IPD Q3 Results Ending April 30th 2015
Common Shares: 15,617,670
Insider Holdings: 8.64 million (45%)
Accounts Receivable: $230,970
Prepaid Expenses: $13,864
Short Term Investments: $263,168
Property & Equipment: $570,452
Licensing Rights: $108,817
Total Assets: $1,499,839 (Down from $1,884,071 last quarter)
Accounts Payables: $228,024
Customer Deposits: $22,594
Total Liabilities: $250,618 (Down from $369,138 last quarter)
9 Month Sales Revenue: $3,068,004
Gross Profit: $1,280,260
Net Earnings: $107,494
IPD MD&A Highlights
Parkside Optical manufactures and distributes to wholesale distributors the following optical lens cleaning devices: LensPen, PEEPS, DigiKlear, Mini-Pro, Mini-Pro II, MicroPro, CellKlear, MobileKlear, FilterKlear, Vidimax, Laptop Pro, Panamatic, SensorKlear, SensorKlear Loupe, SmartKlear, ScreenKlean, screen cleaning kits, HunterPro Kits, Photo Kits, RangeKlear, DSLR Pro kits, and Microfiber cloth. Since the first shipment of LensPen in August 1993, the Company has expanded sales of these products to over 80 distributors in over 85 countries, and is continuously seeking to add new distributors and items to its range of cleaning devices.
The Company experienced a decrease in revenue - $3,068,004 during the period ($3,636,258 for 2014). This translates into a revenue decrease of $568,254. The Company sells its products globally in U.S. dollars but reports in Canadian dollars, causing distortions in period to period comparisons.
During the period Asian customers were hit by a decline in the SLR camera market, as were customers in Russia and Ukraine. Additionally, disruptions due to war, economic problems and currency decline against the USD have negatively impacted Russian and Ukrainian customers’ ability to purchase the Company’s products and sell them through in their retail markets. Revenues from Russia have decreased by 85% since fiscal 2013 and revenues from the Ukraine are down 80%. Markets in Japan, Germany and the UK however are up between 10 and 25% and Management remains optimistic in these areas. The Company’s Board of Directors responded to the negative events in the important Russia and Ukraine markets by directing management to begin cost cutting measures.
The Company’s second quarter financial statements are a testament to the success of those measures instituted by management.
Parkside attended the Vision West Expo in Las Vegas, Vision East Expo in New York, Photokina in Germany, the SHOT Show and CES in Las Vegas, MIDO Optical Fair in Milan, Italy, the Photography Show in the UK and the FVF show in Lodz, Poland. These shows are a valuable tool to find new distributors and assist existing distributors.
Following the trade shows, new distribution was added in the USA, Norway, Spain, Portugal, Andorra, Serbia, Poland, the Czech Republic, Slovakia and India. Other major prospects are still in development and the Company has an extremely bullish outlook for its new eyeglasses and sunglasses lens cleaner PEEPS.
In the second quarter, Essilor began a private label program with the Company’s PEEPS product. Essilor is one of the largest manufacturers of corrective lenses in the world and is the single largest manufacturer of ophthalmic lenses.
In addition to the above, the Company has paid off all loans outstanding; consequently, the Company is completely debt-free except for current trade payables
While the Company is economically dependent on one supplier that provides substantially all the products the Company sells, management is of the opinion that should it be necessary, the Company could arrange for an alternate source of product supplies with minimal impact on operations. For the period ended April 30, 2015, the Company had two customers accounting for more than 10% of total sales as follows: 17% and 15%. (2014 – 1 customer as follows: 20%). As at April 30, 2015, the Company had three customers that account for more than 10% of total accounts receivable as follows: 38%, 37% and 13%. (2014 – 3 customers as follows: 54%, 15% and 12%)
During the year ended July 31, 2014, the Company entered into a Licensing agreement pursuant to a new formula for the Company’s cleaning products. The terms of the licensing agreement will be that Richard Darrow (the “Licensor”) will be paid (and has been paid) the sum of US $100,000 for development reimbursements (non-refundable) along with an earned royalty equal to US $0.0625 per unit for each of the units/products sold, with a minimum guarantee of $100,000 per year. As of April 30, 2015 the Company has paid Richard Darrow $50,000 USD (2014 - $nil) in earned royalties and has accrued $25,000 (2014 - $nil). The Licensing agreement is for a term of 18 years expiring in fiscal 2031. On termination, merger, change of control or death, the agreement provides that the Licensor is entitled to receive on royalties for 18 years from the date of the agreement.
The Company is not exposed to a significant amount of liquidity risk. As at the period ended April 30, 2015, the Company had positive working capital of $569,952 (April 30, 2014 - $783,582). The accounts payable and accrued liabilities balance is expected to be covered through the collection of accounts receivable balances and from current cash balances. The Company is not reliant on external financing.
The Company's objectives when managing capital are: to safeguard its ability to continue as a going concern; and to have sufficient capital to be able to fund the operation of the Company for the benefit of its shareholders.