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AnalytixInsight Inc. Management Reports 2024
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Management Reports
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ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Date: November 29, 2024
The following Management's Discussion and Analysis ("MD&A") relates to the financial condition and results of operations of AnalytixInsight Inc. and its subsidiary ("our", "AnalytixInsight", or the "Company") as at and for the three months ended September 30, 2024. This MD&A should be read in conjunction with the condensed consolidated interim financial statements and related notes for the three months ended September 30, 2024, and the consolidated financial statements and related notes as at and for the year ended December 31, 2023. The consolidated financial statements and related notes of AnalytixInsight have been prepared in accordance with International Financial Reporting Standards ("IFRS"). Unless otherwise noted, all references to currency in this MD&A are in Canadian dollars.
Certain information contained in the MD&A is forward-looking which involves risks and uncertainties. The forward-looking information is not based on historical fact, but is rather based on the current plans, objectives, goals, strategies, estimates, assumptions and projections about the Company's industry, business and future financial results. Actual results could differ materially from the results contemplated by this forward-looking information due to several factors, including those set forth in this MD&A and under the "Cautionary Statement Regarding Forward Looking Information" and "Risk Factors" sections.
The MD&A was prepared in accordance with the requirements set out in National Instrument 51-102 — Continuous Disclosure Obligations of the Canadian Securities Administrators.
The audit committee of the board of directors of the Company has reviewed this MD&A and the consolidated financial statements as at and for the three months ended September 30, 2024, and the Company's board of directors approved these documents prior to their release.
Additional information, including our press releases, have been filed electronically through the System for Electronic Document Analysis and Retrieval ("SEDAR") and are available online under our profile at www.sedar.com.
CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING INFORMATION
This MD&A includes "forward-looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook.
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements, including, but not limited to, the following:
- The Company's strategies and objectives
- General business and economic conditions
- Changes in technology
- The emergence of additional competitors in the industry
- Financial stability of the Company's customers
- Ability of the Company to keep key employees and customers
- The Company's ability to generate positive cash flow
- The Company's ability to manage growth with respect to a new business opportunity
Readers are cautioned that the preceding risks, uncertainties, assumptions and other factors are not exhaustive. Events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in or implied by these forward-looking statements. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, investors in securities of the Company should not place undue reliance on these forward-looking statements. The forward-looking statements contained in this document are made as of the date hereof.
Overview
AnalytixInsight Inc. (the "Company") was continued as a corporation under the Ontario Business Corporations Act on August 18, 2014. As of September 30, 2024, the Company has become a virtual company with all employees working remotely. The Company's shares are listed on the TSX Venture Exchange ("TSX.V") under the symbol "ALY". The Company has a wholly owned subsidiary in the United States named Euclides Technologies, Inc. ("Euclides", formerly named CapitalCube Corp.) and a 49% interest in MarketWall SRL ("MarketWall"), an Italian based developer of fintech solutions for financial institutions. MarketWall in turn owns 100% of a subsidiary named InvestoPro Sim S.p.A ("InvestoPro") which developed a digital stock trading platform and is a European online broker.
The Company provides financial research and content for investors, information providers, finance portals and media through its online portal www.capitalcube.com and through its data services and artificial intelligence business segment. MarketWall focuses on trading and research platform development opportunities especially in the business to business and business to business to consumer spaces.
Description of the Business and Outlook
AnalytixInsight is a data analytics and enterprise software solutions provider, developing and marketing cloud-based platforms that provide financial content, stock trading, and research solutions for banks, brokers, and investors in the financial services industry.
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
The Company created a data service and analysis platform to turn large amounts of market data into actionable insights. The platform auto-generates reports for easy consumption by end-users, including predictive analytics. The Company has developed proprietary algorithms for scoring, peer analysis, benchmarking and other attributes related to predictive analytics.
AI-Driven Strategic Initiatives
While the current application of this engine is in the financial analytics space, the platform and engine are applicable to other sectors and datasets. The Company is predominantly focused on the fintech industry which has growing demand for disruptive technologies, particularly in the capital markets and wealth management businesses.
The Company has partnered (through various teaming, licensing, and outsourcing agreements) with world-leading financial institutions and data providers in the development of its product suite.
The Company provides auto-generated research reports to Refinitiv, an LSEG (London Stock Exchange Group) business and one of the world's largest providers of financial markets data and infrastructure, as part of its arrangement with the Company in which the Company receives raw financial data from Refinitiv that is used by the Company to generate reports.
As part of its B2C offering, MarketWall has deployed InvestoPro (“InvestoPro”), a European online digital trading platform which allows retail investors to trade stocks, bonds, and derivatives. InvestoPro delivers financial analysis, news, research, educational insights, and virtual trading capabilities. As part of its B2C customer acquisition strategy, InvestoPro has partnered with Samsung Electronics Italia S.p.A. in accordance with a fee per click co-operation agreement and fee per download collaboration agreement, as described in greater detail below.
On the B2B2C front, MarketWall developed Investo, a stock trading platform which has been licensed by leading European bank Intesa Sanpaolo. Investo continues to drive a majority of Intesa Sanpaolo’s retail trading volume.
On the B2B side, MarketWall has deployed GEMINA, a white label B2B product offering designed for banks and brokers, and has partnered with Morningstar through a supplier agreement to integrate GEMINA into its world-renowned research offerings under a product offering marketed as Morningstar Global Market.
ANALYTIXING INN
ANALYTIXING INN
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Summary – CapitalCube-AI Data Services
CapitalCube provides fundamental financial analysis on approximately 50,000 equities listed on global exchanges as well as analysis on more than 4,500 exchange traded funds (ETFs) listed on North American exchanges. Financial analysis on stocks includes small and midcap stocks that often are inadequately covered. The Company runs structured data through its engine and creates content pieces that are an outcome of a series of rigorous data analytics that generates scores, peer analysis, and predictive analytics. CapitalCube’s website offers a subscription service to financial advisors and professional financial analysts, however, the Company’s primary efforts are focused on its institutional clients, which currently stand at 3 clients. CapitalCube’s customers include a hedge fund that uses the generated analytics and scores for quantitative benchmarking and internal models.
Additionally, CapitalCube currently supplies value-added financial analysis and content through its platform. The content includes key ratios and charts on companies covered by the platform. This content is created from the Company’s platform through a rigorous set of computations and data analytics. To the Company’s knowledge, CapitalCube is often the only provider of full coverage of the listings on a given exchange. This value-added analysis on a comprehensive set of stocks on a particular exchange provides benefit to customers.
CapitalCube provides auto-generated research reports to Refinitiv as part of its arrangements with the Company in which Refinitiv provides raw financial data that the Company uses in its financial analysis. Under the Refinitiv arrangement, CapitalCube has already published more than 140,000 reports on company earnings, dividend quality, and pre-revenue company analysis, and has embedded ESG scores and ESG metrics into its proprietary analysis and narratives. ESG (Environmental, Social, and Governance) is commonly used as a generic term by investors and regulators to evaluate corporate behaviors.
Summary - Euclides
Euclides Technologies, Inc. is a fully owned subsidiary of the Company and was, until December 31, 2023, an expert system integrator for WFM and field service management integration. The Company decided to discontinue Euclides’ WFM operations due to declining revenues; with its last remaining employee leaving in March 2024. The subsidiary still exists as a shell in case future plans require its use.
Summary – MarketWall
MarketWall was founded by the Company in 2014. Through a series of transactions, by 2016 the Company’s interest in MarketWall had been diluted to 49%. MarketWall, which operates independently from the Company, is a fintech online digital solutions provider to major financial services firms in Europe. References to MarketWall’s customers and activities herein are solely those of MarketWall or its wholly owned subsidiary, InvestoPro.
Intesa Sanpaolo S.p.A. (“Intesa Sanpaolo”) and Phoenix S.R.L. own 33% and 18% of MarketWall, respectively. Notwithstanding the Company is MarketWall’s largest shareholder, Intesa Sanpaolo holds many veto rights, including over the following matters:
ANALYTIXINGISHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
- distribution of profits and/or reserves;
- acts of disposition, even partial, of source codes other than sale for a cash price;
- issuance of debt securities to which property rights or administrative rights are attached;
- determination of compensation to directors and auditors;
- awarding bonuses or other forms of extraordinary compensation to directors;
- statutory amendments;
- capital increases without subscription rights in the hands of shareholders;
- mergers or demergers;
- approval and amendment of stock-option plans and/or other management incentive schemes;
- various bankruptcy proceedings;
- authorization for administrators to carry out competing activities;
- appointment and/or dismissal of the person in charge of auditing, if different from the auditors;
- appointment and/or revocation of the auditing firm and setting of its compensation;
- purchase of assets and/or credits of shareholders and/or directors in certain cases; and
- liquidation.
In addition, Intesa Sanpaolo’s veto rights extend over all of the following matters in situations where one or more MarketWall directors or a number of MarketWall shareholders representing at least 25% of its share capital submit a decision regarding any of the following matters for shareholder approval:
- delegation of authority, revocation or modification of a delegation of authority;
- approval or modification of the business plan and/or budget;
- certain purchases and/or dispositions of assets;
- certain investments not envisaged in the business plan and/or the budget;
- taking on debts, other than those already mentioned in the business plan and/or budget, greater than or equal to 100,000.00 euros;
- issuance of any type of guarantee, real or personal, suretyships, pledges or mortgages, except those provided for in the ordinary business of the budget or those provided for in the business plan and/or budget;
- modification of conditions and/or early repayment of social debts;
- granting of credit, except in certain circumstances respecting deferred customer payments;
- sales or assignments outright to any other title or granting as security of trademarks, patents and industrial and/or intellectual property rights;
- conclusion of transactions with related parties or that could result in a conflict of interest;
- issuances of guarantees and underwriting commitments in general for debts of third parties, other than subsidiaries;
- decisions on employee stability pacts;
- decisions regarding non-competition agreements with employees and/or directors;
- awarding bonuses or other forms of extraordinary compensation to employees;
- hiring of executives and determination of their salaries;
- hiring of certain employees;
- dismissal of employees;
- certain salary increases;
- awarding of certain consulting assignments;
- increases in certain consultant's fees;
ANALYTIXING INSTITUTIONS
ANALYTIX INSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
- entering into and amending joint venture or temporary business association agreements or partnership or co-interest in profits and losses; and
- resolutions relating to the exercise of voting rights at shareholders' meetings - concerning extraordinary transactions or amendments to the articles of association - of companies in which the company has an interest or of entities issuing other financial instruments of any kind subscribed to by the company.
MarketWall has deployed InvestoPro (through its wholly owned subsidiary of the same name), a European online broker that received regulatory approval from CONSOB (Commissione Nazionale per le Società e la Borsa), the Italian financial markets regulator, in 2021. Until January 2024, the Company's former chief executive officer and president held one of five seats on InvestoPro's board. In March 2024, InvestoPro's board resolved not to appoint a representative of the Company to the board seat left vacant following the former chief executive officer's resignation. As of the date hereof, no representative of the Company holds a seat on the InvestoPro board, and the Company has little visibility into its activities and operations.
InvestoPro was jointly introduced to the market by MarketWall and Intesa Sanpaolo, whose customers are able to access online trading with their bank credentials. InvestoPro facilitates trading in stocks, options, and derivatives, and uses Intesa Sanpaolo as its execution broker. MarketWall's editorial team publishes investor-related content on InvestoPro, providing weekly stock market summaries, worldwide financial market outlooks, educational content for stocks, bonds, currencies, new emerging industry trend analysis, and more. As of the date hereof, to the knowledge of the Company, InvestoPro has over 1,000 active users and approximately €131,360,000 assets under custody.
MarketWall also developed Investo, a stock trading application designed for retail users and available under license for deployment by banks and brokers. Investo was licensed by Intesa Sanpaolo and launched in 2018 as part of their Intesa Sanpaolo App constellation. During a MarketWall board meeting in February 2024, attended by Natalie Hirsch, the Company's interim chief executive officer, Ms. Hirsch became aware of a potential breach of the license agreement by Intesa Sanpaolo respecting Investo's source code that occurred in September 2023. Ms. Hirsch subsequently advised the board of directors of the Company and made several additional enquiries of MarketWall regarding the purported breach. In May 2024, Ms. Hirsch attended another MarketWall board meeting at which she was advised that MarketWall had undertaken an investigation and had determined that no such breach occurred. This followed with a MarketWall Shareholder Meeting in July 2024 where despite questions around how the investigation was conducted and the decisions made by the MarketWall CEO, a majority vote was made that there was no impropriety with the process and the issue was closed.
MarketWall also developed GEMINA, a white label B2B next-generation trading platform product offering. GEMINA allows MarketWall to approach banks and brokers globally to license the online broker solution for deployment under their brand. GEMINA will interconnect to that bank or broker's existing trading platform and can be customized by the bank or broker. For example, a traditional full-service broker in Canada that does not have a retail online discount offering can simply license GEMINA for deployment under its existing brand, thus avoiding the time and costs for it to develop its own offering.
MarketWall has partnered through a supplier agreement with Morningstar, Inc., a global investment research and financial services firm, in the development and launch of Morningstar Global Market. Morningstar Global Market is built on MarketWall's GEMINA application and is designed as a cloud-based solution. Available in EMEA as of February 2022, this is the initial product offering under the agreement,
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
where Morningstar will utilize MarketWall’s technology platform to bring a comprehensive suite of
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ANALYTIXING INNOVATIVE AND COST-EFFECTIVE CLOUD-BASED FINANCIAL INVESTMENTS
ANALYTIXINGISIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
innovative and cost-effective cloud-based fintech products to market in response to the growing demand from its enterprise clients.
As noted above, MarketWall is 33% owned by Intesa Sanpaolo, the leading bank in Italy and one of the top banking groups in Europe with a market capitalization of approximately 45 billion euro. Notwithstanding its equity ownership percentage, Intesa Sanpaolo holds many veto rights over MarketWall’s activities.
MarketWall’s licensing deal with Intesa Sanpaolo has accounted for a significant portion of the historic revenues for MarketWall. The licensing deal with Intesa Sanpaolo expired in 2022 and was renewed in February 2023 at a significantly higher value of 4 million euro per year for 2 years with a renewable option for an additional 2 years. Pursuant to the agreement, Intesa Sanpaolo provided notice of renewal in June 2024, which extends the duration of the licensing deal until December 31, 2026.
In addition, MarketWall also derives significant revenues from GEMINA- related opportunities with other banks and brokers, including incorporating trade execution in parallel with enterprise platforms for cloud-based data infrastructure requirements for financial institutions. As of September 30, 2024, GEMINA has been licensed by three clients (in addition to IMI, the Corporate & Investment Banking division of Intesa Sanpaolo) who are licensing the platform for their data infrastructure needs.
Production and Services – CapitalCube, Euclides and MarketWall
The Company’s product and technology platform is based on data sets spanning over 10 years across 50,000 equities globally as well 4,500 exchange traded funds (ETFs) listed on North American exchanges. The rules-based engine that develops learnings from the data sets feeds into a set of natural language algorithms that generates research reports. The Company is focused on building additional models, developing fundamental scores, and machine-generating analysis reports for stocks and other financial assets, based on B2B customer needs.
The Company’s platform is capable of performing more than 100 billion computations everyday across multiple data sources. The platform’s core is a model driven architecture, wherein all the rules and decisions are expressed through models for fast implementations.
The engine’s learning capabilities include the ability to arrive at decisions based on inference rules. The learning includes support from various patterns such as decision trees, decision tables, scores, dynamic computations. Finally, the engine also includes a rules-based narration engine that generates text, tables, and charts for creating natural reports.
Specialized Skill and Knowledge – CapitalCube and MarketWall
The skills and knowledge required to develop the platform and to design and implement products and services on the platform include data services analytical processing, large database operations, financial analysis and research capabilities and machine learning techniques. The Company believes that its current team either has or can secure the requisite skills and experience necessary to implement these technologies for satisfying customer requirements. More specifically, the team has uniquely specialized
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
skills for data analytics and transitioning such information into natural language generation algorithms to create content. A big portion of the architecture is built on creating machine learning through data computations from filings of publicly-listed securities globally across stock exchanges. These include data computations to create a technological platform that creates peer groups, heat maps, and other predictive indicators from raw structured financial data.
Competitive Conditions
The Company competes with a substantial number of companies in the industries in which it operates, some of which have greater technical and financial resources. To create differentiation with its competitors, the Company has entered into strategic agreements within each industry.
CapitalCube – the Company faces competition from financial research providers such as S&P Capital IQ, Factiva, Factset, Morningstar, Koyfin, and Bloomberg and has partnered with Refinitiv, a global provider of financial market data, pursuant to a recently renegotiated data licensing agreement.
MarketWall – MarketWall faces competition from other online stock trading firms that are bank-operated or independently-operated such as Interactive Brokers, Robinhood, Questrade, and others. The Company established MarketWall in 2014. The Company currently holds a 49% equity interest in MarketWall, which operates independently from the Company. Intesa Sanpaolo and Phoenix S.R.L. own 33% and 18% of MarketWall’s equity, respectively. Intesa Sanpaolo holds many veto rights over the Company’s activities, as described above.
Euclides
Until December 31, 2023, Euclides provided product solutions to improve workforce optimization and scheduling in the WFM industry. In early 2024, the Company decided to discontinue Euclides’ WFM operations due to declining revenues; its last remaining employee left Euclides’ employ in March 2024. There have been no revenues or expenses booked to Euclides in Q3 2024.
Outlook and Development
In 2021, MarketWall launched a new digital stock-trading platform, InvestoPro. InvestoPro offers online stock trading and fintech-enabled services on multi-device trading platforms (e.g., mobile, wearables, smart-TV) combined with research and financial education. InvestoPro uses Intesa Sanpaolo as its execution broker in Italy. InvestoPro offers discounted stock trading commissions and other services that are designed to give individual investors greater control over their investments and trading. InvestoPro also offers options and derivatives trading in addition to stock trading. MarketWall onboarded 530 new clients in 2024 with a client acquisition cost of €213 per client. For investoPro Sim, the assets under custody have increased to €131.36 million. The company has 1,011 active clients with 32,024 clients total, including those that are not trading but accessing available content. Average revenue per user is €1,100 over the last 9 months.
As at September 30, 2024, Gemina was also still licensed to the same customers including Banca IMI, (the Corporate & Investment Banking division of Intesa Sanpaolo). The company voted to approve the renewal of the Cardea contract (2025 – 2027) with the renewal value being €846,640 (unchanged from prior year).
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Highlights
There were no new management changes in Q3 2024
With respects to CapitalCube, as of September 30, 2024, approximately 140,000 machine-created company research reports have been published under the Refinitiv research initiative. Continuing in Q3 2024, efforts were underway to expand CapitalCube's enterprise B2B customer base through project bids, increased sales efforts and market validation product interviews in which additional US-based enterprise prospects were approached from a variety of channels including: wealth management, direct investing, exchanges, media, analytics & services and hedge/quantitative funds.
2024 Market Validation: Key Findings
| Year | Quant/Hedge Funds
Interest from existing quant fund client and prospective clients for advanced analytics, scores and quantitative and fundamental data.
Direct Investing Apps
Interest for additional analytics/content, such as Fundamental and Earnings analysis, Scores and Derived Content for their platforms.
Exchanges
Continued interest from existing exchange clients and larger markets (including SIX) for partnerships and reselling arrangements of analytical and corporate/funds content. |
| --- | --- |
| Markets | Media and Service Providers
Interest from media and market content/analytics providers for potential partnership, advertising/revenue share, and resale opportunities. |
| Year | Wealth Management
Large bank dealers have considerable internal research capabilities and entrenched content providers. Wealth management represents a longer sales cycle and exhibited limited interest in our insights/analytics. Independent wealth management firms may have more interest in ALY fundamental data and natural language report generation. |
The Company earned revenues of $52,039 in the quarter ended September 30, 2024 (September 30, 2023: $93,932). The decrease year over year is due entirely to the elimination of Euclides revenues from service contracts. All the same CapitalCube enterprise customers remain in place, with sales efforts to expand underway.
The Company had cash and cash equivalents of $90,711 as at September 30, 2024, with negative working capital of $1,018,895.
With respects to MarketWall, after Prakash Hariharan's resignation from the boards of MarketWall & InvestoPro, Natalie Hirsch was appointed to the board of MarketWall, effective February 2, 2024.
AnalytixInsight received a payment of $2,000,486 from MarketWall in Q2 2023 (declared in Q1 2023),
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
however, a similar payment was not declared in Q1 2024, despite MarketWall's profitability in 2023. This decision was made March 21, 2024 at a board meeting where the majority of the members of the MarketWall Board opposed to pay a distribution from MarketWall's extraordinary reserves. It is noted that MarketWall had been profitable in 2023 and that a payment of approximately C$2 million had been made to the Company from MarketWall's 2022 extraordinary reserves when the company had been operating at a (consolidated) loss. Prior to receiving the payment from MarketWall, the Company and ISP had together made a capital contribution to MarketWall in the amount of approximately C$3.5 million, with AnalytixInsight and ISP contributing approximately C$2.1 million and C$1.4 million, respectively. Phoenix did not make any contributions of note at the time, although it too received a payment of approximately C$750,000 from MarketWall's 2022 extraordinary reserves. As a founding shareholder of MarketWall and its largest shareholder, it is important that AnalytixInsight can derive value from its investment and will continue to pursue all opportunities to realize this value.
Selected Annual Financial Information
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Revenues | $ 152,200 | $ 512,685 | $ 1,672,185 |
| Net loss | $ (725,030) | $ (362,326) | $ (4,169,665) |
| Basic net loss per share | $ (0.01) | $ (0.04) | $ (0.04) |
| Total assets | $ 3,182,539 | $ 4,143,697 | $ 7,383,605 |
| Total current liabilities | $ 1,225,509 | $ 831,289 | $ 678,826 |
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Summary of Quarterly Results
| 30-Sep-24 | 30-Jun-24 | 31-Mar-24 | 31-Dec-23 | |
|---|---|---|---|---|
| Revenue | $ 52,039 | $ 43,205 | $ 54,955 | $ 93,932 |
| Net profit/(loss) | 992,611 | (735,900) | (1,572,206) | (934,376) |
| Basic net loss per share | 0.01 | (0.01) | 0.02 | (0.01) |
| For the three months ended | 30-Sep-23 | 30-Jun-23 | 31-Mar-23 | 31-Dec-22 |
| Revenue from continued operations | $ 185,514 | $ 178,284 | $ 61,133 | $ 928,320 |
| Net loss | (740,415) | (215,329) | (1,826,357) | (168,191) |
| Basic net loss per share | 0.01 | (0.00) | (0.02) | (0.00) |
MarketWall
The Company owns 49% of Consolidated MarketWall. The Company is entitled to appoint one of three directors to the Board of Directors of MarketWall. However, notwithstanding the Company's power of appointment, and the fact that the Company is MarketWall's largest shareholder, the Company does not currently have significant influence over MarketWall's activities and operations. Consolidated MarketWall is classified as an "investment in associate" and accounted for using the equity method. Consolidated MarketWall is comprised of MarketWall and InvestoPro, a wholly owned subsidiary.
Summarized financial information for Consolidated MarketWall as at September 30, 2024, and December 31, 2023, and for the three months ended September 30, 2024, and 2023, is as follows:
| As at | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current and total assets | $ 10,804,575 | $ 8,468,505 |
| Current and total liabilities | 4,789,859 | 4,868,982 |
| Total shareholders' equity | 6,014,716 | 3,599,523 |
| Nine months ended | September 30, 2024 | September 30, 2023 |
| Revenue | $ 6,937,531 | $ 8,141,879 |
| Operating expenses | (6,283,095) | (6,036,592) |
| Net income and comprehensive income | 654,436 | 2,105,287 |
Results of Operations for the three months ended September 30, 2024, 2023
The following is an analysis of the Company's results of continued operations for the three months ended September 30, 2024, and includes a comparison against the results of the three months ended September 30, 2023. Comparative financial information may have been reclassified from statements previously presented to conform to the presentation of the 2023 consolidated financial statements.
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ANALYTIXING INFORMATION
ANALYTIXING INFORMATION
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Sales revenue The Company's recorded revenue of $52,039 for the three months ended September 30, 2024, compared to $93,932 during the same period in 2023. The revenue decline was due to contracts that ended in 2023 and did not continue into 2024.
Expenses for the three months ended September 30, 2024, and 2023 were negative $577,244 and $668,373 respectively, representing a $1,245,617 decrease in expenses from the comparative quarter. This decrease was primarily attributed to lower staffing and cancellation of options and consulting costs.
Consulting and compensation costs for the three months ended September 30, 2024, and 2023 were $127,555 and $325,839, respectively, representing a $198,284 decrease in expenses from the comparative period. This decrease was due to a reducing in fractional staff & consultants.
Professional fees for the three months ended September 30, 2024, and 2023 were $95,142 and $180,383, respectively, representing a $85,241 decrease in expenses from the comparative quarter. This decrease was primarily due to a reduction in legal costs in the comparative period.
Selling and marketing costs for the three months ended September 30, 2024, and 2023 were $nil and $42,644 respectively, representing a decrease of $42,644. This decrease was due to lower travel costs and fewer in person meetings related to sales to reduce costs compared to the comparative period.
Travel costs for the three months ended September 30, 2024, and 2023 were $nil and $41,083, respectively, representing a decrease of $41,083. This decrease was due to a reduction of travel to contain costs compared to the prior period.
Share of income of investment accounted for using the equity method for the three months ended September 30, 2024, was a gain of $208,928 compared to a gain of $240,431 in the same period during the previous period.
In our IFRS financial statements, we first consolidate MarketWall and InvestoPro together, and then apportion our 49% share of the income /(loss) of the consolidated MarketWall entity each reporting period.
Results of Operations for the nine months ended September 30, 2024
The following is an analysis of the Company's results of continued operations for the nine months ended September 30, 2024, and includes a comparison against the results of the nine months ended September 30, 2023. Comparative financial information may have been reclassified from statements previously presented to conform to the presentation of the 2023 consolidated financial statements.
Sales revenue The Company's recorded revenue of $152,200 for the nine months ended September 30, 2024, compared to $457,730 during the same period in 2023. The revenue decline was due to Euclides' contracts that ended in 2023.
Gross loss for the nine months ended September 30, 2024, was $317,699 compared to gross loss of $473,216 in the comparative period. The Company's gross profit increase from prior year as a result of lower expenses in the current year compared to the prior year.
ANALYTIXING INFORMATION
ANALYTIXING INFORMATION
10, 2024
ANALYTIXINGISHT INC. MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Expenses for the nine months ended September 30, 2024, and 2023 were $738,250 and $2,516,724, respectively, representing a $1,778,474 decrease in expenses from the comparative period. This decrease was primarily attributed to lower consulting and compensation, general and administrative costs selling and marketing, travel, cancellation of options and depreciation partially offset by higher professional fees.
Professional fees for the nine months ended September 30, 2024, and 2023 were $622,258 and $350,204, respectively, representing an increase of $272,054. This was due to litigation with previous management.
Selling and marketing costs for the nine months ended September 30, 2024, and 2023 were $19,002 and $253,926, respectively, representing a decrease of $234,924. This decrease was due to less travel and in person sales meeting in 2024 compared to the comparative period.
Travel costs for the nine months ended September 30, 2024, and 2023 were $985 and $156,958, respectively, representing a decrease of $155,973. This decrease was due to a reduction of travel to contain costs compared to the prior period.
Share of income of investment accounted for using the equity method for the nine months ended September 30, 2024, was a gain of $320,674 compared to a gain of $1,031,591 in the same period during the previous period.
In our IFRS financial statements, we first consolidate MarketWall and InvestoPro together, and then apportion our 49% share of the income /(loss) of the consolidated MarketWall entity each reporting period.
Liquidity and Capital Resources
The Company defines capital as the aggregate of cash and its share capital, being comprised of its capital stock, warrants, options, and deficit. The Company's objective when managing capital is to ensure that the Company will continue as a going concern so that it can provide products and services to its customers and returns to its shareholders.
The Company's objective in managing liquidity risk is to maintain sufficient liquidity to meet operational and investing requirements at any point in time. The Company manages the capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company currently is not subject to externally imposed capital requirements. There were no changes in the Company's approach to capital management during the period.
The operations of the business, in the long term, are dependent upon the Company's ability to successfully achieve market acceptance of its current suite of products and any new products that may be introduced. Until the Company has sufficient sales revenue to internally fund its operating cost requirements, the Company will likely require additional financings. These future financings may be obtained from the sale of assets, additional debt arrangements, or the issuance of additional equity securities. The issuance of additional equity securities by the Company could result in significant dilution in the equity interests of the current stockholders. There can be no assurance that additional financing will be available to the
ANALYTIXINGISHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Company when needed or, if available, that it can be obtained on commercially reasonable terms. If the Company is not able to obtain additional financing on a timely basis, it may be forced to scale down or perhaps even cease the operation of its business.
The Company has a history of operating losses and expects to incur further losses in the development of its businesses. As at September 30, 2024, the Company has a negative working capital of $1,036,282 (December 31, 2023 - $627,687). If the Company is unable to achieve profitable operations, other sources of funding will be required, and if not available, it is possible that the Company will be unable to continue as a going concern.
Risks and Uncertainties
The risks and uncertainties below must be taken into account, as they may affect the Company's ability to achieve our strategic goals. Investors are therefore advised to consider the following items in assessing the Company's future prospects as an investment.
Future operations
Presently, the Company's revenues are not sufficient to meet operating and capital expenses and the Company has incurred operating losses since inception, which are likely to continue for the foreseeable future.
There is substantial doubt about the Company's ability to continue as a going concern as the continuation of the business may be dependent upon obtaining further financing, successful and sufficient market acceptance of current products and any new products that may be introduced, the continuing successful development of product and related technologies, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by the Company could result in a significant dilution in the equity interests of the current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase the Company's liabilities and future cash commitments.
There are no assurances that the Company will be able to obtain further funds required for continued operations. The Company is pursuing various financing alternatives to meet its long-term financial requirements. There can be no assurance that additional financing will be available to the Company when needed or, if available, that it can be obtained on commercially reasonable terms. If the Company is not able to obtain the additional financing on a timely basis, it will be forced to scale down or perhaps even cease the operation of its business.
Competition and technological obsolescence
The markets for the Company's products and services experience ongoing technological changes and the Company must compete with existing technology and service providers, new companies and advancing technologies. To remain fully competitive, the Company must continue to innovate and respond with advanced generations of software, products and services. The inability to react in a timely fashion to technological and competitive changes could have a negative impact on the Company and its ability to attract and retain customers. Moreover, the highly competitive market in which the Company operates could cause the Company to reduce its prices and offer other favorable terms to compete successfully with its rivals. These practices could, over time, limit the prices that the Company can charge for its products and services. If the Company was unable to offset such potential price reductions from software
ANALYTIXINGISHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
sales and related products could negatively impact the Company's profit margins and operating results.
Possible dilution to present and prospective shareholders
Business negotiations related to the Company's search for new business opportunities may result in the issuance of cash, securities of the Company, or a combination of the two, and possibly, incurring debt. Any transaction involving the issuance of previously authorized but unissued common shares would result in dilution, possibly substantial, to present and prospective holders of common shares.
Dependence of key personnel
The Company strongly depends on the business and technical expertise of its management and key personnel. There is little possibility that this dependence will decrease in the near term.
Lack of trading
The lack of trading volume of the common shares reduces the liquidity of an investment in the shares.
Volatility of share price
Market prices for the common shares listed on the TSX Venture Exchange are often volatile. Factors such as announcements of financial results, and other factors could have a significant effect on the price of the common shares.
Third party credit risk
The Company may be exposed to third party credit risk through its contractual arrangements with its current or future joint venture partners, marketers and other parties. In the event such entities fail to meet their contractual obligations to the Company, such failures may have a material adverse effect on the Company's business, financial condition, results of operations and prospects.
Regulatory
Technology operations are subject to extensive controls and regulations imposed by various levels of government that may be amended from time to time. The Company's operations may require licenses and permits from various governmental authorities in the countries in which it operates. There can be no assurance that the Company, or its partners, will be able to obtain all necessary licenses and permits that may be required to carry out or continue its operations.
Conflicts of interest
Certain of the directors and officers of the Company may serve from time to time as directors, officers, promoters and members of management of other companies involved in technology similar to the Company and therefore it is possible that a conflict may arise between their duties as a director or officers of the Company and their duties as a director, officer, promoter or member of management of such other companies.
ANALYTIXINGISHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
The directors and officers of the Company are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest and the Company will rely upon such laws in respect of any directors' and officers' conflicts of interest or in respect of any breaches of duty by any of its directors or officers. All such conflicts will be disclosed by such directors or officers in accordance with applicable laws and the directors and officers will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.
Litigation
All industries, including the technology industry, are subject to legal claims, with and without merit. Legal proceedings may arise from time to time in the course of the Company's business. Such litigation may be brought against the Company or its subsidiary in the future from time to time or the Company or its subsidiary may be subject to another form of litigation. Defense and settlement costs of legal claims can be substantial, even with respect to lawsuits that have no merit.
On April 15, 2024, a notice of application was filed in the Ontario Superior Court of Justice (Commercial List) pursuant to which the applicants (the Company, Vince Kadar (chairman), Scott Gardner (director), Natalie Hirsch (interim chief executive officer and president), and Aaron Atin (corporate secretary)) requested that the court grant certain relief against the respondents (Prakash Hariharan (director and former chief executive officer and president), Chaith Kondragunta (director), and Jith Veeravalli (director)) in connection with, inter alia, certain corporate governance matters. A hearing was held before Judge Black on April 26, 2024, and the corresponding endorsement specifying several interim orders was released by the court on May 1, 2024, including that an inspector be appointed to investigate allegations against Mr. Hariharan and Mr. Kondragunta. The Company appointed the inspector effective May 27, 2024. The proceeding was concluded in September 2024, where a settlement was reached. The Company was awarded a $165,000 settlement from previous management.
Lack of dividend policy
The Company does not presently intend to pay cash dividends in the foreseeable future, as any earnings are expected to be retained for use in developing and expanding its business. However, dividends paid by the Company will remain subject to the discretion of the Company's Board of Directors and will depend on results of operations, cash requirements and future prospects of the Company, among other factors.
Related Party Transactions
Unless otherwise specified, the year end balances of receivables/payables referred to are non-interest bearing, unsecured, receivable or payable on demand, and have arisen from the provision of services and expense reimbursements.
Compensation of key management personnel
In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors of the Company.
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
The remuneration of directors and other members of key management personnel during the periods presented were as follows:
| | Three months ended
Sept 30 | | Nine months ended
Sept 30 | |
| --- | --- | --- | --- | --- |
| | 2024 | 2023 | 2024 | 2023 |
| Short-term benefits | $ 85,000 | $ 356,249 | $ 434,750 | $ 706,415 |
| Share-based payments | - | - | - | - |
| | $ 85,000 | $ 356,249 | $ 434,750 | $ 706,415 |
At September 30, 2024, the Company had $81,508 (December 31, 2023 – $21,780) in accounts payables owing to related parties. These amounts are unsecured, non-interest bearing and due on demand.
Ms. Veihba Subramaniam, Prakash Hariharan’s wife, via Neirin Technologies Inc., provided technical consulting services to the Company’s CapitalCube segment for $54,000 and $54,000 for the three and six months ended September 30, 2024 compared to $Nil and $Nil in the three and six months ended September 30, 2023. Ms. Veihba Subramaniam was terminated February 15, 2024.
Mr. Hariharan is the former president, chief executive officer, and chairman of the Company; he resigned from the Board effective September 27, 2024.
In June 2023, the Company entered into an advisory services contract with Numus Financial Inc. (“Numus”), pursuant to which Numus was engaged by the Company to provide a detailed scoping analysis regarding a potential listing of MarketWall on a public stock exchange. As consideration, the Company agreed to pay Numus $100,000 as an engagement fee, as well as hourly fees. On January 1st, 2024, Scott Gardner was appointed as a consultant of Numus. Prior to such date, Mr. Gardner had no business relationship and did not hold any position in Numus. Mr. Gardner is a director of the Company.
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Financial Instruments
Fair value of financial instruments
The Company's financial assets and financial liabilities as at September 30, 2024, and December 31, 2023 were as follows:
| Amortized cost | FVPL | Total | |
|---|---|---|---|
| December 31, 2023 | |||
| Cash and cash equivalents | $ 279,592 | $ 1,000,000 | $ 1,279,592 |
| Restricted deposits | 59,826 | - | 59,826 |
| Accounts and other receivables | 10,652 | - | 10,652 |
| Other investment | - | 32,856 | 32,856 |
| Accounts payable and accrued liabilities | (798,991) | - | (798,991) |
| September 30, 2024 | |||
| Cash and cash equivalents | $ 90,711 | $ - | $ 90,711 |
| Restricted deposits | 1,435 | - | 1,435 |
| Accounts and other receivables | 79,900 | - | 79,900 |
| Other investment | - | 32,856 | 32,856 |
| Accounts payable and accrued liabilities | (1,208,122) | - | (1,208,122) |
The fair values of these financial instruments approximate their carrying values because of their short-term nature and/or the existence of market related interest rate on the instruments.
Level 3 hierarchy
Other investment relates to shares received as debt settlement in the amount of $60,000 during the year ended December 31, 2016. The other investment is classified as a Level 3 financial instrument within the hierarchy of the Company's financial instruments, measured at FVPL in the consolidated statements of financial position as at September 30, 2024, and December 31, 2023.
Within Level 3, the Company includes private company investments which were not quoted on an exchange. The key assumptions used in the valuation of these instruments included (but were not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies. Information from a recent financing was used to determine the value of the assets at $Nil as at September 30, 2024 (December 31, 2023 - $32,856).
The unrealized loss recognized for these assets for the three months ended September 30, 2024, was $nil (2023 - $nil).
Valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, and determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company's financial condition or operating results.
ANALYTIXINGISHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
For those investments valued based on a recent financing or transaction price, management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at September 30, 2024. A +/- 25% change in the fair value of these Level 3 investments as at September 30, 2024, will result in a corresponding +/- $9,558 (2023 - $9,558). The sensitivity analysis is intended to reflect the significant uncertainty inherent in the valuation of private investments under current market conditions, and that results cannot be extrapolated due to non-linear effects that changes in valuation assumptions may have on the estimated fair value of these investments. The analysis does not indicate a probability of changes occurring and it does not necessarily represent the Company's view of expected future changes in the fair value of these investments. Any management actions that may be taken to mitigate inherent risks are not reflected in this analysis.
Financial risk factors
The Company is exposed to a variety of financial instrument related risks:
Credit risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. At September 30, 2024, 100% (December 31, 2023 – 100% due from 1 customer) the trade receivable balance was owing from 2 customers.
The Company is exposed to credit risk from customers. The Company performs ongoing credit evaluations of new and existing customers' financial condition and reviews the collectability of its trade receivables in order to mitigate any possible credit losses.
The Company recognizes a loss allowance for expected credit losses on financial assets measured at amortized cost. The Company considers whether evidence of impairment exists on an individual and collective basis for trade receivables. All trade receivables that are individually material are individually assessed for impairment. All trade receivables that are individually material and not individually impaired are collectively assessed to detect any impairment that may exist but has not yet been identified. Trade receivables that are not individually material are collectively assessed for impairment by aggregating trade receivables. In performing the collective impairment assessment, the Company uses historical patterns for the timing of collection and the amount of incurred credit losses, which are adjusted based on management's judgment about whether economic conditions and credit terms are such that actual losses may be higher or lower than what the historical patterns suggest.
Allowance for doubtful accounts and past due receivables are reviewed by management regularly. The allowance for doubtful accounts balance is also updated regularly based on an impairment calculation under the expected credit loss model. Trade receivables are written off once determined not to be collectible.
ANALYTIXINGISHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
The following table sets forth the continuity of allowance for doubtful accounts for the periods indicated:
| Closing balance, December 31, 2022 | $ 307,871 |
|---|---|
| Provisions made during the year | (214,986) |
| Closing balance, December 31, 2023 | 92,885 |
| Provisions made during the year | (92,885) |
| Receivable write off | - |
| Effects of foreign currency exchange difference | - |
| Closing balance, September 30, 2024 | $ - |
Pursuant to their respective terms, trade receivables are aged as follows as at September 30, 2024, and December 31, 2023:
| Sept 30 2024 | December 31, 2023 | |
|---|---|---|
| Current | $ 9,098 | $ 4,421 |
| 31-60 days | - | - |
| 61-90 days | - | - |
| 91-120 days | - | - |
| Over 120 days | - | - |
| Total trade receivables | $ 9,098 | $ 4,421 |
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulties in meeting its financial liability obligations. The Company manages its liquidity risk through cash and debt management. The Company's objective in managing liquidity risk is to increase revenue, minimize operational costs and to maintain sufficient liquidity in order to meet these operational requirements at any point in time. As at September 30, 2024, the Company has a cash and cash equivalents balance of $90,711 (December 31, 2023 - $1,279,591) current liabilities of $1,225,509 (December 31, 2023 - $831,289) and a negative working capital of $1,036,282 (December 31, 2023 - $627,687). The Company's ability to meet its financial liability obligations and continue to operate as a going concern may include raising capital through a share issuance to obtain sufficient funding. There is no certainty of the Company's ability to raise additional financing through this method.
Interest rate risk
The Company has cash and cash equivalents balances, and all amounts are held with accredited banks. As of September 30, 2024, the Company had short term guaranteed investment certificates of $nil held with an accredited Canadian bank (December 31, 2023 - $1,000,000). A change in interest rate of +/- 1% would result in a change in interest income of $nil (2023 - $10,000).
Currency risk
The Company generates revenue and incurs expenses and expenditures in Canada and the United States. As a result, fluctuations in the rate of exchange between U.S. dollars, Canadian dollars and other currencies can have an effect on the Company's reported results. The Company has not utilized any financial instruments or cash management policies to mitigate the risks arising from changes in foreign
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
currency rates. The net Canadian dollar equivalent of the total of its cost of sales, selling and administrative, and sales denominated in US dollars was approximately $129,100 for the nine months ended September 30, 2024 (September 30, 2023 - $249,000). Accordingly, a 10% increase or decrease in the exchange rate between U.S. and Canadian dollars would result in an increase or decrease of approximately $12,910 in net loss for the period (September 30, 2023 - $24,900).
The Canadian dollar equivalent of net assets denominated in US dollars as at September 30, 2024, was approximately $nil (September 30, 2023 - $108,000). Accordingly, a 10% increase or decrease in the exchange rate between U.S. and Canadian dollars would impact net loss by approximately $nil (Dec 31, 2023 - $10,800).
Capital management
The Company defines capital that it manages as being composed of share capital, reserves, deficit and cash. Its objective when managing capital is to ensure that the Company will continue as a going concern, so that it can provide products and services to its customers and returns to its shareholders.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash and cash equivalents and investments. The Company requires capital to maintain its operating businesses, sustain corporate operations and repay existing obligations. The Company may seek additional financing by means of issuing share capital, the sale of assets or debt financing. There can be no certainty of the Company's ability to raise any additional financing from any of these sources.
In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. The annual and updated budgets are approved by the Board of Directors. The Company is currently not subject to externally imposed capital requirements.
The Company's capital management objectives, policies and processes have not changed during the periods ended September 30, 2024, and December 31, 2023.
The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the TSX.V which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months. As of September 30, 2024, the Company believes it is compliant with the policies of the TSX.V.
Recent Accounting Pronouncements
Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after January 1, 2024. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following have not yet been adopted and are being evaluated to determine their impact on the Company.
ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or noncurrent is based solely on a company’s right to defer settlement at the reporting date. The right needs to be unconditional and must have substance. The amendments also clarify that the transfer of a company’s own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the definition of an equity instrument. These amendments are effective for annual periods beginning on January 1, 2024.
IFRS 10 – Consolidated Financial Statements (“IFRS 10”) and IAS 28 – Investments in Associates and Joint Ventures (“IAS 28”) were amended in September 2014 to address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture, the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. The effective date of these amendments is yet to be determined, however early adoption is permitted.
There are no other standards/amendments or interpretations that are expected to have a significant effect on the consolidated financial statements of the Company.
Critical Accounting Estimates and Judgments
The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Critical accounting estimates are estimates and assumptions made by management that may result in a material adjustment to the carrying amount of assets and liabilities within the next financial year and include, but are not limited to:
Income, value added, withholding and other taxes
The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company’s provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company’s income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.
ANALYTIXINGISHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Income taxes and recoverability of potential deferred tax assets
In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. The Company considers whether relevant tax planning opportunities are within the Company's control, are feasible, and are within management's ability to implement. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. Also, future changes in tax laws could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses unrecognized income tax assets at each reporting period.
Asset carrying values and impairment charges
In the determination of carrying values and impairment charges, management looks at the higher of recoverable amount or fair value less costs to sell in the case of assets and at objective evidence, significant or prolonged decline of fair value on financial assets indicating impairment. These determinations and their individual assumptions require that management make a decision based on the best available information at each reporting period.
Share-based payments
Management determines costs for share-based payments using market-based valuation techniques. The fair value of the market-based and performance-based share awards are determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgment used in applying valuation techniques. These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviors and corporate performance. Such judgments and assumptions are inherently uncertain. Changes in these assumptions could materially affect the fair value estimates.
Revenue recognition
The process of revenue recognition, including the valuation of barter transactions, involves significant management judgment. The Company performed focused procedures to test the valuation of revenue recorded in consideration of non-barter contracts.
In its determination of the amount and timing of revenue to be recognized, management relies on assumptions and estimates supporting its revenue recognition policy. Estimates of the percentage of completion for applicable customer projects are based upon current actual and forecasted information and contractual terms.
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ANALYTIXINGISHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Contingencies
By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events.
Discount rate used for IFRS 16
The determination of the Company's lease liabilities and right-of-use assets depends on certain assumptions, which include the selection of the discount rate. The discount rate is set by reference to the Company's incremental borrowing rate. Significant assumptions are required to be made when determining which borrowing rates to apply in this determination. Changes in the assumptions used may have a significant effect on the Company's consolidated financial statements.
Determination of significant influence and impairment of investment in associate
The Company has classified MarketWall as an associate based on management's judgment that the Company has significant influence through board representation and 49% of the voting rights. Other parties hold 51% of the voting rights and the Company does not exercise control over the board of directors and its operational decision-making process.
Impairment exists when the carrying value of the investment in associate exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The determination of impairment requires significant judgement and can be triggered by significant adverse changes in the market, economic or legal environment in which the associate operates.
Fair value of investment in securities not quoted in an active market or private company investments
Where the fair values of financial assets and financial liabilities recorded on the consolidated statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values.
Expected credit losses
Determining allowance for expected credit losses ("ECLs") requires management to make assumptions about historical patterns for probability of default, the timing of collection and the amount of incurred credit losses, which are adjusted based on management's judgment about whether economic conditions and credit terms are such that actual losses may be higher or lower than what historical patterns suggest.
Functional currency
Functional currency is the currency of the primary economic environment in which the Company and its subsidiaries operate. If indicators of the primary economic environment are mixed, then management uses its judgement to determine the functional currency that most faithfully represents the economic effect of underlying transactions, events and conditions.
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ANALYTIXINSIGHT INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Commitments and Contingencies
The Company is party to certain management contracts. These contracts require payments of $0 upon the occurrence of a change in control of the Company, as defined by each officer's respective consulting agreement. The Company is also committed to payments upon termination of $111,000 pursuant to the terms of these contracts.
The Company is subject to various claims, lawsuits and other complaints arising in the ordinary course of business. The Company records provisions for losses when claims become probable, and the amounts are estimable. Although the outcome of such matters cannot be determined, it is the opinion of management that the final resolution of these matters will not have a material adverse effect on the Company's financial condition, operations or liquidity.
There are no off-balance sheet arrangements.
Management's Responsibility for Financial Reporting
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS. The Company's certifying officers, based on their knowledge, having exercised reasonable diligence, are also responsible to ensure that these filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by these filings, and these consolidated financial statements together with the other financial information included in these filings fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented in these filings. The Board of Directors approves the consolidated financial statements and MD&A and ensures that management has discharged its financial responsibilities. The Board's review is accomplished principally through the Audit Committee, which meets periodically to review all financial reports, prior to filing.
Outstanding Share Data
As at the date of this MD&A, the following common shares, common shares purchase options, share purchase warrants and special performance shares were issued and outstanding:
- 97,366,741 common shares;
- 725,000 common share purchase options with exercise prices ranging from $0.085 to $0.3550 expiring between October 31 2024, and March 7, 2029.
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