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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 11/29/19 Lingo Media Corp 6-K 9/30/19 65:4.4M RDG Filings/FA |
Document/Exhibit Description Pages Size
1: 6-K Report by a Foreign Issuer HTML 352K
2: EX-1 Underwriting Agreement HTML 176K
3: EX-99.1 Miscellaneous Exhibit HTML 23K
4: EX-99.2 Miscellaneous Exhibit HTML 23K
32: R1 Document And Entity Information HTML 34K
51: R2 Condensed Consolidated Interim Balance Sheets HTML 80K
(Current Period Unaudited)
42: R3 Condensed Consolidated Interim Statements of HTML 88K
Comprehensive Income (Loss) (Unaudited)
13: R4 Condensed Consolidated Interim Statements of HTML 46K
Changes in Equity (Unaudited)
33: R5 Condensed Consolidated Interim Statements of Cash HTML 79K
Flows (Unaudited)
52: R6 Note 1 - Corporate Information HTML 26K
43: R7 Note 2 - Basis of Preparation HTML 33K
14: R8 Note 3 - Significant Accounting Judgements, HTML 29K
Estimates and Assumptions
31: R9 Note 4 - Summary of Significant Accounting HTML 71K
Policies
27: R10 Note 5 - Accounts and Grants Receivable HTML 29K
20: R11 Note 6 - Property and Equipment HTML 48K
37: R12 Note 7 - Right-of-use Asset HTML 62K
60: R13 Note 8 - Contract Liability HTML 33K
28: R14 Note 9 - Share Capital HTML 23K
21: R15 Note 10 - Share-based Payments HTML 67K
38: R16 Note 11 - Income Tax HTML 22K
61: R17 Note 12 - Government Grants HTML 25K
26: R18 Note 13 - Financial Instruments HTML 38K
22: R19 Note 14 - Major Customer HTML 24K
44: R20 Note 15 - Capital Management HTML 25K
54: R21 Note 16 - Segmented Information HTML 94K
29: R22 Note 17 - Supplemental Cash Flow Information HTML 26K
11: R23 Note 18 - Related Party Balances and Transactions HTML 26K
45: R24 Significant Accounting Policies (Policies) HTML 69K
55: R25 Note 4 - Summary of Significant Accounting HTML 61K
Policies (Tables)
30: R26 Note 5 - Accounts and Grants Receivable (Tables) HTML 27K
12: R27 Note 6 - Property and Equipment (Tables) HTML 47K
46: R28 Note 7 - Right-of-use Asset (Tables) HTML 61K
53: R29 Note 8 - Contract Liability (Tables) HTML 31K
64: R30 Note 10 - Share-based Payments (Tables) HTML 52K
41: R31 Note 13 - Financial Instruments (Tables) HTML 25K
19: R32 Note 16 - Segmented Information (Tables) HTML 90K
25: R33 Note 17 - Supplemental Cash Flow Information HTML 25K
(Tables)
63: R34 Note 1 - Corporate Information (Details Textual) HTML 21K
40: R35 Note 4 - Summary of Significant Accounting HTML 28K
Policies (Details Textual)
18: R36 Note 4 - Summary of Significant Accounting HTML 90K
Policies - Impacts of Adopting IFRS 16 (Details)
24: R37 Note 5 - Accounts and Grants Receivable - Schedule HTML 26K
of Receivables (Details)
65: R38 Note 6 - Property and Equipment - Schedule of HTML 41K
Property and Equipment (Details)
39: R39 Note 7 - Right-of-use Asset - Schedule of HTML 45K
Right-of-use Asset (Details)
57: R40 Note 8 - Contract Liability - Changes in Contract HTML 31K
Liability (Details)
50: R41 Note 9 - Share Capital (Details Textual) HTML 24K
16: R42 Note 10 - Share-based Payments (Details Textual) HTML 78K
35: R43 Note 10 - Share-based Payments - Options HTML 52K
Outstanding (Details)
56: R44 Note 12 - Government Grants (Details Textual) HTML 31K
49: R45 Note 13 - Financial Instruments (Details Textual) HTML 42K
15: R46 Note 13 - Financial Instruments - Denominated HTML 38K
Monetary Assets and Liabilities (Details)
34: R47 Note 14 - Major Customer (Details Textual) HTML 24K
58: R48 Note 16 - Segmented Information (Details Textual) HTML 21K
48: R49 Note 16 - Segmented Information - Segment Earnings HTML 83K
(Details)
36: R50 Note 16 - Segmented Information - Geographical HTML 39K
Information (Details)
59: R51 Note 17 - Supplemental Cash Flow Information - HTML 23K
Schedule of Income Taxes and Interest Paid
(Details)
23: R52 Note 18 - Related Party Balances and Transactions HTML 31K
(Details Textual)
47: XML IDEA XML File -- Filing Summary XML 118K
17: EXCEL IDEA Workbook of Financial Reports XLSX 53K
5: EX-101.INS XBRL Instance -- lmdc-20190930 XML 1.27M
7: EX-101.CAL XBRL Calculations -- lmdc-20190930_cal XML 83K
8: EX-101.DEF XBRL Definitions -- lmdc-20190930_def XML 726K
9: EX-101.LAB XBRL Labels -- lmdc-20190930_lab XML 596K
10: EX-101.PRE XBRL Presentations -- lmdc-20190930_pre XML 755K
6: EX-101.SCH XBRL Schema -- lmdc-20190930 XSD 147K
62: ZIP XBRL Zipped Folder -- 0001437749-19-023700-xbrl Zip 96K
Exhibit 1
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151 Bloor St West Suite 703 Toronto, Ontario Canada M5S 1S4 Tel: 416.927.7000 Fax: 416.927.1222 |
Lingo Media Corporation
Form 51 – 102 F1
Management Discussion & Analysis
Third Quarter Ended September 30, 2019
November 29, 2019
MANAGEMENT DISCUSSION & ANALYSIS
FOR THE PERIOD ENDED SEPTEMBER 30, 2019
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Notice to Reader
The following Management Discussion & Analysis ("MD&A") of Lingo Media Corporation’s (the "Company" or "Lingo Media") financial condition and results of operations, prepared as of November 29, 2019, should be read in conjunction with the Company's Condensed Consolidated Interim Financial Statements and accompanying Notes for the period ended September 30, 2019 and 2018, which have been prepared in accordance with International Financial Reporting Standards are incorporated by reference herein and form an integral part of this MD&A. All dollar amounts are in Canadian Dollars unless stated otherwise. These documents can be found on the SEDAR website www.sedar.com.
Our MD&A is intended to enable readers to gain an understanding of Lingo Media’s current results and financial position. To do so, we provide information and analysis comparing the results of operations and financial position for the current period to those of the preceding comparable three-month period. We also provide analysis and commentary that we believe is required to assess the Company's future prospects. Accordingly, certain sections of this report contain forward-looking statements that are based on current plans and expectations. These forward-looking statements are affected by risks and uncertainties that are discussed in this document and that could have a material impact on future prospects. Readers are cautioned that actual results could vary. |
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Cautions Regarding Forward-Looking Statements
This MD&A contains certain forward-looking statements, which reflect management’s expectations regarding the Company’s results of operations, performance, growth, and business prospects and opportunities.
Statements about the Company’s future plans and intentions, results, levels of activity, performance, goals or achievements or other future events constitute forward-looking statements. Wherever possible, words such as "may," "will," "should," "could," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," or "potential" or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. These statements reflect management’s current beliefs and are based on information currently available to management as at the date hereof.
Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this MD&A are based upon what management believes to be reasonable assumptions, the Company cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this MD&A, and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including: general economic and market segment conditions, competitor activity, product capability and acceptance, international risk and currency exchange rates and technology changes. More detailed assessment of the risks that could cause actual results to materially differ than current expectations is contained in the "Quantitative and Qualitative Disclosures of Market Risk" section of this MD&A. |
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Lingo Media Corporation Management Discussion & Analysis |
2 |
Summary Description of Lingo Media
Lingo Media (“Lingo Media,” the “Company,” “we” or” us”) is an EdTech company that is ‘Changing the way the world learns Languages’ through the combination of education with technology. The Company is focused on online and print-based technologies and solutions through its two subsidiaries: Lingo Learning Inc. (Lingo Learning”) and ELL Technologies Ltd. (“ELL Technologies”). Through its two distinct business units, Lingo Media develops, markets and supports a suite of English as well as additional language learning solutions consisting of web-based software licensing subscriptions, online and professional services, audio practice tools and multi-platform applications. The Company continues to operate its legacy textbook publishing business from which it collects recurring royalty revenues.
Lingo Media’s two distinct business units include ELL Technologies and Lingo Learning. ELL Technologies is a web-based educational technology (“EdTech”) English language learning training and assessment company that creates innovative software-as-a-service e-learning solutions. Lingo Learning is a print-based publisher of English language learning textbook programs in China. The Company has formed successful relationships with key government and industry organizations, establishing a strong presence in China’s education market. Lingo Media is extending its global reach, beyond its initial market expansion into Latin America and continues to expand its product offerings and technology applications.
The Company continues to invest in language learning and leverage its industry expertise to expand into more scalable education-technology. Recent product initiatives have allowed us to expand the breadth of our language learning product offerings and reinforced the belief that the web-based EdTech learning segment continues to present a significant opportunity for long-term value creation.
Lingo Media continues to focus on software and content development to address market needs within the government and academic training sectors.
Q3 2019 Operational Highlights
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● |
Online English Language Learning: |
|
✓ |
Integrated mobile App data results with LMS |
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✓ |
Completed chat functionality between teachers and students |
|
|
✓ |
Enabled lesson and resource assignment via iPADs |
|
|
✓ |
Added localization for French and Spanish |
|
|
✓ |
Signed new distribution agreements in Ecuador snd Mexico. |
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| ✓ | Added a selling manager to bolster sales in LATAM |
|
● |
Print-Based English Language Learning: |
|
✓ |
expanded existing market for PEP Primary English program into one additional province in China |
Our strategy continues to transition more and more of our business to online subscriptions and digital downloads that enable learners to bring your own device (“BYOD”) and beyond paper-based textbook publishing. We have implemented functionality that allows for “Personalization” of learning by allowing teachers to upload material into our system and assign it to individual/group of students, as well as, assign individual lessons based on level, skill, and subject. We recognize that students learn at their own pace and have to complete certain components of the course, both the students who are struggling or the advanced ones are left behind. This new functionality gives teachers very powerful tools to help such students with additional material, thus personalizing the learning. We are continuously pursuing business relationships in various markets, as well as, working closely with our existing channel partners in building the business.
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Lingo Media Corporation Management Discussion & Analysis |
3 |
Online English Language Learning
ELL Technologies offers more than 3,000 hours of interactive learning through a number of product offerings that include Winnie’s World, English Academy, Campus, English for Success, Master and Business in addition to offering custom solutions. ELL Technologies is primarily marketed in Latin America through a network of distributors and earns its revenues from online and offline licensing fees from its suite of web-based language learning products and applications.
ELL Technologies had an extensive existing product line which required substantial revisions in the technology platform and user interface. Over the past three years, our development team has engineered an eLearning platform and has been introducing new products to the market since the beginning of 2015, integrating cutting-edge technologies, solutions, content and pedagogy.
ELL Technologies’ high-tech, easy to implement eLearning Software-as-a-Service have positioned the Company to develop courses and content that delivers a solution to learners of different age groups (i.e. university, professionals etc.). The table below provides our portfolio of products and their associated target/market segment:
All products have been designed for our proprietary learning management system enabling ELL Technologies to market and sell to academic institutions and governments. Educators who license the platform are able to easily create, convert, edit, and arrange lessons and courses as they see fit.
Formative assessments and data gathering functionality allows us to adapt and improve content. Based on that data, we are able to program iterations to address specific problem areas and to make learning more accessible, efficient and measurable. Built for learners, by learners, we empower educators and allow them to easily transition from pure classroom paper-based teaching to the online world.
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Lingo Media Corporation Management Discussion & Analysis |
4 |
Summary of Q3 2019 product development achievements:
|
● |
Integrated mobile App data results with LMS |
|
● |
Completed chat functionality between teachers and students |
|
● |
Enabled lesson and resource assignment via iPADs |
|
● |
Added localization for French and Spanish |
Print-Based English Language Learning
The Company continues to maintain its legacy textbook publishing business through Lingo Learning, a print-based publisher of English language learning programs in China since 2001. Lingo Learning has an established presence in China’s education market of over 300 million students. To date, it has co-published more than 615 million units from its library of program titles.
Overall Performance
During the three-month period ended September 30, 2019, Lingo Media recorded revenues of $117,545 as compared to $186,518 in 2018. Net loss was $342,182 as compared to a net loss of $156,550 in 2018. Total comprehensive loss was $320,519 as compared to $160,765 in 2018. At the same time, the Company’s selling general and administrative costs was $223,371 compared to $303,739 in 2018. Lingo Media recorded share-based payments of $24,356 as compared to $14,468 in 2018.
In addition, cash used in operations during the period was $111,894 as compared to $115,035 in 2018 same period.
Online English Language Learning
ELL Technologies earned revenue from its portfolio of products of $55,450 for the three months period ended September 30, 2019, compared to $134,647 in 2018. The decrease in revenue is a result of extended sales cycles in securing contracts and time shifting of the sales pipeline.
Print-Based English Language Learning
Lingo Media earned royalty revenue of $62,095 in the third quarter of 2019 compared to $51,872 in 2018 from People’s Education & Audio Visual Press (“PEP AV”). This revenue consists of royalties generated through licensing sales from provincial distributors as a result of Lingo Media and PEP AV’s local marketing and training initiatives.
Market Trends and Business Uncertainties
Lingo Media believes that the global market trends in English language learning are strong and will continue to grow. Developing countries around the world, specifically in Latin America and Asia are expanding their mandates for the teaching of English amongst students, young professionals and adults.
The British Council suggests that there are 1.6 Billion people learning English globally. English language learning products and services are currently a US$8.9 Billion global market notes Orbit Research.
GlobalEnglish forecasts the global eLearning market to grow to 17% year over year. Markets and Markets forecasts the global EdTech market to grow from US$43.27 Billion in 2015 to US$93.76 Billion to 2020, or at a CAGR or 16.72%.
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Lingo Media Corporation Management Discussion & Analysis |
5 |
Latin American Region
The Inter-American Dialogue recently noted that while English language training programs exist in various forms throughout Latin American region, there are three key factors that these programs must address to be successful: ensuring continuity, developing a strong monitoring and evaluation framework that informs adaptation, and addressing the lack of sufficient quality teachers. Students attending English language training (“ELT”) classes in Latin America accounted for approximately 14 per cent of worldwide revenues, or US$321 million in 2018. Growth has been very rapid in the Latin American region and represents a particularly strong opportunity moving forward relative to other geographic regions.
Asia-Pacific Region
Technavio forecasts the English language training (ELT) market in China to be worth $75 Billion by 2022, growing at a CAGR of 22%. The growth of the ELT market in China is driven by more people desiring to learn English, the adaptation of smartphones, increasing levels of disposable income, and the inherent advantages of online education. Technavio also notes that 49% of the growth in the global digital English language learning market will come from the Asia-Pacific region.
Lingo Media is positioned to take advantage of the market opportunity for English language training in Latin America and Asia, with its scalable digital language learning technology and solutions. Although the market outlook remains positive, there can be no assurance that this trend will continue or that the Company will benefit from this trend.
General Financial Condition
As at September 30, 2019 Lingo Media had working capital of $351,112 compared to $417,275 as at September 30, 2018. Total comprehensive loss for the three-month period ended September 30, 2019 was $320,519 compared to $160,765 for the period ended September 30, 2018.
Financial Highlights – for the Third Quarter Ended September 30, 2019
The Company had cash on hand as at September 30, 2019 of $30,367 (2018 - $118,689) and continues to rely on its revenues from its recurring royalty stream, its online English language learning services, and future debt and/or equity financings to fund its operations.
Results of Operations
During the quarter, Lingo Media earned $55,450 in online licensing sales revenue as compared to $134,647 in 2018. The decrease in revenue is a result of extended sales cycles in securing contracts and time shifting of the sales pipeline.
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Lingo Media Corporation Management Discussion & Analysis |
6 |
Revenues from Print-Based English language learning for the quarter were $62,094 compared to $51,872 in 2018. Direct costs associated with publishing revenue are relatively modest and has been consistent throughout the years. The Company continues to maintain its relationship with PEP and is investing in the development of its existing and new programs and marketing activities to maintain and increase its royalty revenues.
Selling, General and Administrative
Selling, general and administrative expenses for the quarter were $223,371 compared to $303,739 in 2018. Selling, general and administrative expenses for the three segments are segregated below.
|
(i) |
Print-Based English Language Learning |
Selling, general and administrative cost for print-based publishing increased from $15,632 in 2018 to $37,337 in 2019 primarily due to the increase in consulting fees and salaries. The following is a breakdown of selling, general and administrative costs directly related to print-based English language learning:
|
(a) |
Rent expense is now recorded as depreciation expense of the right-of-use assets. |
|
(ii) |
Online English Language Learning |
Selling, general and administrative costs related to online English language learning was $38,748 for the quarter compared to $111,051 in 2018. Selling, general and administrative costs, consulting fees and salaries for this business unit decreased in 2019 as compared to 2018.
|
(a) |
Rent expense is now recorded as depreciation expense of the right-of-use assets. |
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Lingo Media Corporation Management Discussion & Analysis |
7 |
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(iii) |
Head Office |
Selling, general and administrative costs related to head office was $143,532 for the quarter compared to $177,056 in 2018. Selling, general and administrative costs for this reporting unit decreased in 2019 as compared to 2018, which is the result of decrease on expenditures related to sales, marking and administration expenses, consulting fees, and professional fees.
Net Loss
Total comprehensive loss for the Company was $320,519 for the quarter ended September 30, 2019 as compared to a comprehensive loss of $160,765 in 2018. These incomes can be attributed to the two operating segments and head office as a reporting segment as shown below:
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Lingo Media Corporation Management Discussion & Analysis |
8 |
Foreign Exchange
The Company recorded foreign exchange loss of $21,415 as compared to $14,968 in 2018, relating to the Company's currency risk through its activities denominated in foreign currencies as the Company is exposed to foreign exchange risk as a significant portion of its revenue and expenses are denominated in Chinese Renminbi and US Dollars.
Share-Based Payments
The Company amortizes share-based payments with a corresponding increase to the contributed surplus account. During the period, the Company recorded an expense of $24,356 compared to $14,468 during 2018.
Net Loss for the Period
The Company reported a net loss of $342,182 for the period as compared to a net loss of $156,550 in 2018.
Total Comprehensive Loss
The total comprehensive loss is calculated after the application of exchange differences on translating foreign operations gain/(loss). The Company reported a total comprehensive loss of $320,519 for the period ended September 30, 2019, as compared to a comprehensive loss of $160,765 in 2018.
Summary of Quarterly Results
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Lingo Media Corporation Management Discussion & Analysis |
9 |
Liquidity and Capital Resources
As at September 30, 2019, the Company had cash of $30,367 compared to $118,689 in 2018. Accounts and grants receivable of $1,001,936 were outstanding at the end of the period compared to $1,117,294 in 2018. With 94% of the receivables from PEP and the balance due from ELL customers with a 90 - 180 days collection cycle, the Company does not anticipate an effect on its liquidity. Total current assets amounted to $1,126,912 (2018 - $1,352,887) with current liabilities of $775,800 (2018 - $970,602) resulting in working capital of $351,112 (2018 - $382,285).
Lingo Learning receives government grants based on certain eligibility criteria for publishing industry development in Canada and for international marketing support. These government grants are recorded as a reduction of general and administrative expenses to offset direct expenditure funded by the grant. The Company receives these grants throughout the year. The grant is applied based on Lingo Learning meeting certain eligibility requirements. The Company has relied on obtaining these grants for its operations and has been successful at securing them in the past, but it cannot be assured of obtaining these grants in the future.
Lingo Media has access to working capital through equity financings or debt financings, if required to finance its growth plans and expansion into new international markets. The Company has been successful in raising sufficient working capital in the past.
Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet finance arrangements.
Contractual Obligations
Future minimum lease payments under operating leases for premises and equipment are as follows:
|
2019 |
67,708 | |||
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2020 |
222,541 | |||
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2021 |
49,280 |
Transactions with Related Parties
The Company’s key management includes Gali Bar-Ziv, CEO, Khurram Qureshi, CFO, and Michael Kraft, Chairman, in addition to Board Directors and the Secretary of the Board.
The Company had the following transactions with related parties, made in the normal course of operations, and accounted for at an amount of consideration established and agreed to by the Company and related parties.
The Company charged $21,509 (2018 - $44,049) to corporations with directors or officer in common for rent, administration, office charges and telecommunications during the quarter.
Key management compensation for the quarter was $79,500 (2018 – $85,197) and is reflected as consulting fees paid to corporations owned by a director and officers of the Company, of which the management compensation is included in accrued liabilities.
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Lingo Media Corporation Management Discussion & Analysis |
10 |
Additional Disclosure
Right-of-use Asset
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Office Lease |
Leasehold Improvements |
Total |
||||||||||
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Cost, January 1, 2018 |
$ | - | $ | - | $ | - | ||||||
|
Additions |
- | - | - | |||||||||
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Cost, September 30, 2018 |
$ | - | $ | - | $ | - | ||||||
|
Additions |
- | 33,180 | 33,180 | |||||||||
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Cost, December 31, 2018 |
$ | - | $ | 33,180 | $ | 33,180 | ||||||
|
Additions |
436,455 | - | 436,455 | |||||||||
|
Cost, September 30, 2019 |
$ | 436,455 | $ | 33,180 | $ | 469,635 | ||||||
|
Accumulated depreciation, January 1, 2018 |
$ | - | $ | - | $ | - | ||||||
|
Charge for the period |
- | - | - | |||||||||
|
Accumulated depreciation, September 30, 2018 |
$ | - | $ | - | $ | - | ||||||
|
Charge for the period |
- | 11,613 | 11,613 | |||||||||
|
Accumulated depreciation, December 31, 2018 |
$ | - | $ | 11,613 | $ | 11,613 | ||||||
|
Charge for the period |
128,858 | 8,710 | 137,568 | |||||||||
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Accumulated depreciation, September 30, 2019 |
$ | 128,858 | $ | 20,323 | $ | 149,181 | ||||||
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Net book value, September 30, 2019 |
$ | 307,597 | $ | 12,857 | $ | 320,454 | ||||||
Property and Equipment
|
Cost, January 1, 2018 |
$ | 89,787 | ||
|
Additions |
6,039 | |||
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Effect of foreign exchange |
326 | |||
|
Cost, September 30, 2018 |
$ | 96,152 | ||
|
Additions |
1,800 | |||
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Effect of foreign exchange |
(77 | ) | ||
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Cost, December 31, 2018 |
$ | 97,875 | ||
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Additions |
450 | |||
|
Write off |
(12,126 | ) | ||
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Effect of foreign exchange |
(1,109 | ) | ||
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Cost, September 30, 2019 |
$ | 85,090 | ||
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Accumulated depreciation, January 1, 2018 |
$ | 59,098 | ||
|
Charge for the period |
4,761 | |||
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Effect of foreign exchange |
299 | |||
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Accumulated depreciation, September 30, 2018 |
$ | 64,158 | ||
|
Charge for the period |
1,995 | |||
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Effect of foreign exchange |
125 | |||
|
Accumulated depreciation, December 31, 2018 |
$ | 66,278 | ||
|
Charge for the period |
4,602 | |||
|
Write off |
(12,126 | ) | ||
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Effect of foreign exchange |
(356 | ) | ||
|
Accumulated depreciation, September 30, 2019 |
$ | 58,398 | ||
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Net book value, January 1, 2018 |
$ | 30,689 | ||
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Net book value, September 30, 2018 |
$ | 31,994 | ||
|
Net book value, December 31, 2018 |
$ | 31,597 | ||
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Net book value, September 30, 2019 |
$ | 26,692 |
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Lingo Media Corporation Management Discussion & Analysis |
11 |
Risk Factors
Business Risk and Uncertainties
We are subject to a number of risks and uncertainties that can significantly affect our business, financial condition and future financial performance, as described below. In particular, there remain significant uncertainties in capital markets impacting the availability of equity financing. While these uncertainties in capital markets do not have a direct impact on our ability to carry out our business, the Company may be impacted should it become more difficult to gain access to capital when and if needed. These risks and uncertainties are not necessarily the only risks the Company faces. Additional risks and uncertainties that are presently unknown to the Company may adversely affect our business.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s monetary assets and liabilities denominated in currencies other than the Canadian Dollar and the Company’s net investments in foreign subsidiaries.
The Company operates internationally and is exposed to foreign exchange risk as certain expenditures are denominated in non-Canadian Dollar currencies.
The Company has been exposed to this fluctuation and has not implemented a program against these foreign exchange fluctuations.
The Company operates internationally and is exposed to foreign exchange risk as certain expenditures are denominated in non-Canadian Dollar currencies.
The Company has been exposed to this fluctuation and has not implemented a program against these foreign exchange fluctuations.
A 10% strengthening of the US Dollar against the Canadian Dollar would have increased the net equity approximately by $2,437 (2018 - $35,457) due to reduction in the value of net liability balance. A 10% of weakening of the US Dollar against the Canadian Dollar at September 30, 2019 would have had the equal but opposite effect. The significant financial instruments of the Company, their carrying values and the exposure to other denominated monetary assets and liabilities, as of September 30, 2019 are as follows:
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US Denominated |
||||
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Cash |
711 | |||
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Accounts receivable |
624,416 | |||
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Accounts payable |
25,708 | |||
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Lingo Media Corporation Management Discussion & Analysis |
12 |
Liquidity Risk
The Company manages its liquidity risk by preparing and monitoring forecasts of cash expenditures to ensure that it will have sufficient liquidity to meet liabilities when due. The Company’s accounts payable and accrued liabilities generally have maturities of less than 90 days. At September 30, 2019, the Company had cash of $30,367, accounts and grants receivable of $1,001,936 and prepaid and other receivables of $94,609 to settle current liabilities of $775,800.
Credit Risk
Credit risk refers to the risk that one party to a financial instrument will cause a financial loss for the counterparty by failing to discharge an obligation. The Company is primarily exposed to credit risk through accounts receivable. The maximum credit risk exposure is limited to the reported amounts of these financial assets. Credit risk is managed by ongoing review of the amount and aging of accounts receivable balances. As at September 30, 2019, the Company has outstanding receivables of $835,554 (2018 - $941,287). New impairment requirements use an 'expected credit loss' ('ECL') model to recognize an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available. The Company deposits its cash with high credit quality financial institutions, with the majority deposited within Canadian Tier 1 Banks.
Retention or Maintenance of Key Personnel
Although Lingo Media’s management has made efforts to align the interests of key employees with the Company by, among other things, granting equity interests to its operations personnel with vesting schedules tied to continued employment, there is no assurance that Lingo Media can attract or retain key personnel in a timely manner as the need arises. Failure to have adequate personnel may materially compromise the ability of the Company to operate its business.
Disclosure of Outstanding Share Data
As of November 29, 2019, the followings are outstanding:
Common Shares – 35,529,192
Warrants – Nil
Stock Options – 6,762,000
Approval
The Directors of Lingo Media have approved the disclosure contained in this MD&A.
Additional Information
Additional information relating to the Company can be found on SEDAR at www.sedar.com.
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Lingo Media Corporation Management Discussion & Analysis |
13 |
| This ‘6-K’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| Filed on: | 11/29/19 | |||
| For Period end: | 9/30/19 | |||
| 12/31/18 | 20-F, NT 20-F | |||
| 9/30/18 | 6-K | |||
| 1/1/18 | ||||
| List all Filings | ||||
