derivative financial assets:
The Company initially recognizes loans and receivables on the date that they are originated. All
other financial assets are recognized initially on the date at which the Company becomes a party
to the contractual provisions of the instrument.
The Company derecognizes a financial asset when the contractual rights to the cash flows from
the asset expire, or it transfers the rights to receive the contractual cash flows on the financial
asset in a transaction in which substantially all the risks and rewards of ownership of the financial
asset are transferred. Any interest in transferred financial assets that is created or retained by the
Company is recognized as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the consolidated
balance sheet when, and only when, the Company has a legal right to offset the amounts and
intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to
determine whether there is objective evidence that it is impaired.
ii. Loans and receivables:
Loans and receivables are financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are recognized initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, loans and receivables are
measured at amortized cost using the effective interest method, less any impairment losses.
iii. Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading
and financial liabilities designated upon initial recognition at fair value through profit or loss. The
Company has issued non-broker warrants that are considered to be derivative liabilities due to the
warrants being exercisable in a currency (Canadian dollar) other than the Company’s functional
2017 Annual Report | Consolidated Financial Statements INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
Page 14
37
currency (United States dollar). Accordingly, the warrants are measured at fair value at each
reporting date, with changes in fair value included in the consolidated statement of profit and loss
and other comprehensive income for the applicable reporting period.
iv. Other liabilities:
The Company initially recognizes debt liabilities on the date that they are originated. All other
financial liabilities are recognized initially on the date at which the Company becomes a party to
the contractual provisions of the instrument.
The Company derecognizes a financial liability when its contractual obligations are discharged,
cancelled or expire.
Such financial liabilities are recognized initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, these financial liabilities are measured at
amortized cost using the effective interest method.
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 and cash equivalents
Amounts receivable
Unbilled revenue
Accounts payable and accrued liabilities
Obligations under finance leases
Notes payable
Other long-term liabilities
Warrant liability
Classification:
Loans and receivables
Loans and receivables
Loans and receivables
Other liabilities
Other liabilities
Other liabilities
Other liabilities
Financial liability at fair value
through profit and loss
v. Share capital:
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
ordinary shares are recognized as a deduction from equity, net of any tax effects.
vi. Compound financial instruments:
Compound financial instruments issued by the Company comprise promissory notes
denominated in United States dollars that include detachable warrants denominated in United
States dollars and Canadian dollars that can be converted to share capital at the option of the
holder.
The liability component of a compound financial instrument is recognized initially at the fair value
of a similar liability that does not have an equity component. The equity component is recognized
initially at the difference between the fair value of the compound financial instrument as a whole
and the fair value of the liability component. Any directly attributable transaction costs are
allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument
is measured at amortized cost using the effective interest method. The equity component of a
compound financial instrument is not re-measured subsequent to initial recognition.
Interest related to the financial liability is recognized in profit or loss. On conversion, the financial
liability is reclassified to equity and no gain or loss is recognized.
2017 Annual Report | Consolidated Financial Statements
38
n. Segments:
The operations of the Company are in one industry segment: digital mapping and related services.
4. New and revised IFRS accounting pronouncements:
a. New accounting standards:
The Company adopted the following new accounting standards and amendments which are effective
for the Company’s condensed consolidated interim financial statements commencing January 1, 2017.
i. Amendments to IAS 7, Statement of Cash Flows
In January 2016, the IASB issued amendments to IAS 7. These amendments require entities to
provide disclosures that help users of the financial statements to better understand changes in
liabilities that arise from financing activities, including both changes arising from cash flow and
non-cash changes. The Company adopted the amendments to IAS 7 in its financial statements
for the annual period beginning on January 1, 2017. To meet the disclosure requirement, the
Company provided a reconciliation of the opening and closing balances of liabilities arising from
financing activities (see Note 7).
ii. Amendments to IAS 12, Income Taxes
In January 2016, the IASB issued amendments to IAS 12. The amendments clarify the accounting
for deferred tax assets for unrealized losses on debt instruments measured at fair value. These
amendments are to be applied retrospectively for annual periods beginning on or after January 1,
2017. The Company adopted the amendments to IAS 12 in its financial statements for the annual
period beginning on January 1, 2017. The adoption of these amendments did not have a material
impact on the consolidated financial statements.
b. Future pronouncements:
The IASB and International Financial Reporting Interpretations Committee (IFRIC) issued the following
standards that have not been applied in preparing these consolidated financial statements, as their
effective dates fall within annual periods beginning subsequent to the current reporting period.
i.
IFRS 9, Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9, bringing together the classification
and measurement, impairment and hedge accounting phases of the project to replace IAS 39,
Financial Instruments: Recognition and Measurement. This standard simplifies the classification
of a financial asset as either at amortized cost or at fair value as opposed to the multiple
classifications which were permitted under IAS 39. This standard also requires the use of a single
impairment method as opposed to the multiple methods in IAS 39. The approach in IFRS 9 is
based on how an entity manages its financial instruments in the context of its business model and
the contractual cash flow characteristics of the financial assets. The standard also adds guidance
on the classification and measurement of financial liabilities. IFRS 9 is to be applied retrospectively
for annual periods beginning on or after January 1, 2018. Early application is permitted. The
Company does not expect the adoption of this standard will have a material impact on the
consolidated financial statements.
ii.
IFRS 15, Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15, which provides a single, principles-based five-step model
forrevenue recognition to be applied to all customer contracts, and requires enhanced disclosures.
The standard also provides guidance relating to recognition of customer acquisition costs. In
April 2016, the IASB issued Clarifications to IFRS 15 in relation to the identification of performance
obligations, principal versus agent considerations, as well as licensing application guidance.
2017 Annual Report | Consolidated Financial Statements 39
This standard will be effective January 1, 2018 and allows early adoption. The two permitted
transition methods under the new standard are the full retrospective method, in which case
the standard would be applied to each prior reporting period presented, or the modified
retrospective method, in which case the cumulative effect of applying the standard would be
recognized at the date of initial application.
The Company is finalizing its assessment of the impact of the adoption of this new revenue
standard on the consolidated financial statements and related disclosures. Based on the results
of the evaluation performed to date, the Company has not identified any changes which will
have a material impact on the consolidated financial statements. Similarly, the Company has not
identified any significant impact on the business processes, controls and systems. The Company
will need to provide expanded disclosures relating to the nature, amount, timing, and uncertainty
of revenues and cash flows arising from contracts with customers. The Company is in the process
of finalizing the documentation of the accounting policies and has adopted the new standard
effective January 1, 2018 using the modified retrospective approach.
iii.
IFRS 16, Leases
In January 2016, the International Accounting Standards Board issued IFRS 16, Leases, which
specifies how to recognize, measure, present and disclose leases. The standard provides a single
lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless
the lease term is 12 months or less or the underlying asset has a low value. Consistent with its
predecessor, IAS 17, the new lease standard continues to require lessors to classify leases as
operating or finance. IFRS 16 is to be applied retrospectively for annual periods beginning on
or after January 1, 2019. Earlier application is permitted if IFRS 15 Revenue from contract with
customers has also been applied. The Company does not intend to adopt this standard early and
is currently evaluating the impact of adopting this standard. The Company expects the adoption
of this standard to increase assets and liabilities as it will be required to record a right-of-use asset
and a corresponding liability in the consolidated financial statements.
2017 Annual Report | Consolidated Financial Statements INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
Page 19
40
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Aircraft
and
engines
Radar and
mapping
equipment
Furniture
and
fixtures
Property and equipment
Leasehold
improvements
Under
construction
For the years ended December 31, 2017 and 2016
$
1,246
$
555
$
5
$
$
14
Page 19
102
Total
$
1,922
Balance at December 31, 2015
5. Property and equipment:
Additions
Finance lease
Depreciation
Property and equipment
Disposal
Aircraft
and
engines
-
Radar and
-
mapping
(409)
equipment
-
8
Furniture
68
and
(347)
fixtures
(1)
7
Leasehold
(3)
improvements
-
-
15
-
Under
(78)
construction
-
Total
275
-
-
-
305
68
(837)
(1)
Balance at December 31, 2015
Balance at December 31, 2016
$
1,246
$
$
837
555
$
$
5
283
Additions
Additions
Finance lease
Transfer from under construction
Depreciation
Depreciation
Disposal
-
-
(409)
-
-
-
(369)
8
68
(347)
(1)
7
294
-
3,489
(517)
-
(3)
$
$
9
$
102
$
14
39
$
1,922
$
289
$
1,457
3
-
(4)
15
-
(78)
-
275
24
-
-
-
(34)
-
305
3,606
68
(3,489)
(837)
-
(1)
3,927
-
(924)
Balance at December 31, 2016
Balance at December 31, 2017
Additions
Transfer from under construction
Depreciation
Property and equipment
Balance at December 31, 2017
Cost
Accumulated depreciation
Property and equipment
Cost
Balance at December 31, 2016
Accumulated depreciation
Cost
Balance at December 31, 2016
Accumulated depreciation
Cost
Balance at December 31, 2017
Accumulated depreciation
$
837
$
$
468
283
$
$
9
3,549
$
$
8
$
39
$
289
29
-
-
(369)
Aircraft
and
engines
$
294
3,489
(517)
-
3
Radar and
mapping
(4)
equipment
$
8
3,549
$
468
Aircraft
$
and
engines
10,951
Radar and
mapping
equipment
(10,114)
Furniture
27,383
and
fixtures
(27,100)
$
$
10,951
$
$
837
27,383
$
$
283
376
Furniture
and
fixtures
$
24
-
(34)
3,606
(3,489)
Leasehold
-
improvements
$
406
29
$
376
Leasehold
improvements
(367)
$
Under
construction
(895)
934
$
$
9
934
$
$
289
39
(10,114)
$
10,951
(27,100)
$
31,132
(367)
$
379
(895)
$
-
959
$
837
$
283
$
10,951
31,132
(10,483)
$
468
$
$
9
(27,583)
$
379
3,549
(10,483)
(27,583)
(371)
$
(371)
$
959
39
$
289
(930)
$
406
$
29
-
(930)
$
$
8
$
1,457
$
406
$
4,460
3,927
-
Under
(924)
construction
$
4,460
Total
$
289
$
39,933
Total
-
(38,476)
$
39,933
$
289
$
1,457
(38,476)
$
406
$
43,827
$
1,457
-
(39,367)
$
43,827
$
(39,367)
406
$
4,460
Balance at December 31, 2017
$
468
$
3,549
$
8
$
29
$
406
$
4,460
During the twelve months ended December 31, 2017, the Company disposed of assets with an original
cost of $28 and a net book value of $Nil (December 31, 2016 - $39), recognized a gain of $3 on those assets
(December 31, 2016 - $Nil) and received cash proceeds of $3 (December 31, 2016 - $1). Property and
equipment additions for the year ended December 31, 2017 include an amount of $456 (December 31,
2016 - $Nil) recorded to accounts payable and accrued liabilities.
6. Accounts payable and accrued liabilities:
December 31,
2017
December 31,
December 31,
2017
2016
December 31,
2016
Accounts payable
Accounts payable
Accrued liablities
Accrued liablities
Other taxes payable
Other taxes payable
$
$
$
1,910
2,043
58
4,011
$
1,910
$
2,043
58
$
4,011
$
2,296
1,251
8
3,555
$
2,296
1,251
8
3,555
2017 Annual Report | Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
Page 20
41
7. Finance liabilities:
The following table details the financial liabilities activity and balances at December 31, 2017 and 2016:
Notes
Payable
Liabilities
Project
Financing
Finance
Leases
Equity
Share
Capital
Restricted
Cash
Total
Balance at December 31, 2015
$
16,387
$
1,295
$
109
$
196,409
$
801
$
215,001
Changes from financing activities:
Proceeds from notes payable
Movement from restricted cash
Repayment of notes payable
Share issuance costs
Repayment of obligations under finance lease
Total changes from financing activities
Foreign exchange
Other changes:
Financing costs
Purchase of equipment
Discount recognized on the note
Exercise of options
Share-based compensation
15,000
-
(617)
(168)
-
14,215
-
6,137
-
(9,038)
-
-
-
-
-
-
-
-
-
-
-
-
(6)
93
-
-
-
-
(120)
(120)
-
-
-
-
17
67
-
-
-
-
-
-
-
-
-
-
103
174
-
801
-
-
-
801
-
-
-
-
-
-
15,000
801
(617)
(168)
(120)
14,896
(6)
6,247
67
(9,038)
103
174
Balance at December 31, 2016
$
27,701
$
1,382
$
73
$
196,686
$
-
$
227,444
-
-
-
-
-
-
-
-
-
-
2,890
(2,890)
(164)
(56)
(220)
12
2,538
(746)
162
60
$
229,250
Changes from financing activities:
Proceeds from issuance of common shares
Repayment of notes payable
Share issuance costs
Repayment of obligations under finance lease
Total changes from financing activities
-
(2,890)
-
-
(2,890)
-
-
-
-
-
-
-
-
(56)
(56)
2,890
-
(164)
-
2,726
Foreign exchange
-
12
-
-
Other changes:
Financing costs
Discount recognized on the note
LTIP issuance
Share-based compensation
2,431
(746)
-
-
100
-
-
-
7
-
-
-
-
-
162
60
Balance at December 31, 2017
INTERMAP TECHNOLOGIES CORPORATION
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
a. Notes payable:
The following table details the liability and equity components of each note payable balance at December
31, 2017:
Closing Date of Note
For the years ended December 31, 2017 and 2016
March 30, 2017
Page 21
Page 21
$
-
199,634
26,496
$
$
1,494
Total
$
$
24
Proceeds from issuance of notes
Closing Date of Note
Repayment
Proceeds from issuance of notes
Note modification - 2016
Repayment
Conversion to long-term note payable
Note modification - 2016
Issuance of December 2016 note
Conversion to long-term note payable
Transaction costs
Issuance of December 2016 note
Discount on the note
Transaction costs
Effective interest on note discount
Discount on the note
Long-term portion of notes payable
Effective interest on note discount
$
-
March 30, 2017
-
$
-
-
-
3,110
-
-
3,110
-
-
(746)
-
147
(746)
2,511
147
$
$
December 14,
2016
December 14,
$
6,000
2016
(2,890)
6,000
-
(2,890)
(3,110)
-
-
(3,110)
-
-
(158)
-
158
(158)
$
-
158
December 14,
2016
December 14,
2016
$
-
-
-
$
27,800
-
-
27,800
3,000
-
(168)
3,000
(8,880)
(168)
2,233
(8,880)
23,985
2,233
$
$
$
6,000
Total
(2,890)
6,000
27,800
(2,890)
-
27,800
3,000
-
(168)
3,000
(9,784)
(168)
2,538
(9,784)
26,496
2,538
$
Long-term portion of notes payable
$
2,511
$
-
$
23,985
$
26,496
The following table details the liability and equity components of each note payable balance at December
31, 2016:
Closing Date of Note
Proceeds from issuance of notes
Closing Date of Note
Transfer of accrued interest
Proceeds from issuance of notes
Note restructuring - 2015 notes
Transfer of accrued interest
Note restructuring - 2016 notes
Note restructuring - 2015 notes
Note modification - 2016
Note restructuring - 2016 notes
Issuance of December 2016 note
Note modification - 2016
Transaction costs
Issuance of December 2016 note
Discount on the note
Transaction costs
Effective interest on note discount
Discount on the note
Note repayment
Effective interest on note discount
Carrying amount of notes payable
Note repayment
$
December
14, 2016
December
$
6,000
14, 2016
-
6,000
-
-
-
-
-
-
-
-
-
-
(158)
-
22
(158)
-
22
5,864
-
$
December
14, 2016
December
$
-
14, 2016
-
-
$
-
-
-
-
27,800
-
3,000
27,800
(168)
3,000
(8,880)
(168)
85
(8,880)
-
85
21,837
-
$
$
September
15, 2016
September
$
2,000
15, 2016
1,545
2,000
-
1,545
22,255
-
(25,800)
22,255
-
(25,800)
-
-
-
-
-
-
-
-
-
$
-
$
July 8,
2016
July 8,
$
2,000
2016
-
2,000
-
-
-
-
(2,000)
-
-
(2,000)
-
-
-
-
-
-
-
-
-
$
-
April
12, 2016
$
April
$
5,000
12, 2016
1,130
5,000
7,000
1,130
(13,130)
7,000
-
(13,130)
-
-
-
-
-
-
-
-
-
-
-
$
-
$
March
2, 2016
March
$
$
-
2, 2016
1,825
-
$
7,300
1,825
(9,125)
7,300
-
(9,125)
-
-
-
-
-
-
-
-
-
-
-
$
-
$
Total
15,000
Total
4,500
15,000
14,300
4,500
-
14,300
-
-
3,000
-
(168)
3,000
(9,038)
(168)
107
(9,038)
-
107
27,701
-
Carrying amount of notes payable
Less current portion
$
5,864
(5,864)
$
21,837
-
$
-
-
$
-
-
$
-
-
$
-
-
$
27,701
(5,864)
Long-term portion of notes payable
Less current portion
$
-
(5,864)
$
21,837
-
$
-
-
$
-
-
$
-
-
Long-term portion of notes payable
$
-
$
21,837
$
-
$
-
$
-
$
-
-
$
-
$
21,837
(5,864)
$
21,837
2017 Annual Report | Consolidated Financial Statements
42
i. March 2, 2016 note payable:
On March 2, 2016, the Company restructured and consolidated the February 23, 2015 notes
payable of $5,800 and $1,500 into one note. The original notes, bearing interest at 25% per
annum, were canceled with the related principal of $7,300 and accrued interest of $1,825
consolidated into a new note payable totaling $9,125, bearing interest at a rate of 15% and
a maturity date of August 24, 2016. On September 19, 2016, the Company announced the
cancellation of this note and the issuance of a new note dated September 15, 2016 (see Note 7(i)).
ii. April 12, 2016 note payable:
In April 12, 2016, the Company restructured and consolidated into one note its April 1, 2015 note
payable of $1,500, April 28, 2015 note payable of $2,500, and July 13, 2015 note payable of $3,000.
The original notes, bearing interest at 20%, 20%, and 15% per annum, respectively, were canceled.
The new note payable, dated April 12, 2016, in the principal amount of $13,130 includes an
additional $5,000 debt financing and accrued interest from the canceled notes of $1,130. Simple
interest is payable at maturity on October 11, 2016 at an annual rate of 15%. On September 19,
2016, the Company announced the cancellation of this note and the issuance of a new note dated
September 15, 2016 (see Note 7(i)).
iii. July 8, 2016 note payable:
On July 8, 2016, the Company issued a promissory note for $2,000 to Vertex. The note bears
simple interest at an annual rate of 15%. The principal and accrued interest balance is payable
on the earlier of (i) maturity on July 8, 2017 or (ii) the date on which a down payment in excess of
$2,000 from a material geospatial project is received by the Company. On December 14, 2016, the
Company amended the terms of the July 8, 2016 and September 15, 2016 notes, and accounted
for the changes as a consolidated note modification (see Note 7(k)).
iv. September 15, 2016 note payable:
On September 15, 2016, the Company restructured and consolidated into one note its March
2, 2016 note payable of $9,125 and April 12, 2016 note payable of $13,130. The original notes,
bearing interest at 15% per annum each, were canceled. The new note payable, dated September
15, 2016, in the principal amount of $25,800 includes an additional $2,000 debt financing and
accrued interest from the canceled notes of $1,545. Simple interest is payable at maturity on
September 15, 2017 at an annual rate of 15%. On December 14, 2016, the Company amended
the terms of the July 8, 2016 and September 15, 2016 notes, and accounted for the changes as a
consolidated note modification (see Note 7(k)).
v. December 14, 2016 note payable:
On December 14, 2016, the Company received $6,000 as a bridge loan from Vertex. The loan is
payable on the earlier of March 31, 2017 or the completion of the Rights Offering, which closed
on March 30, 2017 (see Note 11(b)). All the proceeds of the Rights Offering were to be used to pay
down this note payable, and any amounts which remain outstanding after the Rights Offering
will be converted into a term loan due September 1, 2020. The note is non-interest bearing, and
therefore the fair value at inception must be estimated to account for an imputed interest factor.
The value at inception was determined to be $5,842. The estimated discount rate was 9.21% and
is subject to estimation uncertainty. The discount of $158 was recognized in contributed surplus
and was amortized over the term of the note using the effective interest method. The note was
subject to prepayment provisions, if the Company’s aggregate cash balance exceeds $10.0 million
at the end of any calendar quarter, 50% of the balance greater than $10.0 million must be pre-paid
against the outstanding notes payable.
2017 Annual Report | Consolidated Financial Statements INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
43
For the years ended December 31, 2017 and 2016
Page 23
vi. December 14, 2016 note modification:
On December 14, 2016, the Company and Vertex restructured its September 15, 2016 note
payable of $25,800 and July 8, 2016 note payable of $2,000. The original notes, bearing interest
at 15% per annum each, were extended to mature on September 1, 2020 and the interest
was eliminated. In addition, a promissory note payable for $3,000 was issued in exchange for
the termination of the royalty agreement, executed on February 23, 2015, and the amending
agreement, which established the cash sweep requirement, executed on April 28, 2015. The
restructured notes were treated as an extinguishment for accounting purposes, and given they
require for zero interest payments, the fair value at inception must be estimated to account for an
imputed interest factor. The value of the remaining promissory notes ($25,800, $2,000 and $3,000)
at inception was determined to be $21,752, net of transaction costs of $168. The estimated
discount rate was 9.21% and is subject to estimation uncertainty. The discount to the note payable
will be amortized over the term of the note using the effective interest method. For the twelve
months ending December 31, 2017, $2,233 (twelve months ended December 31, 2016 - $85) was
recognized in financing costs. The note is subject to prepayment provisions, if the Company’s
aggregate cash balance exceeds $10.0 million at the end of any calendar quarter, 50% of the
balance greater than $10.0 million must be pre-paid against the outstanding notes payable.
At December 14, 2016, the accounting for the modification of debt resulted in a gain of $15,063
recognized in contributed surplus:
Discount recognized on the December 14, 2016 modifications to the promissory notes
Reversal of long-term royalty obligation
Reversal of accrued interest
Reversal of accrued royalty
Less: New December 14, 2016 promissory note payable
Gain recognized on modification of debt
2016
$
9,038
7,300
1,084
641
(3,000)
$
15,063
vii. March 30, 2017 note payable:
On March 30, 2017, the Company executed an amended and restated promissory note with
Vertex One Asset Management (Vertex), for $3,110 due September 1, 2020. The note represents
the balance remaining from the December 14, 2016 bridge loan, following the completion of the
Rights Offering (See Note 11(b)) and repayment of $2,890. The note is non-interest bearing, and
therefore the fair value at inception must be estimated to account for an imputed interest factor.
The value at inception was determined to be $2,364, based on the estimated discount rate of
8.05%, and is subject to estimation uncertainty. The resulting discount of $746 was recognized in
contributed surplus as a gain on the modification of debt at March 30, 2017, and will be amortized
over the term of the note using the effective interest method. For the twelve months ending
December 31, 2017, $147 was recognized in financing costs. The note is subject to prepayment
provisions, if the Company’s aggregate cash balance exceeds $10.0 million at the end of any
calendar quarter, 50% of the balance greater than $10.0 million must be pre-paid against the
outstanding notes payable.
b. Project financing:
Project financing includes a promissory note with a service provider. The note bears interest at 8% per
annum and is secured by a last priority lien on an aircraft owned by the Company. As of December 31,
2017, the balance of the note is $1,303.
Additionally, the project financing balance includes reimbursable project development funds provided
by a corporation designed to enable the development and commercialization of geomatics solutions
2017 Annual Report | Consolidated Financial Statements
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)
For the years ended December 31, 2017 and 2016
For the years ended December 31, 2017 and 2016
Page 24
Page 24
44
in Canada. The funding is repayable upon the completion of a specific development project and the
first sale of any of the resulting product(s). Repayment is to be made in quarterly installments equal to
the lesser of 20% of the funding amount or 25% of the prior quarter’s sales.
Promissory note payable
Promissory note payable
Reimbursable project funding
Reimbursable project funding
Less current portion
Less current portion
Long-term portion of project financing
Long-term portion of project financing
8. Obligations under finance leases:
Finance lease liabilities are payable as follows:
December 31,
December 31,
2017
2017
December 31,
December 31,
2016
2016
$
$
1,303
1,303
191
191
$
$
1,203
1,203
179
179
1,494
1,494
1,382
1,382
(1,303)
(1,303)
191
191
$
$
(1,214)
(1,214)
168
168
$
$
December 31, 2017
December 31, 2017
December 31, 2016
December 31, 2016
Future
Future
minimum
minimum
lease
lease
payments
payments
Interest (1)
Interest (1)
Present
Present
value of
value of
minimum
minimum
lease
lease
payments
payments
Future
Future
minimum
minimum
lease
lease
payments
payments
Interest (2)
Interest (2)
Present
Present
value of
value of
minimum
minimum
lease
lease
payments
payments
Less than one year
Less than one year
(current portion)
(current portion)
Between one and five years
Between one and five years
(long-term portion)
(long-term portion)
$
$
12
12
$
2
$
2
$
$
10
10
$
$
57
57
$
8
$
8
$
$
49
49
$
$
15
15
27
27
1
1
$
3
$
3
$
$
14
14
24
24
$
$
27
27
84
84
$
$
3
3
11
11
$
$
24
24
73
73
(1) Interest rate ranging from 7.48% to 9.65%.
(1) Interest rate ranging from 7.48% to 9.65%.
(2) Interest rate ranging from 7.48% to 22.96%.
(2) Interest rate ranging from 7.48% to 22.96%.
(1) Interest rate ranging from 7.48% to 9.65%.
(2) Interest rate ranging from 7.48% to 22.96%.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
In July 2016, the Company entered a finance lease to purchase $90 of computer equipment. The lease bears
interest at an implicit rate of 22.96% and is secured by the underlying assets. The lease matured in June
2017.
For the years ended December 31, 2017 and 2016
9. Revenue:
Details of revenue are as follows:
For the twelve months ended December 31,
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
$
2017
Acquisition services
Value-added data
Software and solutions
Page 25
2016
$
3,546
2,202
1,301
7,049
14,926
2,837
1,541
19,304
$
$
Page 26
For the years ended December 31, 2017 and 2016
10. Operating and financing costs:
a. Operating costs:
For the twelve months ended December 31,
2017
2016
Personnel
Purchased services & materials(1)
Travel
Facilities and other expenses
$
$
8,580
5,391
597
2,260
16,828
9,412
3,285
268
1,816
14,781
$
$
(1) Purchased services and materials include aircraft costs, project costs, professional and consulting fees, and selling and
marketing costs.
b. Restructuring costs:
On During the twelve months ended December 31, 2017, the Company continued organizational
restructuring to lower on-going operating costs. As a result, the company recorded $244 of workforce
For the twelve months ended December 31,
2017
2016
Accretion of discounts recognized on notes payable
$
2,431
$
5,821
Interest on project financing
Interest on finance lease
Interest on notes payable
Royalty expense associated with note payable
100
7
-
-
3,281
17
93
857
$
2,538
$
10,069
2017 Annual Report | Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
Page 26
For the twelve months ended December 31,
2017
2016
Purchased services & materials(1)
Personnel
Travel
Facilities and other expenses
$
8,580
$
9,412
5,391
597
2,260
3,285
268
1,816
$
16,828
$
14,781
reduction restructuring costs (twelve months ended December 31, 2016 - $941).
c.
Financing costs:
For the twelve months ended December 31,
2017
2016
45
Accretion of discounts recognized on notes payable
Interest on project financing
Interest on finance lease
Interest on notes payable
Royalty expense associated with note payable
$
2,431
100
7
-
-
2,538
$
$
5,821
3,281
17
93
857
10,069
$
11. Share capital:
a. Authorized:
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
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.
For the years ended December 31, 2017 and 2016
b.
Issued:
Page 27
December 31, 2017
Number of
December 31, 2016
Number of
Class A common shares
Shares
Amount
Shares
Amount
Balance, beginning of period:
Issuance of common shares from
Rights offering
Issuance costs
Option exercise
LTIP Issuance
Share-based compensation
Share consolidation rounding
Balance, end of period:
10,134,458
$
196,686
10,023,737
$
196,409
6,011,273
-
-
149,293
101,250
16
16,396,289
2,890
(164)
-
162
60
-
199,634
$
-
-
26,763
-
83,958
-
10,134,458
103
-
174
-
196,686
$
On On December 1, 2017, the Company completed a previously approved share consolidation on a 10
for 1 basis. No partial shares were issued in the consolidation and quantities were either rounded up or
down to the nearest share. As a result, sixteen additional shares were issued due to rounding. The share
quantities and per share prices in these Consolidated Financial Statements for 2016 and forward have
been adjusted to reflect the share consolidation for comparative purposes.
On June 20, 2017, 101,250 Class A common shares were issued to directors and employees of the
Company as compensation for services. Compensation expense of $60 for these Class A common
shares is included in operating costs.
On April 12 and June 29, 2017, the Company issued a total of 149,293 Class A common shares that
were earned under the LTIP Plan (see note 11(h)).
On February 24, 2017, the Company announced its plans to proceed with the previously announced
Rights Offering. The Rights Offering Notice was mailed on March 2, 2017 to all shareholders of record as
of March 1, 2017. Pursuant to the Rights Offering, one right was issued for each common share of the
Company held and each right entitles the holder to subscribe for one common share of the Company
upon the payment of the subscription price of C$0.60 or US$0.50 per common share. An aggregate
of 10,134,458 rights were issued pursuant to the Rights Offering, and the rights expired on March 27,
2017. On March 30, 2017, the Company issued 6,011,273 Class A common shares, with total proceeds
of $2,890 and issuance costs of $164. All proceeds were used to reduce the $6,000 bridge loan, and the
remaining balance of $3,110 was converted to a term note due on September 1, 2020, bearing zero
interest (see Note 7(vii)).
2017 Annual Report | Consolidated Financial Statements
46
On July 25, 2016, 15,300 Class A common shares were issued upon the exercise of options with a grant
date fair value of $29 for a reduction in accounts payable of $35.
On June 29, 2016, 20,169 Class A common shares were issued to directors of the Company as
compensation for services. Compensation expense of $40 for these Class A common shares is included
in operating costs.
On May 17, 2016, 63,789 Class A common shares were issued to directors of the Company as
INTERMAP TECHNOLOGIES CORPORATION
compensation for services in exchange for settlement of accounts payable of $134.
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
On May 3, 2016, 11,463 Class A common shares were issued upon the exercise of options with a grant
date fair value of $16 in exchange for settlement of accounts payable of $22.
For the years ended December 31, 2017 and 2016
Page 29
c. Contributed surplus:
Balance, beginning of period
Gain on modification of notes payable (Note 7(a))
Share-based compensation
LTIP issuance
Exercise of options
Deferred tax effect of notes payable
Balance, end of period
d. Earnings (loss) per share:
December 31,
2017
December 31,
2016
$
24,497
746
314
(115)
-
(200)
$
11,578
15,063
359
-
(45)
(2,458)
$
25,242
$
24,497
The calculation of earnings (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 in the calculation of diluted loss per share. The Company has incurred a net loss
for each period presented and the inclusion of the outstanding options and warrants in the loss per
share calculation are anti-dilutive and are therefore not included in the calculation.
The weighted average number of shares have been retrospectively adjusted for the bonus element of a
1.14 factor because of the rights issued pursuant to the Rights Offering (Note 11(b).
The underlying Class A common shares pertaining to 1,396,079 outstanding share options and
1,807,391 outstanding warrants could potentially dilute earnings.
e. Director’s share compensation plan:
The Company has a director’s share compensation plan which allows for the issuance 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 June 8, 2016, an
amendment to the share compensation plan was approved to increase the maximum number of Class
A common shares of the Corporation issuable thereunder from 240,000 to 440,000. As of December
31, 2017, 78,581 Class A common shares remain available under the plan. Compensation expense for
issued shares is included in operating costs.
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. At the Annual General and Special Meeting of the Shareholders on June 8,
2016, an amendment to the share compensation plan was approved to increase the maximum number
of Class A common shares of the Corporation issuable thereunder from 800,000 to 1,000,000. As of
December 31, 2017, 730,189 Class A common shares remain available for issuance under the plan.
2017 Annual Report | Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
Page 30
47
Compensation expense for issued shares is included in operating costs.
g. Share option plan:
The Company established a share 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, 2017, 1,639,629 Class A common shares were authorized
under the plan, of which 1,396,079 share options are issued and outstanding and 243,550 options
remain available for future issuance. Under the plan, no one individual shall be granted an option
resulting in cumulative grants in excess of 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 six to ten years, and generally vest over a period of one to four years. Options granted to directors
generally vest on the date of the grant and expire on the tenth anniversary of the date of such grant.
The following tables summarize information regarding share options outstanding:
December 31, 2017
December 31, 2016
Number of
shares
under option
Weighted
average
exercise
price (CDN)
Number of
shares
under option
Weighted
average
exercise
price (CDN)
Options outstanding,
beginning of period
Granted
Exercised
Expired
Forfeitures
Options outstanding, end of period
924,991
905,214
-
(423,126)
(11,000)
1,396,079
$
$
2.48
0.70
-
3.26
2.78
1.09
686,506
578,493
(26,763)
(191,808)
(121,438)
924,991
4.10
1.30
2.80
4.50
3.00
2.48
$
$
Options exercisable, end of period
766,944
$
1.26
809,907
$
2.40
Exercise
Price
(CDN$)
0.70
0.80
1.70
2.30
2.70
2.90
4.40
Options
outstanding
905,214
291,732
2,500
12,381
49,375
72,625
62,252
1,396,079
Weighted average
remaining
contractual life
9.28 years
8.88 years
2.62 years
3.63 years
4.22 years
2.22 years
1.20 years
8.23 years
Options
exercisable
330,204
291,732
1,875
12,381
14,125
54,375
62,252
766,944
During the twelve months ended December 31, 2017, 905,214 options were granted at a weighted
average grant date fair value of C$0.70 per share, determined using the Black-Scholes option pricing
model on the date of grant with the following assumptions: share price of C$0.70, expected dividend
yield 0%, risk-free interest rate of 1.37%, volatility of 124.9% and expected life of 10 years. Volatilities
are calculated based on the actual historical trading statistics of the Company’s Class A common shares
for the period commensurate with the expected option term. The estimated forfeiture rate was 10.36%
(2016 - $12.97%). During the twelve months ended December 31, 2017, the Company recognized $274
(twelve months ended December 31, 2016 - $339) of non-cash compensation expense related to the
share option plan.
h. Long-term incentive plan:
During the third quarter of 2014, the Board of Directors approved the terms of a long-term incentive
plan (LTIP) intended to retain and compensate senior management of the Company. The LTIP is a share-
based payments plan, based on the average stock price of the Company during the last quarter of the
2017 Annual Report | Consolidated Financial Statements
48
year ended December 31, 2015, and included the award of up to 239,800 common shares to be issued
as equity-settled share-based compensation and up to 359,700 common shares to be settled in either
cash or common shares, at the discretion of the Board of Directors. At December 31, 2015, 105,817
shares were earned under the equity-settled portion of the LTIP and 158,725 shares were earned under
the optional settlement portion of the LTIP. At December 31, 2017, all shares under the plan have been
issued or forfeited.
The fair value of the awards is subject to estimation uncertainty and was calculated using a Monte
Carlo simulation model with the following assumptions at the grant date: expected dividend yield 0%,
risk-free interest rate of 1.02%, volatility of 94.35%, grant date of August 8, 2014 and expiration date of
December 31, 2015. Volatilities were calculated based on the actual historical trading statistics of the
Company’s Class A common shares with a 1.4-year historical look back, commensurate with the term of
the LTIP.
The grant date fair value of the equity-settled portion of the LTIP was $133 and was charged to
non-cash compensation expense over the service period, which ended March 31, 2016, with a
corresponding charge to contributed surplus.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
The grant date fair value of the optional settlement portion of the LTIP was $169, with payment
timing subject to predetermined working capital thresholds, and was determined using a discount
Page 32
rate of 8.97%. The fair value of the amount estimated to be payable to employees under the optional
settlement portion of the LTIP is charged to non-cash compensation expense with a corresponding
increase in liabilities, over the service period, and is re-measured to the current fair value at each
reporting date. Any changes in the liability were recognized in profit or loss over the service period.
For the years ended December 31, 2017 and 2016
The fair value of the awards was subject to estimation uncertainty and at December 31, 2016 a liability
of $100 was recorded representing the fair value of the optional settlement portion of the LTIP. During
the twelve months ended December 31, 2017, 149,293 Class A common shares were issued with a
value of $47, 22,659 Class A common shares with a value of $12 were forfeited and a gain of $41 has
been charged to non-cash compensation expense.
i.
Share-based compensation expense:
Non-cash compensation expense has been included in operating costs with respect to the LTIP, share
options, and shares granted to employees and non-employees as follows:
For the twelve months ended December 31,
Employees
Non-employees
Non-cash compensation
2017
2016
$
159
153
$
(76)
365
$
312
$
289
Grant Date Expiry Date
Exercise
Price
Granted
Exercised
December Anti-dilution
Adjustment
31, 2016
Expired
Number of
Warrants
Outstanding
Number of
Warrants
Outstanding
December
31, 2017
2/7/2014
12/12/2014
12/26/2014
1/6/2015
1/14/2015
4/1/2015
5/1/2015
2/7/2017 C$ 0.80
12/12/2017 C$ 1.00
12/26/2017 C$ 0.70
2/6/2017 C$ 0.80
1/21/2018 C$ 0.80
4/1/2018 US$ 0.70
5/1/2018 US$ 0.60
309,157
113,720
166,667
459,744
146,983
917,827
453,017
-
-
-
(95,802)
-
-
-
309,157
113,720
166,667
363,942
146,983
917,827
453,017
-
21,695
31,796
-
28,041
175,099
86,424
(309,157)
(135,415)
(198,463)
(363,942)
-
-
-
-
-
-
-
175,024
1,092,925
539,441
2,567,115
(95,802)
2,471,313
343,055
(1,006,977)
1,807,391
2017 Annual Report | Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
Page 32
For the twelve months ended December 31,
Employees
Non-employees
Non-cash compensation
2017
2016
$
159
153
$
(76)
365
$
312
$
289
49
12. Class A common share purchase warrants:
The warrant amounts and prices have been adjusted because of the December 2017 share consolidation
(see Note 11(b)). The following table details the number of Class A common share purchase warrants
outstanding at each balance sheet date:
Grant Date Expiry Date
Exercise
Price
Granted
Exercised
December Anti-dilution
Adjustment
31, 2016
Expired
Number of
Warrants
Outstanding
Number of
Warrants
Outstanding
December
31, 2017
2/7/2014
12/12/2014
12/26/2014
1/6/2015
1/14/2015
4/1/2015
5/1/2015
2/7/2017 C$ 0.80
12/12/2017 C$ 1.00
12/26/2017 C$ 0.70
2/6/2017 C$ 0.80
1/21/2018 C$ 0.80
4/1/2018 US$ 0.70
5/1/2018 US$ 0.60
309,157
113,720
166,667
459,744
146,983
917,827
453,017
-
-
-
(95,802)
-
-
-
309,157
113,720
166,667
363,942
146,983
917,827
453,017
-
21,695
31,796
-
28,041
175,099
86,424
(309,157)
(135,415)
(198,463)
(363,942)
-
-
-
-
-
-
-
175,024
1,092,925
539,441
2,567,115
(95,802)
2,471,313
343,055
(1,006,977)
1,807,391
Each warrant entitles its holder to purchase one Class A common share. Vertex, the holder of all the
Company’s notes payable holds 546,469 of the warrants outstanding at December 31, 2017.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
The warrants contain anti-dilution protection provisions, and following the closing of the Rights Offering
on March 30, 2017, 343,055 warrants were issued based on a share rate factor of 1.1908, as calculated
according to the terms defined in the warrant agreements. The expiry dates and exercise prices remained
unchanged.
Page 33
During February 2017, 309,157 warrants that were issued on February 7, 2014 and 363,942 warrants that
were issued on January 6, 2015 naturally expired.
During December 2017, 135,415 warrants (113,720 warrants issued on December 12, 2014 adjusted for
anti-dilution provisions on March 30, 2017) and 198,463 warrants (166,667 warrants issued on December 26,
2014 adjusted for anti-dilution provisions on March 30, 2017) naturally expired.
The 508,902 warrants denominated in Canadian dollars, a currency different from the Company’s functional
currency, are recognized as a financial liability at fair value through profit and loss. The 1,632,366 warrants
denominated in United States dollars are recognized as part of share capital. At December 31, 2017 $385 is
included in share capital related to these warrants.
The following table details the number and value of the non-broker Class A common share purchase
warrants denominated in Canadian dollars that are outstanding and included in warrant liability at each
balance sheet date.
Balance at December 31, 2016
Anti-dilution adjustment
Expired
Revaluation
Balance at December 31, 2017
Number of
non-broker warrants
Warrant
liability
1,100,470
$
137
81,531
(1,006,977)
-
8
(105)
(40)
175,024
$
-
On December 31, 2017, the 146,983 non-broker warrants issued on January 14, 2015 and increased to
175,024 on March 30, 2017 were revalued to $Nil utilizing the Black-Scholes option pricing model with the
following assumptions: exercise price of C$0.80; average volatility rate of 58.4%; risk-free interest rate of
1.41%; expected life of 1 month; and an exchange rate of 0.80.
2017 Annual Report | Consolidated Financial Statements
50
The Company also issued 917,827 non-broker warrants on April 1, 2015 and 453,017 non-broker warrants
on May 1, 2015 that were increased to 1,092,925 and 539,441, respectively on March 30, 2017. As the
exercise price for both issuances are denominated in U.S. dollars, the Company’s functional currency, the
warrants are not considered a derivative liability and are not required to be recorded as a liability and
INTERMAP TECHNOLOGIES CORPORATION
revalued at each balance sheet date.
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
INTERMAP TECHNOLOGIES CORPORATION
13. Income taxes:
Notes to Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
INTERMAP TECHNOLOGIES CORPORATION
a. Current tax (expense) recovery:
INTERMAP TECHNOLOGIES CORPORATION
(In thousands of United States dollars, except per share information)
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
(In thousands of United States dollars, except per share information)
(In thousands of United States dollars, except per share information)
Page 35
$
December 31
Page 34
2017
Current period
Adjustment for prior periods
For the years ended December 31, 2017 and 2016
For the years ended December 31, 2017 and 2016
(51)
$
-
$
(51)
Page 35
Page 35
$
(14)
2016
(9)
(5)
December 31
b. Deferred tax recovery:
Origination and reversal of temporary differences
December 31
December 31
Origination and reversal of temporary differences
Origination and reversal of temporary differences
2017
2016
$
200
2017
2017
$
2,458
2016
2016
$
$
200
200
$
$
2,458
2,458
During 2017, the Company recognized $200 (2016 - $2,458) in deferred tax expense related to the
notes payable directly in equity.
c. Reconciliation of effective tax rate:
Income tax expense varies from the amount that would be computed by applying the basic federal
December 31,
and provincial income tax rates to the net loss before taxes as follows:
Losses, excluding income tax
December 31,
December 31,
Tax rate
Losses, excluding income tax
Losses, excluding income tax
Expected Canadian income tax recovery
Tax rate
Tax rate
Decrease resulting from:
Expected Canadian income tax recovery
Expected Canadian income tax recovery
Decrease resulting from:
Decrease resulting from:
(1,304)
2017
2017
27.0%
(1,304)
(1,304)
352
27.0%
27.0%
$
$
$
$
$
$
$
$
$
$
$
$
2017
(17,729)
2016
2016
27.0%
(17,729)
(17,729)
4,787
27.0%
27.0%
2016
Change in unrecognized temporary differences
Change in US statutory rate
Difference between Canadian statutory rate and those
Change in unrecognized temporary differences
Change in unrecognized temporary differences
applicable to U.S. and other foreign subsidiaries
Change in US statutory rate
Change in US statutory rate
Non-deductible expenses and non-taxable income
Difference between Canadian statutory rate and those
Difference between Canadian statutory rate and those
Adjustment for prior years income tax matters
applicable to U.S. and other foreign subsidiaries
applicable to U.S. and other foreign subsidiaries
Tax losses expiring during the year
Non-deductible expenses and non-taxable income
Non-deductible expenses and non-taxable income
Other
Adjustment for prior years income tax matters
Adjustment for prior years income tax matters
Tax losses expiring during the year
Tax losses expiring during the year
Other
Other
352
352
21,735
(22,263)
21,735
21,735
35
(22,263)
(22,263)
(580)
114
35
35
751
(580)
(580)
5
114
114
149
751
751
5
5
149
149
4,787
4,787
(1,223)
-
(1,223)
(1,223)
1,126
-
-
(2,898)
552
1,126
1,126
(2,898)
(2,898)
100
552
552
2,444
100
100
2,444
2,444
$
$
$
$
$
$
d. Recognized deferred tax assets and liabilities:
Deferred income taxes reflect the impact of temporary differences between amounts of assets and
liabilities for financial reporting purposes and such amounts as measured by tax laws. Deferred tax
assets and liabilities recognized at December 31, 2017 and 2016, are as follows:
December 31,
Property and equipment
December 31,
December 31,
Note payable
Property and equipment
Tax loss carryforwards
Property and equipment
Note payable
Note payable
Tax (assets) liabilities
Tax loss carryforwards
Tax loss carryforwards
Set off of tax
Tax (assets) liabilities
Tax (assets) liabilities
Net tax (assets) liabilities
Set off of tax
Set off of tax
Net tax (assets) liabilities
Net tax (assets) liabilities
Assets
Liabilities
2017
2016
2017
$
Assets
Assets
$
-
2017
2017
-
-
$
(200)
$
-
-
-
(200)
(200)
(200)
200
$
(200)
(200)
$
$
-
200
200
-
$
$
-
$
-
2016
2016
-
-
$
(2,471)
$
-
-
-
(2,471)
(2,471)
(2,471)
2,471
$
(2,471)
(2,471)
$
$
-
2,471
2,471
$
-
$
-
$
Liabilities
Liabilities
$
-
2017
2017
200
-
$
-
$
-
200
200
$
200
-
-
(200)
$
200
200
$
$
-
(200)
(200)
$
-
$
-
2016
.
$
13
2016
2016
.
2,458
.
13
$
-
$
13
2,458
2,458
2,471
-
-
(2,471)
$
2,471
2,471
$
$
-
(2,471)
(2,471)
-
$
$
-
$
Net
2017
2016
Net
Net
$
-
2017
2017
200
-
$
(200)
$
-
200
200
$
-
(200)
(200)
-
-
$
$
-
$
-
-
-
-
$
$
-
$
$
$
2016
2016
13
2,458
13
(2,471)
13
2,458
2,458
$
-
(2,471)
(2,471)
-
$
-
$
-
$
-
-
-
$
-
$
-
2017 Annual Report | Consolidated Financial Statements
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)
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)
For the years ended December 31, 2017 and 2016
For the years ended December 31, 2017 and 2016
For the years ended December 31, 2017 and 2016
For the years ended December 31, 2017 and 2016
Page 36
Page 36
Page 36
Page 36
51
e. Unrecognized deferred tax assets:
December 31
December 31
Deferred tax assets have not been recognized in respect of the following items:
December 31
December 31
Deductible temporary differences
Deductible temporary differences
Tax loss carryforwards
Deductible temporary differences
Tax loss carryforwards
Tax loss carryforwards
Deductible temporary differences
Tax loss carryforwards
$
$
2017
19,891
19,891
215,222
215,222
$
$
2017
2017
2017
19,891
19,891
215,222
215,222
235,113
235,113
2016
2016
2016
18,908
18,908
217,276
217,276
236,184
236,184
$
$
2016
18,908
18,908
217,276
217,276
$
$
236,184
$
$
$
$
236,184
$
$
$
235,113
$
235,113
The deferred tax asset is recognized when it is probable that future taxable profit will be available to
utilize the benefits. The Company has not recognized deferred tax assets with respect to these items
due to the uncertainty of future Company earnings.
Loss carry forwards:
At December 31, 2017, approximately $222,639 of loss carry forwards and $2,550 of tax credits were
available in various jurisdictions. At December 31, 2017 $7,417 of loss carry forwards were recognized
as a deferred tax asset. A summary of losses by year of expiry are as follows:
Twelve months ended December 31,
Twelve months ended December 31,
Twelve months ended December 31,
Twelve months ended December 31,
2018
2018
2018
2020
2020
2020
2021-2037
2021-2037
2021-2037
2018
2020
2021-2037
f. Movement in deferred tax balances during the year:
$
$
$
1,870
1,870
$
1,870
2,812
1,870
2,812
2,812
217,957
2,812
217,957
217,957
222,639
$
217,957
222,639
$
222,639
222,639
$
$
Property and equipment
Property and equipment
Property and equipment
Note payable
Property and equipment
Note payable
Note payable
Tax loss carryforwards
Note payable
Tax loss carryforwards
Tax loss carryforwards
Tax loss carryforwards
Net tax (assets) liabilities
Net tax (assets) liabilities
Net tax (assets) liabilities
Net tax (assets) liabilities
Balance at
December 31, 2016
Recognized in
Profit and Loss
Balance at
Balance at
Balance at
December 31, 2016
December 31, 2016
December 31, 2016
$
$
Recognized in
Profit and Loss
13
$
13
$
13
2,458
13
$
2,458
2,458
(2,471)
2,458
(2,471)
(2,471)
(2,471)
-
$
-
$
-
$
$
Recognized in
Recognized in
Profit and Loss
Profit and Loss
$
(13)
$
(13)
(658)
(658)
471
471
$
(200)
$
(200)
$
$
-
Recognized
Balance at
Recognized
Balance at
Recognized
Balance at
in Equity
December 31, 2017
Recognized
Balance at
in Equity
December 31, 2017
in Equity
December 31, 2017
in Equity
December 31, 2017
-
(13)
$
$
-
$
-
$
-
-
(13)
$
$
-
200
(658)
2,000
$
-
-
$
200
2,000
200
(658)
2,000
-
471
(2,000)
200
2,000
-
(2,000)
-
471
(2,000)
-
(2,000)
$
200
(200)
-
$
200
-
$
200
(200)
$
$
-
$
$
-
$
200
$
14. Commitments:
The Company has commitments related to operating leases for office space and equipment which require
the following payments for each year ending December 31:
2018
2018
2019
2019
2020
2020
2018
2019
2020
2018
2019
2020
$
$
$
509
$
509
388
388
233
$
233
1,130
$
1,130
509
509
388
388
233
233
1,130
1,130
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
$
$
For the years ended December 31, 2017 and 2016
During the twelve months ended December 31, 2017, the Company recognized $915 (year ended
Page 37
December 31, 2016 - $1,086) in operating lease expense for office space.
15. Segmented information:
The operations of the Company are in one industry segment: digital mapping and related services.
Geographic segments of revenue are as follows:
Year ended December 31,
2017
2016
United States
Asia/Pacific
Europe
December 31,
United States
Canada
Europe
Asia/Pacific
$
$
6,925
10,987
1,392
19,304
4,960
686
1,403
7,049
$
$
2017
2016
$
4,191
194
4
71
$
1,401
31
22
3
$
4,460
$
1,457
Year ended December 31,
Customer A
Customer B
2017
5,631
$
9,270
$
-
$
14,901
$
3,546
2016
3,546
2017 Annual Report | Consolidated Financial Statements
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
For the years ended December 31, 2017 and 2016
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
Page 37
Page 37
Year ended December 31,
United States
Year ended December 31,
Asia/Pacific
Europe
United States
Asia/Pacific
Europe
52
December 31,
Property and equipment of the Company are located as follows:
United States
Canada
December 31,
Europe
United States
Asia/Pacific
Canada
Europe
Asia/Pacific
2017
2016
$
$
$
$
$
$
$
$
2017
2016
$
$
$
$
$
$
$
$
6,925
2017
10,987
1,392
6,925
19,304
10,987
1,392
19,304
4,191
194
2017
4
4,191
71
194
4,460
4
71
4,460
4,960
2016
686
1,403
4,960
7,049
686
1,403
7,049
1,401
31
2016
22
1,401
3
31
1,457
22
3
1,457
A summary of sales to major customers that exceeded 10% of total sales during each period are as follows:
Year ended December 31,
Customer A
Year ended December 31,
Customer B
Customer A
Customer B
16. Financial risk management:
2017
2016
$
$
$
$
9,270
2017
5,631
14,901
9,270
5,631
14,901
$
-
2016
3,546
$
3,546
$
-
3,546
3,546
$
The Company has exposure to the following risks from its use of financial instruments: credit risk, market
risk, liquidity risk, and capital risk. Management, the Board of Directors, and the Audit Committee monitor
risk management activities and review the adequacy of such activities. This note presents information about
the Company’s exposure to each of the risks as well as the objectives, policies and processes for measuring
and managing those risks.
The Company’s risk management policies are established to identify and analyze the risks faced by the
Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and the
Company’s activities. The Company, through its training and management standards and procedures, aims
to develop a disciplined and constructive control environment in which all employees understand their
roles and obligations.
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 certain financial
assets held by the Company consisting of outstanding trade receivables and investment securities.
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each
customer. However, management also considers the demographics of the Company’s customer base,
including the default risk of the industry and country in which customers operate, as these factors may
have an influence on credit risk.
Approximately 77 percent of the Company’s revenue is attributable to transactions with two key
customers (year ended December 31, 2016 - 50 percent of the revenue was attributable to one key
customer), approximately 20 percent of the Company’s trade amounts receivable at year end are
attributable to customers located in Asia/Pacific (December 31, 2016 – approximately 12 percent), and
approximately 67 percent of the Company’s trade amounts receivable at year end are attributable to
customers located in Europe (December 31, 2016 – approximately 32 percent).
The Company has established a credit policy under which each new customer is analyzed individually
for creditworthiness before the Company’s standard payment and delivery terms and conditions are
offered.
A significant portion of the Company’s customers have transacted with the Company in the past or are
reputable large Companies and losses have occurred infrequently.
The maximum exposure to credit risk of the Company at period end is the carrying value of these
financial assets.
2017 Annual Report | Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
Page 38
53
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.
Amounts receivable as of December 31, 2017, and December 31, 2016, consist of:
December 31,
2017
2016
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)
Trade amounts receivable
Employee receivables
Other miscellaneous receivables
Allowance for doubtful accounts
$
519
-
2
-
$
559
2
45
(6)
For the years ended December 31, 2017 and 2016
For the years ended December 31, 2017 and 2016
$
521
$
600
Page 40
Page 40
Trade amounts receivable by geography consist of:
December 31,
December 31,
United States
United States
Asia/Pacific
Asia/Pacific
Europe
Europe
Canada
Canada
2017
2017
2016
2016
$
$
67
67
103
103
349
349
-
-
$
$
308
308
66
66
180
180
5
5
$
$
519
519
$
$
559
559
An aging of the Company’s trade amounts receivable are as follows:
December 31,
December 31,
Current
Current
31-60 days
31-60 days
61-90 days
61-90 days
Over 91 days
Over 91 days
2017
2017
2016
2016
$
$
344
344
49
49
-
-
126
126
$
$
403
403
60
60
3
3
93
93
$
$
519
519
$
$
559
559
The balance of the past due amounts relates to reoccurring customers and are considered collectible.
ii.
Investments in securities
The Company manages its credit risk surrounding cash 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. The balance at December 31, 2017, 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, Malaysian ringgit 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 most its subsidiaries.
2017 Annual Report | Consolidated Financial Statements
54
INTERMAP TECHNOLOGIES CORPORATION
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
(In thousands of United States dollars, except per share information)
Notes to Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
Page 41
Page 41
For the years ended December 31, 2017 and 2016
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
currency fluctuations.
Page 41
The balances in foreign currencies at December 31, 2017, are as follows:
(in USD)
Euro
Cash and
(in USD)
cash equivalents
Cash and
(in USD)
Amounts receivable
cash equivalents
Accounts payable and
Cash and
Amounts receivable
accrued liabilities
cash equivalents
Accounts payable and
Amounts receivable
accrued liabilities
Accounts payable and
accrued liabilities
(in USD)
(in USD)
Cash and
cash equivalents
Cash and
(in USD)
Amounts receivable
cash equivalents
Accounts payable and
Cash and
Amounts receivable
accrued liabilities
cash equivalents
Accounts payable and
Amounts receivable
accrued liabilities
Accounts payable and
accrued liabilities
December 31, 2017
December 31, 2017
December 31, 2017
United States dollar:
Depreciates 10%
United States dollar:
Appreciates 10%
Depreciates 10%
United States dollar:
Appreciates 10%
December 31, 2016
Depreciates 10%
Appreciates 10%
December 31, 2016
December 31, 2016
Australian
Dollar
Australian
Dollar
Australian
$
-
Dollar
99
$
-
99
(54)
-
$
$
99
45
(54)
$
Canadian
Dollar
Canadian
Dollar
Canadian
246
Dollar
4
246
4
(730)
246
4
(480)
(730)
$
$
$
British
Pound
British
Pound
British
$
-
Pound
33
$
-
Indonesian
Rupiah
Indonesian
Rupiah
Indonesian
$
9
Rupiah
-
$
9
Euro
$
-
Euro
43
$
-
43
(197)
-
$
33
(3)
-
$
-
(239)
9
$
$
43
(154)
(197)
$
33
30
(3)
$
-
(230)
(239)
Czech
Republic
Czech
Koruna
Republic
Czech
Koruna
Republic
(2)
Koruna
117
(2)
117
(172)
(2)
117
(57)
(172)
$
$
$
$
$
45
(54)
$
(480)
(730)
$
(154)
(197)
$
30
(3)
$
(230)
(239)
$
(57)
(172)
$
45
$
(480)
$
(154)
$
30
$
(230)
$
(57)
Australian
Dollar
Australian
Dollar
Australian
$
-
Dollar
7
$
-
$
-
7
(2)
7
$
5
(2)
Canadian
Dollar
Canadian
Dollar
Canadian
166
Dollar
47
166
47
(482)
166
47
(269)
(482)
Euro
Euro
$
7
Euro
74
$
7
74
(176)
$
7
74
(95)
(176)
$
British
Pound
British
Pound
British
$
-
Pound
18
$
-
Indonesian
Rupiah
Indonesian
Rupiah
Indonesian
$
9
Rupiah
-
$
9
18
(3)
-
$
-
(177)
9
$
$
18
15
(3)
$
-
(168)
(177)
$
$
$
$
Czech
Republic
Czech
Koruna
Republic
Czech
Koruna
Republic
67
Koruna
42
67
42
(121)
67
42
(12)
(121)
$
$
$
$
$
5
(2)
$
(269)
(482)
$
(95)
(176)
$
15
(3)
$
(168)
(177)
$
(12)
(121)
The balances in foreign currencies at December 31, 2016, are as follows:
$
Based on the net exposures at December 31, 2017 and 2016, and if 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:
$
5
$
$
$
$
(168)
(269)
(95)
15
(12)
$
$
$
$
$
$
$
$
$
$
$
$
Euro
Euro
15
Euro
(15)
15
(15)
15
(15)
Euro
Australian
Dollar
Australian
Dollar
Australian
(5)
Dollar
5
(5)
5
(5)
5
Australian
Dollar
Australian
Dollar
Australian
(1)
Dollar
1
(1)
1
(1)
1
Canadian
Dollar
Canadian
Dollar
Canadian
26
Dollar
(26)
26
(26)
26
(26)
Canadian
Dollar
Canadian
Dollar
Canadian
27
Dollar
(27)
27
(27)
27
(27)
British
Pound
British
Pound
British
(3)
Pound
3
(3)
3
(3)
3
British
Pound
British
Pound
British
(1)
Pound
1
(1)
1
(1)
1
$
$
Indonesian
Rupiah
Indonesian
Rupiah
Indonesian
$
23
Rupiah
(23)
23
(23)
23
(23)
Indonesian
Rupiah
Indonesian
Rupiah
Indonesian
17
Rupiah
(17)
17
(17)
17
(17)
Czech
Republic
Czech
Koruna
Republic
Czech
Koruna
Republic
$
6
Koruna
(6)
$
6
(6)
6
$
Czech
(6)
Republic
Czech
Koruna
Republic
Czech
Koruna
Republic
$
1
Koruna
(1)
1
$
(1)
1
$
(1)
$
$
United States dollar:
Depreciates 10%
United States dollar:
Appreciates 10%
Depreciates 10%
United States dollar:
Appreciates 10%
Depreciates 10%
Interest rate risk
Appreciates 10%
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.
Euro
$
9
Euro
(9)
9
$
(9)
9
$
(9)
$
$
$
$
$
$
$
$
$
$
ii.
Financial assets and financial liabilities with variable interest rates expose the Company to cash
flow interest rate risk. The Company does not have any debt instruments outstanding with
variable interest rates at December 31, 2017, or December 31, 2016.
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
principal payments.
2017 Annual Report | Consolidated Financial Statements
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
Page 42
55
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.
The Company’s approach to managing capital is to ensure, as far as possible, that it will have sufficient
liquidity to meets its obligations.
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, 2017, the
Company has a cash balance of $6,363 (year ended December 31, 2016 – $6,527) and working capital
of positive $348 (year ended December 31, 2016 – negative $3,849).
The following are the contractual maturities of the undiscounted cash flows of financial liabilities as of
December 31, 2017:
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
Accounts payable
Notes Payable
Project financing
Obligations under
finance leases
and accrued liabilities
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
3,279
-
1,303
4
-
191
706
-
-
22
-
-
-
33,914
-
For the years ended December 31, 2017 and 2016
3
3
6
12
$
4,585
$
25
$
712
$
207
3
Page 43
33,917
$
The following are the contractual maturities of the undiscounted cash flows of financial liabilities as of
December 31, 2016:
Accounts payable
and accrued liabilities
Warrant liabilities(1)
Notes Payable
Project financing
Other long-term liabilities
Obligations under
finance leases
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
$
2,920
53
6,000
1,214
100
$
164
-
-
-
-
$
471
54
-
-
-
-
$
30
-
168
-
-
$
-
30,803
-
-
25
25
6
14
14
$
10,312
$
189
$
531
$
212
$
30,817
The warrant liabilities are 100% vested and can be exercised by the holders at any time; however, the obligation is
(1)
non-cash and will be settled in equity (see Note 12).
d. Capital risk
The Company’s objectives when managing its capital risk is to safeguard its assets, while at the same
time maintaining investor, creditor, and market confidence, and to sustain future development of the
business and ultimately protect shareholder value. The Company manages its risks and exposures by
implementing the strategies below.
The Company includes shareholders’ deficiency, long-term notes payable, long-term portion of project
financing and long-term portion of obligations under finance leases in the definition of capital. Total
capital at December 31, 2017, was positive $4,688 (December 31, 2016 – negative $2,525). To maintain
or adjust the capital structure, the Company may issue new shares, issue new debt with different
2017 Annual Report | Consolidated Financial Statements
56
characteristics, acquire or dispose of assets, or adjust the amount of cash and short-term investment
balances held.
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 considering 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.
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
17. Fair values:
For the years ended December 31, 2017 and 2016
a. Fair value:
Page 44
Set out below is a comparison by class of the carrying amounts and fair value of the Company’s
financial instruments that are carried in the Consolidated Balance Sheet:
December 31, 2017
Carrying
Amount
Fair
Value
December 31, 2016
Carrying
Amount
Fair
Value
Financial assets
Loans and receivables:
Cash
Amounts receivable
Financial liabilities
Derivative financial liabilities at fair value
through profit and loss:
Non-broker warrants
Other financial liabilities:
Notes payable
Accounts payable and accrued liabilities
$
$
6,363
521
6,884
$
$
6,363
521
6,884
$
$
6,527
600
7,127
$
$
6,527
600
7,127
$
-
$
-
$
137
$
137
26,496
4,011
30,507
$
27,136
4,011
31,147
$
27,701
3,555
31,393
$
27,701
3,555
31,393
$
The fair values of the financial assets and liabilities are shown at the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than in a forced or
liquidation sale.
The following methods and assumptions were used to estimate the fair values:
•
•
•
Cash, amounts receivable, accounts payable and accrued liabilities and provisions approximate
their carrying amounts largely due to the short-term maturities of these instruments.
Notes payable are evaluated by the Company based on parameters such as interest rates and the
risk characteristics of the instrument.
The fair value of the non-broker warrants is estimated using the Black-Scholes option pricing
model incorporating various inputs including the underlying price volatility and discount rate (see
Note 12).
b. Fair value hierarchy:
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;
Level 2 – valuation techniques based on inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices;
2017 Annual Report | Consolidated Financial Statements
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
(In thousands of United States dollars, except per share information)
For the years ended December 31, 2017 and 2016
For the years ended December 31, 2017 and 2016
Page 45
Page 45
57
Level 3 – valuation techniques using inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The fair value hierarchy of financial instruments recorded at fair value on the Consolidated Balance
Sheet are as follows:
Financial liabilities
Non-broker warrants
Financial liabilities
Non-broker warrants
$
-
December 31, 2017
Level 1 Level 2 Level 3
December 31, 2017
Level 1 Level 2 Level 3
Level 1
December 31, 2016
Level 2
December 31, 2016
Level 2
Level 1
Level 3
Level 3
$
-
$
-
$
-
$
137
$
-
$
-
$
-
$
-
$
-
$
137
$
-
During the reporting periods, there were no transfers between Level 1 and Level 2 fair value
measurements.
18. Key management personnel and director compensation:
The Company’s compensation program specifically provides for total compensation for executive officers,
which is a combination of base salary, performance-based incentives and benefit programs that reflect
aggregated competitive pay considering business achievement, fulfillment of individual objectives and
overall job performance. Executive officers participate in the Company’s share compensation and share
option plans (Note 11).
The compensation of non-employee directors consists of a cash component and a share component.
Directors participate in the Company’s share option plan and director’s share compensation plan (Note
11(e)).
The following summarizes key management personnel and directors’ compensation for the years ended
December 31, 2017 and 2016:
Year ended December 31,
2017
2016
Year ended December 31,
Compensation and benefits
Post-employment benefits
Share-based payments
LTIP
Compensation and benefits
Post-employment benefits
Share-based payments
LTIP
INTERMAP TECHNOLOGIES CORPORATION
Notes to Consolidated Financial Statements
(In thousands of United States dollars, except per share information)
$
$
The following summarizes key management personnel and directors share ownership of the Company as of
December 31, 2017, and 2016:
For the years ended December 31, 2017 and 2016
Page 46
$
1,839
202
$
260
(33)
2,268
2017
$
1,482
620
$
321
(130)
2,293
1,839
202
260
$
(33)
2,268
$
2016
1,482
620
321
(130)
2,293
December 31,
Number of Class A Common shares held
Percentage of total Class A Common shares issued
2017
377,871
2.30%
2016 (1)
232,207
2.29%
(1) Class A Common shares were adjusted due to the share consolidation in December 2017 (see Note 11(b)) for
comparative purposes.
19. Subsequent event:
During January 2018, 175,024 warrants (146,983 warrants issued on January 21, 2014 adjusted for anti-
dilution provisions on March 30, 2017) naturally expired.
2017 Annual Report | Consolidated Financial Statements
Intermap Technologies
8310 South Valley Highway, Suite 400
Englewood, Colorado 80112-5809
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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