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ARCpoint Inc. — Interim / Quarterly Report 2021
May 26, 2021
45041_rns_2021-05-26_b9a0da07-7331-4096-9be5-2005dcba0ed4.pdf
Interim / Quarterly Report
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RSI INTERNATIONAL SYSTEMS INC.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three months ended March 31, 2021
(Unaudited)
(In Canadian Dollars)
RSI International Systems Inc.
Notice to Reader:
These condensed consolidated interim financial statements of RSI International Systems Inc. (the “Company”) have been prepared by management and reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors of the Company. In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its external auditors have not reviewed these condensed consolidated interim financial statements, notes to condensed consolidated financial statements and the related quarterly Management Discussion and Analysis.
RSI INTERNATIONAL SYSTEMS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited, in Canadian dollars)
| Notes | March 31, 2021 December 31, 2020 |
|---|---|
| ASSETS Current Cash $ Short-term investment – GIC Interest receivables - GIC Lease receivables 4,7 Prepaid Expenses |
4,155$ 29,609 5,080,866 5,009,617 765 56,131 128,763 174,606 37,223 39,491 |
| $ | 5,251,772 $ 5,309,454 |
| LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts Payable & Accrued Liabilities $ Lease liability 4,7 |
56,184 $ 57,168 128,763 174,606 |
| 184,947 231,774 |
|
| Shareholders' Equity Share Capital 5 Contributed Surplus Deficit |
5,633,039 5,633,039 696,609 696,609 (1,262,823) (1,251,968) |
| $ | 5,066,825 5,077,680 5,251,772$ 5,309,454 |
Note 1 – Nature of operations
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
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RSI INTERNATIONAL SYSTEMS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited in Canadian dollars)
| Three months ended | Three months ended | ||
|---|---|---|---|
| Notes | March 31, 2021 | March31,2020 | |
| EXPENSES | |||
| Business Development and Travel | - | 4,375 | |
| Filing and Transfer Agent Fees | 2,914 | 6,577 | |
| Interests and Bank Charges | 1,059 | 367 | |
| Interest income | (15,884) | (26,779) | |
| Office and Miscellaneous | 3,829 | 4,400 | |
| Professional Fees | 18,937 | 30,775 | |
| Stock-based Compensation | - | 12,900 | |
| Lease accretiongain,net | 4 | - | (774) |
| 10,855 | 31,841 | ||
| NET LOSS AND COMPREHENSIVE LOSS FOR | |||
| THE PERIOD | (10,855) | (31,841) | |
| Loss per share - Basic and Diluted | $(0.00) $ | (0.00) | |
| Weighted average number of shares outstanding – basic | |||
| & diluted | 36,835,278 | 36,835,278 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
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RSI INTERNATIONAL SYSTEMS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited, in Canadian dollars, except share number)
| Issued Common Shares | Issued Common Shares | Contributed Surplus | Deficit Total Equity |
|
|---|---|---|---|---|
| Number | Amount Received | |||
| BALANCE, DECEMBER 31, 2020 Net and comprehensivelossforthe period |
36,835,278 - |
$ 5,633,039 - |
$ 696,609 - |
$ $ (1,251,968) 5,077,680 (10,855) (10,855) |
| BALANCE, MARCH 31, 2021 | 36,835,278 | 5,633,039 | 696,609 | (1,262,823) 5,066,825 |
| BALANCE, DECEMBER 31, 2019 | 36,835,278 | 5,633,039 | 668,892 | (1,092,267) 5,209,664 |
| Stock-based compensation Net and comprehensive income for the period |
- - |
- - |
12,900 - |
- 12,900 (31,841) (31,841) |
| BALANCE, MARCH 31, 2020 | 36,835,278 | 5,633,039 | **681,792 ** | (1,124,108) 5,190,723 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
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RSI INTERNATIONAL SYSTEMS INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited, in Canadian dollars)
| Three months ended | Three months ended | ||
|---|---|---|---|
| Notes | March 31, 2021 | March 31,2020 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Net loss for the period | $ (10,855) | $ (31,841) | |
| Items not affecting cash: | |||
| Lease accretion gain, net | - | (774) | |
| Stock-based compensation | - | 12,900 | |
| (10,855) | (19,715) | ||
| Changes in Non-Cash Working Capital Items: | |||
| Receivables | (15,883) | 81,911 | |
| Prepaid expenses | 2,268 | 2,740 | |
| Accountspayable and accrued liabilities | (984) | (7,697) | |
| (25,454) | 57,239 | ||
| Interest on lease liability payment | - | (8,462) | |
| Interest on lease receivable receipt | - | 9,236 | |
| Variable lease expense payment | - | (34,238) | |
| Variable lease expense receipts | - | 22,590 | |
| Net Cash(Used in)Flow byOperatingActivities | (25,454) | 46,365 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Acquisition of short term investment | - | (108,617) | |
| Lease receivable receipts | - | 27,668 | |
| Interest received from short term investment | 71,249 | ||
| Proceeds from sale of short term investment | 5,009,617 | - | |
| Investment in short term investment | (5,080,866) | - | |
| Net Cash(Used in)Flow byInvestingActivities | - | (80,949) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Leasepayments | - | (41,901) | |
| Net Cash Used In FinancingActivities | - | (41,901) | |
| Change in Cash During the period | (25,454) | (76,485) | |
| Cash, Beginning ofperiod | 29,609 | 269,928 | |
| Cash, End ofperiod | $ 4,155 | $ 193,443 | |
| SUPPLEMENTAL CASH FLOW INFOMRMATION | |||
| Lease liability – paid by sublessee (note 4(a)) | (50,363) | - | |
| Lease receivable– proceed deposited directly to landlord (note 4(a)) |
50,363 | - |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
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RSI INTERNATIONAL SYSTEMS INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ENDED MARCH 31, 2021 AND 2020 (Unaudited, in Canadian dollars)
1. NATURE OF OPERATIONS
RSI International Systems Inc. (the “Company”) is a publicly listed company incorporated under the laws of British Columbia, Canada. The address of the Company’s head and registered office is Suite 1201 – 1166 Alberni Street, Vancouver, BC, V6E 3Z3. The condensed consolidated interim financial statements of the Company as at and for the period ended March 31, 2021 include the Company and its subsidiary. The Company was in the business of providing an integrated web-based real-time reservation and property management system to the hotel and resort industries. The Company sold its RoomKeyPMS business in Q1 2019 and is currently looking for other ventures to build value for its shareholders.
On August 13, 2019, the Company transitioned from the TSX-V to the NEX, the Company’s trading symbol changed from RSY to RSY.H. There was no change in the Company's name, its CUSIP number and there was no consolidation of capital. The NEX is a separate board of the TSX-V.
These condensed consolidated interim financial statements were approved and authorized for issue by the Board of Directors on May 26, 2021.
These condensed consolidated interim financial statements have been prepared using International Financial Reporting Standards applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities and commitments in the normal course of operations for the foreseeable future.
During the period ended March 31, 2021, net loss was $10,855 (2020 – $31,841). The Company also has a working capital of $5,066,825 (December 31, 2020 – $5,077,680) and an accumulated deficit as of March 31, 2021 of $1,262,823 (December 31, 2020 – $1,251,968).
Accordingly, there is a material uncertainty that may cast significant doubt on the validity of this assumption. Although the Company has a positive working capital, the Company has no operating revenue that will cover all of its o operating expenses. The Company’s ability to continue as a going concern is dependent on its ability to raise equity financing or the attainment of profitable operations. If the going concern assumption was not appropriate for these consolidated financial statements, then adjustment may be necessary in the carrying values of assets and liabilities and the reported expenses. These condensed consolidated interim financial statement does not reflect any adjustment, which could be material, to the carrying amounts of assets and liabilities, reported revenues and expenses, and balance sheet classification used, that would be necessary if the Company were unable to continue as a going concern.
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RSI INTERNATIONAL SYSTEMS INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ENDED MARCH 31, 2021 AND 2020
(Unaudited, in Canadian dollars)
COVID-19
During March 2020, there was a global outbreak of COVID-19 (coronavirus), which has had a significant impact on businesses through the restrictions put in place by the Canadian, provincial and municipal governments regarding travel, business operations and isolation/quarantine orders. At this time, it is unknown the extent of the impact the COVID-19 outbreak may have on the Company as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place by Canada and other countries to fight the virus.
For period ended March 31, 2021, COVID19 has hindered business travel and corporate development opportunities for the Company. Impact in 2021 remains unknown.
One of the key risks identified by the Company is the collections of lease receivable from the sublease related to the office space (note 4). The Company and its landlord decreased the lease payments from the sublessee and the Company. In addition, the sublessee is paying the Company’s landlord directly to mitigate this risk.
2. SIGNIFICANT ACCOUNTING POLICIES
These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standards (“IAS”) 34 Interim Financial Reporting have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with IFRS have been omitted or condensed, and therefore these condensed consolidated interim financial statements should be read in conjunction with the December 31, 2020 audited annual consolidated financial statements and the notes.
These unaudited condensed consolidated interim financial statements are based on the IFRS effective as of the date these unaudited condensed consolidated interim financial statements were authorized for issuance by the Company’s Board of Directors (see note 1), and follow the same accounting policies and methods of computation as the most recent annual consolidated financial statements.
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RSI INTERNATIONAL SYSTEMS INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ENDED MARCH 31, 2021 AND 2020 (Unaudited, in Canadian dollars)
3. KEY ASSUMPTIONS AND SIGNIFICANT JUDGEMENTS
Significant Accounting Judgments and Estimates
The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments and estimates and form assumptions that affect the reported amount of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities, revenues and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates under different assumptions and conditions.
In preparing these condensed consolidated interim financial statements, significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation were the same as those that applied to the consolidated financial statements as at and for the year ended December 31, 2020.
4. LEASES
| March 31, 2021 | December 31, 2020 | |
|---|---|---|
| $ | $ | |
| Carrying Value | Carrying Value | |
| Lease receivables (a) | ||
| Total | 128,763 | 174,606 |
| Current | (128,763) | (174,606) |
| Long term | - | - |
| Lease liability (b) | ||
| Total | 128,763 | 174,606 |
| Current | (128,763) | (174,606) |
| Long term | - | - |
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RSI INTERNATIONAL SYSTEMS INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ENDED MARCH 31, 2021 AND 2020
(Unaudited, in Canadian dollars)
| March 31, 2021 | December 31, 2020 | |
|---|---|---|
| $ | $ | |
| Undiscounted value | Undiscounted value | |
| Lease receivables (a) | ||
| Total | 134,300 | 184,663 |
| Current | (134,300) | (184,663) |
| Long term | - | - |
| Lease liability (b) | ||
| Total | 134,300 | 184,663 |
| Current | (134,300) | (184,663) |
| Long term | - | - |
-
a) Accretion gain on the lease receivables for the three months ended March 31, 2021 is $4,520 (2020 - $9,236); in addition, the Company received $nil (2020 - $59,494) from subleasing office space. A security deposit of $nil (2020 - $28,997) was applied to one of the month’s sublease payment for period ended March 31, 2021. During the period ended March 31, 2021, the sublessee paid $50,363 (2020 - $nil) to the Company’s landlord directly.
-
b) Accretion expense on the lease liabilities for the three months ended March 31, 2021 is $nil (2020 - $8,462); in addition, the Company paid $nil (2020 - $84,601) for leasing the office space, as it was paid directly from sublessee to the Company’s landlord (see note 4(a)).
5. SHARE CAPITAL
Authorized: Unlimited common shares without par value
Escrow Shares
As at March 31, 2021, the Company has no escrow shares.
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RSI INTERNATIONAL SYSTEMS INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ENDED MARCH 31, 2021 AND 2020 (Unaudited, in Canadian dollars)
Stock Options
A summary of the Company’s stock options is as follows:
| Weighted | |||
|---|---|---|---|
| Number of | Average | ||
| Shares | Exercise Price | ||
| Options outstanding as at December 31, 2020 | 1,825,000 | $ | 0.12 |
| Expired | - | - | |
| Granted | - | - | |
| Options outstanding as at March 31, 2021 | 1,825,000 | $ | 0.12 |
As at March 31, 2021, the Company has the following stock options outstanding:
| Number of | Number of | ||||
|---|---|---|---|---|---|
| Options | Options | Exercise | Expiry | ||
| Date Issued | Outstanding | Exercisable | Price | Date | |
| January 23, 2017 | 425,000 | 425,000 | $ | 0.20 | January 23, 2022 |
| May 1, 2019 | 1,400,000 | 1,400,000 | $ | 0.10 | May 1, 2024 |
| 1,825,000 | 1,825,000 |
Warrants
As at March 31, 2021, the Company has no warrants (December 31, 2020 – no warrants) outstanding.
6. RELATED PARTY TRANSACTIONS
The Company’s related parties include its subsidiaries, associates over which it exercises significant influence, and key management personnel. Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel include officers, directors or companies with common directors of the Company
Related party transactions not otherwise disclosed in these consolidated financial statements are as follows:
- The Company paid remuneration for management services to a company controlled by the CEO totaling $9,450 (2020 - $9,000).
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RSI INTERNATIONAL SYSTEMS INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ENDED MARCH 31, 2021 AND 2020 (Unaudited, in Canadian dollars)
- The Company paid remuneration for management services to a company controlled by the CFO totaling $9,450 (2020 - $9,000).
As at March 31, 2021 the Company had amounts payable of $3,399 (December 31, 2020 - $10,705) to these parties which has been included in accounts payable.
These transactions are in the normal course of the operations on normal commercial terms and conditions and at exchange rates, which is the amount of consideration established and agreed to by the related parties.
7. FINANCIAL INSTRUMENTS
Fair Value
Set out below is a comparison by class of the carrying amounts of the Company’s financial instruments that are carried in the Consolidated Statements of Financial Position:
| March 31, 2021 | December 31, 2020 | |
|---|---|---|
| $ | $ | |
| Financial Assets | ||
| Amortized cost: | ||
| Cash | 4,155 | 29,609 |
| Short-term investment | 5,080,866 | 5,009,617 |
| Interest receivable | 766 | 56,131 |
| Lease receivable | 128,763 | 174,606 |
| Financial Liabilities | ||
| Amortized cost: | ||
| Accounts payable and accrued liabilities | 56,184 | 57,168 |
| Lease liability | 128,763 | 174,606 |
The carrying value of cash, interest receivable and accounts payable and accrued liabilities approximates the fair value because of the short-term of these instruments.
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RSI INTERNATIONAL SYSTEMS INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ENDED MARCH 31, 2021 AND 2020 (Unaudited, in Canadian dollars)
Financial Risk Management
Credit Risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. As at March 31, 2021, the Company’s maximum exposure to credit risk is in the carrying value of its cash and short-term investment. The Company limits its exposure to credit loss by placing its cash and short-term investments with high credit quality financial institutions.
Currency Risk
The functional currency of RSI is the Canadian dollar. As at March 31, 2021, most of the foreign currency risk is related to US dollar funds held in bank US$1,004 (December 31, 2020 - US$15,155), denominated in US dollar. Therefore, the Consolidated Statements of Operations and Comprehensive Income (Loss) is impacted by fluctuations in the valuation of the US dollar in relation to the Canadian dollar.
The Company does not hedge its exposure to currency fluctuations. The Company has completed a sensitivity analysis to estimate the impact that a change in foreign exchange rates would have on the net loss of the Company, based on the Company’s financial instruments in US dollar as at year end. This sensitivity analysis shows that a change of +/- 10% in US$ foreign exchange rate would have a +/- $122 (2020 - +/- $1,916) impact on the Consolidated Statements of Operations and Comprehensive Loss.
Interest Rate Risk
The Company is only subject to interest rate risk on its short-term investment balance in the bank and there is unlikely to be a material impact on Consolidated Statements of Operations and Comprehensive Loss.
Liquidity Risk
Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time.
As at March 31, 2021, the Company had total payable in the amount of $56,184 due within 12 months (December 31, 2020 - $57,168). As at March 31, 2021, the Company held cash and short-term investment of $5,080,866 (December 31, 2020 - $5,009,617).
The Company’s objective in managing liquidity risk is to maintain sufficient readily available reserves to meet its liquidity requirements at any point in time. With the current cash balance
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RSI INTERNATIONAL SYSTEMS INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ENDED MARCH 31, 2021 AND 2020 (Unaudited, in Canadian dollars)
and working capital position, management expects it is sufficient to meet the Company’s liquidity requirements.
Management of Capital
The Company’s objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of growth combined with strategic acquisitions and to provide returns to its shareholders. RSI defines capital that it manages as the aggregate of its shareholders’ equity, which is comprised of issued capital, contributed surplus and deficit. The Company manages its capital structure and makes adjustments to it in light of general economic conditions, the risk characteristics of the underlying assets and the Company’s working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from its Board of Directors, may issue shares, issue debt, pay dividends or undertake other activities as deemed appropriate under the specific circumstances.
The Company was not subject to any other externally imposed capital requirements as at March 31, 2021. The Company’s overall strategy with respect to management of capital at March 31, 2021 remains fundamentally unchanged from the year ended December 31, 2020.
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